SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
February 25, 1999
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under the
Trust Agreement, dated as of February 1, 1999, providing for the
issuance of First Nationwide Trust 1999-1, Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series
1999-1)
Structured Asset Securities Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-68513-02 74-2440850
- --------------------------- ------------ -------------------
State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
- ----------------------- ----------
Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (212) 526-5594
No Change
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
A. The Registrant registered issuances of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"),
by a Registration Statement on Form S-3 (Registration File No. 333-68513) (the
"Registration Statement"). Pursuant to the Registration Statement, the
Registrant issued $827,525,429 in aggregate principal amount of Class 1-A,
Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class 2-A5, Class 2-A6, Class
2-A7, Class 2-A8, Class AX, Class AP, Class 1-B1, Class 2-B1, Class 1-B2, Class
2-B2, Class 1-B3, Class 2-B3 and Class R Certificates of its First Nationwide
Trust 1999-1, Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1999-1 on February 25, 1999. This Current Report on Form
8-K is being filed to satisfy an undertaking, contained in the definitive
Prospectus dated January 15, 1999, as supplemented by the Prospectus Supplement
dated February 18, 1999 (the "Group 2 Prospectus Supplement) and the Prospectus
Supplement dated February 23, 1999 (the "Group 1 Prospectus Supplement," and
together with the Group 2 Prospectus Supplements, the "Prospectus
Supplements"), to file a copy of the Trust Agreement (in the form filed as an
Exhibit to the Registration Statement) and other material agreeements executed
in connection with the issuance of the Certificates.
The Certificates were issued pursuant to a Trust Agreement (the "Trust
Agreement"), attached hereto as Exhibit 4.1, dated as of February 1, 1999,
between Structured Asset Securities Corporation, as depositor (the "Depositor")
and U.S. Bank National Association, as trustee (the "Trustee"). The
"Certificates" consist of the following classes: Class 1-A, Class 2-A1, Class
2-A2, Class 2-A3, Class 2-A4, Class 2-A5, Class 2-A6, Class 2-A7, Class 2-A8,
Class AX, Class AP, Class 1-B1, Class 2-B1, Class 1-B2, Class 2-B2, Class 1-B3,
Class 2-B3, Class 1-B4, Class 2-B4, Class 1-B5, Class 2-B5, Class 1-B6, Class
2-B6 and Class R. The Certificates evidence all the beneficial ownership
interest in a trust fund (the "Trust Fund") that consists primarily of a pool
of fixed rate, fully amortizing, conventional, first lien residential mortgage
loans (the "Mortgage Loans") with an aggregate outstanding principal balance of
$833,936,657 as of February 1, 1999, together with certain other assets.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Trust Agreement.
<PAGE>
Item 7. Financial Statements; Pro Forma Financial Information and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated February 18, 1999, between Structured Asset
Securities Corporation and Lehman Brothers Inc.
3.1 Trust Agreement, dated as of February 1, 1999, between Structured
Asset Securities Corporation, as Depositor, and U.S. Bank National
Association, as Trustee.
3.2 Insurance Agreement, dated as of February 1, 1999, among MBIA
Insurance Corporation, as Insurer, Structured Asset Securities
Corporation, as Depositor, Lehman Capital, a Division of Lehman
Brothers Holdings Inc., as Seller, and U.S. Bank National
Association, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of February 1,
1999, between Lehman Capital, A Division of Lehman Brothers Holdings
Inc., as Purchaser and Structured Asset Securities Corporation, as
Seller.
99.2 Seller's Warranties and Servicing Agreement, dated as of February 1,
1999, among Lehman Capital, A Division of Lehman Brothers Holdings
Inc., as purchaser, and First Nationwide Mortgage Corporation.
99.3 Mortgage Loan Purchase Agreement, dated as of February 1, 1999, among
Lehman Capital, A Division of Lehman Brothers Holdings Inc., and
First Nationwide Mortgage Corporation.
99.4 Assignment and Assumption Agreement, dated as of February 1, 1999,
between Lehman Capital, a Division of Lehman Brothers Holdings Inc.,
as Assignor and First Nationwide Mortgage Corporation, as Assignee.
<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 hereunto duly authorized.
STRUCTURED ASSET SECURITIES
CORPORATION
By:/s/ Joseph J. Kelly
----------------------
Name: Joseph J Kelly
Title: Vice President
Dated: March 5, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Terms Agreement, dated February 18, 1999,
between Structured Asset Securities
Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of February 1,
1999, between Structured Asset Securities
Corporation, as Depositor and U.S. Bank
National Association, as Trustee.
4.2 Insurance Agreement, dated as of February 1,
1999, among MBIA Insurance Corporation, as
Insurer, Structured Asset Securities
Corporation, as Depositor, Lehman Capital, a
Division of Lehman Brothers Holdings Inc., as
Seller, and U.S. Bank National Association,
as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement,
dated as of February 1, 1999, between Lehman
Capital, A Division of Lehman Brothers
Holdings Inc. and Structured Asset Securities
Corporation.
99.2 Seller's Warranties and Servicing Agreement,
dated as of February 1, 1999, between Lehman
Capital, A Division of Lehman Brothers
Holdings Inc., as purchaser, and First
Nationwide Mortgage Corporation, as seller.
99.3 Mortgage Loan Purchase Agreement, dated as of
February 1, 1999, between Lehman Capital, A
Division of Lehman Brothers Holdings Inc.,
and First Nationwide Mortgage Corporation.
99.4 Assignment and Assumption Agreement, dated as
of February 1, 1999, between Lehman Capital,
a Division of Lehman Brothers Holdings Inc,
as Assignor, and First Nationwide Mortgage
Corporation, as Assignee.
FIRST NATIONWIDE TRUST 1999-1
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-1
TERMS AGREEMENT
Dated: February 18, 1999
To: Structured Asset Securities Corporation, as Depositor under the Trust
Agreement dated as of February 1, 1999 (the "Trust Agreement").
Re: Underwriting Agreement Standard Terms dated as of April 16, 1996 (the
"Standard Terms," and together with this Terms Agreement, the
"Agreement").
Series Designation: First Nationwide Trust 1999-1; Series 1999-1.
Terms of the Series 1999-1 Certificates: First Nationwide Trust 1999-1,
Structured Asset Securities Corporation, Series 1999-1 Mortgage Pass-Through
Certificates, Class 1-A, Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class
2-A5, Class 2-A6, Class 2-A7, Class 2-A8, Class AX, Class AP, Class 1-B1, Class
2-B1, Class 1-B2, Class 2-B2, Class 1-B3, Class 2-B3, Class 1-B4, Class 2-B4,
Class 1-B5, Class 2-B5, Class 1-B6, Class 2-B6 and Class R Certificates (the
"Certificates") will evidence, in the aggregate, the entire beneficial
ownership interest in a trust fund (the "Trust Fund"). The primary assets of
the Trust Fund consist of (i) two pools of fixed rate, fully amortizing,
conventional, first lien residential mortgage loans (the "Mortgage Loans");
(ii) a certificate guaranty insurance policy for the exclusive benefit of the
Class 2-A3 Certificates; and (iii) a reserve fund exclusively for the benefit
of the Class 2-A3 Certificates. Only the Class 1-A, Class 2-A1, Class 2-A2,
Class 2-A3, Class 2-A4, Class 2-A5, Class 2-A6, Class 2-A7, Class 2-A8, Class
AX, Class AP, Class 1-B1, Class 2-B2, Class 1-B2, Class 2-B2, Class 1-B3, Class
2-B3 and Class R Certificates (together, the "Offered Certificates") are being
sold pursuant to the terms hereof.
Registration Statement: File Number 333-68513.
Certificate Ratings: It is a condition of Closing that at the Closing Date the
Class 1-A, Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A5, Class 2-A6, Class
2-A7, Class 2-A8 and Class R Certificates be rated "AAA" by Standard & Poor's
Rating Services, a division of the McGraw-Hill Companies, Inc. ("S&P") that the
Class 1-A, Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class 2-A5, Class
2-A6, Class 2-A7, Class 2-A8, Class AX, Class AP and Class R Certificates be
rated "AAA" by Fitch IBCA, Inc. ("Fitch"); that the Class 2-A4, Class AX and
Class AP Certificates be rated "AAAr" by S&P; that the Class 1-B1 and Class
2-B1 Certificates be rated "AA" by Fitch; that the Class 1-B2 and Class 2-B2
Certificates be rated "A" by Fitch; and that the Class 1-B3 and Class 2-B3
Certificates be rated "BBB" by Fitch.
Terms of Sale of Offered Certificates: The Depositor agrees to sell to Lehman
Brothers Inc. (the "Underwriter") and the Underwriter agrees to purchase from
the Depositor, the Offered Certificates in the principal amounts and prices set
forth on Schedule 1 annexed hereto. The purchase price for the Offered
Certificates shall be the Purchase Price Percentage set forth in Schedule 1
plus accrued interest at the initial interest rate per annum from and including
the Cut-off Date up to, but not including, the Closing Date.
The Underwriter will offer the Offered Certificates to the public from time to
time in negotiated transactions or otherwise at varying prices to be determined
at the time of sale.
Cut-off Date: February 1, 1999.
Closing Date: 10:00 A.M., New York time, on or about February 25, 1999. On the
Closing Date, the Depositor will deliver the Offered Certificates to the
Underwriter against payment therefor for the account of the ------------
Underwriter.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Depositor and the Underwriter in accordance with its terms.
LEHMAN BROTHERS INC.
By: /s/ Stanley P. Labanowski
----------------------------
Name: Stanley P. Labanowski
Title: Vice President
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Joseph J. Kelly
------------------------
Name: Joseph J. Kelly
Title: Vice President
<PAGE>
Schedule 1
Initial
Certificate Certificate Purchase
Principal Interest Price
Class Amount(1) Rate Percentage
Class 1-A $102,124,000.00 6.25% 99.50%
Class 2-A1 $250,000,000.00 6.50% 99.60%
Class 2-A2 $ 2,400,000.00 6.50%(2) 99.60%
Class 2-A3 $ 21,457,000.00 6.50% 99.60%
Class 2-A4 $ 132,100.00 (4) 99.60%
Class 2-A5 $ 20,324,000.00 6.50%(2) 99.60%
Class 2-A6 $120,000,000.00 6.50% 99.60%
Class 2-A7 $116,000,600.00 6.50% 99.60%
Class 2-A8 $169,453,800.00 6.50% 99.60%
Class R $ 100.00 6.50% 99.60%
Class AX (3) (3) 99.60%
Class AP $ 1,657,829.00 (4) 99.60%
Class 1-B1 $ 729,000.00 6.25% 99.50%
Class 2-B1 $ 13,134,000.00 6.50% 99.60%
Class 1-B2 $ 365,000.00 6.25% 99.50%
Class 2-B2 $ 6,568,000.00 6.50% 99.60%
Class 1-B3 $ 261,000.00 6.25% 99.50%
Class 2-B3 $ 2,919,000.00 6.50% 99.60%
- ------------------------------
(1) Approximate.
(2) The amount of interest accruing on the Class 2-A2 Certificates and the
Class 2-A5 Certificates will not be distributable on such Certificates
until the principal balance of the Class 2-A6 Certificates are paid in
full (in the case of the Class 2-A2 Certificates) and the principal
balance of the Class 2-A1 Certificates are paid in full (in the case of
the Class 2-A5 Certificates), but will instead be added to the principal
balance of such Certificates, except as described in the Group 2
Prospectus Supplement.
(3) The Class AX Certificates are interest-only certificates; they will not
be entitled to payments of principal. Interest will accrue on each of the
two components of the Class AX Certificates at a rate of 6.25% in the
case of the AX(1) Component, and 6.50% in the case of the AX(2)
Component, in each case on a calculated Component Notional Amount as
described in the Group 2 Prospectus Supplement.
(4) The Class 2-A4 and Class AP Certificates are principal-only certificates;
they will not be entitled to payments of interest. Principal will be
distributed on each of the two components of the Class AP Certificates as
described in the Group 2 Prospectus Supplement.
EXECUTION
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
and
U.S. BANK NATIONAL ASSOCIATION, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of February 1, 1999
---------------------------
FIRST NATIONWIDE TRUST 1999-1
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
<PAGE>
Table of Contents
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions...............................................10
Section 1.02. Calculations Respecting Mortgage Loans....................40
Section 1.03. Calculations Respecting Accrued Interest..................40
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans............................................40
Section 2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund..............................41
Section 2.03. Representations and Warranties of the Depositor...........42
Section 2.04. Discovery of Breach.......................................43
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans....44
Section 2.06. Grant Clause..............................................44
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates..........................................45
Section 3.02. Registration..............................................46
Section 3.03. Transfer and Exchange of Certificates.....................46
Section 3.04. Cancellation of Certificates..............................49
Section 3.05. Replacement of Certificates...............................49
Section 3.06. Persons Deemed Owners.....................................49
Section 3.07. Temporary Certificates....................................49
Section 3.08. Appointment of Paying Agent...............................50
Section 3.09. Book-Entry Certificates...................................50
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Omitted].................................................51
Section 4.02. [Omitted].................................................51
Section 4.03. Reports to Certificateholders.............................51
Section 4.04. Certificate Account.......................................54
Section 4.05. Determination of LIBOR....................................55
Section 4.06. The Class 2-A3 Reserve Fund...............................55
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally...................................55
Section 5.02. Distributions from the Certificate Account................56
Section 5.03. Allocation of Realized Losses.............................63
Section 5.04. Trustee Advances..........................................65
Section 5.05. Distributions of Principal on Redemption Certificates.....66
Section 5.06. The Class 2-A3 Certificate Insurance Policy...............70
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee.........................................73
Section 6.02. Certain Matters Affecting the Trustee.....................75
Section 6.03. Trustee Not Liable for Certificates.......................75
Section 6.04. Trustee May Own Certificates..............................76
Section 6.05. Eligibility Requirements for Trustee......................76
Section 6.06. Resignation and Removal of Trustee........................76
Section 6.07. Successor Trustee.........................................77
Section 6.08. Merger or Consolidation of Trustee........................77
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian..78
Section 6.10. Authenticating Agents.....................................79
Section 6.11. Indemnification of Trustee................................80
Section 6.12. Fees and Expenses of Trustee..............................81
Section 6.13. Collection of Monies......................................81
Section 6.14. Trustee To Act; Appointment of Successor..................81
Section 6.15. Additional Remedies of Trustee Upon Event of Default......83
Section 6.16. Waiver of Defaults........................................83
Section 6.17. Notification to Holders...................................83
Section 6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default...................................83
Section 6.19. Action Upon Certain Failures of the Servicer and Upon
Event of Default..........................................84
ARTICLE VII
PURCHASE AND TERMINATION
Section 7.01. Termination of Trust Fund Upon Repurchase or
Liquidation of All Mortgage Loans.........................84
Section 7.02. Procedure Upon Termination of Trust Fund..................85
Section 7.03. Additional Trust Fund Termination Requirements............85
<PAGE>
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders...........................86
Section 8.02. Access to List of Holders.................................87
Section 8.03. Acts of Holders of Certificates...........................87
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 9.01. Trustee To Retain Possession of Certain Documents.........88
Section 9.02. Preparation of Tax Returns and Other Reports..............88
Section 9.03. Release of Mortgage Files.................................89
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration......................................90
Section 10.02. Prohibited Transactions and Activities....................91
Section 10.03. Indemnification with Respect to Certain Taxes and Loss
of REMIC Status...........................................92
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment...................92
Section 11.02. Entire Agreement..........................................92
Section 11.03. Amendment.................................................93
Section 11.04. Voting Rights.............................................94
Section 11.05. Provision of Information..................................94
Section 11.06. Governing Law.............................................94
Section 11.07. Notices...................................................94
Section 11.08. Severability of Provisions................................95
Section 11.09. Indulgences; No Waivers...................................95
Section 11.10. Headings Not To Affect Interpretation.....................95
Section 11.11. Benefits of Agreement.....................................95
Section 11.12. Special Notices to the Rating Agencies....................95
Section 11.13. Counterparts..............................................96
Section 11.14. Matters Relating to the Class 2-A3 Certificate
Insurance Policy..........................................96
<PAGE>
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Trustee Final Certification
Exhibit B-2 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Seller's Warranties and Servicing Agreement
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited
Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
Exhibit K Class 2-A3 Certificate Insurance Policy
Exhibit L The Insurance Agreement
Schedule A Mortgage Loan Schedule
Schedule B Principal Amount Schedule
<PAGE>
This TRUST AGREEMENT, dated as of February 1, 1999 (the "Agreement"),
is by and between STRUCTURED ASSET SECURITIES CORPORATION, a Delaware
corporation, as depositor (the "Depositor"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee") and
acknowledged by FIRST NATIONWIDE MORTGAGE CORPORATION solely for purposes of
Section 9.03 and Section 11.11.
PRELIMINARY STATEMENT
All defined terms used in this Preliminary Statement that are not
defined in the Preliminary Statement are defined in Article I (Definitions)
herein.
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller"), and at the Closing
Date is the owner of the Mortgage Loans and the other property being conveyed
by it to the Trustee for inclusion in the Trust Fund. On the Closing Date, the
Depositor will acquire the Certificates from the Trust Fund, as consideration
for its transfer to the Trust Fund of the Mortgage Loans (exclusive of any
Retained Yield on such Mortgage Loans) and the other property constituting the
Trust Fund. The Depositor has duly authorized the execution and delivery of
this Agreement to provide for the conveyance to the Trustee of the Mortgage
Loans and the other property constituting the Trust Fund. All covenants and
agreements made by the Depositor and the Trustee herein with respect to the
Mortgage Loans and the other property constituting the Trust Fund are for the
benefit of the Holders from time to time of the Certificates and the Class
2-A3 Certificate Insurer. The Depositor is entering into this Agreement, and
the Trustee is accepting the Trust Fund created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as comprising two real estate mortgage
investment conduits (each a "REMIC" or, in the alternative , the "Lower Tier
REMIC" and the "Upper Tier REMIC," respectively). The Certificates, other than
the Class R Certificate, represent ownership of regular interest in the Upper
Tier REMIC for purposes of the REMIC Provisions. The Upper Tier REMIC shall
also issue a single class of residual interest within the meaning of the REMIC
Provisions and the Class R Certificate shall evidence the ownership of such
residual interest.
The Lower Tier REMIC shall issue two classes of uncertificated Lower
Tier Interests that shall be regular interests in the Lower Tier REMIC within
the meaning of the REMIC Provisions; the "Class LT1 Interest" and the "Class
LT2 Interest". The Lower Tier REMIC shall also issue a single uncertificated
interest that shall be the sole residual interest in the Lower Tier REMIC
within the meaning of the REMIC Provisions; the "Class LTR Interest". The
Class LT1 and Class LT2 Interests will be held as assets of the Upper Tier
REMIC.
The Class LT1 Interest shall have an initial principal balance equal
to the Cut-off Date Aggregate Principal Balance of the Pool 1 Mortgage Loans
and shall bear interest at a rate equal to the weighted average of the Net
Mortgage Rates of the Pool 1 Mortgage Loans (the "Class LT1 Rate"). On any
Distribution Date, the Class LT1 Interest shall be entitled to interest
payments at the Class LT1 Rate and principal distributions to the extent of
the Principal Distribution Amount for the Group 1 Certificates. Realized
Losses and Net Prepayment Interest Shortfalls with respect to the Mortgage
Loans in Pool 1 shall be allocated to the Class LT1 Interest.
The Class LT2 Interest shall have an initial principal balance equal
to the Cut-off Date Aggregate Principal Balance of the Pool 2 Mortgage Loans
and shall bear interest at a rate equal to the weighted average of the Net
Mortgage Rates of the Pool 2 Mortgage Loans (the "Class LT2 Rate"). On any
Distribution Date, the Class LT2 Interest shall be entitled to interest
payments at the Class LT2 Rate and principal distributions to the extent of
the Principal Distribution Amount for the Group 2 Certificates. Realized
Losses and Net Prepayment Interest Shortfalls with respect to the Mortgage
Loans in Pool 2 shall be allocated to the Class LT2 Interest.
The Class LTR Interest shall not have a principal balance and shall
not bear interest. The Class R Certificate shall evidence ownership of the
Class LTR Interest.
The Lower Tier REMIC shall hold all assets included in the Trust Fund
other than (a) the Class LT1, Class LT2, and Class LTR Interests, (b) the
Class 2-A3 Reserve Fund, (c) the Rounding Account, and (d) the Class 2-A3
Certificate Insurance Policy.
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Certificate Principal Amount (or
Aggregate Notional Amount) and minimum denomination for each Class of
Certificates comprising the interests in the Trust Fund created hereunder.
<PAGE>
<TABLE>
<CAPTION>
Class Certificate Initial Certificate Minimum
Designation Interest Rate Principal Amount Denominations
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class 1-A1 6.25% $102,124,000.00 $100,000
Class 2-A1 6.50% 250,000,000.00 100,000
Class 2-A2 6.50% 2,400,000.00 25,000
Class 2-A3 6.50% 21,457,000.00 1,000
Class 2-A4 0.00%(1) 132,100.00 132,100
Class 2-A5 6.50% 20,324,000.00 25,000
Class 2-A6 6.50% 120,000,000.00 100,000
Class 2-A7 6.50% 116,000,000.00 100,000
Class 2-A8 6.50% 169,453,800.00 100,000
Class AX Variable (2) (2) (2)
Class AP 0.00%(3) 1,657,829.43(3) 100,000
Class R 6.50%(4) 100.00 100
Class 1-B1 6.25% 729,000.00 100,000
Class 2-B1 6.50% 13,134,000.00 250,000
Class 1-B2 6.25% 365,000.00 100,000
Class 2-B2 6.50% 6,568,000.00 250,000
Class 1-B3 6.25% 261,000.00 100,000
Class 2-B3 6.50% 2,919,000.00 250,000
Class 1-B4 6.25% 208,000.00 100,000
Class 2-B4 6.50% 2,919,000.00 250,000
Class 1-B5 6.25% 156,000.00 100,000
Class 2-B5 6.50% 1,094,000.00 100,000
Class 1-B6 6.25% 209,359.23 100,000
Class 2-B6 6.50% 1,824,871.40 100,000
</TABLE>
- ----------------------
(1) The Class 2-A4 Certificate is a principal-only certificate and,
accordingly, will not accrue interest.
(2) The Class AX Certificates are interest-only certificates and,
accordingly, will not be entitled to payments of principal. The
Class AX Certificates will consist of two payment components: the
AX(1) Component relating to Pool 1 and the AX(2) Component relating
to Pool 2.
The AX(1) Component will accrue interest at a Component Interest
Rate of 6.25% per annum on a calculated Component Notional Amount
equal, as to any Distribution Date, to the product of (x) the
fraction, the numerator of which is the excess of the Weighted
Average Rate of the Pool 1 Premium Mortgage Loans over 6.25%, and
the denominator of which is 6.25%, and (y) the aggregate Scheduled
Principal Balance of the Pool 1 Premium Mortgage Loans as of the
first day of the related Interest Accrual Period. The initial
Component Notional Amount of the AX(1) Component as of the Closing
Date is $1,934,706.80.
The AX(2) Component will accrue interest at a Component Interest
Rate of 6.50% per annum on a calculated Component Notional Amount
equal, as to any Distribution Date, to the product of (x) the
fraction, the numerator of which is the excess of the Weighted
Average Rate of the Pool 2 Premium Mortgage Loans over 6.50%, and
the denominator of which is 6.50%, and (y) the aggregate Scheduled
Principal Balance of the Pool 2 Premium Mortgage Loans as of the
first day of the related Interest Accrual Period. The initial
Component Notional Amount of the AX(2) Component as of the Closing
Date is $2,333,235.17. The Class AX Certificate will be issued in
minimum Notional Amounts of $100,000.
(3) The Class AP Certificates are principal-only certificates and,
accordingly, will not accrue interest. The Class AP Certificates
will consist of two payment components: (a) the AP(1) Component
relating to Pool 1 and having an initial Component Principal Amount
as of the Closing Date of $173,294.35 and (b) the AP(2) Component
relating to Pool 2 and having an initial Component Principal Amount
as of the Closing Date of $1,484,535.07.
(4) The Class R Certificate will be designated as the sole class of a
residual interest in the Upper-Tier REMIC within the meaning of
Section 860G(a)(2) of the Internal Revenue Code.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $833,966,660.06.
For all purposes of this Agreement, each Certificate Group shall
"relate" to the Mortgage Pool with the same numerical designation.
In consideration of the mutual agreements herein contained, the
Depositor and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: As defined in the Seller's Warranties
and Servicing Agreement.
Accountant: A person engaged in the practice of accounting who
(except when this Agreement provides that an Accountant must be Independent)
may be employed by or affiliated with the Depositor or an Affiliate of the
Depositor.
Accretion Directed Certificate: Any Class 2-A6 Certificates and any
Class 2-A1 Certificates.
Accrual Amount: With respect to any Distribution Date, the sum of the
(i) Class 2-A2 Accrual Amount and (ii) Class 2-A5 Accrual Amount.
Accrual Certificate: Any Class 2-A2 Certificates and Class 2-A5
Certificates.
Accrual Component: None.
Accrued Certificate Interest: As to any Class of Certificates (other
than the Class AX Certificates and any Class of Principal Only Certificates or
Component thereof) and any Notional Component and any Distribution Date,
interest accrued for the related Interest Accrual Period equal to the product
of (x) the Certificate Interest Rate or Component Interest Rate for such Class
of Certificates or Component and (y) the outstanding Class Certificate
Principal Amount (or Aggregate Notional Amount) of such Class of Certificates
or Component Principal Amount (or Component Notional Amount) of such Component
immediately preceding such Distribution Date, as reduced by (i) such Class's
or Component's allocable share of the interest portion of any Excess Losses
with respect to the related Mortgage Pool for such date and, after the Credit
Support Depletion Date for the related Certificate Group, any Realized Losses
with respect to the related Mortgage Pool for such date, (ii) after the Credit
Support Depletion Date for the related Certificate Group, such Class's or
Component's allocable share of any Relief Act Reduction with respect to the
related Mortgage Pool for such date and (iii) any Deferred Interest allocated
to such Class or Component on such date. Such amounts in respect of a Mortgage
Pool described in clauses (i) and (ii) shall be allocable among the related
Certificates (other than the Principal Only Certificates) in respect of a
Mortgage Pool pro rata based on the Accrued Certificate Interest otherwise
distributable thereon. With respect to any Certificate (other than the
Principal Only Certificates), interest will be calculated on the basis of a
360-day year of twelve 30-day months.
With respect to the Class AX Certificates and any Distribution Date,
the sum of the Accrued Certificate Interest on each Component thereof.
Additional Collateral: None.
Adjustable Rate Mortgage Loan: None.
Advance: An advance of the aggregate of payments of principal and
interest (net of the Servicing Fee) on one or more Mortgage Loans that were
due on the Due Date in the related Due Period and not received as of the close
of business on the related Determination Date, required to be made by the
Servicer pursuant to the Seller's Warranties and Servicing Agreement (or by
the Trustee hereunder).
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Class 2-A3 Certificate Insurance Premium: As to any
Distribution Date, the sum of (a) the Class 2-A3 Certificate Insurance Premium
for such Distribution Date and (b) the amount of any Class 2-A3 Certificate
Insurance Premium that was not distributed to the Class 2-A3 Certificate
Insurer on any prior Distribution Date.
Aggregate Notional Amount: With respect to the Class AX Certificates
and any Distribution Date, the sum of the Component Notional Amounts of the
AX(1) and AX(2) Components on such date, calculated as described in the
Preliminary Statement hereto.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
Balances for all Mortgage Loans in the Trust Fund or in a Mortgage Pool, as
the context requires, at the date of determination.
Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
AP(1) Deferred Amount: As to any Distribution Date on or prior to the
Credit Support Depletion Date for the Group 1 Certificates, the aggregate of
the applicable AP Percentage of the principal portion of each Realized Loss on
a Pool 1 Discount Mortgage Loan, other than an Excess Loss, to be allocated to
the AP(1) Component on such Distribution Date or previously allocated to the
AP(1) Component and not yet paid to the Holders of the Class AP Certificates
pursuant to Section 5.02(a)(v)(A).
AP(2) Deferred Amount: As to any Distribution Date on or prior to the
Credit Support Depletion Date for the Group 2 Certificates, the aggregate of
the applicable AP Percentage of the principal portion of each Realized Loss on
a Pool 2 Discount Mortgage Loan, other than an Excess Loss, to be allocated to
the AP(2) Component on such Distribution Date or previously allocated to the
AP(2) Component and not yet paid to the Holders of the Class AP Certificates
pursuant to Section 5.02(a)(v)(B).
AP Percentage: With respect to any Distribution Date and any Pool 1
Discount Mortgage Loan, the percentage equivalent of the fraction, the
numerator of which is 6.25% minus the applicable Net Mortgage Rate, and the
denominator of which is 6.25%. As to any Pool 1 Non-Discount Mortgage Loan,
0.00%. With respect to any Distribution Date and any Pool 2 Discount Mortgage
Loan, the percentage equivalent of the fraction, the numerator of which is
6.50% minus the applicable Net Mortgage Rate and the denominator of which is
6.50%. As to any Pool 2 Non-Discount Mortgage Loan, 0.00%.
AP Principal Distribution Amount: For any Distribution Date and for
each Certificate Group, the sum of the following amounts:
(i) the applicable AP Percentage of the principal
portion of each Scheduled Payment (without giving effect to any Debt
Service Reduction occurring prior to the Bankruptcy Coverage
Termination Date) on a Mortgage Loan in the related Mortgage Pool due
during the related Due Period;
(ii) the applicable AP Percentage of each of the
following amounts: (1) each Principal Prepayment in the related
Mortgage Pool collected during the applicable Prepayment Period, (2)
each other unscheduled collection for the related Mortgage Pool,
including Insurance Proceeds and Liquidation Proceeds (other than
with respect to any Mortgage Loan in the related Mortgage Pool that
was finally liquidated during the applicable Prepayment Period),
representing or allocable to recoveries of principal received during
the applicable Prepayment Period and (3) the principal portion of all
proceeds of the purchase of any Mortgage Loan in the related Mortgage
Pool (or, in the case of a permitted substitution, amounts
representing a principal adjustment) actually received by the Trustee
with respect to the applicable Prepayment Period;
(iii) with respect to unscheduled recoveries allocable
to principal of any Mortgage Loan in the related Mortgage Pool that
was finally liquidated during the related Prepayment Period, the
applicable AP Percentage of the related net Liquidation Proceeds
allocable to principal; and
(iv) any amounts described in clauses (i) through (iii)
for any previous Distribution Date that remain unpaid.
Appraised Value: With respect to any Mortgage Loan, the amount set
forth in an appraisal made in connection with the origination of such Mortgage
Loan as the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Trustee, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law; provided, however, that
the Trustee shall not be responsible for determining whether any such
assignment is in recordable form.
Authenticating Agent: Any authenticating agent appointed by the
Trustee pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's
Certificate on behalf of the Depositor.
Available Distribution Amount: On any Distribution Date and in
respect of each Mortgage Pool, the sum of the following amounts:
(1) the total amount of all cash received by the Servicer
through the related Collection Period (or, the related Prepayment
Period, in the case of Principal Prepayments) with respect to the
Mortgage Loans in the related Mortgage Pool and remitted to the
Trustee on the Remittance Date (including proceeds of any Insurance
Policy and any other credit support relating to the Mortgage Loans),
plus all Advances made by the Servicer (or Trustee) for such
Distribution Date and any Compensating Interest Payment for such
date, but not including:
(a) all amounts distributed pursuant to Section 5.02 on prior
Distribution Dates;
(b) all Scheduled Payments of principal and interest collected but
due on a date subsequent to the related Due Period;
(c) all Principal Prepayments received or identified by the Servicer
after the related Prepayment Period (together with any interest payments
received with such prepayments to the extent that they represent the payment
of interest accrued on the related Mortgage Loans for the period subsequent to
the related Prepayment Period);
(d) any other unscheduled recovery, including Liquidation Proceeds
and Insurance Proceeds received by the Servicer after the related Prepayment
Period; and
(e) all amounts due or reimbursable to the Trustee or the Servicer
pursuant to the terms of this Agreement or to First Nationwide Mortgage, as
originator of the Mortgage Loans, pursuant to the Seller's Warranties and
Servicing Agreement, including but not limited to any prepayment penalties on
the Mortgage Loans and the Retained Yield; and
(2) any other payment made by the Servicer or the Depositor
or any other Person with respect to such Distribution Date (including
the Purchase Price with respect to any Mortgage Loan repurchased by
the Servicer, the Depositor, Lehman Capital or any other Person).
Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief, or seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator, dissolution, or termination, as the case may
be, of such Person pursuant to the provisions of either the United States
Bankruptcy Code of 1986, as amended, or any other similar state laws.
Bankruptcy Coverage Termination Date: As to both Mortgage Pools, the
Distribution Date on which the Bankruptcy Loss Limit has been reduced to zero
(or less than zero).
Bankruptcy Loss Limit: $217,773.00, which amount shall be reduced
from time to time by the amount of Bankruptcy Losses allocated to either
Certificate Group.
Bankruptcy Losses: (i) with respect to the Mortgage Loans in the
related Mortgage Pool, losses (as reported by the Servicer to the Trustee)
arising from a proceeding under the United States Bankruptcy Code or any other
similar state law or other proceeding with respect to the Mortgagor of or
Mortgaged Property under a Mortgage Loan in the related Mortgage Pool,
including without limitation any such loss arising from (a) the difference
between (i) the principal amount that would have been due under the original
scheduled payments of principal and interest due on the related Mortgage Loan
and (ii) the value established in the relevant court with respect to such
Mortgaged Property, including without limitation a Deficient Valuation, or (b)
a Debt Service Reduction.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the
Trustee to the effect that any proposed transfer will not (i) cause the assets
of the Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the
Depositor or the Trustee.
Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by a
Clearing Agency as described in Section 3.09; provided, that after the
occurrence of a condition whereupon book-entry registration and transfer are
no longer permitted and Definitive Certificates are to be issued to
Certificate Owners, such Book-Entry Certificates shall no longer be
"Book-Entry Certificates." As of the Closing Date, the following Classes of
Certificates constitute Book-Entry Certificates: Class 1-A, Class 2-A1, Class
2-A2, Class 2-A3, Class 2-A4, Class 2-A5, Class 2-A6, Class 2-A7, Class 2-A8,
Class AP, Class AX, Class 1-B1, Class 2-B1, Class 1-B2, Class 2-B2, Class 1-B3
and Class 2-B3 Certificates.
Breach: As defined in Section 3.03 of the Seller's Warranties and
Servicing Agreement.
Business Day: In the case of the Group 2 Certificates, any day other
than (i) a Saturday or a Sunday, or (ii) a day on which the Certificate
Insurer, banking institutions in New York, New York or, if other than New
York, the city in which the Corporate Trust Office of the Trustee is located,
or the State of Maryland, are authorized or obligated by law or executive
order to be closed. In the case of the Group 1 Certificates, the same
definition will apply, but disregarding the reference above to the Certificate
Insurer.
Certificate: Any one of the certificates signed and countersigned by
the Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in
accordance with the provisions of Section 4.04.
Certificate Group: The Group 1 Certificates or the Group 2
Certificates, as applicable.
Certificate Interest Rate: With respect to each Class of Certificates
(other than the Class AP or Class AX Certificates), the applicable per annum
rate set forth or described in the Preliminary Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate other
than a Notional Certificate, at the time of determination, the maximum
specified dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the initial principal amount
set forth on the face of such Certificate (plus, in the case of any Negative
Amortization Certificate, any Deferred Interest allocated thereto on previous
Distribution Dates, and plus, in the case of any Accrual Certificate, its
Percentage Interest of any related Accrual Amount for each previous
Distribution Date), less the amount of all principal distributions previously
made with respect to such Certificate, all Realized Losses previously
allocated to such Certificate, and, in the case of a Subordinate Certificate,
any Subordinate Certificate Writedown Amount previously allocated to such
Certificate. For purposes of Article V hereof, unless specifically provided to
the contrary, Certificate Principal Amounts shall be determined as of the
close of business of the immediately preceding Distribution Date, after giving
effect to all distributions made on such date. Notional Certificates are
issued without Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register
maintained and the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
Class: All Certificates bearing the same class designation.
Class 2-A2 Accretion Termination Date: The Distribution Date on which
the Class Certificate Principal Amount of the Class 2-A6 Certificates has been
reduced to zero.
Class 2-A2 Accrual Amount: As to the Class 2-A2 Certificates and each
Distribution Date through the Class 2-A2 Accretion Termination Date, the sum
of (x) any amount of Accrued Certificate Interest allocable to the Class 2-A2
Certificates pursuant to Section 5.02(a)(ii) on such Distribution Date and (y)
any Interest Shortfall allocable to the Class 2-A2 Certificates pursuant to
Section 5.02(a)(iii) on such Distribution Date. As to the Class 2-A2
Certificates and each Distribution Date after the Class 2-A2 Accretion
Termination Date, zero.
Class 2-A3 Certificate Insurance Policy: The Certificate Guaranty
Insurance Policy No. 28644 dated the Closing Date issued by the Class 2-A3
Certificate Insurer to the Trustee for the benefit of the Holders of the Class
2-A3 Certificates.
Class 2-A3 Certificate Insurance Premium: With respect to any
Distribution Date and with respect to the Class 2-A3 Certificate Insurance
Policy, an amount equal to 1/12th of the product of (a) the Class Certificate
Principal Amount of the Class 2-A3 Certificates as of such Distribution Date
(prior to giving effect to any distribution thereon on such Distribution Date)
and (b) the Premium Percentage.
Class 2-A3 Certificate Insurer: MBIA Insurance Corporation, or any
successor thereto, as issuer of the Class 2-A3 Certificate Insurance Policy.
Class 2-A3 Certificate Insurer Default: The occurrence and
continuance of any of the following events:
(a) the Class 2-A3 Certificate Insurer shall have failed to make a
payment required to be made under the Class 2-A3 Certificate Insurance Policy
in accordance with its terms;
(b) the Class 2-A3 Certificate Insurer shall have (i) filed a
petition or commenced a case or proceeding under any provision or chapter of
the United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it under the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the Office of the Commissioner
of Insurance of the State of New York or other competent regulatory authority
shall have entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, trustee, agent or receiver for the Class 2-A3
Certificate Insurer or for all or any material portion of its property or (ii)
authorizing the taking of possession by a custodian, trustee, agent or
receiver of the Class 2-A3 Certificate Insurer (or the taking of possession of
all or any material portion of the property of the Class 2-A3 Certificate
Insurer).
Class 2-A3 Policy Payments Account: The separate Eligible Account
created and maintained by the Trustee pursuant to Section 5.06(c) in the name
of the Trustee for the benefit of the Class 2-A3 Certificateholders and
designated "U.S. Bank National Association, Class 2-A3 Policy Payments Account
in trust for registered holders of First Nationwide Trust 1999-1, Structured
Asset Securities Corporation Mortgage Pass-Through Certificates, Series
1999-1, Class 2-A3." Funds in the Class 2-A3 Policy Payments Account shall be
held in trust for the benefit of the Class 2-A3 Certificateholders for the
uses and purposes set forth in this Agreement.
Class 2-A3 Reserve Fund: The separate, interest-bearing Eligible
Account created and maintained by the Trustee pursuant to Section 4.06 with a
depository institution in the name of the Trustee for the benefit of the Class
2-A3 Certificateholders and designated "U.S. Bank National Association, Class
2-A3 Reserve Fund in trust for registered holders of First Nationwide Trust
1999-1 Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1999-1, Class 2-A3." The Class 2-A3 Reserve Fund will not
be a part of any REMIC and, for all federal and state income tax purposes,
will be beneficially owned by Lehman Brothers Inc.
Class 2-A3 Rounding Account: The separate Eligible Account
established and maintained by the Trustee pursuant to Section 5.05(e) in the
name of the Trustee for the benefit of the Class 2-A3 Certificateholders and
designated "U.S. Bank National Association, Class 2-A3 Rounding Account in
trust for registered holders of First Nationwide Trust 1999-1, Structured
Asset Securities Corporation Mortgage Pass-Through Certificates, Series
1999-1, Class 2-A3." Funds in the Rounding Account shall be held in trust for
the benefit of the Class 2-A3 Certificateholders for the uses and purposes set
forth in this Agreement. The Class 2-A3 Rounding Account will not be a part of
any REMIC and, for all federal and state income tax purposes, will be
beneficially owned by Lehman Brothers Inc.
Class 2-A5 Accretion Termination Date: The Distribution Date on which
the Class Certificate Principal Amount of the Class 2-A1 Certificates has been
reduced to zero.
Class 2-A5 Accrual Amount: As to the Class 2-A5 Certificates and each
Distribution Date through the Class 2-A5 Accretion Termination Date, the sum
of (x) any amount of Accrued Certificate Interest allocable to the Class 2-A5
Certificates pursuant to Section 5.02(a)(ii) on such Distribution Date and (y)
any Interest Shortfall allocable to the Class 2-A5 Certificates pursuant to
Section 5.02(a)(iii) on such Distribution Date. As to the Class 2-A5
Certificates and each Distribution Date after the Class 2-A5 Accretion
Termination Date, zero.
Class 2-A7 Percentage: As to any Distribution Date, the lesser of (i)
100% and (ii) the percentage equivalent of the fraction, the numerator of
which is equal to the sum of (a) the Class Certificate Principal Amount of the
Class 2-A7 Certificates immediately prior to such date and (b) $40,000,000,
and the denominator of which is equal to the sum of the aggregate Certificate
Principal Amount of all Group 2 Certificates other than the Component
Principal Amount of the AP(2) Component immediately prior to such date.
Class 2-A7 Prepayment Shift Percentage: As to any Distribution Date
occurring during the five years beginning on the first Distribution Date, 0%.
As to any Distribution Date occurring on or after the fifth anniversary of the
first Distribution Date, the following percentage for such Distribution Date:
for any Distribution Date in the first year thereafter, 40%; for any
Distribution Date in the second year thereafter, 50%; for any Distribution
Date in the third year thereafter, 60%; for any Distribution Date in the
fourth year thereafter, 90%; and for any subsequent Distribution Date, 100%.
Class 2-A7 Priority Amount: As to any Distribution Date, an amount
equal to the lesser of (i) the sum of (x) the product of the Class 2-A7
Percentage for such date, the Class 2-A7 Scheduled Principal Percentage for
such date and the Scheduled Principal Amount for such date and (y) the product
of the Class 2-A7 Percentage for such date, the Class 2-A7 Prepayment Shift
Percentage for such date and the Unscheduled Principal Amount for such date,
and (ii) the Class Certificate Principal Amount of the Class 2-A7 Certificates
immediately prior to such date.
Class 2-A7 Scheduled Principal Percentage: As to any Distribution
Date occurring during the five years beginning on the first Distribution Date,
0%. As to any Distribution Date occurring on or after the fifth anniversary of
the first Distribution Date, 100%.
Class B Certificate: Any Class 1-B1, Class 2-B1, Class 1-B2, Class
2-B2, Class 1-B3, Class 2-B3, Class 1-B4, Class 2-B4, Class 1-B5, Class 2-B5,
Class 1-B6 and Class 2-B6 Certificate.
Class Certificate Principal Amount: With respect to each Class of
Certificates other than any Class of Notional Certificates, the aggregate of
the Certificate Principal Amounts of all Certificates of such Class at the
date of determination.
Class LT1 Interest: As defined in the Preliminary Statement.
Class LT2 Interest: As defined in the Preliminary Statement.
Class LTR Interest: As defined in the Preliminary Statement.
Class LT1 Rate: As defined in the Preliminary Statement.
Class LT2 Rate: As defined in the Preliminary Statement.
Class Percentage: For each Class of Certificates or Component, for
each Distribution Date, the percentage obtained by dividing the Class
Certificate Principal Amount or Component Principal Amount of such Class or
Component immediately prior to such Distribution Date by the aggregate
Certificate Principal Amount of all Certificates or Component Principal Amount
of all Components of the related Certificate Group immediately prior to such
date.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
Closing Date: February 25, 1999.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Account: Not applicable.
Collection Period: With respect to each Mortgage Loan and any
Distribution Date, the period beginning immediately following the conclusion
of the next preceding Collection Period (or, in the case of the first
Distribution Date, beginning on the Cut-off Date) and ending at the close of
the Business Day immediately preceding the related Remittance Date.
Compensating Interest Payment: With respect to any Distribution Date,
the amount paid by the Servicer in respect of Prepayment Interest Shortfalls
pursuant to Section 4.04(viii) of the Seller's Warranties and Servicing
Agreement.
Component: Any of the components of the Class AP or Class AX
Certificates having the designations, the initial Component Principal Amounts
(in the case of the Class AP Certificate) or the initial Component Notional
Amounts (in the case of the Class AX Certificates) as follows:
Component Component
Designation Principal Amount Notional Amount
----------- ---------------- ---------------
AP(1) $ 173,294.36
AP(2) 1,484,535.07
AX(1) --- $1,934,706.80
AX(2) --- 2,333,235.17
Component Certificate: Any Class AP or Class AX Certificate.
Component Interest Rate: With respect to any Distribution Date and
(i) the AX(1) Component, the Pool 1 Rate and (ii) the AX(2) Component, the
Pool 2 Rate.
Component Notional Amount: With respect to the AX(1) and AX(2)
Components of the Class AX Certificates and any Distribution Date, the
Component Notional Amount calculated as described in footnote 2 of the table
set forth in the Preliminary Statement.
Component Principal Amount: As of any Distribution Date and with
respect to any Component, other than any Notional Component, the initial
Component Principal Amount thereof as set forth in the definition of Component
(plus, in the case of any Negative Amortization Component, any Deferred
Interest allocated thereto on previous Distribution Dates and plus, in the
case of any Accrual Component, any related Accrual Amount for each previous
Distribution Date), less the sum of (x) all amounts distributed in reduction
thereof on previous Distribution Dates pursuant to Section 5.02, (y) the
amount of all Realized Losses previously allocated thereto pursuant to Section
5.03 and (z) any Subordinate Certificate Writedown Amount previously allocated
to such Component.
Conventional Loan: A Mortgage Loan that is not insured by the United
States Federal Housing Administration or guaranteed by the United States
Veterans Administration.
Converted Mortgage Loan: None.
Convertible Mortgage Loan: None.
Corporate Trust Office: The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Structured Finance (First
Nationwide Trust 1999-1/SASCO 1999-1).
Credit Support Depletion Date: As to each Certificate Group, the
Distribution Date on which, after giving effect to all distributions on such
date, the aggregate Certificate Principal Amount of the Subordinate
Certificates of such Certificate Group have been reduced to zero.
Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Percentages of
all Subordinate Certificates in the related Certificate Group that rank lower
in priority than such Class.
Custodial Agreement: The Custodial Agreement, dated as of February 1,
1999, between the Custodian and the Trustee.
Custodial Account: An account or accounts maintained by the Servicer
pursuant to the Seller's Warranties and Servicing Agreement into which it will
deposit collections and recoveries with respect to the Mortgage Loans.
Custodian: U.S. Bank Trust National Association or any successor in
interest or assigns, to the Custodian under the Custodial Agreement.
Cut-off Date: February 1, 1999.
Cut-off Date Aggregate Principal Balance: With respect to the
Mortgage Loans in the Trust Fund or in a particular Mortgage Pool, as the
context requires, on the Closing Date, the Aggregate Principal Balance of all
such Mortgage Loans as of the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction of the Scheduled Payment that the related Mortgagor is obligated to
pay on any Due Date thereon as a result of any proceeding under bankruptcy law
or any similar proceeding.
Deceased Holder: With respect to a Holder of a Redemption
Certificate, as defined in Section 5.05(b).
Deferred Interest: With respect to any Class of Negative Amortization
Certificates and any Distribution Date, the aggregate Mortgage Loan Negative
Amortization, if any, for the related Collection Period.
Deficiency Amount: The meaning assigned to such term in the Class
2-A3 Certificate Insurance Policy.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under such Mortgage Loan, which
valuation results from a proceeding under bankruptcy law or any similar
proceeding.
Definitive Certificate: A Certificate of any Class issued in
definitive, fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the
Trust Fund pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation, having its principal place of business in New York, or its
successors in interest.
Determination Date: With respect to each Distribution Date, the 18th
day of the month in which such Distribution Date occurs, or, if such 18th day
is not a Business Day, the immediately preceding Business Day.
Disqualified Organization: Either (i) the United States, (ii) any
state or political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative
described in section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code unless such organization is subject to the tax imposed
by section 511 of the Code, (vii) any organization described in section
1381(a)(2)(C) of the Code, or (viii) any other entity designated as a
Disqualified Organization by relevant legislation amending the REMIC
Provisions and in effect at or proposed to be effective as of the time of the
determination. In addition, a corporation will not be treated as an
instrumentality of the United States or of any state or political subdivision
thereof if all of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of
directors is not selected by such governmental unit.
Distribution Date: The 25th day of each month or, if such day is not
a Business Day, the next succeeding Business Day, commencing in March 1999.
Due Date: With respect to any Mortgage Loan, the date on which a
Scheduled Payment is due under the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable
to the Rating Agencies or (ii) an account or accounts the deposits in which
are insured by the FDIC to the limits established by such corporation,
provided that any such deposits not so insured shall be maintained in an
account at a depository institution or trust company whose commercial paper or
other short term debt obligations (or, in the case of a depository institution
or trust company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations of such
holding company or depository institution, as the case may be) have been rated
by each Rating Agency in its highest short-term rating category, or (iii) a
segregated trust account or accounts (which shall be a "special deposit
account") maintained with the Trustee or any other federal or state chartered
depository institution or trust company, acting in its fiduciary capacity, in
a manner acceptable to the Trustee and the Rating Agencies. Eligible Accounts
may bear interest.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully
guaranteed as to timely payment of principal and interest by, the
United States of America or any agency or instrumentality of the
United States of America the obligations of which are backed by the
full faith and credit of the United States of America ("Direct
Obligations");
(ii) federal funds, or demand and time deposits in,
certificates of deposits of, or bankers' acceptances issued by, any
depository institution or trust company (including U.S. subsidiaries
of foreign depositories and the Trustee or any agent of the Trustee,
acting in its respective commercial capacity) incorporated or
organized under the laws of the United States of America or any state
thereof and subject to supervision and examination by federal or
state banking authorities, so long as at the time of investment or
the contractual commitment providing for such investment the
commercial paper or other short-term debt obligations of such
depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal
subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or
deposit institution, as the case may be) have been rated by each
Rating Agency in its highest short-term rating category or one of its
two highest long-term rating categories;
(iii) repurchase agreements collateralized by Direct
Obligations or securities guaranteed by GNMA, FNMA or FHLMC with any
registered broker/dealer subject to Securities Investors' Protection
Corporation jurisdiction or any commercial bank insured by the FDIC,
if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed obligation rated by each Rating Agency in its highest
short-term rating category;
(iv) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States of America or any state thereof which have a credit rating
from each Rating Agency, at the time of investment or the contractual
commitment providing for such investment, at least equal to one of
the two highest long-term credit rating categories of each Rating
Agency; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount
of securities issued by such corporation and held as part of the
Trust Fund to exceed 20% of the sum of the Aggregate Principal
Balance and the aggregate principal amount of all Eligible
Investments in the Certificate Account; provided, further, that such
securities will not be Eligible Investments if they are published as
being under review with negative implications from either Rating
Agency;
(v) commercial paper (including both noninterest-bearing
discount obligations and interest-bearing obligations payable on
demand or on a specified date not more than 180 days after the date
of issuance thereof) rated by each Rating Agency in its highest
short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct
ownership interests in future interest or principal payments on
obligations of the United States of America or its agencies or
instrumentalities (which obligations are backed by the full faith and
credit of the United States of America) held by a custodian in
safekeeping on behalf of the holders of such receipts; and
(viii) any other demand, money market, common trust fund
or time deposit or obligation, or interest-bearing or other security
or investment, (A) rated in the highest rating category by each
Rating Agency or (B) that would not adversely affect the then current
rating by either Rating Agency of any of the Certificates (in the
case of the Class 2-A3 Certificates, determined without regard to the
Class 2-A3 Certificate Insurance Policy);
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
ERISA-Restricted Certificate: Any Subordinate Certificate.
Event of Default: An event described in Section 10.01 of the Seller's
Warranties and Servicing Agreement, which pursuant to such agreement is a
default by the Servicer and entitles the Trustee to terminate such Servicer.
Excess Loss: With respect to each Mortgage Pool, any Bankruptcy Loss,
or portion thereof, in excess of the then-applicable Bankruptcy Loss Limit,
any Fraud Loss, or portion thereof, in excess of the then-applicable Fraud
Loss Limit, and any Special Hazard Loss, or portion thereof, in excess of the
then-applicable Special Hazard Loss Limit.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Scheduled Distribution Date: In the case of the Group 1
Certificates, February 25, 2014 and, in the case of the Group 2 Certificates,
March 25, 2029.
Financial Intermediary: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
First Nationwide Mortgage: First Nationwide Mortgage Corporation, a
Delaware corporation and a wholly owned subsidiary of California Federal Bank,
FSB, or any successor in interest.
Fitch: Fitch IBCA, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Fraud Loss: With respect to each Mortgage Pool, any Realized Loss on
a Mortgage Loan in such Mortgage Pool sustained by reason of a default arising
from fraud, dishonesty or misrepresentation in connection with the related
Mortgage Loan.
Fraud Loss Limit: As of the Cut-off Date, $8,339,367. The Fraud Loss
Limit shall be reduced by the amount of Fraud Losses allocated to the
Certificates (or Components thereof), (i) on the first and second
anniversaries of the Cut-off Date, to an amount equal to the excess of 1.00%
of the Cut-off Date Balance of the Mortgage Loans over the cumulative amount
of Fraud Losses allocated to the Certificates (or Components thereof), (ii) on
the third and fourth anniversaries of the Cut-off Date, to an amount equal to
the excess of 0.50% of the Cut-off Date Balance of the Mortgage Loans over the
cumulative amount of Fraud Losses allocated to the Certificates (or Components
thereof), and (iii) on the fifth anniversary of the Cut-off Date, to zero. All
such calculations of the Fraud Loss Limit will be determined on an aggregate
basis rather than by Mortgage Pool or Certificate Group.
GNMA: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.
Group 1: All of the Group 1 Certificates.
Group 1 Certificate: Any Class 1-A, Class 1-B1, Class 1-B2, Class
1-B3 or Class 1-B4, Class 1-B5, Class 1-B6 or any of the Group 1 Components.
Group 1 Component: The AX(1) Component and the AP(1) Component.
Group 1 Senior Certificate: Any Class 1-A Certificate or the Group 1
Components of the Class AP and Class AX Certificates.
Group 1 Subordinate Certificate: Any of the Class 1-B1, Class 1-B2,
Class 1-B3, Class 1-B4, Class 1-B5 or Class 1-B6 Certificates.
Group 2: All of the Group 2 Certificates.
Group 2 Certificate: Any Class 2-A1, Class 2-A2, Class 2-A3, Class
2-A4, Class 2-A5, Class 2-A6, Class 2-A7, Class 2-A8, Class R, Class 2-B1,
Class 2-B2, Class 2-B3, Class 2-B4, Class 2-B5, Class 2-B6 or any of the Group
2 Components.
Group 2 Component: The AX(2) Component and the AP(2) Component.
Group 2 Senior Certificate: Any Class 2-A1, Class 2-A2, Class 2-A3,
Class 2-A4, Class 2-A5, Class 2-A6, Class 2-A7, Class 2-A8, Class R or any of
the Group 2 Components of the Class AX and Class AP Certificates.
Group 2 Subordinate Certificate: Any Class 2-B1, Class 2-B2, Class
2-B3, Class 2-B4, Class 2-B5 or Class 2-B6 Certificates.
Guaranteed Distributions: (a) With respect to any Distribution Date,
(i) the Accrued Certificate Interest for the Class 2-A3 Certificates for such
Distribution Date, including the amount of any Net Prepayment Interest
Shortfalls allocable to the Class 2-A3 Certificates on such Distribution Date
that are not covered by the Class 2-A3 Reserve Fund, net of any Relief Act
Reduction allocable to such Class on such date and (ii) the amount of any
Realized Loss, including any Excess Loss, allocated to the Class 2-A3
Certificates on such Distribution Date and (b) for the Final Scheduled
Distribution Date, the Class Certificate Principal Amount of the Class 2-A3
Certificates to the extent unpaid on the Final Scheduled Distribution Date.
Holder or Certificateholder: The registered owner of any Certificate
as recorded on the books of the Certificate Registrar except that, solely for
the purposes of taking any action or giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Depositor, the
Servicer, the Trustee or any Affiliate thereof shall be deemed not to be
outstanding in determining whether the requisite percentage necessary to
effect any such consent has been obtained, except that, in determining whether
the Trustee shall be protected in relying upon any such consent, only
Certificates which a Responsible Officer of the Trustee knows to be so owned
shall be disregarded. The Trustee may request and conclusively rely on
certifications by the Depositor or the Servicer in determining whether any
Certificates are registered to an Affiliate of the Depositor or the Servicer.
HUD: The United States Department of Housing and Urban Development,
or any successor thereto.
Independent: When used with respect to any Accountants, a Person who
is "independent" within the meaning of Rule 2-01(b) of the Securities and
Exchange Commission's Regulation S-X. When used with respect to any other
Person, a Person who (a) is in fact independent of another specified Person
and any Affiliate of such other Person, (b) does not have any material direct
financial interest in such other Person or any Affiliate of such other Person,
and (c) is not connected with such other Person or any Affiliate of such other
Person as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
Individual Redemption Certificate: A Redemption Certificate with a
$1,000 Certificate Principal Amount.
Initial LIBOR Rate: None.
Insurance Agreement: The Insurance Agreement, dated as of February 1,
1999, among the Depositor, the Seller, the Trustee and the Class 2-A3
Certificate Insurer, a copy of which is attached as Exhibit L hereto.
Insurance Policy: Any Primary Mortgage Insurance Policy and any
standard hazard insurance policy, flood insurance policy, earthquake insurance
policy or title insurance policy relating to the Mortgage Loans or the
Mortgaged Properties, to be in effect as of the Closing Date or thereafter
during the term of this Agreement.
Insurance Proceeds: Amounts paid by the insurer under any Insurance
Policy, other than (i) amounts to be applied to restoration or repair of the
related Mortgaged Property, (ii) required to be paid over to the Mortgagor
pursuant to law or the related Mortgage Note or (iii) amounts applied toward
payment of the Retained Yield.
Insured Payment: The meaning assigned to such term in the Class 2-A3
Certificate Insurance Policy.
Interest Accrual Period: With respect to any Distribution Date and
any Class of Certificates (other than any Principal Only Certificates) or
Component, the one-month period beginning immediately following the end of the
preceding Interest Accrual Period (or from the Cut-off Date, in the case of
the first Interest Accrual Period) and ending on the last day of the month
preceding the month in which such Distribution Date occurs.
Interest Distribution Amount: Not applicable.
Interest Shortfall: With respect to any Class of Certificates and any
Distribution Date, any Accrued Certificate Interest (net of any Net Prepayment
Interest Shortfalls allocable to such Class) not paid with respect to a
previous Distribution Date.
Intervening Assignments: The original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Maturity Date: March 25, 2031.
Lehman Capital: Lehman Capital, A Division of Lehman Brothers
Holdings Inc., or any successor in interest.
LIBOR: Not Applicable.
LIBOR Certificate: None.
LIBOR Determination Date: Not Applicable.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Servicer has determined that all amounts that it expects to recover on behalf
of the Trust Fund from or on account of such Mortgage Loan have been
recovered.
Liquidation Proceeds: As defined in the Seller's Warranties and
Servicing Agreement but excluding any amounts applied toward payment of the
Retained Yield.
Living Holder: Any Holder of a Redemption Certificate other than a
Deceased Holder.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the ratio of
the principal balance of such Mortgage Loan at origination, or such other date
as is specified, to the Original Value thereof.
London Business Day: Not Applicable.
Lower Tier Interest: Any one of the Class LT1, Class LT2, or Class
LTR Interests as described in the Preliminary Statement.
Lower Tier Interest Rate: The Class LT1 Interest Rate and the Class
LT2 Interest Rate as described in the Preliminary Statement.
Lower Tier REMIC: As described in the Preliminary Statement.
Mortgage: A mortgage, deed of trust or other instrument encumbering a
fee simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage File: The mortgage documents listed in Exhibit B-1 to the
Seller's Warranties and Servicing Agreement pertaining to a particular
Mortgage Loan required to be delivered to the Trustee pursuant to this
Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold,
assigned to or deposited with the Trustee pursuant to Section 2.01 or Section
2.05, including without limitation, each Mortgage Loan listed on the Mortgage
Loan Schedule, as amended from time to time.
Mortgage Loan Negative Amortization: Not Applicable.
Mortgage Loan Sale and Assignment Agreement: The agreement for the
sale of the Mortgage Loans by Lehman Capital to the Depositor and the
assignment to the Depositor of the rights of Lehman Capital under the Seller's
Warranties and Servicing Agreement, between Lehman Capital, as seller and
assignor, and the Depositor, as purchaser and assignee.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A,
which shall identify each Mortgage Loan in either Pool 1 or Pool 2, as such
schedule may be amended from time to time to reflect the addition of Mortgage
Loans to, or the deletion of Mortgage Loans from, the Trust Fund.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: Either of Pool 1 or Pool 2.
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan.
Mortgaged Property: The fee simple interest in real property,
together with improvements thereto including any exterior improvements to be
completed within 120 days of disbursement of the related Mortgage Loan
proceeds.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization Certificate: None.
Negative Amortization Component: None.
Net Mortgage Rate: With respect to any Mortgage Loan, the Mortgage
Rate thereof reduced by the sum of the Servicing Fee Rate and the applicable
Retained Yield Rate.
Net Prepayment Interest Shortfall: With respect to any Distribution
Date, the excess, if any, of any Prepayment Interest Shortfalls for such date
over any amount that is required under the Seller's Warranties and Servicing
Agreement to be paid by the Servicer in respect of such shortfalls. Any Net
Prepayment Interest Shortfall shall be allocated among all Classes of
Certificates (other than any Class of Principal Only Certificates) and among
the Components (other than any Principal Only Component) of any Component
Certificate in proportion to the respective amounts of Accrued Certificate
Interest otherwise distributable thereon.
Non-AP Percentage: As to any Pool 1 Discount Mortgage Loan, the
percentage equivalent of the fraction, the numerator of which is the Net
Mortgage Rate of such Pool 1 Discount Mortgage Loan and the denominator of
which is 6.25%. As to any Pool 1 Non-Discount Mortgage Loan, 100%. As to any
Pool 2 Discount Mortgage Loan, the percentage equivalent of the fraction, the
numerator of which is the Net Mortgage Rate of such Pool 2 Discount Mortgage
Loan and the denominator of which is 6.50%. As to any Pool 2 Non-Discount
Mortgage Loan, 100%.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Non-U.S. Person: Any individual, corporation, partnership or other
person other than a citizen or resident of the United States; a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, including for this purpose the District of
Columbia; an estate that is subject to U.S. federal income tax regardless of
the source of its income; or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States trustees have authority to control all substantial
decisions of the trust.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Notice of Nonpayment: The notice to be delivered by the Trustee to
the Class 2-A3 Certificate Insurer with respect to any Distribution Date
pursuant to Section 5.06(a), which shall be in the form attached to the Class
2-A3 Certificate Insurance Policy.
Notional Amount: With respect to any Notional Certificate (or
Component thereof) and any Distribution Date, such Certificate's or
Component's Percentage Interest of the Aggregate Notional Amount of such Class
of Certificates for such Distribution Date.
Notional Certificate: The Class AX Certificates.
Notional Component: The AX(1) Component and the AX(2) Component of
the Class AX Certificates.
Offering Document: Either the Prospectus relating to the
publicly-offered Certificates or the private placement memorandum relating to
the Restricted Certificates.
Officer's Certificate: A certificate signed by the Chairman of the
Board, any Vice Chairman, the President, any Vice President or any Assistant
Vice President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably
acceptable in form and substance to the Trustee, and who may be in-house or
outside counsel to the Depositor or the Servicer but which must be Independent
outside counsel with respect to any such opinion of counsel concerning the
transfer of any Residual Certificate or concerning certain matters with
respect to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the taxation, or the federal income tax status, of each REMIC.
Original Credit Support Percentage: With respect to each Class of
Subordinate Certificates, the Credit Support Percentage for such Class on the
Closing Date.
Original Group Subordinate Principal Amount: With respect to each
Certificate Group, the sum of the Class Certificate Principal Amount of each
related Subordinate Certificate as of the Closing Date.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor
at the time the related Mortgage Loan was originated.
PAC Amount: Not Applicable.
PAC Certificate: None.
PAC Component: None.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate (other than a Class AX Certificate), the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal
Amount (or, in the case of a Class AX Certificate, the initial Notional
Amount) thereof divided by the initial Class Certificate Principal Amount (or,
in the case of a Class AX Certificate, the initial Aggregate Notional Amount)
of all Certificates of the same Class. With respect to any Class AX
Certificate, the Percentage Interest evidenced thereby shall be specified on
the face thereof.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Placement Agent: Lehman Brothers Inc.
Plan Asset Regulations: The Department of Labor regulations set forth
in 29 C.F.R. 2510.3-101.
Pool 1: The aggregate of the fully amortizing Mortgage Loans having
original terms to maturity not greater than 15 years as identified on the
Mortgage Loan Schedule.
Pool 1 Discount Mortgage Loan: Any Pool 1 Mortgage Loan with a Net
Mortgage Rate less than 6.25% per annum.
Pool 1 Non-Discount Mortgage Loan: Any Pool 1 Mortgage Loan with a
Net Mortgage Rate greater than or equal to 6.25% per annum.
Pool 1 Premium Mortgage Loan. Any Pool 1 Mortgage Loan with a Net
Mortgage Rate greater than 6.25% per annum.
Pool 1 Rate: 6.25% per annum.
Pool 1 Trust Rate: With respect to a Pool 1 Mortgage Loan, the sum of
the Pool 1 Rate and (b) the Servicing Fee Rate.
Pool 2: The aggregate of the fully amortizing Mortgage Loans having
original terms to maturity not less than 15 years or greater than 30 years as
identified on the Mortgage Loan Schedule.
Pool 2 Discount Mortgage Loan: Any Pool 2 Mortgage Loan with a Net
Mortgage Rate less than 6.50% per annum.
Pool 2 Non-Discount Mortgage Loan: Any Pool 2 Mortgage Loan with a
Net Mortgage Rate greater than or equal to 6.50% per annum.
Pool 2 Premium Mortgage Loan. Any Pool 2 Mortgage Loan with a Net
Mortgage Rate greater than 6.50% per annum.
Pool 2 Rate: 6.50% per annum.
Pool 2 Trust Rate: With respect to a Pool 2 Mortgage Loan, the sum of
the Pool 2 Rate and (b) the Servicing Fee Rate.
Pool Rate: Either of the Pool 1 Rate or the Pool 2 Rate.
Preference Amount: The meaning assigned to such term in the Class
2-A3 Certificate Insurance Policy.
Premium Percentage: The meaning assigned to such term in the
Insurance Agreement.
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the difference between (i) one full
month's interest at the applicable Mortgage Rate (giving effect to any
applicable Relief Act Reduction), as reduced by the Servicing Fee Rate, on the
Scheduled Principal Balance of such Mortgage Loan immediately prior to such
prepayment and (ii) the amount of interest actually received with respect to
such Mortgage Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
Primary Mortgage Insurance Policy: Mortgage guaranty insurance, if
any, on an individual Mortgage Loan, as evidenced by a policy or certificate.
Principal Amount Schedule: The principal amount schedule attached
hereto as Schedule B setting forth the TAC Amounts of the TAC Certificates.
Principal Distribution Amount: With respect to any Distribution Date
and any Certificate Group, the sum of the related Senior Principal
Distribution Amount, the related Subordinate Distribution Amount and the
related AP Principal Distribution Amount.
Principal Only Certificate: Any Class AP Certificate or Class 2-A4
Certificate.
Principal Only Component: The AP(1) Component and the AP(2) Component.
Principal Prepayment: Any Mortgagor payment of principal or other
recovery of principal on a Mortgage Loan that is recognized as having been
received or recovered in advance of its scheduled Due Date and applied to
reduce the principal balance of the Mortgage Loan in accordance with the terms
of the Mortgage Note or Accepted Servicing Practices.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Prospectus: The prospectus supplement dated February 18, 1999
relating to the Group 2 Senior Certificates and the Group 2 Subordinate
Certificates (other than the Class 2-B4, Class 2-B5 and Class 2-B6
Certificates) and the prospectus supplement dated February 23, 1999 relating
to the Group 1 Senior Certificates and the Group 1 Subordinate Certificates
(other than the Class 1-B4, Class 1-B5 and Class 1-B6 Certificates), in each
case together with the accompanying prospectus dated January 15, 1999.
Purchase Price: With respect to the repurchase of a Mortgage Loan
pursuant to Article II of this Agreement, an amount equal to the sum of (a)
100% of the unpaid principal balance of such Mortgage Loan and (b) accrued
interest thereon at the Mortgage Rate, from the date as to which interest was
last paid to (but not including) the Due Date immediately preceding the
related Distribution Date and (c) any amounts advanced by the Servicer (or the
Trustee) not previously reimbursed, together with any unpaid Reimbursement
Amounts due to the Certificate Insurer, and any unpaid amounts due to the
Servicer, in each case with respect to such Mortgage Loan. The Servicer (or
the Trustee, if applicable) shall be reimbursed from the Purchase Price for
any Mortgage Loan or relate REO Property for any Advances made with respect to
such Mortgage Loan or related Mortgage Property that are reimbursable to the
Servicer under the Seller's Warranties and Servicing Agreement (or to the
Trustee hereunder).
Qualified GIC: A guaranteed investment contract or surety bond
providing for the investment of funds in the Collection Account or the
Certificate Account and insuring a minimum, fixed or floating rate of return
on investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other corporation
whose long-term debt is rated by each Rating Agency in one of its two highest
rating categories or, if such insurance company has no long-term debt, whose
claims paying ability is rated by each Rating Agency in one of its two highest
rating categories, and whose short-term debt is rated by each Rating Agency in
its highest rating category;
(b) provide that the Trustee may exercise all of the rights under
such contract or surety bond without the necessity of taking any action by any
other Person;
(c) provide that if at any time the then current credit standing of
the obligor under such guaranteed investment contract is such that continued
investment pursuant to such contract of funds would result in a downgrading of
any rating of the Certificates, the Trustee shall terminate such contract
without penalty and be entitled to the return of all funds previously invested
thereunder, together with accrued interest thereon at the interest rate
provided under such contract to the date of delivery of such funds to the
Trustee;
(d) provide that the Trustee's interest therein shall be transferable
to any successor trustee hereunder: and
(e) provide that the funds reinvested thereunder and accrued interest
thereon be returnable to the Collection Account or the Certificate Account, as
the case may be, not later than the Business Day prior to any Distribution
Date.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the related Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided and whose claims paying
ability is rated by each Rating Agency in its highest rating category or whose
selection as an insurer will not adversely affect the rating of the
Certificates.
Qualifying Substitute Mortgage Loan: A "Qualified Substitute Mortgage
Loan" as defined in the Seller's Warranties and Servicing Agreement. Whenever
a Qualifying Substitute Mortgage Loan is substituted for a Deleted Mortgage
Loan pursuant to this Agreement, the party effecting such substitution shall
certify such qualification in writing to the Trustee.
Rating Agency: Each of Fitch and S&P; provided, that with respect to
the Group 1 Subordinate Certificates and the Group 2 Subordinate Certificates,
Fitch will be the sole Rating Agency.
Realized Loss: (a) with respect to each Liquidated Mortgage Loan, an
amount equal to (i) the unpaid principal balance of such Mortgage Loan as of
the date of liquidation, plus (ii) interest at the applicable Net Mortgage
Rate from the date as to which interest was last paid up to the last day of
the month of such liquidation, minus (iii) Liquidation Proceeds received, net
of amounts that are reimbursable to the Servicer with respect to such Mortgage
Loan (other than Advances of principal and interest), including expenses of
liquidation, and (b) with respect to each Mortgage Loan that has become the
subject of a Deficient Valuation, the difference between the unpaid principal
balance of such Mortgage Loan immediately prior to such Deficient Valuation
and the unpaid principal balance of such Mortgage Loan as reduced by such
Deficient Valuation. In determining whether a Realized Loss is a Realized Loss
of interest or principal, Liquidation Proceeds shall be allocated, first, to
payment of expenses related to such Liquidated Mortgage Loan (including
payment of any Retained Yield), then to accrued unpaid interest and finally to
reduce the principal balance of the Mortgage Loan.
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
in which such Distribution Date occurs.
Redemption Certificate: Any Class 2-A3 Certificate.
Reference Banks: Not Applicable.
Reimbursement Amount: The meaning assigned to such term in Section
5.02(a)(vi).
Relief Act Reduction: With respect to any Mortgage Loan as to which
there has been a reduction in the amount of interest collectible thereon as a
result of application of the Solders' and Sailors' Civil Relief Act of 1940,
as amended, any amount by which interest collectible on such Mortgage Loan for
the Due Date in the related Collection Period is less than interest accrued
thereon for the applicable one-month period at the Mortgage Rate without
giving effect to such reduction.
REMIC: The Lower Tier REMIC and the Upper Tier REMIC as described in
the Preliminary Statement.
REMIC Provisions: The provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at sections
860A through 86OG of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations, including proposed regulations and rulings, and
administrative pronouncements promulgated thereunder, as the foregoing may be
in effect from time to time.
Remittance Date: The day in each month on which the Servicer is
required to remit payments to the account maintained by the Trustee, which
shall be the 18th day of each month (or the immediately following Business
Day, if such 18th day is not a Business Day).
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the
REMIC Provisions.
Reserve Interest Rate: Not Applicable.
Residual Certificate: Any Class R Certificate.
Responsible Officer: When used with respect to the Trustee, any Vice
President, Assistant Vice President, the Secretary, any assistant secretary,
the Treasurer, or any assistant treasurer, working in its corporate trust
department, or any other officer of the Trustee to whom a matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Class 1-B4, Class 2-B4, Class 1-B5, Class
2-B5, Class 1-B6 or Class 2-B6 Certificate.
Retained Yield: The meaning assigned to such term in the Seller's
Warranties and Servicing Agreement.
Retained Yield Rate: With respect to any Pool 1 Mortgage Loan which
contains prepayment penalty provisions, a percentage per annum equal to the
lesser of (a) the related Mortgage Rate minus the Pool 1 Trust Rate and (b)
0.50% per annum. With respect to any Pool 1 Mortgage Loan which does not
contain prepayment penalty provisions, a percentage per annum equal to the
lesser of (a) the related Mortgage Rate minus the Pool 1 Trust Rate and (b)
0.25% per annum. With respect to any Pool 2 Mortgage Loan, a percentage per
annum equal to the lesser of (a) the related Mortgage Rate minus the Pool 2
Trust Rate and (b) 0.50% per annum.
Rounding Account: The Class 2-A3 Rounding Account.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor in interest.
Scheduled Amount: As to any Distribution Date and any Class of
Scheduled Certificates and any Scheduled Component, the amount designated as
such for such Distribution Date and such Class or Component as set forth in
the Principal Amount Schedules.
Scheduled Certificate: None.
Scheduled Component: None.
Scheduled Payment: Each scheduled payment of principal and interest
(or of interest only, if applicable) to be paid by the Mortgagor on a Mortgage
Loan, as reduced (except where otherwise specified herein) by the amount of
any related Debt Service Reduction (excluding all amounts of principal and
interest that were due on or before the Cut-off Date whenever received) and,
in the case of an REO Property, an amount equivalent to the Scheduled Payment
with respect to interest that would have been due on the related Mortgage Loan
if such Mortgage Loan had remained in existence.
Scheduled Principal Amount: As to any Distribution Date, an amount
equal to the amount described in clause (i)(b) of the definition of Senior
Principal Distribution Amount (without application of the related Senior
Percentage).
Scheduled Principal Balance: With respect to (i) any Mortgage Loan as
of any Distribution Date, the principal balance of such Mortgage Loan at the
close of business on the Cut-off Date, after giving effect to principal
payments due on or before the Cut-off Date, whether or not received, less an
amount equal to principal payments due after the Cut-off Date and on or before
the Due Date in the related Due Period, whether or not received from the
Mortgagor or advanced by the Servicer, and all amounts allocable to
unscheduled principal payments (including Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds and condemnation proceeds, in each case to the
extent identified and applied prior to or during the Prepayment Period ending
in the month prior to the month of such Distribution Date) and (ii) with
respect to any REO Property as of any Distribution Date, the Scheduled
Principal Balance of the related Mortgage Loan on the Due Date immediately
preceding the date of acquisition of such REO Property by or on behalf of the
Trustee (reduced by any amount applied as a reduction of principal on the
Mortgage Loan). With respect to any Pool 1 or Pool 2 Mortgage Loan and the
Cut-off Date, a specified in the Mortgage Loan Schedule.
Seller's Warranties and Servicing Agreement: The Seller's Warranties
and Servicing Agreement between First Nationwide Mortgage, as seller and
servicer, and Lehman Capital, as purchaser, dated as of February 1, 1999,
attached hereto as Exhibit E.
Seller: Lehman Capital, a division of Lehman Brothers Holding's Inc.,
or any successor in interest.
Senior Certificate: Any Group 1 Senior Certificate or Group 2 Senior
Certificate.
Senior Percentage: With respect to each Certificate Group and any
Distribution Date, the percentage equivalent of the fraction, the numerator of
which is the aggregate Class Certificate Principal Amount of the related
Senior Certificates (other than, in the case of Group 1, the AP(1) Component
and, in the case of Group 2, the AP(2) Component) immediately prior to such
date and the denominator of which is the sum of the aggregate Class
Certificate Principal Amount of all Classes of related Senior Certificates
(other than, in the case of Group 1, the AP(1) Component and, in the case of
Group 2, the AP(2) Component) and the Class Certificate Principal Amounts of
the related Class of Subordinate Certificates immediately prior to such date.
Senior Prepayment Percentage: With respect to each Certificate Group
and any Distribution Date occurring during the five years beginning on the
first Distribution Date, 100%. The Senior Prepayment Percentage for each
Certificate Group and any Distribution Date occurring on or after the fifth
anniversary of the first Distribution Date will be the related Senior
Percentage plus the following percentage of the related Subordinate Percentage
for such Distribution Date: for any Distribution Date in the first year
thereafter, 70%; for any Distribution Date in the second year thereafter, 60%;
for any Distribution Date in the third year thereafter, 40%; for any
Distribution Date in the fourth year thereafter, 20%; and for any subsequent
Distribution Date, 0%; provided, however, that if on any of the foregoing
Distribution Dates the Senior Percentage for any Certificate Group exceeds the
initial Senior Percentage for such Certificate Group, the Senior Prepayment
Percentage for such Certificate Group for such Distribution Date will once
again equal 100% for such Distribution Date.
Notwithstanding the foregoing, except as provided in the next
succeeding paragraph, no decrease in the Senior Prepayment Percentage below
the level in effect for the most recent prior period set forth in the
paragraph above shall be effective on any Distribution Date if, as of the
first Distribution Date as to which any such decrease applies, (i) the average
outstanding principal balance on such Distribution Date and for the preceding
five Distribution Dates of all Mortgage Loans in the related Mortgage Pool
that were delinquent 60 days or more (including for this purpose any Mortgage
Loans in foreclosure and the Scheduled Payments that would have been due on
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust Fund if the related Mortgage Loan had remained in
existence) is greater than or equal to 50% of the sum of (x) the Class
Certificate Principal Amount of the Subordinate Certificates relating to the
Certificate Group immediately prior to such Distribution Date or (ii)
cumulative Realized Losses with respect to the Mortgage Loans in the related
Mortgage Pool exceed (a) with respect to the Distribution Date on the fifth
anniversary of the first Distribution Date, 30% of the Original Group
Subordinate Principal Balance, (b) with respect to the Distribution Date on
the sixth anniversary of the first Distribution Date, 35% of the Original
Group Subordinate Principal Amount, (c) with respect to the Distribution Date
on the seventh anniversary of the first Distribution Date, 40% of the Original
Group Subordinate Principal Amount, (d) with respect to the Distribution Date
on the eighth anniversary of the first Distribution Date, 45% of the Original
Group Subordinate Principal Amount, and (e) with respect to the Distribution
Date on the ninth anniversary of the first Distribution Date, 50% of the
Original Group Subordinate Principal Amount.
Senior Principal Distribution Amount: For any Distribution Date and
each Certificate Group, the sum of the following amounts:
(i) the product of (a) the related Senior Percentage for
such date and (b) the principal portion (multiplied by the applicable
Non-AP Percentage) of each Scheduled Payment (without giving effect
to any Debt Service Reduction occurring prior to the applicable
Bankruptcy Coverage Termination Date), on a Mortgage Loan in the
related Mortgage Pool due during the related Due Period;
(ii) the product of (a) the related Senior Prepayment
Percentage for such date and (b) each of the following amounts
(multiplied by the applicable Non-AP Percentage): (1) each Principal
Prepayment on the Mortgage Loans in the related Mortgage Pool
collected during the related Prepayment Period, (2) each other
unscheduled collection, including Insurance Proceeds and Liquidation
Proceeds (other than with respect to any Mortgage Loan in the related
Mortgage Pool that was finally liquidated during the related
Prepayment Period), representing or allocable to recoveries of
principal received during the related Prepayment Period, and (3) the
principal portion of all proceeds of the purchase of any Mortgage
Loan in the related Mortgage Pool (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable
to principal of any Mortgage Loan in the related Mortgage Pool that
was finally liquidated during the related Prepayment Period, the
lesser of (a) the related net Liquidation Proceeds allocable to
principal (multiplied by the applicable Non-AP Percentage) and (b)
the product of the related Senior Prepayment Percentage for such date
and the Scheduled Principal Balance (multiplied by the applicable
Non-AP Percentage) of such related Mortgage Loan at the time of
liquidation; and
(iv) any amounts described in clauses (i) through (iii)
for any previous Distribution Date that remain unpaid.
Servicer: First Nationwide Mortgage, as servicer under the Seller's
Warranties and Servicing Agreement, or any successor in interest.
Servicing Advance: As defined in the Seller's Warranties and
Servicing Agreement.
Servicing Fee: As defined in the Seller's Warranties and Servicing
Agreement.
Servicing Fee Rate: A rate per annum equal to 0.25%.
Servicing Officer: Any officer of the Servicer involved in or
responsible for the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Trustee, as such list may be amended from time to time.
Special Hazard Loss: With respect to the Mortgage Loans, (x) any
Realized Loss arising out of any direct physical loss or damage to a Mortgaged
Property which is caused by or results from any cause, exclusive of any loss
covered by a hazard policy or a flood insurance policy required to be
maintained in respect of such Mortgaged Property and any loss caused by or
resulting from (i) normal wear and tear, (ii) conversion or other dishonest
act on the part of the Trustee, the Servicer or any of their agents or
employees, or (iii) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues, or (y) any
Realized Loss arising from or related to the presence or suspected presence of
hazardous wastes or hazardous substances on a Mortgaged Property unless such
loss is covered by a hazard policy or flood insurance policy required to be
maintained in respect of such Mortgaged Property.
Special Hazard Loss Limit: As of the Cut-off Date, $13,828,944.00,
which amount shall be reduced from time to time to an amount equal on any
Distribution Date to the lesser of (a) the greatest of (i) 1% of the aggregate
of the Scheduled Principal Balances of the Mortgage Loans; (ii) twice the
Scheduled Principal Balance of the Mortgage Loan having the highest Scheduled
Principal Balance, and (iii) the aggregate Scheduled Principal Balances of the
Mortgage Loans secured by Mortgaged Properties located in the single
California postal zip code area having the highest aggregate Scheduled
Principal Balance of Mortgage Loans of any such postal zip code area and (b)
the applicable Special Hazard Loss Limit as of the Closing Date less the
amount, if any, of Special Hazard Losses incurred with respect to the Mortgage
Loans since the Closing Date. All the foregoing calculations shall be
determined on an aggregate basis rather than by Mortgage Pool.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Subordinate Certificate: Any Group 1 Subordinate Certificate or Group
2 Subordinate Certificate.
Subordinate Certificate Writedown Amount: With respect to the
Certificate Group and as to any Distribution Date, the amount by which (i) the
sum of the Class Certificate Principal Amounts of all the Certificates in the
related Certificate Group (after giving effect to the distribution of
principal and the application of Realized Losses in reduction of the
Certificate Principal Amounts of the related Certificates on such Distribution
Date) exceeds (ii) the aggregate Scheduled Principal Balance of the Mortgage
Loans on the first day of the month of such Distribution Date.
Subordinate Class Percentage: With respect to any Distribution Date
and any Class of Subordinate Certificates, the percentage obtained by dividing
the Class Certificate Principal Amount of such Class immediately prior to such
Distribution Date by the sum of the Certificate Principal Amounts of all
Subordinate Certificates in the related Certificate Group immediately prior to
such date.
Subordinate Percentage: With respect to any Distribution Date and
each Certificate Group, the difference between 100% and the related Senior
Percentage for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution
Date and each Certificate Group, the difference between 100% and the Senior
Prepayment Percentage for such Distribution Date.
Subordinate Principal Distribution Amount: For any Distribution Date
and each Certificate Group, the sum of the following:
(i) the product of (a) the related Subordinate
Percentage for such date and (b) the principal portion (multiplied by
the applicable Non-AP percentage) of each Scheduled Payment (without
giving effect to any Debt Service Reduction occurring prior to the
applicable Bankruptcy Coverage Termination Date) on a Mortgage Loan
due during the related Due Period;
(ii) the product of (a) the related Subordinate
Prepayment Percentage for such date and (b) each of the following
amounts (multiplied by the applicable Non-AP percentage): (1) each
Principal Prepayment on the Mortgage Loans in the related Mortgage
Pool collected during the related Prepayment Period, (2) each other
unscheduled collection, including Insurance Proceeds and Net
Liquidation Proceeds (other than with respect to any Mortgage Loan in
the related Mortgage Pool that was finally liquidated during the
related Prepayment Period), representing or allocable to recoveries
of principal received during the related Prepayment Period, and (3)
the principal portion of all proceeds of the purchase of any Mortgage
Loan in the related Mortgage Pool (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable
to principal of any Mortgage Loan in the related Mortgage Pool that
was finally liquidated during the related Prepayment Period, the
related Net Liquidation Proceeds allocable to principal (multiplied
by the applicable Non-AP Percentage) less any related amount paid
pursuant to subsection (iii) of the definition of Senior Principal
Distribution Amount for the related Certificate Group; and
(iv) any amounts described in clauses (i) through (iii)
for any previous Distribution Date that remain unpaid.
TAC Amount: As to any Distribution Date and any Class of TAC
Certificates and any TAC Component, the amount designated as such for such
Distribution Date and such Class as set forth in the Principal Amount
Schedule.
TAC Certificate: Any Class 2-A6 Certificates.
TAC Component: None.
Tax Matters Person: The "tax matters person" as defined in the REMIC
Provisions.
Termination Price: As defined in Section 7.01 hereof.
Title Insurance Policy: A title insurance policy maintained with
respect to a Mortgage Loan.
Trust Fund: The corpus of the trust created pursuant to this
Agreement, consisting of the Mortgage Loans, the assignment of the Depositor's
rights under the Mortgage Loan Sale and Assignment Agreement, such amounts as
shall from time to time be held in the Custodial Accounts, the Certificate
Account, the Insurance Policies, any REO Property, the Class 2-A3 Certificate
Insurance Policy, the Class 2-A3 Reserve Fund and the other items referred to
in, and conveyed to the Trustee under, Section 2.01(a).
Trustee: U.S. Bank National Association, or any successor in
interest, or if any successor trustee or any co-trustee shall be appointed as
herein provided, then such successor trustee and such co-trustee, as the case
may be.
Trustee Fee: None. (The Trustee's compensation is described in
Section 4.04(c).)
Unscheduled Principal Amount: As to any Distribution Date and for
each Pool 2 Mortgage Loan, the sum of the amounts described in clauses (ii)
and (iii) (without regard to the reference in clause (iii) to the "Senior
Prepayment Percentage") of the definition of Senior Principal Distribution
Amount.
Voting Interests: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
99% of all Voting Interests shall be allocated to the Certificates other than
the Class AX Certificates and 1% of all Voting Interests shall be allocated to
the Class AX Certificates. Voting Interests allocated to the Class AX
Certificates shall be allocated among the Certificates of such Class in
proportion to their respective Percentage Interests. Voting Interests shall be
allocated among the other Classes of Certificates (and among the Certificates
within each such Class) in proportion to their Class Certificate Principal
Amounts (or Certificate Principal Amounts); provided, however, that on and
after the date, if any, on which the Class 2-A3 Certificate Insurer has paid a
claim under the Class 2-A3 Certificate Insurance Policy in respect of the
Class 2-A3 Certificates, the Class 2-A3 Certificate Insurer will be entitled
to exercise all consent, voting and related rights of such class.
Weighted Average Rate: With respect to any Distribution Date, the per
annum variable rate equal to the weighted average of the Net Mortgage Rates of
the Mortgage Loans as of the first day of the calendar month immediately
preceding such Distribution Date.
Section 1.02. Calculations Respecting Mortgage Loans. Calculations
required to be made pursuant to this Agreement with respect to any Mortgage
Loan in the Trust Fund shall be made based upon current information as to the
terms of the Mortgage Loans and reports of payments received from the
Mortgagor on such Mortgage Loans and payments to be made to the Trustee as
supplied to the Trustee by the Servicer. The Trustee shall not be required to
recompute, verify or recalculate the information supplied to it by the
Servicer.
Section 1.03. Calculations Respecting Accrued Interest. Accrued
interest, if any, on any Certificate shall be calculated based upon a 360-day
year consisting of twelve 30-day months.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans. (a) Concurrently with the execution and delivery of this
Agreement, the Depositor does hereby transfer, assign, set over, deposit with
and otherwise convey to the Trustee, without recourse, in trust, all the
right, title and interest of the Depositor in and to the Mortgage Loans. Such
conveyance includes, without limitation, the right to all distributions of
principal and interest due with respect to the Mortgage Loans after the
Cut-off Date (exclusive of any Retained Yield), together with all of the
Depositor's right, title and interest in and to the Certificate Account and
all amounts from time to time credited to and the proceeds of the Custodial
Accounts, the Certificate Account, any REO Property and the proceeds thereof,
the Depositor's rights under any Insurance Policies related to the Mortgage
Loans, and the Depositor's security interest in any collateral pledged to
secure the Mortgage Loans, including the Mortgaged Properties, to have and to
hold, in trust; and the Trustee declares that, subject to the review provided
for in the Seller's Warranties and Servicing Agreement, it has received and
shall hold the Trust Fund, as trustee, in trust, for the benefit and use of
the Holders of the Certificates and for the purposes and subject to the terms
and conditions set forth in this Agreement, and, concurrently with such
receipt, has caused to be executed, authenticated and delivered to or upon the
order of the Depositor, in exchange for the Trust Fund, Certificates in the
authorized denominations evidencing the entire ownership of the Trust Fund. In
addition, the Depositor has caused the Class 2-A3 Certificate Insurer to
deliver the Class 2-A3 Certificate Insurance Policy for the benefit of the
Class 2-A3 Certificateholders and has made an initial deposit to the Class
2-A3 Reserve Fund of $2,000.
Concurrently with the execution and delivery of this agreement, the
Depositor does hereby (i) assign to the Trustee all of its rights and interest
under the Mortgage Loan Sale and Assignment Agreement, which include all of
Lehman Capital's rights and interests under the Seller's Warranties and
Servicing Agreement, and (ii) delegates its obligations under the Mortgage
Loan Sale and Assignment Agreement, which include the obligations of Lehman
Capital under the Seller's Warranties and Servicing Agreement, (which rights
and interests have been assigned and which obligations have been delegated to
the Depositor by Lehman Capital pursuant to the Mortgage Loan Sale and
Assignment Agreement) to the Trustee. The Trustee hereby accepts such
assignment and delegation, and shall be entitled to exercise all such rights,
and obligated to fulfill such obligations, of the Depositor under the Mortgage
Loan Sale and Assignment Agreement and the Seller's Warranties and Servicing
Agreement as if, for such purpose, it were the Depositor.
(b) In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, or cause to be delivered to and
deposited with, the Custodian, acting on behalf of the Trustee, the documents
or instruments with respect to each Mortgage Loan (each a "Mortgage File") so
transferred and assigned as are specified in the Seller's Warranties and
Servicing Agreement.
The parties hereto acknowledge and agree that the form of endorsement
attached hereto as Exhibit B-2 is intended to effect the transfer to the
Trustee, for the benefit of the Certificateholders, of the Mortgage Notes and
the Mortgages.
(c) Assignments of Mortgage shall be recorded; provided, however,
that such Assignments need not be recorded if, in the Opinion of Counsel
(which must be Independent counsel) acceptable to the Trustee and the Rating
Agencies, recording in such states is not required to protect the Trustee's
interest in the related Mortgage Loans. Subject to the preceding sentence, as
soon as practicable after the Closing Date, the Trustee shall, or shall cause
the Custodian, at the expense of the Depositor, to cause to be properly
recorded in each public recording office where the Mortgages are recorded each
Assignment of Mortgage.
(d) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above-referenced documents, herewith delivers or causes to be
delivered to the Trustee an Officer's Certificate which shall include a
statement to the effect that all amounts received in connection with such
prepayment that are required to be deposited in the Custodial Account
maintained by the Servicer pursuant to the Seller's Warranties and Servicing
Agreement have been so deposited.
Section 2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund. (a) The Trustee, by execution and delivery
hereof, acknowledges receipt (by it or by the Custodian) of the Mortgage Files
pertaining to the Mortgage Loans listed on the Mortgage Loan Schedule, subject
to the review thereof by the Custodian in its capacity as designee of the
Purchaser under the Seller's Warranties and Servicing Agreement and to the
Trustee's review thereof as specified herein. The Custodian has executed and
delivered on or before the Closing Date an initial certification (the "Initial
Certification") certifying as to its receipt of the documents required to be
delivered pursuant to the Seller's Warranties and Servicing Agreement and
identifying any defects in such documents, and delivered such certification to
the Depositor and to First Nationwide Mortgage. Pursuant to Section 3.03 of
the Seller's Warranties and Servicing Agreement, First Nationwide Mortgage is
obligated to cure any Breach (as defined in Section 3.03 of the Seller's
Warranties and Servicing Agreement) identified in such Initial Certification,
or to repurchase the related Mortgage Loan or substitute another mortgage loan
therefor, within 60 days of receipt of such Initial Certification or other
notice of such Breach.
(b) Prior to the first anniversary of the Closing Date, the Trustee
shall deliver (or cause the Custodian to deliver) to the Depositor a Final
Certification substantially in the form annexed hereto as Exhibit B-1
evidencing the completeness of the Mortgage Files in its possession or
control.
(c) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee, the Certificateholders or the Class
2-A3 Certificate Insurer of any unsatisfied duty, claim or other liability on
any Mortgage Loan or to any Mortgagor.
Section 2.03. Representations and Warranties of the Depositor. (a)
The Depositor hereby represents and warrants to the Trustee, for the benefit
of Certificateholders, and to the Class 2-A3 Certificate Insurer, as of the
Closing Date or such other date as is specified, that:
(i) the Depositor is a corporation duly organized,
validly existing and in good standing under the laws governing its
creation and existence and has full corporate power and authority to
own its property, to carry on its business as presently conducted, to
enter into and perform its obligations under this Agreement, and to
create the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Depositor; neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will
conflict with or result in a breach of, or constitute a default
under, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on the Depositor or its
properties or the certificate of incorporation or bylaws of the
Depositor;
(iii) the execution, delivery and performance by the
Depositor of this Agreement and the consummation of the transactions
contemplated hereby do not require the consent or approval of, the
giving of notice to, the registration with, or the taking of any
other action in respect of, any state, federal or other governmental
authority or agency, except such as has been obtained, given,
effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered
by the Depositor and, assuming due authorization, execution and
delivery by the Trustee, constitutes a valid and binding obligation
of the Depositor enforceable against it in accordance with its terms
except as such enforceability may be subject to (A) applicable
bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally and (B) general
principles of equity regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(v) there are no actions, suits or proceedings pending
or, to the knowledge of the Depositor, threatened or likely to be
asserted against or affecting the Depositor, before or by any court,
administrative agency, arbitrator or governmental body (A) with
respect to any of the transactions contemplated by this Agreement or
(B) with respect to any other matter which in the judgment of the
Depositor will be determined adversely to the Depositor and will if
determined adversely to the Depositor materially and adversely affect
it or its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its obligations
under this Agreement;
(b) The representations and warranties of First Nationwide Mortgage
with respect to the Mortgage Loans in the Seller's Warranties and Servicing
Agreement, which have been assigned to the Trustee hereunder, were made as of
February 11, 1999. To the extent that any fact, condition or event with
respect to a Mortgage Loan constitutes a breach of both (i) a representation
or warranty of First Nationwide Mortgage under the Seller's Warranties and
Servicing Agreement and (ii) a representation or warranty of Lehman Capital
under the Mortgage Loan Sale and Assignment Agreement, the only right or
remedy of the Trustee or of any Certificateholder shall be the Trustee's right
to enforce the obligations of First Nationwide Mortgage under any applicable
representation or warranty made by it. The Trustee acknowledges that the
representations and warranties of Lehman Capital in Section 1.04(b) of the
Mortgage Loan Sale and Assignment Agreement are applicable only to facts or
conditions that arise or events that occur subsequent to February 11, 1999,
and which do not constitute a breach of any representation or warranty made by
First Nationwide Mortgage in Section 3.02 of the Seller's Warranties and
Servicing Agreement. The Trustee acknowledges that Lehman Capital shall have
no obligation or liability with respect to any breach of a representation or
warranty made by it with respect to the Mortgage Loans if the fact, condition
or event constituting such breach also constitutes a breach of a
representation or warranty made by First Nationwide Mortgage in Section 3.02
of the Seller's Warranties and Servicing Agreement, without regard to whether
First Nationwide Mortgage fulfills its contractual obligations in respect of
such representation or warranty. The Trustee further acknowledges that the
Depositor shall have no obligation or liability with respect to any breach of
any representation or warranty with respect to the Mortgage Loans under any
circumstances.
Section 2.04. Discovery of Breach. It is understood and agreed that
the representations and warranties set forth in Section 2.03 and the
representations and warranties of First Nationwide Mortgage and Lehman Capital
assigned to the Trustee hereunder survive delivery of the Mortgage Files and
the Assignment of Mortgage of each Mortgage Loan to the Trustee and shall
continue throughout the term of this Agreement. Upon discovery by either the
Depositor, the Trustee or the Class 2-A3 Certificate Insurer of a breach of
any of the representations and warranties set forth in Section 2.03 that
adversely and materially affects the value of the related Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other
parties. Within 90 days of the discovery of such a breach with respect to the
representations and warranties given to the Trustee and the Certificate
Insurer by the Depositor or given by Lehman Capital to the Depositor and
assigned to the Trustee, the Depositor or Lehman Capital, as applicable, shall
either (a) cure such breach in all material respects, (b) repurchase such
Mortgage Loan or any property acquired in respect thereof from the Trustee at
the Purchase Price or (c) within the two year period following the Closing
Date, substitute a Qualifying Substitute Mortgage Loan for the affected
Mortgage Loan.
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans.
(a) With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Article II, by First Nationwide Mortgage pursuant to the Seller's
Warranties and Servicing Agreement or by Lehman Capital pursuant to the
Mortgage Loan Sale and Assignment Agreement, the principal portion of the
funds received by the Trustee in respect of such repurchase of a Mortgage Loan
will be considered a Principal Prepayment and shall be deposited in the
Certificate Account. The Trustee, upon receipt of the full amount of the
Purchase Price for a Deleted Mortgage Loan, or upon receipt of the Mortgage
File for a Qualifying Substitute Mortgage Loan substituted for a Deleted
Mortgage Loan, shall release or cause to be released and reassign to the
Depositor, First Nationwide Mortgage or Lehman Capital, as applicable, the
related Mortgage File for the Deleted Mortgage Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be necessary to vest in such
party or its designee or assignee title to any Deleted Mortgage Loan released
pursuant hereto, free and clear of all security interests, liens and other
encumbrances created by this Agreement, which instruments shall be prepared by
the Trustee (or the Custodian) at the Depositor's expense, and the Trustee
shall have no further responsibility with respect to the Mortgage File
relating to such Deleted Mortgage Loan.
(b) With respect to each Qualifying Substitute Mortgage Loan to be
delivered to the Trustee (or the Custodian) by the Depositor pursuant to the
terms of this Article II in exchange for a Deleted Mortgage Loan: (i) the
Depositor must deliver to the Trustee (or its custodian) the Mortgage File for
the Qualifying Substitute Mortgage Loan containing the documents set forth in
Section 2.01(b) along with a written certification certifying as to the
delivery of such Mortgage File and containing the granting language set forth
in Section 2.01(a); and (ii) the Depositor or Lehman Capital, as applicable,
will be deemed to have made with respect to such Qualifying Substitute
Mortgage Loan each of the representations made by it with respect to the
Deleted Mortgage Loan. As soon as practicable after the delivery of any
Qualifying Substitute Mortgage Loan hereunder, the Trustee, at the expense of
Lehman Capital and with the cooperation of the Servicer, shall cause the
Assignment of Mortgage with respect to such Qualifying Substitute Mortgage
Loan to be recorded if required pursuant to the first sentence of Section
2.01(c).
(c) Notwithstanding any other provision of this Agreement, the right
to substitute Mortgage Loans pursuant to this Article II shall be subject to
the additional limitations that no substitution of a Qualifying Substitute
Mortgage Loan for a Deleted Mortgage Loan shall be made unless the Trustee has
received an Opinion of Counsel (at the expense of the party seeking to make
the substitution) that, under current law, such substitution will not (A)
affect adversely the status of any REMIC established hereunder as a REMIC, or
of the related "regular interests" as "regular interests" in any such REMIC,
or (B) cause any such REMIC to engage in a "prohibited transaction" or
prohibited contribution pursuant to the REMIC Provisions.
Section 2.06. Grant Clause. It is intended that the conveyance of the
Depositor's right, title and interest in and to property constituting the
Trust Fund pursuant to this Agreement shall constitute, and shall be construed
as, a sale of such property and not grant of a security interest to secure a
loan. However, if such conveyance is deemed to be in respect of a loan, it is
intended that: (1) the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement; (2) the Depositor hereby
grants to the Trustee for the benefit of the Holders of the Certificates and
the Class 2-A3 Certificate Insurer a first priority security interest in all
of the Depositor's right, title and interest in, to and under, whether now
owned or hereafter acquired, the Trust Fund and all proceeds of any and all
property constituting the Trust Fund to secure payment of the Certificates;
and (3) this Agreement shall constitute a security agreement under applicable
law. If such conveyance is deemed to be in respect of a loan and the Trust
created by this Agreement terminates prior to the satisfaction of the claims
of any Person holding any Certificate, the security interest created hereby
shall continue in full force and effect and the Trustee shall be deemed to be
the collateral agent for the benefit of such Person, and all proceeds shall be
distributed as herein provided.
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates. (a) The Certificates shall be
issuable in registered form only. The Book-Entry Certificates will be
evidenced by one or more certificates, beneficial ownership of which will be
held in the dollar denominations in Certificate Principal Amount or Notional
Amount, as applicable, specified in this paragraph. Each Class of Book-Entry
Certificates other than the Class AX Certificates will be issued in the
minimum denominations in Certificate Principal Amount specified in the
Preliminary Statement hereto and in integral multiples of $1.00 in excess
thereof, except in the case of the Class 2-A2 and the Class 2-A5 Certificates
which may be issued in integral multiples of $1,000 in excess thereof, and the
Class 2-A4 Certificate which will be issued in an amount equal to the initial
Class Certificate Principal Amount for such Class. The Class AX Certificates
will be issued in minimum denominations in Notional Amount of $100,000 and in
multiples of $1,000 in excess thereof. Each Class of Non-Book Entry
Certificates other than the Residual Certificates will be issued in
definitive, fully registered form in the minimum denominations in Certificate
Principal Amount specified in the Preliminary Statement hereto and in integral
multiples of $1.00 in excess thereof. The Residual Certificate will be issued
as a single Certificate and maintained in definitive, fully registered form in
a minimum denomination equal to 100% of the Percentage Interest of such Class.
The Certificates may be issued in the form of typewritten certificates. One
Certificate of each Class of Certificates other than the Residual Certificates
may be issued in any denomination in excess of the minimum denomination.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Each Certificate
shall, on original issue, be authenticated by the Trustee upon the order of
the Depositor upon receipt by the Trustee of the Mortgage Files described in
Section 2.01. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or the
Authenticating Agent, if any, by manual signature, and such certification upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Depositor to the Trustee or
the Authenticating Agent for authentication and the Trustee or the
Authenticating Agent shall authenticate and deliver such Certificates as in
this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and
hereby accepts its appointment as, Certificate Registrar in respect of the
Certificates and shall maintain books for the registration and for the
transfer of Certificates (the "Certificate Register"). The Trustee may appoint
a bank or trust company to act as Certificate Registrar. A registration book
shall be maintained for the Certificates collectively. The Certificate
Registrar may resign or be discharged or removed and a new successor may be
appointed in accordance with the procedures and requirements set forth in
Sections 6.06 and 6.07 hereof with respect to the resignation, discharge or
removal of the Trustee and the appointment of a successor Trustee. The
Certificate Registrar may appoint, by a written instrument delivered to the
Holders, any bank or trust company to act as co-registrar under such
conditions as the Certificate Registrar may prescribe; provided, however, that
the Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates. (a) A
Certificate (other than Book-Entry Certificates which shall be subject to
Section 3.09 hereof) may be transferred by the Holder thereof only upon
presentation and surrender of such Certificate at the office of the
Certificate Registrar duly endorsed or accompanied by an assignment duly
executed by such Holder or his duly authorized attorney in such form as shall
be satisfactory to the Certificate Registrar. Upon the transfer of any
Certificate in accordance with the preceding sentence, the Trustee shall
execute, and the Trustee or any Authenticating Agent shall authenticate and
deliver to the transferee, one or more new Certificates of the same Class and
evidencing, in the aggregate, the same aggregate Certificate Principal Amount
as the Certificate being transferred. No service charge shall be made to a
Certificateholder for any registration of transfer of Certificates, but the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any registration
of transfer of Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any
number of new Certificates of the same Class, in authorized denominations,
representing in the aggregate the same Certificate Principal Amount (or
Notional Amount) as the Certificate surrendered, upon surrender of the
Certificate to be exchanged at the office of the Certificate Registrar duly
endorsed or accompanied by a written instrument of transfer duly executed by
such Holder or his duly authorized attorney in such form as is satisfactory to
the Certificate Registrar. Certificates delivered upon any such exchange will
evidence the same obligations, and will be entitled to the same rights and
privileges, as the Certificates surrendered. No service charge shall be made
to a Certificateholder for any exchange of Certificates, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any exchange of
Certificates. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, and the Trustee or the Authenticating Agent shall
authenticate, date and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth
thereon and agrees that it will transfer such a Certificate only as provided
herein.
The following restrictions shall apply with respect to the transfer
and registration of transfer of a Restricted Certificate to a transferee that
takes delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the
transfer of a Restricted Certificate if the requested transfer is (x)
to the Depositor or the Placement Agent, an affiliate (as defined in
Rule 144(a)(1) under the 1933 Act) of the Depositor or the Placement
Agent or (y) being made to a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended
(the "Act") by a transferor who has provided the Trustee with a
certificate in the form of Exhibit F hereto; and
(ii) The Certificate Registrar shall register the
transfer of a Restricted Certificate if the requested transfer is
being made to an "accredited investor" under Rule 501(a)(1), (2), (3)
or (7) under the Act by a transferor who furnishes to the Trustee a
letter of the transferee substantially in the form of Exhibit G
hereto.
(d) (i) No transfer of an ERISA-Restricted Certificate in the form of
a Definitive Certificate shall be made to any Person unless the Trustee has
received (A) a certificate substantially in the form of Exhibit H hereto from
such transferee or (B) an Opinion of Counsel satisfactory to the Trustee and
the Depositor to the effect that the purchase and holding of such a
Certificate will not constitute or result in the assets of the Trust Fund
being deemed to be "plan assets" subject to the prohibited transactions
provisions of ERISA or Section 4975 of the Code and will not subject the
Trustee or the Depositor to any obligation in addition to those undertaken in
the Agreement; provided, however, that the Trustee will not require such
certificate or opinion in the event that, as a result of a change of law or
otherwise, counsel satisfactory to the Trustee has rendered an opinion to the
effect that the purchase and holding of an ERISA-Restricted Certificate by a
Plan or a Person that is purchasing or holding such a Certificate with the
assets of a Plan will not constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code. The preparation and delivery of the
certificate and opinions referred to above shall not be an expense of the
Trust Fund, the Trustee or the Depositor. Notwithstanding the foregoing, no
opinion or certificate shall be required for the initial issuance of the
ERISA-Restricted Certificates.
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of Certificate.
(f) Notwithstanding anything to the contrary contained herein, no
Residual Certificate may be owned, pledged or transferred, directly or
indirectly, by or to a Disqualified Organization or (ii) an individual,
corporation or partnership or other person unless such person is (A) not a
Non-U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate
in connection with a trade or business within the United States and has
furnished the transferor and the Trustee with an effective Internal Revenue
Service Form 4224 or successor form at the time and in the manner required by
the Code (any such person who is not covered by clause (A) or (B) above is
referred to as a "Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale
or other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto
as Exhibit D-1 representing and warranting, among other things, that such
transferee is neither a Disqualified Organization, an agent or nominee acting
on behalf of a Disqualified Organization nor a Non-permitted Foreign Holder
(any such transferee, a "Permitted Transferee"), and the proposed transferor
shall deliver to the Trustee an affidavit in substantially the form attached
hereto as Exhibit D-2. In addition, the Trustee may (but shall have no
obligation to) require, prior to and as a condition of any such transfer, the
delivery by the proposed transferee of an Opinion of Counsel, addressed to the
Depositor and the Trustee satisfactory in form and substance to the Depositor,
that such proposed transferee or, if the proposed transferee is an agent or
nominee, the proposed beneficial owner, is neither a Disqualified
Organization, agent or nominee thereof, nor Non-permitted Foreign Holder.
Notwithstanding the registration in the Certificate Register of any transfer,
sale, or other disposition of a Residual Certificate to a Disqualified
Organization, an agent or nominee thereof, or a Non-permitted Foreign Holder,
such registration shall be deemed to be of no legal force or effect whatsoever
and such Disqualified Organization, agent or nominee thereof, or Non-permitted
Foreign Holder shall not be deemed to be a Certificateholder for any purpose
hereunder, including, but not limited to, the receipt of distributions on such
Residual Certificate. The Trustee shall not be under any liability to any
person for any registration or transfer of a Residual Certificate to a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, or for the maturity of any payments due on such Residual Certificate
to the Holder thereof or for taking any other action with respect to such
Holder under the provisions of the Agreement, so long as the transfer was
effected in accordance with this Section 3.03(f), unless the Trustee shall
have actual knowledge at the time of such transfer or the time of such payment
or other action that the transferee is a Disqualified Organization, agent or
nominee thereof, or Non-permitted Foreign Holder. The Trustee shall be
entitled to recover from any Holder of a Residual Certificate that was a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, at the time it became a Holder or any subsequent time it became a
Disqualified Organization all payments made on such Residual Certificate at
and after either such times (and all costs and expenses, including but not
limited to attorneys' fees, incurred in connection therewith). Any payment
(not including any such costs and expenses) so recovered by the Trustee shall
be paid and delivered to the last preceding Holder of such Residual
Certificate.
If any purported transferee shall become a registered Holder of a
Residual Certificate in violation of the provisions of this Section 3.03(f),
then upon receipt of written notice to the Trustee that the registration of
transfer of such Residual Certificate was not in fact permitted by this
Section 3.03(f), the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of such registration of
transfer of such Residual Certificate. The Trustee shall be under no liability
to any Person for any registration of transfer of a Residual Certificate that
is in fact not permitted by this Section 3.03(f), for making any payment due
on such Certificate to the registered Holder thereof or for taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered upon receipt of the affidavit described in
the preceding paragraph of this Section 3.03(f).
(g) Each Holder of a Residual Certificate, by such Holder's
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this section.
Section 3.04. Cancellation of Certificates. Any Certificate
surrendered for registration of transfer or exchange shall be cancelled and
retained in accordance with normal retention policies with respect to
cancelled certificates maintained by the Trustee or the Certificate Registrar.
Section 3.05. Replacement of Certificates. If (i) any Certificate is
mutilated and is surrendered to the Trustee or any Authenticating Agent or
(ii) the Trustee or any Authenticating Agent receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and there
is delivered to the Trustee or the Authenticating Agent such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Depositor and any Authenticating Agent that such
destroyed, lost or stolen Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and the Trustee or any Authenticating
Agent shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee and Authenticating Agent may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee or the Authenticating Agent)
connected therewith. Any replacement Certificate issued pursuant to this
Section 3.05 shall constitute complete and indefeasible evidence of ownership
in the applicable Trust Fund, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of
Section 3.09 with respect to Book-Entry Certificates, the Depositor, the
Trustee, the Certificate Registrar and any agent of any of them may treat the
Person in whose name any Certificate is registered upon the books of the
Certificate Registrar as the owner of such Certificate for the purpose of
receiving distributions pursuant to Sections 5.01 and 5.02 and for all other
purposes whatsoever, and neither the Depositor, the Trustee, the Certificate
Registrar nor any agent of any of them shall be affected by notice to the
contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in
exchange therefor a like aggregate Certificate Principal Amount of definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Certificates of the same
Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a
Paying Agent (which may be the Trustee) for the purpose of making
distributions to Certificateholders hereunder. The Trustee shall cause such
Paying Agent (other than Trustee) to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee that such
Paying Agent will hold all sums held by it for the payment to
Certificateholders in an Eligible Account in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to the
Certificateholders. All funds remitted by the Trustee to any such Paying Agent
for the purpose of making distributions shall be paid to Certificateholders on
each Distribution Date and any amounts not so paid shall be returned on such
Distribution Date to the Trustee. If the Paying Agent is not the Trustee, the
Trustee shall cause to be remitted to the Paying Agent on or before the
Business Day prior to each Distribution Date, by wire transfer in immediately
available funds, the funds to be distributed on such Distribution Date. Any
Paying Agent shall be either a bank or trust company or otherwise authorized
under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
Certificates, upon original issuance, shall be issued in the form of one or
more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the Book-Entry
Certificates, except as provided in Section 3.09(c). Unless Definitive
Certificates have been issued to Certificate Owners of Book-Entry Certificates
pursuant to Section 3.09(c):
(i) the provisions of this Section 3.09 shall be in full
force and effect;
(ii) the Depositor, the Paying Agent, the Registrar and
the Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Book-Entry
Certificates) as the authorized representatives of the Certificate
Owners and the Clearing Agency shall be responsible for crediting the
amount of such distributions to the accounts of such Persons entitled
thereto, in accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section
3.09 conflict with any other provisions of this Agreement, the
provisions of this Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and the Clearing Agency Participants
and shall be limited to those established by law and agreements
between such Certificate Owners and the Clearing Agency and/or the
Clearing Agency Participants. Unless and until Definitive
Certificates are issued pursuant to Section 3.09(c), the initial
Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit distributions of
principal of and interest on the Book-Entry Certificates to such
Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders
is required under this Agreement, unless and until Definitive Certificates
shall have been issued to Certificate Owners pursuant to Section 3.09(c), the
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Certificate Principal
Amount of a Class of Book-Entry Certificates identified as such to the Trustee
by an Officer's Certificate from the Clearing Agency advise the Trustee and
the Clearing Agency through the Clearing Agency Participants in writing that
the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Certificate Owners of a Class of
Book-Entry Certificates, the Trustee shall notify or cause the Certificate
Registrar to notify the Clearing Agency to effect notification to all
Certificate Owners, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates. Neither the Transferor nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Certificates all references herein to obligations
imposed upon or to be performed by the Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable, with
respect to such Definitive Certificates and the Trustee shall recognize the
holders of the Definitive Certificates as Certificateholders hereunder.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Omitted].
Section 4.02. [Omitted].
Section 4.03. Reports to Certificateholders. (a) On each Distribution
Date, the Trustee shall deliver or cause to be delivered by first class mail
to each Certificateholder and the Class 2-A3 Certificate Insurer a written
report setting forth the following information, by Mortgage Pool and
Certificate Group, which information the Trustee will determine on the basis
of, with respect to the Mortgage Loans, data which the Servicer will provide
to the Trustee or its designee prior to the Remittance Date:
(i) the aggregate amount of the distribution to be made
on such Distribution Date to the Holders of each Class of
Certificates (and in respect of any Component), other than any Class
of Notional Certificates (or any Notional Component), allocable to
principal on the Mortgage Loans, including Liquidation Proceeds and
Insurance Proceeds, stating separately the amount attributable to
scheduled principal payments and unscheduled payments in the nature
of principal in each Mortgage Pool;
(ii) the aggregate amount of the distribution to be made
on such Distribution Date to the Holders of each Class of
Certificates (other than any Class of Principal Only Certificates)
allocable to interest, including any Accrual Amount added to the
Class Certificate Principal Amount of any Class of Accrual
Certificates;
(iii) the amount, if any, of any distribution to the
Holder of the Residual Certificates;
(iv) the aggregate amount of any Advances in respect of
the Mortgage Loans in each Mortgage Pool made by or on behalf of the
Servicer (or the Trustee) included in the amounts actually
distributed to the Certificateholders;
(v) the aggregate Scheduled Principal Balance of the
Mortgage Loans in each Mortgage Pool as of the close of business on
the last day of the related Due Period, after giving effect to
payments allocated to principal reported under clause (i) above;
(vi) the Class Certificate Principal Amount (or
Aggregate Notional Amount) of each Class of Certificates as of such
Distribution Date after giving effect to payments allocated to
principal reported under clause (i) above (and to the addition of any
Accrual Amount in the case of any Class of Accrual Certificates),
separately identifying any reduction of any of the foregoing
Certificate Principal Amounts due to Realized Losses:
(vii) any Realized Losses realized with respect to the
Mortgage Loans (x) in the related Prepayment Period and (y) in the
aggregate since the Cut-off Date, stating separately the amount of
Special Hazard Losses, Fraud Losses and Bankruptcy Losses and the
aggregate amount of such Realized Losses, and the remaining Special
Hazard Loss Amount, Fraud Loss Amount and Bankruptcy Loss Amount;
(viii) the amount of the Servicing Fees paid during the
Due Period to which such distribution relates;
(ix) the number and aggregate Scheduled Principal
Balance of Mortgage Loans, as reported to the Trustee by the
Servicer, (a) remaining outstanding (b) delinquent one month, (c)
delinquent two months, (d) delinquent three or more months, and (e)
as to which foreclosure proceedings have been commenced as of the
close of business on the last Business Day of the calendar month
immediately preceding the month in which such Distribution Date
occurs;
(x) the deemed principal balance of each REO Property as
of the close of business on the last Business Day of the calendar
month immediately preceding the month in which such Distribution Date
occurs;
(xi) with respect to any Mortgage Loan that became an
REO Property during the preceding calendar month, the principal
balance of such Mortgage Loan and the number of such Mortgage Loans
as of the close of business on the Distribution Date in such
preceding month;
(xii) with respect to substitution of Mortgage Loans in
the preceding calendar month, the Scheduled Principal Balance of each
Deleted Mortgage Loan, and of each Qualifying Substitute Mortgage
Loan;
(xiii) the aggregate outstanding Interest Shortfalls and
Net Prepayment Interest Shortfalls, if any, for each Class of
Certificates, after giving effect to the distribution made on such
Distribution Date;
(xiv) the Certificate Interest Rate applicable to such
Distribution Date with respect to each Class of Certificates;
(xv) if applicable, the amount of any shortfall (i.e.,
the difference between the aggregate amounts of principal and
interest which Certificateholders would have received if there were
sufficient available amounts in the Certificate Account and the
amounts actually distributed);
(xvi) any other "loan-level" information for any
Mortgage Loans that are delinquent three or more months and any REO
Property held by the Trust that is reported by the Servicer to the
Trustee;
(xvii) The Purchase Price of any Mortgage Loan
repurchased pursuant to Section 2.05; and
(xviii) any Insured Payments made in respect of
Guaranteed Distributions paid under the Class 2-A4 Certificate
Insurance Policy.
In the case of information furnished pursuant to subclauses (i), (ii)
and (viii) above, the amounts shall be expressed as a dollar amount per $1,000
of original principal amount of Certificates.
On each Distribution Date, the Trustee shall also deliver or cause to
be delivered by first class mail to the Depositor a copy of the
above-described written report, to the following address: Mortgage Finance
Group, Lehman Brothers Inc., Three World Financial Center, 200 Vesey Street,
New York, New York 10285, Attention: Joseph J. Kelly, Vice President, or to
such other address as the Depositor may designate.
(b) Upon the reasonable advance written request of any
Certificateholder that is a savings and loan, bank or insurance company, the
Trustee shall, to the extent that such information has been provided to the
Trustee by the Servicer, provide, or cause to be provided (or, to the extent
that such information or documentation is not required to be provided by the
Servicer under the Seller's Warrants and Servicing Agreement, shall use
reasonable efforts to obtain such information and documentation from the
Servicer and provide), to such Certificateholder such reports and access to
information and documentation regarding the Mortgage Loans as such
Certificateholder may reasonably deem necessary to comply with applicable
regulations of the Office of Thrift Supervision or its successor or other
regulatory authorities with respect to investment in the Certificates;
provided, however, that the Trustee shall be entitled to be reimbursed by such
Certificateholder for such Trustee's actual expenses incurred in providing
such reports and access.
(c) Within 90 days, or such shorter period as may be required by
statute or regulation, after the end of each calendar year, the Trustee shall
send to each Person who at any time during the calendar year was a
Certificateholder of record, and make available to Certificate Owners
(identified as such by the Clearing Agency) in accordance with applicable
regulations, a report summarizing the items provided to Certificateholders
pursuant to Section 4.03(a) on an annual basis as may be required to enable
such Holders to prepare their federal income tax returns. Such information
shall include the amount of original issue discount accrued on each Class of
Certificates and information regarding the expenses of the Trust Fund.
(d) Not later than two days following each Distribution Date, the
Trustee shall deliver to the Persons designated by the Depositor, in the
format provided by the Servicer, "loan level" information with respect to the
Mortgage Loans as of the related Determination Date, to the extent that such
information has been provided in electronic format to the Trustee by the
Servicer.
Section 4.04. Certificate Account. (a) The Trustee shall establish
and maintain in its name, as trustee, a special deposit trust account (the
"Certificate Account"), to be held in trust for the benefit of the
Certificateholders and the Class 2-A3 Certificate Insurer until disbursed
pursuant to the terms of this Agreement. The Certificate Account shall be an
Eligible Account. If the existing Certificate Account ceases to be an Eligible
Account, the Trustee shall establish a new Certificate Account that is an
Eligible Account within 20 Business Days and transfer all funds on deposit in
such existing Certificate Account into such new Certificate Account. The
Certificate Account shall relate solely to the Certificates issued hereunder
and funds in the Certificate Account shall be held separate and apart from and
shall not be commingled with any other monies including, without limitation,
other monies of the Trustee held under this Agreement.
(b) The Trustee shall cause to be deposited into the Certificate
Account on the day on which, or, if such day is not a Business Day, the
Business Day immediately following the day on which, any monies are remitted
by the Servicer to the Trustee, all such amounts. The Trustee shall make
withdrawals from the Certificate Account only for the following purposes:
(i) to withdraw amounts deposited in the Certificate
Account in error;
(ii) to pay itself any investment income earned with
respect to funds in the Certificate Account invested in Eligible
Investments as set forth in subsection (c) below, and to make payment
to itself and others pursuant to any provision of this Agreement;
(iii) to make distributions to the Certificateholders
and the Class 2-A3 Certificate Insurer pursuant to Article V; and
(iv) to clear and terminate the Certificate Account
pursuant to Section 7.02.
(c) The Trustee may invest, or cause to be invested, funds held in
the Certificate Account in Eligible Investments (which may be obligations of
the Trustee). All such investments must mature no later than the next
Distribution Date, and shall not be sold or disposed of prior to their
maturity. All such Eligible Investments will be made in the name of the
Trustee (in its capacity as such) or its nominee. All income and gain realized
from any such investment shall be compensation for the Trustee and shall be
subject to its withdrawal on order from time to time. The amount of any losses
incurred in respect of any such investments shall be paid by the Trustee for
deposit in the Certificate Account out of its own funds immediately as
realized.
Section 4.05. Determination of LIBOR. [RESERVED]
Section 4.06. The Class 2-A3 Reserve Fund. (a) The Trustee shall
establish and maintain the Class 2-A3 Reserve Fund, which shall be an
interest-bearing Eligible Account into which there shall have been deposited
the amount of $2,000 on the Closing Date. No additional funds will be
deposited in the Class 2-A3 Reserve Fund after the Closing Date. All funds
deposited in the Class 2-A3 Reserve Fund, other than investment earnings
thereon which shall be released by the Trustee to the Depositor, shall be held
in trust for the benefit of the Holders of the Class 2-A3 Certificates until
withdrawn in accordance with Section 5.02(d). The Class 2-A3 Reserve Fund
shall be an "outside reserve fund" under the REMIC Provisions. Lehman Brothers
Inc. will be the beneficial owner of the Class 2-A3 Reserve Fund for federal
and state income tax purposes. The Trustee, upon the instructions of the
Depositor, may invest, or cause to be invested, funds in the Class 2-A4
Reserve Fund in Eligible Investments (which may be the obligation of the
Trustee).
(b) The Trustee shall from time to time make withdrawals from the
Class 2-A3 Reserve Fund on behalf of the Trust Fund for the following
purposes:
(i) prior to each Distribution Date, to withdraw from
the Class 2-A3 Reserve Fund an amount equal to the lesser of (a) any
Net Prepayment Interest Shortfalls for Pool 2 allocable to the Class
2-A3 Certificates for the related Distribution Date, and (b) the
amount on deposit in the Class 2-A3 Reserve Fund, and remit such
amount to the Certificate Account for distribution to the Class 2-A3
Certificateholders on such Distribution Date; and
(ii) on the earlier of (a) the Distribution Date on
which the Class Certificate Principal Amount of the Class 2-A3
Certificates is reduced to zero and (b) the termination of this
Agreement pursuant to Section 7.01, to clear and terminate the Class
2-A3 Reserve Fund and to pay all amounts on deposit therein to Lehman
Brothers Inc. at the address supplied by it to the Trustee for such
purpose.
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
respecting the final distribution on the Certificates, on each Distribution
Date the Trustee or the Paying Agent shall make distributions in accordance
with this Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date by (x) any Certificateholder owning the entire interest in
the Class 2-A4, Class 1-B1, Class 1-B2 or Class 1-B3 Certificates, (y) any
Certificateholder owning an aggregate initial Certificate Principal Amount of
at least $2,500,000, (or, in the case of the Class AX Certificates, a
Percentage Interest of not less than 50%) by wire transfer in immediately
available funds to an account specified in the request and at the expense of
such Certificateholder; provided, however, that the final distribution in
respect of any Certificate shall be made only upon presentation and surrender
of such Certificate at the Corporate Trust Office. Wire transfers will be made
at the expense of the Holder requesting such wire transfer by deducting a wire
transfer fee from the related distribution. Notwithstanding such final payment
of principal of any of the Certificates, the Residual Certificates will remain
outstanding until the termination of each REMIC and the payment in full of all
other amounts due with respect to the Residual Certificates and at such time
such final payment in retirement of any Residual Certificates will be made
only upon presentation and surrender of such Certificate at the Corporate
Trust Office of the Trustee or at the office of the Trustee's New York
presenting agent. If any payment required to be made on the Certificates is to
be made on a day that is not a Business Day, then such payment will be made on
the next succeeding Business Day. Payments to the Class 2-A3 Certificate
Insurer shall in all cases be made by wire transfer of immediately available
funds.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in
proportion to their respective initial Certificate Principal Amounts (or
initial Notional Amounts).
Section 5.02. Distributions from the Certificate Account. (a) On each
Distribution Date the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Available Distribution Amount
with respect to each Mortgage Pool, and shall distribute such amount to the
Class 2-A3 Certificate Insurer in payment of the Aggregate Class 2-A3
Certificate Insurance Premium and to the Holders of record of each Class of
Certificates in the related Certificate Group in the following order of
priority:
(i) from the Available Distribution Amount for Pool 2,
to the Class 2-A3 Certificate Insurer, the Aggregate Class 2-A3
Certificate Insurance Premium;
(ii) from the Available Distribution Amount for the
related Mortgage Pool, to each Class of Senior Certificates (or
Component thereof) in the related Certificate Group (other than any
Class of Principal Only Certificates or Component thereof), the
Accrued Certificate Interest thereon for such Distribution Date, as
reduced by such Class's or Component's pro rata share (determined on
the basis of Accrued Certificate Interest otherwise distributable
thereon) of any Net Prepayment Interest Shortfalls for the related
Mortgage Pool for such Distribution Date; provided, however, that any
shortfall in available amounts shall be allocated among such Classes
or Components in proportion to the amount of Accrued Certificate
Interest (as so reduced) that would otherwise be distributable
thereon; provided, further, that on each Distribution Date through
the Class 2-A2 Accretion Termination Date, such amounts otherwise
distributable with respect to the Class 2-A2 Certificates shall not
be distributed under this priority (ii), but shall instead be added
to the Class Certificate Principal Amount thereof and distributed in
accordance with subparagraph d(i) below; and provided further, on
each Distribution Date through the Class 2-A5 Accretion Termination
Date, such amounts otherwise distributable with respect to the Class
2-A5 Certificates will not be distributed under this priority (ii),
but will instead be added to the Class Certificate Principal Amount
thereof and distributed in accordance with subparagraph (d)(ii)
below.
(iii) from the remaining Available Distribution Amount
for the related Mortgage Pool, to each Class of Senior Certificates
(or Component thereof) in the related Certificate Group (other than
any Class of Principal Only Certificates), any related Interest
Shortfall for such Distribution Date; provided, however, that any
shortfall in available amounts shall be allocated among such Classes
or Components in proportion to the Interest Shortfall for each such
Class or Component on such Distribution Date; provided, further, that
through the Class 2-A2 Accretion Termination Date, in the case of the
Class 2-A2 Certificate, or the Class 2-A5 Accretion Termination, in
the case of the Class 2-A5 Certificate, such amounts with respect to
such Certificates will not be distributed to either such Class under
this priority (iii), but will instead be added to the Class
Certificate Principal Amounts of such Class and distributed in
accordance with subparagraphs (d)(i) and (d)(ii) below.
(iv) from the remaining Available Distribution Amount
for the related Mortgage Pool, to the Senior Certificates of each
Certificate Group, as follows:
(A) to the payment of principal on the Group 1
Senior Certificates (other than the Notional Certificates or
the Components thereof), in reduction of their respective
Class Certificate Principal Amounts (or Component Principal
Amounts), concurrently, as follows:
(1) to the Class 1-A Certificates, the
Senior Principal Distribution Amount for Pool 1 for
such Distribution Date until the Class Certificate
Principal Amount thereof has been reduced to zero;
and
(2) to the AP(1) Component of the Class AP
Certificates, the AP Principal Distribution Amount
for Pool 1 for such Distribution Date, until the
Component Principal Amount thereof has been reduced
to zero; and
(B) to the payment of principal on the Group 2
Senior Certificates (other than the Notional Certificates or
the Components thereof), in reduction of their Class
Certificate Principal Amounts (or Component Principal
Amounts), concurrently as follows:
(1) to the Group 2 Senior Certificates
(other than the AX(2) Component and the AP(2)
Component) in the following order of priority:
(x) to the Class 2-A7
Certificates, the lesser of (i) the Class
2-A7 Priority Amount for such Distribution
Date and (ii) 98.6% of the Senior
Principal Distribution Amount for Group 2
until the Class Certificate Principal
Amount thereof has been reduced to zero;
(y) to the Group 2 Senior
Certificates (other than the AX(2)
Component and the AP(2) Component),
concurrently as follows:
(I) to the Class 2-A2, Class A3, Class
2-A4, Class 2-A6 and Class 2-A8 Certificates,
53.6931607462% of the Senior Principal Distribution
Amount for Group 2 for such Distribution Date
(after application of priority (iv)(B)(1)(x)), in
the following order of priority:
(a) if such Distribution Date
occurs on or after the Distribution Date
in March 2002, to the Class 2-A3
Certificates and Class 2-A4 Certificates,
pro rata in proportion to their respective
Class Certificate Principal Amounts
outstanding, an amount on each
Distribution Date up to $21,589.10, until
the Class Certificate Principal Amounts of
each such Class has been reduced to zero;
(b) to the Class 2-A8
Certificates, 58.0611936524% of the
remaining Senior Principal Distribution
Amount for Group 2 (after application of
the priorities through
(iv)(B)(1)(y)(I)(a)), until the Class
Certificate Principal Amount thereof has
been reduced to zero;
(c) to the Class 2-A2 and Class
2-A6 Certificates, the remaining Senior
Principal Distribution Amount for Group 2
(after application of the priorities
through (iv)(B)(I)(y)(1)(b)) in the
following order of priority:
(i) to the Class 2-A6 Certificates,
up to an amount necessary to reduce the
Class Certificate Principal Amount thereof
to its TAC Amount for such Distribution
Date;
(ii) to the Class 2-A2 Certificates,
until the Class Certificate Principal
Amount thereof has been reduced to zero;
(iii) to the Class 2-A6 Certificates
without regard to its TAC Amount, until
the Class Certificate Principal Amount
thereof has been reduced to zero; and
(d) to the Class 2-A3 and Class 2-A4
Certificates, pro rata in proportion to their
respective Class Certificate Principal Amounts
outstanding, until the Class Certificate Principal
Amount of each such Class has been reduced to zero;
and
(II) to the Class 2-Al, Class 2-A5, Class R and
Class 2-A7 Certificates, sequentially, in that order, the
remaining Senior Principal Distribution Amount for Group 2
until the Class Certificate Principal Amount of each such
Class has been reduced to zero; and
(2) to the AP(2) Component of the Class AP
Certificates, the AP Principal Distribution Amount for such
Distribution Date, until the Component Principal Amount
thereof has been reduced to zero;
(v) to the AP(1) Component and AP(2) Component of the
Class AP Certificates, to the extent of the remaining Available
Distribution Amount for Group 1 (in the case of the AP(1) Component)
and Group 2 (in the case of the AP(2) Component), concurrently as
follows:
(A) to the AP(1) Component of the Class AP
Certificates, from the Available Distribution Amount for
Pool 1 for such Distribution Date, the AP(1) Deferred Amount
for such Distribution Date, until the Component Principal
Amount thereof has been reduced to zero; provided, that
distributions pursuant to this priority (v) (A) shall not
exceed the Subordinate Principal Distribution Amount for
Group 1 for such Distribution Date, and such distributions
shall not reduce the Component Principal Amount of such
AP(1) Component;
(B) to the AP(2) Component of the Class AP
Certificates, from the Available Distribution Amount for
Pool 2 for such Distribution Date, the AP(2) Deferred Amount
for such Distribution Date, until the Component Principal
Amount thereof has been reduced to zero; provided, that
distributions pursuant to this priority (v)(B) shall not
exceed the Subordinate Principal Distribution Amount for
Group 2 for such Distribution Date, and such distributions
shall not reduce the Component Principal Amount of such
AP(2) Component; and
(vi) to the Class 2-A3 Certificate Insurer, payment of
any unreimbursed Insured Payments, plus all amounts due to the Class
2-A3 Certificate Insurer under the Insurance Agreement, together with
interest thereon at the rate specified in the Insurance Agreement
(collectively, the "Reimbursement Amounts"); and
(vii) from the remaining Available Distribution Amount
for the related Mortgage Pool, to the Subordinate Certificates of
each Certificate Group, as follows:
(A) to the Class 1-B1 and Class 2-B1 Certificates,
the Accrued Certificate Interest thereon for such
Distribution Date, as reduced by such Class's pro rata share
(determined on the basis of Accrued Certificate Interest
otherwise distributable thereon) of any Net Prepayment
Interest Shortfalls for the related Mortgage Pool for such
Distribution Date;
(B) to the Class 1-B1 and Class 2-B1 Certificates,
any Interest Shortfall for such Class on such Distribution
Date;
(C) to the Class 1-B1 and Class 2-B1 Certificates,
in reduction of their respective Class Certificate Principal
Amounts, such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the related
Certificate Group for such Distribution Date, except as
provided in Section 5.02(c), until the Class Certificate
Principal Amount of each such Class has been reduced to
zero;
(D) to the Class 1-B2 and Class 2-B2 Certificates,
the Accrued Certificate Interest thereon for such
Distribution Date, as reduced by such Class's pro rata share
(determined on the basis of Accrued Certificate Interest
otherwise distributable thereon) of any Net Prepayment
Interest Shortfalls for the related Mortgage Pool for such
Distribution Date;
(E) to the Class 1-B2 and Class 2-B2 Certificates,
any Interest Shortfall for such Class on such Distribution
Date;
(F) to the Class 1-B2 and Class 2-B2 Certificates,
in reduction of the their respective Class Certificate
Principal Amounts, such Class's Subordinate Class Percentage
of the Subordinate Principal Distribution Amount for the
related Certificate Group for such Distribution Date, except
as provided in Section 5.02(c), until the Class Certificate
Principal Amount of each such Class has been reduced to
zero;
(G) to the Class 1-B3 and Class 2-B3 Certificates,
the Accrued Certificate Interest thereon for such
Distribution Date, as reduced by such Class's pro rata share
(determined on the basis of Accrued Certificate Interest
otherwise distributable thereon) of any Net Prepayment
Interest Shortfalls for the related Mortgage Pool for such
Distribution Date;
(H) to the Class 1-B2 and Class 2-B3 Certificates,
any Interest Shortfall for such Class on such Distribution
Date;
(I) to the Class 1-B3 and Class 2-B3 Certificates,
in reduction of their respective Class Certificate Principal
Amounts, such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the related
Certificate Group for such Distribution Date, except as
provided in Section 5.02(c), until the Class Certificate
Principal Amount of each such Class has been reduced to
zero;
(J) to the Class 1-B4 and Class 2-B4 Certificates,
the Accrued Certificate Interest thereon for such
Distribution Date, as reduced by such Class's pro rata share
(determined on the basis of Accrued Certificate Interest
otherwise distributable thereon) of any Net Prepayment
Interest Shortfalls for the related Mortgage Pool for such
Distribution Date;
(K) to the Class 1-B4 and Class 2-B4 Certificates,
any Interest Shortfall for such Class on such Distribution
Date;
(L) to the Class 1-B4 and Class 2-B4 Certificates,
in reduction of their respective Class Certificate Principal
Amounts, such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the related
Certificate Group for such Distribution Date, except as
provided in Section 5.02(c), until the Class Certificate
Principal Amount of each such Class has been reduced to
zero;
(M) to the Class 1-B5 and Class 2-B5 Certificates,
the Accrued Certificate Interest thereon for such
Distribution Date, as reduced by such Class's pro rata share
(determined on the basis of Accrued Certificate Interest
otherwise distributable thereon) of any Net Prepayment
Interest Shortfalls for the related Mortgage Pool for such
Distribution Date;
(N) to the Class 1-B5 and Class 2-B5 Certificates,
any Interest Shortfall for such Class on such Distribution
Date;
(O) to the Class 1-B5 and Class 2-B5 Certificates,
in reduction of their respective Class Certificate Principal
Amounts, such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the related
Certificate Group for such Distribution Date, except as
provided in Section 5.02(c), until the Class Certificate
Principal Amount of each such Class has been reduced to
zero;
(P) to the Class 1-B6 and Class 2-B6 Certificates,
the Accrued Certificate Interest thereon for such
Distribution Date, as reduced by such Class's pro rata share
(determined on the basis of Accrued Certificate Interest
otherwise distributable thereon) of any Net Prepayment
Interest Shortfalls for the related Mortgage Pool for such
Distribution Date;
(Q) to the Class 1-B6 and Class 2-B6 Certificates,
any Interest Shortfall for such Class on such Distribution
Date; and
(R) to the Class 1-B6 and Class 2-B6 Certificates,
in reduction of their respective Class Certificate Principal
Amounts, such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the related
Certificate Group for such Distribution Date, except as
provided in Section 5.02(c), until the Class Certificate
Principal Amount of each such Class has been reduced to
zero.
(b) If on any Distribution Date (i) the aggregate Class Certificate
Principal Amounts of the Subordinate Certificates of a Certificate Group have
been reduced to zero, the Available Distribution Amount with respect to the
related Mortgage Pool remaining after distribution of interest to the related
Senior Certificates on such date shall be distributed among the related
Classes of Senior Certificates pro rata, on the basis of their respective
Class Certificate Principal Amounts immediately prior to such Distribution
Date, regardless of the priorities and amounts set forth in Sections
5.02(a)(iv)(A) and (B).
(c) (i) If on any Distribution Date the Credit Support Percentage for
the Class 1-B1 or Class 2-B1 Certificates is less than the Original Credit
Support Percentage for such Class, then, notwithstanding anything to the
contrary in Section 5.02(a), no distribution of amounts described in clauses
(ii) and (iii) of the definition of Subordinate Principal Distribution Amount
will be made in respect of the Class B2, Class B3, Class B4, Class B5 or Class
B6 Certificates in the related Certificate Group on such Distribution Date.
(ii) If on any Distribution Date the Credit Support Percentage for the Class
1-B2 and Class 2-B2 Certificates is less than the Original Credit Support
Percentage for such Class, then, notwithstanding anything to the contrary in
Section 5.02(a), no distribution of amounts described in clauses (ii) and
(iii) of the definition of Subordinate Principal Distribution Amount will be
made in respect of the Class B3, Class B4, Class B5 or Class B6 Certificates
in the related Certificate Group on such Distribution Date. (iii) If on any
Distribution Date the Credit Support Percentage for the Class 1-B3 and Class
2-B3 Certificates is less than the Original Credit Support Percentage for such
Class, then, notwithstanding anything to the contrary in Section 5.02(a), no
distribution of amounts described in clauses (ii) and (iii) of the definition
of Subordinate Principal Distribution Amount will be made in respect of the
Class B4, Class B5 or Class B6 Certificates in the related Certificate Group
on such Distribution Date. (iv) If on any Distribution Date the Credit Support
Percentage for the Class 1-B4 and Class 2-B4 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B5 or Class B6
Certificates in the related Certificate Group on such Distribution Date. (v)
If on any Distribution Date the Credit Support Percentage for the Class 1-B5
or Class 2-B5 Certificates is less than the Original Credit Support Percentage
for such Class, then, notwithstanding anything to the contrary in Section
5.02(a), no distribution of amounts described in clauses (ii) and (iii) of the
definition of Subordinate Principal Distribution Amount will be made in
respect of the Class B6 Certificates in the related Certificate Group on such
Distribution Date.
Any amount not distributed in respect of any Class of Subordinate
Certificates on any Distribution Date pursuant to the immediately preceding
paragraph will be allocated among the remaining Classes or Components of the
related Certificate Group in proportion to their respective Class Certificate
Principal Amounts, as applicable.
(d)(i) On each Distribution Date through the Class 2-A2 Accretion
Termination Date, before distribution of any amounts pursuant to priority
(iv)(B)(1)(y)(I)(c) above, an amount equal to the Class 2-A2 Accrual Amount
for such Distribution Date will be distributed in the following order of
priority:
first, to the Class 2-A6 Certificates, in an amount
necessary to reduce the Class Certificate Principal Amount thereof to
its TAC Amount for such Distribution Date, until the Class
Certificate Principal Amount thereof has been reduced to zero; and
second, to the Class 2-A2 Certificates, in reduction of the
Class Certificate Principal Amount thereof, until the Class
Certificate Principal Amount thereof has been reduced to zero.
On each Distribution Date after the Class 2-A2 Accretion Termination
Date, the Accrued Certificate Interest allocable to the Class 2-A2
Certificates pursuant to priorities (ii) and (iii) above will be distributable
as interest thereon and not be added to the Class Certificate Principal Amount
thereof.
(d)(ii) On each Distribution Date through the Class 2-A5 Accretion
Termination Date, before distribution of any amounts pursuant to priority
(iv)(B)(1)(y)(II) above, an amount equal to the Class 2-A5 Accrual Amount for
such date will be distributed in the following order of priority:
first, to the Class 2-A1 Certificates, in reduction of the
Class Certificate Principal Amount thereof, until the Class
Certificate Principal Amount thereof has been reduced to zero; and
second, to the Class 2-A5 Certificates, in reduction of the
Class Certificate Principal Amount thereof, until the Class
Certificate Principal Amount thereof has been reduced to zero.
On each Distribution Date after the Class 2-A5 Accretion Termination
Date, Accrued Certificate Interest allocable to the Class 2-A5 Certificates
pursuant to priorities (ii) and (iii) above will be distributable as interest
thereon and will not be added to the Class Certificate Principal Amount
thereof.
(e) On each Distribution Date, the Trustee shall distribute the
amount withdrawn from the Class 2-A3 Reserve Fund with respect to such
Distribution Date pursuant to Section 4.06, to the extent of funds on deposit
in the Class 2-A3 Reserve Fund, and shall apply such funds to distributions on
the Class 2-A3 Certificates, as interest thereon, in the amount of any Net
Prepayment Interest Shortfalls for Pool 2 with respect to such Distribution
Date.
(f) On each Distribution Date, the Trustee shall distribute to the
Holder of the Class R Certificate any amounts remaining in the Upper Tier
REMIC for such Distribution Date after application of all amounts described in
paragraph (a) of this Section 5.02. Any distribution pursuant to this
paragraph (f) should not reduce the Class Certificate Principal Amount of the
Class R Certificate.
Section 5.03. Allocation of Realized Losses. (a) On any Distribution
Date, the principal portion of each Realized Loss (other than any Excess Loss)
in respect of a Mortgage Loan in either Mortgage Pool shall be allocated as
follows:
(i) The applicable AP Percentage of the principal
portion of any such Realized Loss in Pool 1 shall be allocated to the
AP(1) Component and the principal portion of any Realized Loss in
Pool 2 shall be allocated to the AP(2) Component until their
respective Component Principal Amounts have been reduced to zero; and
(ii) The applicable Non-AP Percentage of the principal
portion of any such Realized Loss from either Mortgage Pool shall be
allocated in the following order of priority:
first, to the Class Certificate Principal Amounts
of the Class B-6 Certificates of the related Certificates
Group, until the Class Certificate Principal Amount of each
such Class has been reduced to zero;
second, to the Class Certificate Principal Amounts
of the Class B5 Certificates of the related Certificate
Group, as applicable, until the Class Certificate Principal
Amount of each such Class has been reduced to zero;
third, to the Class Certificate Principal Amounts
of the Class B4 Certificates of the related Certificate
Group, until the Class Certificate Principal Amount of each
such Class has been reduced to zero;
fourth, to the Class Certificate Principal Amounts
of the Class B3 Certificates of the related Certificate
Group, until the Class Certificate Principal Amount of each
such Class has been reduced to zero;
fifth, to the Class Certificate Principal Amounts
of the Class B2 Certificates of the related Certificate
Group, until the Class Certificate Principal Amount of each
such Class has been reduced to zero;
sixth, to the Class Certificate Principal Amounts
of the Class B1 Certificates of the related Certificate
Group, until the Class Certificate Principal Amount of each
such Class has been reduced to zero; and
seventh, to the Classes of Senior Certificates of
the related Certificate Group pro rata, in accordance with
their Class Certificate Principal Amounts (or Component
Principal Amounts); provided, however, that any such loss
allocated to any Class of Accrual Certificates (and any
Accrual Component) shall be allocated (subject to Section
5.03(c)) on the basis of the lesser of (x) the Class
Certificate Principal Amount (or Component Principal Amount)
thereof immediately prior to the applicable Distribution
Date and (y) the Class Certificate Principal Amount (or
Component Principal Amount) thereof on the Closing Date (as
reduced by any Realized Losses previously allocated
thereto).
(b) With respect to any Distribution Date, the principal portion of
any Excess Loss in respect of a Mortgage Loan in either Mortgage Pool shall be
allocated as follows: (1) the AP Percentage of any such loss shall be
allocated to the AP(1) Component and AP(2) Component, as applicable, and (2)
the Non-AP Percentage of any such loss shall be allocated among the Classes of
the related Certificate Group, other than the Class AP Certificates, pro rata,
based on the respective Class Certificate Principal Amounts thereof; provided,
however, that any such loss allocated to any Class of Accrual Certificates
shall be allocated (subject to Section 5.03(c)) on the basis of the lesser of
(x) the Class Principal Amount thereof immediately prior to the applicable
Distribution Date and (y) the Class Principal Amount thereof on the Closing
Date (as reduced by any Realized Losses previously allocated thereto).
(c) Any Realized Losses allocated to a Class of Certificates pursuant
to Section 5.03(a) or (b) shall be allocated among the Certificates of such
Class in proportion to their respective Certificate Principal Amounts. Any
allocation of Realized Losses pursuant to this paragraph (c) shall be
accomplished by reducing the Certificate Principal Amount of the related
Certificates on the related Distribution Date in accordance with Section
5.03(d).
(d) Realized Losses allocated in accordance with this Section 5.03
shall be allocated on the Distribution Date in the month following the month
in which such loss was incurred and, in the case of the principal portion
thereof, after giving effect to distributions made on such Distribution Date,
except that the aggregate amount of Realized Losses to be allocated to the
AP(1) Component and the AP(2) Component on such Distribution Date will be
taken into account in determining distributions in respect of any AP(1)
Deferred Amount or AP(2) Deferred Amount, as applicable for such date.
(e) On each Distribution Date, the Subordinate Certificate Writedown
Amount for such date shall effect a corresponding reduction in the Certificate
Principal Amount of the lowest ranking Class of outstanding Subordinate
Certificates, which reduction shall occur on such Distribution Date after
giving effect to distributions made on such Distribution Date.
(f) In the event that there is a recovery of an amount in respect of
principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates and, if applicable, to
one or more Components, each outstanding Class or Component to which any
portion of such Realized Loss had previously been allocated shall be entitled
to receive, on the Distribution Date in the month following the month in which
such recovery is received, its pro rata share (based on the Class Certificate
Principal Amount or Component Principal Amount thereof) of such recovery, up
to the amount of the portion of such Realized Loss previously allocated to
such Class. A Class of Certificates that is no longer outstanding shall not be
entitled to any share of such recovery. In the event that the total amount of
such recovery exceeds the amount of such recovery allocated to the outstanding
Classes in accordance with the preceding provisions, each outstanding Class of
Certificates or Component shall be entitled to receive its pro rata share of
the amount of such excess, up to the amount of any unrecovered Realized Loss
previously allocated to such Class. Any such recovery allocated to a Class of
Certificates shall not further reduce the Certificate Principal Amount of such
Certificate. Any such amounts not otherwise allocated to any Class of
Certificates pursuant to this subsection shall be treated as Principal
Prepayments for purposes of this Agreement.
Section 5.04. Trustee Advances. In the event that the Servicer fails
for any reason to make an Advance required to be made by it pursuant to the
Seller's Warranties and Servicing Agreement on or before the Remittance Date,
the Trustee shall, on or before the related Distribution Date, deposit in the
Certificate Account an amount equal to the excess of (a) Advances required to
be made by the Servicer that would have been deposited in such Certificate
Account over (b) the amount of any Advance made by the Servicer with respect
to such Distribution Date; provided, however, that the Trustee shall be
required to make such Advance only if it is not prohibited by law from doing
so and it has determined that such Advance would be recoverable from amounts
to be received with respect to such Mortgage Loan, including Liquidation
Proceeds, Insurance Proceeds, or otherwise. The Trustee shall be entitled to
be reimbursed from the Certificate Account for Advances made by it pursuant to
this Section 5.04 as if it were the Servicer. In no event will the Trustee be
required to make an Advance of the Retained Yield.
Section 5.05. Distributions of Principal on Redemption Certificates.
(a) Except as provided in subclauses (d) and (f) below, on each Distribution
Date on which distributions in reduction of the Class Certificate Principal
Amount of a Class of Redemption Certificates are made, such distributions will
be made in the following order of priority:
(i) any request by the personal representative of a
Deceased Holder or by a surviving tenant by the entirety, by a
surviving joint tenant or by a surviving tenant in common or other
Person empowered to act on behalf of such Deceased Holder upon his or
her death, in an amount up to but not exceeding $100,000 per request;
and
(ii) any request by a Living Holder, in an amount up to
but not exceeding $10,000 per request.
Thereafter, distributions will be made as provided in clauses (i) and
(ii) above up to a second $100,000 and $10,000 per request, respectively. This
sequence of priorities will be repeated for each request for principal
distributions made by the Certificate Owners of a Class of Redemption
Certificates until all such requests have been honored.
Requests for distributions in reduction of the Certificate Principal
Amounts of Redemption Certificates presented on behalf of Deceased Holders in
accordance with the provisions of clause (i) above will be accepted in the
order of their receipt by the Clearing Agency. Requests for distributions in
reduction of the Certificate Principal Amounts of Redemption Certificates
presented in accordance with the provisions of clause (ii) above will be
accepted in the order of priority established by the random lot procedures of
the Clearing Agency after all requests with respect to such Class presented in
accordance with clause (i) have been honored. All requests for distributions
in reduction of the Class Certificate Principal Amount of a Class of
Redemption Certificates with respect to any Distribution Date shall be made in
accordance with Section 5.05(c) below and must be received by the Clearing
Agency and forwarded to, and received by, the Trustee no later than the close
of business on the related Record Date. Requests for distributions that are
received by the Clearing Agency and forwarded to the Trustee after the related
Record Date and requests, in either case, for distributions timely received
but not accepted with respect to any Distribution Date, will be treated as
requests for distributions in reduction of the Class Certificate Principal
Amount of the applicable Class of Redemption Certificates on the next
succeeding Distribution Date, and each succeeding Distribution Date
thereafter, until each such request is accepted or is withdrawn as provided in
Section 5.05(c). Such requests as are not so withdrawn shall retain their
order of priority without the need for any further action on the part of the
appropriate Certificate Owner of the related Redemption Certificate, all in
accordance with the procedures of the Clearing Agency and the Trustee. Upon
the transfer of beneficial ownership of any Redemption Certificate, any
distribution request previously submitted with respect to such Certificate
will be deemed to have been withdrawn only upon the receipt by the Trustee of
notification of such withdrawal using a form required by the Clearing Agency.
Distributions in reduction of the Certificate Principal Amounts of
Redemption Certificates will be applied, in the aggregate, to such
Certificates in an amount equal to the portion of the Available Distribution
Amount distributable to the Redemption Certificates pursuant to Section
5.02(a)(iv), plus any amounts available for distribution from the applicable
Rounding Account pursuant to Section 5.05(e), provided that the aggregate
distribution in reduction of the Class Certificate Principal Amount of any
Class of Redemption Certificates on any Distribution Date is made in an
integral multiple of $1,000.
(b) A "Deceased Holder" is a Certificate Owner of a Redemption
Certificate who was living at the time such interest was acquired and whose
authorized personal representative, surviving tenant by the entirety,
surviving joint tenant or surviving tenant in common or other Person empowered
to act on behalf of such Certificate Owner upon his or her death, causes to be
furnished to the Trustee a certified copy of the death certificate of such
Certificate Owner and any additional evidence of death required by and
satisfactory to the Trustee and any tax waivers requested by the Trustee.
Redemption Certificates beneficially owned by tenants by the entirety, joint
tenants or tenants in common will be considered to be beneficially owned by a
single owner. The death of a tenant by the entirety, joint tenant or tenant in
common will be deemed to be the death of the Certificate Owner, and any
Redemption Certificates so beneficially owned will be eligible for priority
with respect to distributions in reduction of the Class Certificate Principal
Amount of such Class of Redemption Certificates, subject to the limitations
stated above. Redemption Certificates beneficially owned by a trust will be
considered to be beneficially owned by each beneficiary of the trust to the
extent of such beneficiary's beneficial interest therein, but in no event will
a trust's beneficiaries collectively be deemed to be Certificate Owners of a
number of Individual Redemption Certificates greater than the number of
Individual Redemption Certificates of which such trust is the beneficial
owner. The death of a beneficiary of a trust will be deemed to be the death of
a Certificate Owner of the Redemption Certificates beneficially owned by the
trust to the extent of such beneficiary's beneficial interest in such trust.
The death of an individual who was a tenant by the entirety, joint tenant or
tenant in common in a tenancy that is the beneficiary of a trust will be
deemed to be the death of the beneficiary of the trust. The death of a person
who, during his or her lifetime, was entitled to substantially all of the
beneficial ownership interests in Redemption Certificates will be deemed to be
the death of the Certificate Owner of such Redemption Certificates regardless
of the registration of ownership of such Redemption Certificates, if such
beneficial interest can be established to the satisfaction of the Trustee.
Such beneficial interest will be deemed to exist in typical cases of street
name or nominee ownership, ownership by a trustee, ownership under the Uniform
Gifts to Minors Act and community property or other joint ownership
arrangements between a husband and wife. Beneficial interests shall include
the power to sell, transfer or otherwise dispose of a Redemption Certificate
and the right to receive the proceeds therefrom, as well as interest and
distributions in reduction of the Certificate Principal Amounts of the
Redemption Certificates payable with respect thereto. The Trustee shall not be
under any duty to determine independently the occurrence of the death of any
deceased Certificate Owner. The Trustee may rely entirely upon documentation
delivered to it pursuant to Section 5.05(a) in establishing the eligibility of
any Certificate Owner to receive the priority accorded Deceased Holders in
Section 5.05(a).
(c) Requests for distributions in reduction of the Certificate
Principal Amount of a Redemption Certificate must be made by delivering a
written request therefor to the Clearing Agency Participant or Financial
Intermediary that maintains the account evidencing the Certificate Owner's
interest in such Redemption Certificate. Such Clearing Agency Participant or
Financial Intermediary should in turn make the request of the Clearing Agency
(or, in the case of an Financial Intermediary, such Financial Intermediary
should notify the related Clearing Agency Participant of such request, which
Clearing Agency Participant should make the request of the Clearing Agency) on
a form required by the Clearing Agency and provided to the Clearing Agency
Participant. Upon receipt of such request, the Clearing Agency will date and
time stamp such request and forward such request to the Trustee. The Clearing
Agency may establish such procedures as it deems fair and equitable to
establish the order of receipt of requests for such distributions received by
it on the same day. The Trustee shall not be liable for any delay in delivery
of requests for distributions or withdrawals of such requests by the Clearing
Agency, a Clearing Agency Participant or any Financial Intermediary.
In the event that any requests for distributions in
reduction of the Certificate Principal Amount of Redemption Certificates are
rejected by the Trustee for failure to comply with the requirements of this
Section 5.05, the Trustee shall return such requests to the appropriate
Clearing Agency Participant with a copy to the Clearing Agency with an
explanation as to the reason for such rejection.
The Trustee shall maintain a list of those Clearing Agency
Participants representing the Certificate Owners of Redemption Certificates
that have submitted requests for distributions in reduction of the Certificate
Principal Amount of such Redemption Certificates, together with the order of
receipt and the amounts of such requests. The Trustee shall notify the
Clearing Agency and the appropriate Clearing Agency Participants as to which
requests should be honored on each Distribution Date. Requests shall be
honored by the Clearing Agency in accordance with the procedures, and subject
to the priorities and limitations, described in this Section 5.05. The exact
procedures to be followed by the Trustee and the Clearing Agency for purposes
of determining such priorities and limitations shall be those established from
time to time by the Trustee or the Clearing Agency, as the case may be. The
decisions of the Trustee and the Clearing Agency concerning such matters shall
be final and binding on all affected Persons.
Payments in reduction of the Certificate Principal Amounts
of Redemption Certificates shall be made on the applicable Distribution Date
and the Certificate Balances as to which such payments are made shall cease to
bear interest after the last day of the month preceding the month in which
such Distribution Date occurs.
Any Certificate Owner of a Redemption Certificate that has
requested a distribution may withdraw its request by so notifying in writing
the Clearing Agency Participant or Financial Intermediary that maintains such
Certificate Owner's account. In the event that such account is maintained by a
Financial Intermediary, such Financial Intermediary should notify the related
Clearing Agency Participant which in turn should forward the withdrawal of
such request, on a form required by the Clearing Agency, to the Trustee. If
such notice of withdrawal of a request for distribution has not been received
by the Clearing Agency and forwarded to the Trustee on or before the Record
Date for the next Distribution Date, the previously made request for
distribution will be irrevocable with respect to the making of distributions
in reduction of the Certificate Principal Amount of such Redemption
Certificate on such Distribution Date.
(d) To the extent, if any, that amounts available for distribution in
reduction of the Class Certificate Principal Amount of any Class of Redemption
Certificates on a Distribution Date exceed the dollar amount of requests for
distributions with respect to such Class that have been received by the
related Record Date, as provided in Section 5.05(c) above, distributions in
reduction of the Class Certificate Principal Amount of such Class of
Redemption Certificates will be made by mandatory distributions in reduction
thereof. The Trustee shall notify the Clearing Agency of the aggregate amount
of the mandatory distribution in reduction of the Class Certificate Principal
Amount of such Class of Redemption Certificates to be made on the next
Distribution Date. The Clearing Agency shall then allocate such aggregate
amount among its Clearing Agency Participants on a random lot basis. Each
Clearing Agency Participant and, in turn, each Financial Intermediary, will
then select, in accordance with its own procedures, Individual Redemption
Certificates from among those held in its accounts to receive mandatory
distributions in reduction of the Class Certificate Principal Amount of such
Class of Redemption Certificates, such that the total amount so selected is
equal to the aggregate amount of such mandatory distributions allocated to
such Clearing Agency Participant by the Clearing Agency and to such Financial
Intermediary by its related Clearing Agency Participant, as the case may be.
Clearing Agency Participants and Financial Intermediaries that hold Redemption
Certificates selected for mandatory distributions in reduction of the Class
Certificate Principal Amount thereof should provide notice of such mandatory
distributions to the affected Certificate Owners.
(e) On the Closing Date, a Rounding Account shall be established with
the Trustee for each Class of Redemption Certificates, and Lehman Brothers
Inc. shall cause to be initially deposited the sum of $999.99 in each Rounding
Account. On each Distribution Date on which a distribution is made in
reduction of the Class Certificate Principal Amount of a Class of Redemption
Certificates, funds on deposit in the applicable Rounding Account shall be, to
the extent needed, withdrawn by the Trustee and applied to round upward to an
integral multiple of $1,000 the aggregate distribution in reduction of the
Class Certificate Principal Amount to be made on such Redemption Certificates.
Rounding of such distribution on such Redemption Certificates shall be
accomplished, on the first such Distribution Date, by withdrawing from the
applicable Rounding Account the amount of funds, if any, needed to round the
amount otherwise available for such distribution in reduction of the Class
Certificate Principal Amount of such Class of Redemption Certificates upward
to the next integral multiple of $1,000. On each succeeding Distribution Date
on which distributions in reduction of the Class Certificate Principal Amount
of such Class of Redemption Certificates are to be made, the aggregate amount
of such distributions allocable to such Class of Redemption Certificates shall
be applied first to repay any funds withdrawn from the applicable Rounding
Account and not previously repaid, and then the remainder of such allocable
amount, if any, shall be similarly rounded upward and applied as distributions
in reduction of the Class Certificate Principal Amount of such Class of
Redemption Certificates; this process shall continue on succeeding
Distribution Dates until the Class Certificate Principal Amount of such Class
of Redemption Certificates has been reduced to zero. Each Rounding Account
shall be an "outside reserve fund" under the REMIC Provisions that is
beneficially owned for all federal income tax purposes by Lehman Brothers Inc.
Lehman Brothers Inc. will report all income, gain, deduction or loss with
respect thereto. The Trustee, upon the instructions of the Depositor, may
invest, or cause to be invested funds in the Class 2-A3 Reserve Fund in
Eligible Investments (which may be obligations of the Trustee). The Trustee
shall distribute interest earnings, if any, on amounts held in any Rounding
Account as such interest is earned pursuant to written instructions from
Lehman Brothers Inc. to the Trustee.
Notwithstanding anything herein to the contrary, on the Distribution
Date on which distributions in reduction of the Class Certificate Principal
Amount of any Class of Redemption Certificates will reduce the Class
Certificate Principal Amount thereof to zero or in the event that
distributions in reduction of the Class Certificate Principal Amount of such
Class of Redemption Certificates are made in accordance with the provisions
set forth in Section 5.05(f), an amount equal to the difference between
$999.99 and the sum then held in the applicable Rounding Account shall be paid
from the Available Distribution Amount for such Distribution Date to such
Rounding Account. Any funds then on deposit in such Rounding Account shall be
distributed to Lehman Brothers Inc.
(f) Notwithstanding any provisions herein to the contrary, on each
Distribution Date following the first Distribution Date on or after the Credit
Support Depletion Date, all distributions in reduction of the Class
Certificate Principal Amount of any Class of Redemption Certificates will be
made among the Holders of such Class of Certificates, pro rata, based on their
Certificate Principal Amounts, and will not be made in integral multiples of
$1,000 or pursuant to requested distributions or mandatory distributions by
random lot.
(g) In the event that Definitive Certificates representing any Class
of Redemption Certificates are issued pursuant to Section 3.09(c), all
requests for distributions or withdrawals of such requests relating to such
Class must be submitted to the Trustee, and the Trustee shall perform the
functions described in Section 5.05(a) through (c) using its own procedures,
which procedures shall, to the extent practicable, be consistent with the
procedures described in Section 5.05(a) through (c).
Section 5.06. The Class 2-A3 Certificate Insurance Policy. (a) If, on
the second Business Day before any Distribution Date, the Trustee determines
that an Insured Payment is required to be made by the Certificate Insurer on
such Distribution Date, the Trustee shall determine the amount of any such
Insured Payment and shall give notice to the Class 2-A3 Certificate Insurer by
completing a Notice of Nonpayment in the form of Exhibit A to the Certificate
Insurance Policy and submitting such Notice of Nonpayment by 12:00 noon, New
York City time on such second Business Day as a claim for an Insured Payment.
The Trustee's responsibility for delivering a Notice of Nonpayment to the
Class 2-A3 Certificate Insurer, as provided in the preceding sentence, is
limited to the availability, timeliness and accuracy of the information
provided by the Servicer.
(b) In the event the Trustee receives a certified copy of an order of
the appropriate court that any scheduled payment of principal or interest on a
Class 2-A3 Certificate has been voided in whole or in part as a preference
payment under applicable bankruptcy law, the Trustee shall (i) promptly notify
the Class 2-A3 Certificate Insurer, as appropriate, and the Fiscal Agent, if
any, and (ii) comply with the provisions of the Class 2-A3 Certificate
Insurance Policy to obtain payment by the Class 2-A3 Certificate Insurer of
such voided scheduled payment. In addition, the Trustee shall mail notice to
all Holders of the Class 2-A3 Certificates so affected that, in the event that
any such Holder's scheduled payment is so recovered, such Holder will be
entitled to payment pursuant to the terms of the Class 2-A3 Certificate
Insurance Policy, a copy of which shall be made available to such Holders by
the Trustee. The Trustee shall furnish to the Class 2-A3 Certificate Insurer
and the appropriate Fiscal Agent, if any, its records listing the payments on
the affected Class 2-A3 Certificates, if any, that have been made by the
Trustee and subsequently recovered from the affected Holders, and the dates on
which such payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes hereof,
the Trustee shall establish a separate special purpose trust account in the
name of the Trustee for the benefit of Holders of the Class 2-A3 Certificates
(the "Class 2-A3 Policy Payments Account") over which the Trustee shall have
exclusive control and sole right of withdrawal. The Class 2-A3 Policy Payments
Account shall be an Eligible Account. The Trustee shall deposit any amount
paid under the Class 2-A3 Certificate Insurance Policy into the Class 2-A3
Policy Payments Account and distribute such amount only for the purposes of
making payments to Holders of the Class 2-A3 Certificates in respect of the
Guaranteed Distributions (or other amounts payable pursuant to paragraph (b)
above on the Class 2-A3 Certificates by the Class 2-A3 Certificate Insurer
pursuant to the Class 2-A3 Certificate Insurance Policy) for which the related
claim was made under the Policy. Such amounts shall be allocated by the
Trustee to Holders of Class 2-A3 Certificates affected by such shortfalls in
the same manner as principal and interest distributions are to be allocated
with respect to such Certificates pursuant to Section 5.02. It shall not be
necessary for such payments to be made by checks or wire transfers separate
from the checks or wire transfers used to make regular payments hereunder with
funds withdrawn from the Certificate Account. However, any payments made on
the Class 2-A3 Certificates from funds in the Class 2-A3 Policy Payments
Account shall be noted as provided in subsection (e) below. Funds held in the
Class 2-A3 Policy Payments Account shall not be invested by the Trustee.
(d) Any funds received from the Class 2-A3 Certificate Insurer for
deposit into the Class 2-A3 Policy Payments Account pursuant to the Class 2-A3
Certificate Insurance Policy in respect of a Distribution Date or otherwise as
a result of any claim under such Class 2-A3 Certificate Insurance Policy shall
be applied by the Trustee directly to the payment in full (i) of the Insured
Payments due on such Distribution Date on the Class 2-A3 Certificates, or (ii)
of other amounts to which payments under the Class 2-A3 Certificate Insurance
Policy are to be applied. Funds received by the Trustee as a result of any
claim under the Class 2-A3 Certificate Insurance Policy shall be used solely
for payment to the Holders of the Class 2-A3 Certificates, respectively, and
may not be applied for any other purpose, including, without limitation,
satisfaction of any costs, expenses or liabilities of the Trustee or the Trust
Fund. Any funds remaining in the Class 2-A3 Policy Payments Account on the
first Business Day after each Distribution Date shall be remitted promptly to
the Class 2-A3 Certificate Insurer pursuant to the written instruction of the
Class 2-A3 Certificate Insurer.
(e) The Trustee shall keep complete and accurate records in respect
of (i) all funds remitted to it by the Class 2-A3 Certificate Insurer and
deposited into the Class 2-A3 Policy Payments Account and (ii) the allocation
of such funds to (A) payments of interest on and principal in respect of any
Class 2-A3 Certificates, (B) Realized Losses allocated to the Class 2-A3
Certificates, (C) Net Prepayment Interest Shortfalls allocated to the Class
2-A3 Certificates, and (D) payments in respect of Preference Amounts. The
Class 2-A3 Certificate Insurer shall have the right to inspect such records at
reasonable times during normal business hours upon three Business Days' prior
notice to the Trustee. Any Insured Payments disbursed by the Trustee from
proceeds of the Class 2-A3 Certificate Insurance Policy shall be considered
payment by the Class 2-A3 Certificate Insurer and not by the Trust Fund with
respect to the Class 2-A3 Certificates and the Class 2-A3 Certificates Insurer
will be entitled to receive the related Reimbursement Amount pursuant to
Section 5.02(a)(vi.
(f) The Trustee acknowledges, and each Holder of a Class 2-A3
Certificate by its acceptance of such Class 2-A3 Certificate agrees, that,
without the need for any further action on the part of the Class 2-A3
Certificate Insurer or the Trustee, to the extent the Class 2-A3 Certificate
Insurer makes Insured Payments, directly or indirectly, on account of
principal of or interest on any Class 2-A3 Certificates, the Class 2-A3
Certificate Insurer will be fully subrogated to the rights of the Holders of
such Class 2-A3 Certificates to receive the related Reimbursement Amount
pursuant to Section 5.02(a)(vi). The Class 2-A3 Certificateholders, by
acceptance of the Class 2-A3 Certificates, assign their rights as Holders of
the Class 2-A3 Certificates to the extent of the Class 2-A3 Certificate
Insurer's interest with respect to amounts paid under the Class 2-A3
Certificate Insurance Policy. Each of the Depositor and Trustee agrees to such
subrogation and, further agrees to execute such instruments and to take such
actions as, in the sole judgment of the Class 2-A3 Certificate Insurer are
necessary to evidence such subrogation and, subject to the priority of payment
provisions of this Agreement, to perfect the rights of the Class 2-A3
Certificate Insurer to receive any moneys paid or payable in respect of the
Class 2-A3 Certificates under this Agreement or otherwise. Anything herein to
the contrary notwithstanding, solely for purposes of determining the Class
2-A3 Certificate Insurer's rights as subrogee for payments distributable
pursuant to Section 5.02, any payment with respect to distributions to the
Class 2-A3 Certificates that is made with funds received pursuant to the terms
of the Class 2-A3 Certificate Insurance Policy shall not be considered payment
of the Class 2-A3 Certificates from the Trust Fund and shall not result in the
distribution or the provision for the distribution in reduction of the Class
Certificate Principal Amount of the Class 2-A3 Certificates or Accrued
Certificate Interest thereon, within the meaning of Article V.
(g) Upon its becoming aware of the occurrence of an Event of Default,
the Trustee shall promptly notify the Class 2-A3 Certificate Insurer of such
Event of Default.
(h) The Trustee shall promptly notify the Class 2-A3 Certificate
Insurer of either of the following as to which it has actual knowledge: (A)
the commencement of any proceeding by or against the Depositor commenced under
the United States bankruptcy code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency
Proceeding") and (B) the making of any claim in connection with any Insolvency
Proceeding seeking the avoidance as a preferential transfer (a "Preference
Claim") of any distribution made with respect to the Class 2-A3 Certificates.
Each Holder of a Class 2-A3 Certificate, by its purchase of Class 2-A3
Certificates, and the Trustee hereby agree that the Class 2-A3 Certificate
Insurer (so long as no the Class 2-A3 Certificate Insurer Default exists) may
at any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without limitation
of the foregoing, the Class 2-A3 Certificate Insurer shall be subrogated to
the rights of the Trustee and each Holder of a Class 2-A3 Certificate in the
conduct of any Preference Claim, including, without limitation, all rights of
any party to an adversary proceeding action with respect to any court order
issued in connection with any such Preference Claim.
(i) The Trustee shall surrender the Class 2-A3 Certificate Insurance
Policy to the Class 2-A3 Certificate Insurer for cancellation upon the
termination of the Trust Fund pursuant to Section 7.01 hereof.
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee. (a) The Trustee, except during the
continuance of an Event of Default, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. Any permissive
right of the Trustee provided for in this Agreement shall not be construed as
a duty of the Trustee. If an Event of Default has occurred and has not
otherwise been cured or waived, the Trustee shall exercise such of the rights
and powers vested in it by this Agreement and use the same degree of care and
skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs unless the Trustee
is acting as Servicer, in which case it shall use the same degree of care and
skill as the Servicer under the Seller's Warranties and Servicing Agreement.
The Trustee may appoint a custodian to maintain custody of the
Mortgage Loans and to perform certain administrative functions on behalf of
the Trustee, to the extent provided herein. The reasonable compensation of any
such custodian shall be paid by the Trustee, and shall be reimbursable to the
Trustee from the Certificate Account.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they are in the form required by this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Servicer, to the Trustee pursuant to this
Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful
misconduct. No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of Holders of
Certificates as provided in Section 6.19 hereof;
(ii) For all purposes under this Agreement, the Trustee
shall not be deemed to have notice of any Event of Default (other
than resulting from a failure by the Servicer (i) to remit funds (or
to make Servicing Advances) or (ii) to furnish information to the
Trustee when required to do so by the Seller's Warranties and
Servicing Agreement) unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which
is in fact such a default is received by the Trustee at the Corporate
Trust Office, and such notice references the Holders of the
Certificates and this Agreement;
(iii) No provision of this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it; and
(iv) The Trustee shall not be responsible for any act or
omission of the Servicer.
(d) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided,
however, that the Trustee shall use its best efforts to remit to the Servicer
upon receipt any such complaint, claim, demand, notice or other document (i)
which is delivered to the Corporate Trust Office of the Trustee, (ii) of which
a Responsible Officer has actual knowledge, and (iii) which contains
information sufficient to permit the Trustee to make a determination that the
real property to which such document relates is a Mortgaged Property.
(e) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Certificateholders of any Class holding
Certificates which evidence, as to such Class, Percentage Interests
aggregating not less than 25% as to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement.
(f) As assignee of the rights and delegee of the obligations of the
Depositor under the Mortgage Loan Sale and Assignment Agreement and the
Seller's Warranties and Servicing Agreement, the Trustee shall have the rights
and obligations of the "Purchaser" under the Seller's Warranties and Servicing
Agreement. Notwithstanding anything in the Seller's Warranties and Servicing
Agreement, the Trustee shall:
(i) under Section 4.02 of the Seller's Warranties and
Servicing Agreement, in any case in a Mortgaged Property has been
determined to be contaminated by hazardous or toxic substances,
direct the Servicer not to proceed with foreclosure or acceptance of
a deed in lieu of foreclosure;
(ii) not consent under Section 9.04 of the Seller's
Warranties and Servicing Agreement to any transfer or delegation by
the Servicer of its rights or duties under the Seller's Warranties
and Servicing Agreement to other than a subservicer unless the
Servicer complies with the provisions of items (i) through (iv) of
the last paragraph of such Section;
(iii) not terminate the rights of the Servicer under the
Seller's Warranties and Servicing Agreement without cause under
Section 11.02 of the Seller's Warranties and Servicing Agreement; and
(iv) not agree to any amendment of the Seller's
Warranties and Servicing Agreement except pursuant to the same
limitations and requirements as are applicable to amendments of this
Agreement pursuant to Section 11.03 hereof.
Section 6.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 6.01:
(i) The Trustee may request, and may rely and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Trustee may consult with counsel and any advice
of its counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(iii) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) Unless an Event of Default shall have occurred and
be continuing, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document (provided
the same appears regular on its face), unless requested in writing to
do so by Holders of at least a majority in Class Certificate
Principal Amount (or Aggregate Notional Amount) of each Class of
Certificates; provided, however, that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense or
liability or payment of such estimated expenses as a condition to
proceeding. The reasonable expense thereof shall be paid by the
Holders requesting such investigation; and
(v) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, which agents or attorneys shall have any
or all of the rights, powers, duties and obligations of the Trustee
conferred on them by such appointment provided that the Trustee shall
continue to be responsible for its duties and obligations hereunder.
Section 6.03. Trustee Not Liable for Certificates. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of
the Certificates (other than the certificate of authentication on the
Certificates) or of any Mortgage Loan, or related document save that the
Trustee represents that, assuming due execution and delivery by the other
parties hereto, this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms except that such enforceability may be
subject to (A) applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of the rights of creditors generally, and (B)
general principles of equity regardless of whether such enforcement is
considered in a proceeding in equity or at law. The Trustee shall not be
accountable for the use or application by the Depositor of funds paid to the
Depositor in consideration of the assignment of the Mortgage Loans to the
Trust Fund by the Depositor or for the use or application of any funds
deposited into the Certificate Account or any other fund or account maintained
with respect to the Certificates.
Section 6.04. Trustee May Own Certificates. The Trustee and any
Affiliate or agent of the Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates and may transact banking and trust
with the other parties hereto with the same rights it would have if it were
not Trustee or such agent.
Section 6.05. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (i) an institution insured by the FDIC and
(ii) a corporation or national banking association, organized and doing
business under the laws of any State or the United States of America,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority. If such corporation
or national banking association publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then, for the purposes of this Section, the combined
capital and surplus of such corporation or national banking association shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified
in Section 6.06.
Section 6.06. Resignation and Removal of Trustee. (a) The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor. Upon receiving such notice of
resignation, the Depositor will promptly appoint a successor trustee by
written instrument, one copy of which instrument shall be delivered to the
resigning Trustee, and one copy to the successor trustee. If no successor
trustee shall have been so appointed and shall have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.05 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, (iii)
a tax is imposed or threatened with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund held by the Trustee is located, or (iv)
the continued use of the Trustee would result in a downgrading of the rating
by the Rating Agencies of any Class of Certificates with a rating (in the case
of the Class 2-A3 Certificates, determined without regard to the Class 2-A3
Certificate Insurance Policy), then the Depositor may remove the Trustee and
appoint a successor trustee by written instrument, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(c) The Holders of more than 50% of the Class Certificate Principal
Amount (or Aggregate Notional Amount) of each Class of Certificates may at any
time upon 30 days' written notice to the Trustee and to the Depositor remove
the Trustee by such written instrument, signed by such Holders or their
attorney-in-fact duly authorized, one copy of which instrument shall be
delivered to the Depositor and one copy to the Trustee so removed; the
Depositor shall thereupon use its best efforts to appoint a mutually
acceptable successor trustee in accordance with this Section.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 6.07.
Section 6.07. Successor Trustee. (a) Any successor trustee appointed
as provided in Section 6.06 shall execute, acknowledge and deliver to the
Depositor and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as trustee herein. The predecessor trustee shall
deliver to the successor trustee all Mortgage Files and documents and
statements related to each Mortgage Files held by it hereunder, and shall duly
assign, transfer, deliver and pay over to the successor trustee the entire
Trust Fund, together with all necessary instruments of transfer and assignment
or other documents properly executed necessary to effect such transfer and
such of the record or copies thereof maintained by the predecessor trustee in
the administration hereof as may be requested by the successor trustee and
shall thereupon be discharged from all duties and responsibilities under this
Agreement. In addition, the predecessor trustee shall execute and deliver such
other instruments and do such other things as may reasonably be required to
more fully and certainly vest and confirm in the successor trustee all such
rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown
in the Certificate Register and to the Rating Agencies. The expenses of such
mailing shall be borne by the Depositor.
Section 6.08. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Persons succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding, provided that
such Person shall be eligible under the provisions of Section 6.05.
Section 6.09. Appointment of Co-Trustee, Separate Trustee or
Custodian. (a) Notwithstanding any other provisions hereof, at any time, the
Trustee, the Depositor or the Certificateholders evidencing more than 50% of
the Class Certificate Principal Amount (or Aggregate Notional Amount) of each
Class of Certificates shall each have the power from time to time to appoint
one or more Persons to act either as co-trustees jointly with the Trustee, or
as separate trustees, or as custodians, for the purpose of holding title to,
foreclosing or otherwise taking action with respect to any Mortgage Loan
outside the state where the Trustee has its principal place of business where
such separate trustee or co-trustee is necessary or advisable under the laws
of any state in which a property securing a Mortgage Loan is located or for
the purpose of otherwise conforming to any legal requirement, restriction or
condition in any state in which a property securing a Mortgage Loan is located
or in any state in which any portion of the Trust Fund is located. The
separate Trustees, co-trustees, or custodians so appointed shall be trustees
or custodians for the benefit of all the Certificateholders and shall have
such powers, rights and remedies as shall be specified in the instrument of
appointment; provided, however, that no such appointment shall, or shall be
deemed to, constitute the appointee an agent of the Trustee. The obligation of
the Trustee to make Advances pursuant to Section 5.04 and 6.14 hereof shall
not be affected or assigned by the appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all powers, duties, obligations and rights conferred
upon the Trustee in respect of the receipt, custody and payment of
moneys shall be exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate
trustee, co-trustee, or custodian jointly, except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed the Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers,
duties and obligations, including the holding of title to the Trust
Fund or any portion thereof in any such jurisdiction, shall be
exercised and performed by such separate trustee, co-trustee, or
custodian;
(iii) no trustee or custodian hereunder shall be
personally liable by reason of any act or omission of any other
trustee or custodian hereunder; and
(iv) the Trustee or the Certificateholders evidencing
more than 50% of the Aggregate Voting Interests of the Certificates
may at any time accept the resignation of or remove any separate
trustee, co-trustee or custodian, so appointed by it or them, if such
resignation or removal does not violate the other terms of this
Agreement.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee, co-trustee or custodian shall refer to this
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision
of this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee.
(d) Any separate trustee, co-trustee or custodian may, at any time,
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee, co-trustee or custodian shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts
shall vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the
extent necessary to fulfill the Trustee's obligations hereunder.
(g) The Trustee shall pay the reasonable compensation of the
co-trustees to the extent, and in accordance with the standards, specified in
Section 6.12 hereof (which compensation shall not reduce any compensation
payable to the Trustee under such Section).
Section 6.10. Authenticating Agents. (a) The Trustee may appoint one
or more Authenticating Agents which shall be authorized to act on behalf of
the Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an Authenticating Agent and
a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation
organized and doing business under the laws of the United States of America or
of any state, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to do a trust business and subject to supervision
or examination by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any Person succeeding to the corporate agency business of
any Authenticating Agent, shall continue to be the Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at
least 30 days' advance written notice of resignation to the Trustee and the
Depositor. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Depositor. Upon receiving a notice of resignation
or upon such a termination, or in case at any time any Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section
6.10, the Trustee may appoint a successor Authenticating Agent, shall give
written notice of such appointment to the Depositor and shall mail notice of
such appointment to all Holders of Certificates. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with
all the rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.10. No Authenticating Agent shall have
responsibility or liability for any action taken by it as such at the
direction of the Trustee. Any Authenticating Agent shall be entitled to
reasonable compensation for its services and, if paid by the Trustee, it shall
be a reimbursable expense pursuant to Section 6.12.
Section 6.11. Indemnification of Trustee. The Trustee and its
directors, officers, employees and agents shall be entitled to indemnification
from the Trust Fund, to the extent that indemnification is not provided by the
Servicer pursuant to the Seller's Warranties and Servicing Agreement, for any
loss, liability or expense incurred in connection with any legal proceeding
and incurred without negligence or willful misconduct on their part, arising
out of, or in connection with, the acceptance or administration of the trusts
created hereunder, including the costs and expenses of defending themselves
against any claim in connection with the exercise or performance of any of
their powers or duties hereunder, provided that:
(i) to the extent that the indemnification provisions of
the Seller's Warranties and Servicing Agreement indemnify the
Trustee, as assignee of the "Purchaser" thereunder, for such loss,
liability or expense, the Trustee has first made reasonable efforts
to enforce any applicable provisions in the Seller's Warranties and
Servicing Agreement for indemnification or reimbursement of the
Trustee (as "Purchaser") by the Servicer (it being understood and
agreed that "reasonable efforts" shall, without limitation, (A) not
require that the Trustee have brought suit against the Servicer to
enforce such indemnification provisions before making a claim against
the assets of the Trust Fund and (B) have been satisfied if the
Trustee shall have made demand on the Servicer for such
indemnification, but the Servicer is unable to satisfy such demand
due to its insolvency);
(ii) with respect to any such claim, the Trustee shall
have given the Depositor and the Holders written notice thereof
promptly after the Trustee shall have knowledge thereof;
(iii) while maintaining control over its own defense,
the Trustee shall cooperate and consult fully with the Depositor in
preparing such defense; and
(iv) notwithstanding anything to the contrary in this
Section 6.11, the Trust Fund shall not be liable for settlement of
any such claim by the Trustee entered into without the prior consent
of the Depositor, which consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to any loss, liability or expense
under any environmental law.
Section 6.12. Fees and Expenses of Trustee. The Trustee shall be
entitled to receive, and is authorized to pay to itself, the amount of income
or gain earned from the investment of funds in the Certificate Account. The
Trustee shall be entitled to reimbursement of reasonable disbursements and
expenses made or incurred by the Trustee in accordance with the provisions of
this Agreement, but not for (i) any such expense, disbursement or advance as
may arise from the Trustee's negligence or willful misconduct or (ii) any
amount expressly required under this Agreement to be paid by the Trustee from
its own funds.
Section 6.13. Collection of Monies. Except as otherwise expressly
provided in this Agreement, the Trustee may demand payment or delivery of, and
shall receive and collect, all money and other property payable to or
receivable by the Trustee pursuant to this Agreement. The Trustee shall hold
all such money and property received by it as part of the Trust Fund and shall
distribute it as provided in this Agreement. If the Trustee shall not have
timely received amounts to be remitted with respect to the Mortgage Loans from
the Servicer, the Trustee shall request the Servicer to make such distribution
as promptly as practicable or legally permitted. If the Trustee shall
subsequently receive any such amount, it may withdraw such request.
Section 6.14. Trustee To Act; Appointment of Successor. (a) If an
Event of Default shall occur, then, in each and every case, subject to
applicable law, so long as any such Event of Default shall not have been
remedied within any period of time prescribed by the Seller's Warranties and
Servicing Agreement, the Trustee by notice in writing to the Servicer may, and
shall, if so directed by Certificateholders evidencing more than 50% of the
Class Certificate Principal Amount (or Aggregate Notional Amount) of each
Class of Certificates, terminate all of the rights and obligations of the
Servicer under the Seller's Warranties and Servicing Agreement and in and to
the Mortgage Loans and the proceeds thereof. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer, and
only in its capacity as Servicer under the Seller's Warranties and Servicing
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee pursuant to and under the terms of the
Seller's Warranties and Servicing Agreement; and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the defaulting
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents or otherwise.
If any Event of Default shall occur, the Trustee shall promptly
notify the Rating Agencies and the Class 2-A3 Certificate Insurer of the
nature and extent of such Event of Default. The Trustee shall immediately give
written notice to the Servicer upon such Servicer's failure to remit funds on
the Remittance Date.
(b) On and after the time the Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee
receives the resignation of the Servicer evidenced by an Opinion of Counsel
pursuant to the applicable provision of the Seller's Warranties and Servicing
Agreement, the Trustee, unless another servicer shall have been appointed,
shall be the successor in all respects to the Servicer in its capacity as such
under this Agreement and the transactions set forth or provided for herein and
shall have all the rights and powers and be subject to all the
responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Servicer under the Seller's Warranties and Servicing
Agreement, including the obligation to make Advances pursuant to this
Agreement, but in no event will the Trustee have the obligation to make
Advances of the Retained Yield; provided, however, that any failure to perform
such duties or responsibilities caused by the Servicer's failure to provide
information required by the Seller's Warranties and Servicing Agreement shall
not be considered a default by the Trustee hereunder. In addition, the Trustee
shall have no responsibility for any act or omission of the Servicer prior to
the issuance of any notice of termination. In the Trustee's capacity as such
successor, the Trustee shall have the same limitations on liability herein
granted to the Servicer. As compensation therefor, the Trustee shall be
entitled to receive all compensation payable to the Servicer under the
Seller's Warranties and Servicing Agreement, including the applicable portion
of the related Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be
unwilling to continue to so act, or shall, if it is unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
housing and home finance institution servicer, master servicer, servicer or
mortgage servicing institution having a net worth of not less than $15,000,000
and meeting such other standards for a successor servicer as are set forth in
the Seller's Warranties and Servicing Agreement, as the successor to such
Servicer in the assumption of all of the responsibilities, duties or
liabilities of a servicer, like the Servicer. Any entity designated by the
Trustee as a successor Servicer may be an Affiliate of the Trustee; provided,
however, that, unless such Affiliate meets the net worth requirements and
other standards set forth herein for a successor servicer, the Trustee, in its
individual capacity shall agree, at the time of such designation, to be and
remain liable to the Trust Fund for such Affiliate's actions and omissions in
performing its duties hereunder. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess
of that permitted to the Servicer. The Trustee and such successor shall take
such actions, consistent with this Agreement, as shall be necessary to
effectuate any such succession and may make other arrangements with respect to
the servicing to be conducted hereunder which are not inconsistent herewith.
The Servicer shall cooperate with the Trustee and any successor servicer in
effecting the termination of the Servicer's responsibilities and rights
hereunder including, without limitation, notifying Mortgagors of the
assignment of the servicing functions and providing the Trustee and successor
servicer, as applicable, all documents and records in electronic or other form
reasonably requested by it to enable it to assume the Servicer's functions
hereunder and the transfer to the Trustee or such successor servicer, as
applicable, all amounts which shall at the time be or should have been
deposited by the Servicer in the Certificate Account and any other account or
fund maintained with respect to the Certificates or thereafter be received
with respect to the Mortgage Loans. Neither the Trustee nor any other
successor servicer shall be deemed to be in default hereunder by reason of any
failure to make, or any delay in making, any distribution hereunder or any
portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, (ii) to cooperate as
required by the Seller's Warranties and Servicing Agreement, (iii) to deliver
the Mortgage Loan data to the Trustee as required by the Seller's Warranties
and Servicing Agreement or (iv) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer.
Section 6.15. Additional Remedies of Trustee Upon Event of Default.
During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as
trustee of an express trust, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the Certificateholders
and the Class 2-A3 Certificate Insurer (including the institution and
prosecution of all judicial, administrative and other proceedings and the
filings of proofs of claim and debt in connection therewith). Except as
otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy, and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Event of Default.
Section 6.16. Waiver of Defaults. 35% or more of the Aggregate Voting
Interests of Certificateholders may waive any default or Event of Default by
the Servicer in the performance of its obligations under the Seller's
Warranties and Servicing Agreement except that a default in the making of any
required deposit to the Certificate Account that would result in a failure of
the Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, any Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement, and, to the extent that
such default related to the Servicer's obligation to make any Advance, the
Trustee shall not be obligated to make such Advance, notwithstanding anything
to the contrary in this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to
the extent expressly so waived.
Section 6.17. Notification to Holders. Upon termination of the
Servicer or appointment of a successor Servicer, in each case as provided
herein, the Trustee shall promptly mail notice thereof by first class mail to
the Certificateholders at their respective addresses appearing on the
Certificate Register. The Trustee shall also, within 45 days after the
occurrence of any Event of Default known to the Trustee, give written notice
thereof to Certificateholders, unless such Event of Default shall have been
cured or waived prior to the issuance of such notice and within such 45-day
period.
Section 6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default. Subject to the provisions of Section 8.01 hereof,
during the continuance of any Event of Default, Holders of Certificates
evidencing not less than 25% of the Class Certificate Principal Amount (or
Aggregate Notional Amount) of each Class of Certificates may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Agreement; provided, however, that the Trustee shall be under no
obligation to pursue any such remedy, or to exercise any of the trusts or
powers vested in it by this Agreement (including, without limitation, (i) the
conducting or defending of any administrative action or litigation hereunder
or in relation hereto and (ii) the terminating of the Servicer or any
successor servicer from its rights and duties as servicer hereunder) at the
request, order or direction of any of the Certificateholders, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which may be incurred
therein or thereby; and, provided further, that, subject to the provisions of
Section 8.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee, in accordance with an Opinion of Counsel, determines
that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith determines that the action or proceeding so directed
would involve it in personal liability or be unjustly prejudicial to the
non-assenting Certificateholders.
Section 6.19. Action Upon Certain Failures of the Servicer and Upon
Event of Default. In the event that the Trustee shall have actual knowledge of
any action or inaction of the Servicer, which would become an Event of Default
upon the Servicer's failure to remedy the same after notice, the Trustee shall
give notice thereof to the Servicer. For all purposes of this Agreement, in
the absence of actual knowledge by a Responsible Officer of the Trustee, the
Trustee shall not be deemed to have knowledge of any failure of the Servicer
or any other Event of Default unless notified thereof in writing by the
Servicer or by a Certificateholder.
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or
Liquidation of All Mortgage Loans. (a) The obligations and responsibilities of
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as set forth in Section 7.02), shall terminate
on the earlier of (i) the final payment or other liquidation of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the sale of the property held by the Trust Fund in
accordance with Section 7.01(b); provided, however, that in no event shall the
Trust Fund created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof, and (ii) the Latest Possible Maturity Date. Any
termination of the Trust Fund shall be carried out in such a manner so that
the termination of each REMIC included therein shall qualify as a "qualified
liquidation" under the REMIC Provisions.
(b) On any Distribution Date occurring after the date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans in either Mortgage
Pool is less than 5% of the Cut-off Date Aggregate Principal Balance of the
Mortgage Loans in such Pool, the Depositor will have the option to cause the
sale of the Mortgage Loans, any REO property and any other property remaining
in such Pool. The property of such Pool shall be sold at a price equal to: (i)
100% of the unpaid principal balance of each Mortgage Loan on the day of such
purchase plus interest accrued thereon at the applicable Mortgage Rate with
respect to any Mortgage Loan to the Due Date in the Due Period immediately
preceding the related Distribution Date to the date of such repurchase, (ii)
the fair market value of any REO Property and any other property held by such
Pool, such fair market value to be determined by an appraiser or appraisers
mutually agreed upon by the Servicer and the Trustee, (iii) any unreimbursed
Advances made by the Servicer or the Trustee, including Servicing Advances,
and (iv) in the case of the termination of Pool 2, any Reimbursement Amounts
due to the Class 2-A3 Certificate Insurer. The termination of both Mortgage
Pools pursuant to this Section 7.01(b) shall be deemed an adoption by the
Trust Fund of a plan of complete liquidation pursuant to Section 7.03.
Section 7.02. Procedure Upon Termination of Trust Fund. (a) Notice of
any termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made with respect
to the Certificate Group, shall be given promptly by the Trustee by first
class mail to the applicable Certificateholders mailed no later than the later
of five Business Days after the Trustee has received notice from the Depositor
of its intent to exercise its right to cause the termination of a Mortgage
Pool pursuant to Section 7.01(b) or the final payment or other liquidation of
the last Mortgage Loan or REO Property in the Trust Fund. Such notice shall
specify (A) the Distribution Date upon which final distribution on the
Certificates of the Certificate Group will be made upon presentation and
surrender of the Certificates at the Corporate Trust Office, and (B) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distribution being made only upon presentation and surrender of such
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Certificate Registrar at the time such
notice is given to Holders of the Certificates. Upon termination of both
Mortgage Pools, the duties of the Certificate Registrar with respect to the
Certificates shall terminate and the Trustee shall terminate the Certificate
Account and any other account or fund maintained with respect to the
Certificates, subject to the Trustee's obligation hereunder to hold all
amounts payable to Certificateholders in trust without interest pending such
payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to
contact the remaining Certificateholders concerning surrender of such
Certificates, and the cost thereof shall be paid out of the amounts
distributable to such Holders. If within two years after the second notice any
Certificates shall not have been surrendered for cancellation, the Trustee
shall, subject to applicable state law relating to escheatment, hold all
amounts distributable to such Holders for the benefit of such Holders. No
interest shall accrue on any amount held by the Trustee and not distributed to
a Certificateholder due to such Mortgage Certificateholder's failure to
surrender its Certificate(s) for payment of the final distribution thereon in
accordance with this Section.
Section 7.03. Additional Trust Fund Termination Requirements. (a) The
Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee seeks, and subsequently receives, an Opinion
of Counsel, addressed to the Trustee to the effect that the failure of the
Trust Fund to comply with the requirements of this Section 7.03 will not (i)
result in the imposition of taxes on any REMIC under the REMIC Provisions or
(ii) cause any REMIC established hereunder to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of
the final payment on the Certificates, the Trustee (upon notification
by the Depositor that it intends to exercise its option to cause the
termination of the Trust Fund) shall adopt a plan of complete
liquidation of the Trust Fund on behalf of each REMIC, meeting the
requirements of a qualified liquidation under the REMIC Provisions;
(ii) The sale of the assets of the Trust Fund pursuant
to Section 7.02 shall be a sale for cash and shall occur at or after
the time of adoption of such a plan of complete liquidation and prior
to the time of making of the final payment on the Certificates;
(iii) On the date specified for final payment of the
Certificates, the Trustee shall make final distributions of principal
and interest on the Certificates in accordance with Section 5.02 and,
after payment of, or provision for any outstanding expenses,
distribute or credit, or cause to be distributed or credited, to the
Holders of the Residual Certificates all cash on hand after such
final payment (other than cash retained to meet claims), and the
Trust Fund (and each REMIC) shall terminate at that time; and
(iv) In no event may the final payment on the
Certificates or the final distribution or credit to the Holders of
the Residual Certificates be made after the 89th day from the date on
which the plan of complete liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof
hereby (i) authorizes the Trustee to take such action as may be necessary to
adopt a plan of complete liquidation of the related REMIC and (ii) agrees to
take such other action as may be necessary to adopt a plan of complete
liquidation of the related REMIC, which authorization shall be binding upon
all successor Residual Certificateholders.
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or this Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or take any action or
proceeding in any court for a partition or winding up of this Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them. Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a Certificateholder,
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of Certificates evidencing not less than 25% of the
Class Certificate Principal Amount (or Aggregate Notional Amount) of
Certificates of each Class shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the cost, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for sixty days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding and no direction inconsistent with such
written request has been given such Trustee during such sixty-day period by
such Certificateholders; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and
the Trustee, that no one or more Holders of Certificates shall have any right
in any manner whatever by virtue or by availing of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any
other of such Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 8.02. Access to List of Holders. (a) If the Trustee is not
acting as Certificate Registrar, the Certificate Registrar will furnish or
cause to be furnished to the Trustee, within fifteen days after receipt by the
Certificate Registrar of a request by the Trustee in writing, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter
referred to as "Applicants") apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other
Holders with respect to their rights under this Agreement or under the
Certificates and is accompanied by a copy of the communication which such
Applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, afford such Applicants reasonable
access during the normal business hours of the Trustee to the most recent list
of Certificateholders held by the Trustee or shall, as an alternative, send,
at the Applicants' expense, the written communication proffered by the
Applicants to all Certificateholders at their addresses as they appear in the
Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing
Agency, by receiving and holding a Certificate, agrees with the Depositor, the
Certificate Registrar and the Trustee that neither the Depositor, the
Certificate Registrar nor the Trustee shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 8.03. Acts of Holders of Certificates. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Holders or Certificate
Owner, if the Holder is a Clearing Agency, may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders
in person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee. Such instrument or
instruments (as the action embodies therein and evidenced thereby) are herein
sometimes referred to as an "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agents shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments or deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the individual executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates
shall be overdue and notwithstanding any notation of ownership or other
writing thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee nor the Depositor shall be
affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Certificate shall bind every
future Holder of the same Certificate and the Holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Trustee in reliance thereon, whether or not notation of such action is
made upon such Certificate.
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 9.01. Trustee To Retain Possession of Certain Documents.
Until all amounts distributable in respect of the Certificates have been
distributed in full, the Trustee (or its custodian) shall retain possession
and custody of each Mortgage File in accordance with and subject to the terms
and conditions of this Agreement; provided, that documents relating to any
Additional Collateral may be held by Custodian on behalf of the Trustee.
Section 9.02. Preparation of Tax Returns and Other Reports. (a) The
Trustee shall prepare or cause to be prepared on behalf of the Trust Fund,
based upon the information furnished by the Servicer or calculated by the
Trustee in accordance with this Agreement pursuant to instructions given by
the Depositor, and shall file federal tax returns and appropriate state income
tax returns and such other returns as may be required by applicable law
relating to the Trust Fund and shall forward copies to the Depositor of all
such returns and Form 1099 information and such other information within the
control of the Trustee as the Depositor may reasonably request in writing, and
shall forward to each Certificateholder such forms and furnish such
information within the control of the Trustee as are required by the Code and
the REMIC Provisions to be furnished to them, and will prepare and disseminate
to Certificateholders Form 1099s (or otherwise furnish information within the
control of the Trustee) to the extent required by applicable law.
(b) The Trustee shall prepare and file with the Internal Revenue
Service ("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4.
(c) The Depositor will prepare or cause to be prepared the initial
current report on Form 8-K and thereafter the Trustee will prepare or cause to
be prepared Forms 10-K and 10-Q (if necessary), or monthly current reports on
Form 8-K, on behalf of the Trust Fund, as may be required by applicable law or
regulation, and will file such reports electronically with the Securities and
Exchange Commission (the "SEC"). The Trustee will sign each such report on
behalf of the Trust Fund, and will forward a copy of each such report to the
Depositor promptly after such report has been filed with the SEC. The
Depositor agrees to use its best efforts to seek to terminate such filing
obligation after the period during which such filings are required under the
Securities Exchange Act of 1934.
Section 9.03. Release of Mortgage Files. (a) Upon becoming aware of
the payment in full of any Mortgage Loan, or upon receipt by the Servicer of a
notification that payment in full has been escrowed in a manner customary for
payment to the Trustee on the next Remittance Date, the Servicer will
immediately notify the Trustee (or the Custodian) by a certification (which
certification shall include a statement to the effect that all amounts
received in connection with such payment that are required to be remitted to
the Trustee have been or will be so remitted) of a Servicing Officer and shall
request the Trustee (or the Custodian) to deliver to the Servicer the related
Mortgage File. Upon receipt of such certification and request, the Trustee (or
the Custodian) shall promptly release the related Mortgage File to the
Servicer and the Trustee shall have no further responsibility with regard to
such Mortgage File. Upon any such payment in full, the Trustee authorizes the
Servicer to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that
no expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Certificate
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with Accepted Servicing
Practices, the Trustee (or the Custodian) shall execute such documents as
shall be prepared and furnished to the Trustee by the Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution
of any such proceedings. The Trustee (or the Custodian) shall, upon request of
the Servicer and delivery to the Trustee (or the Custodian) of a trust receipt
signed by a Servicing Officer substantially in the form of Exhibit C (or in
the form acceptable to FNMA or FHLMC), release the related Mortgage File held
in its possession or control to the Servicer. Such trust receipt shall
obligate the Servicer to return the Mortgage File to the Trustee (or the
Custodian) when the need therefor by the Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that specified above, the trust
receipt shall be released by the Trustee (or the Custodian) to the Servicer.
(c) The Trustee covenants and agrees that it will comply with all
relevant laws and regulations governing the custody, processing, release and
delivery of the Mortgage Loan documents within its possession or control.
ARTICLE X
REMIC ADMINISTRATION*
Section 10.01. REMIC Administration. As set forth in the Preliminary
Statement, the Trustee shall elect REMIC status in accordance with the REMIC
Provisions with respect to each of the Lower Tier REMIC and the Upper Tier
REMIC. The Trustee shall make such elections on Forms 1066 or other
appropriate federal tax or information return for the taxable year ending on
the last day of the calendar year in which the Certificates are issued. For
purposes of such elections, the Class LT1 Interest and the Class LT2 Interest
are designated as regular interests in the Lower Tier REMIC. The Certificates,
other than the Class R Certificate, the Class AX Certificate, and the Class AP
Certificate, and each Component of the Class AX Certificate and the Class AP
Certificate, are designated as regular interests in the Upper Tier REMIC. The
Class LTR Interest and the Class R Certificate, are hereby designated as
representing ownership of the residual interest in each of the Lower Tier
REMIC and the Upper Tier REMIC.
(a) The Closing Date is hereby designated as the "Startup Day" of
each REMIC within the meaning of section 86OG(a)(9) of the Code.
(b) The Trustee shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial
proceedings with respect to such REMIC that involve the Internal Revenue
Service or state tax authorities, but only to the extent that (i) such
expenses are ordinary or routine expenses, including expenses of a routine
audit but not expenses of litigation (except as described in (ii)); or (ii)
such expenses or liabilities (including taxes and penalties) are attributable
to the negligence or willful misconduct of the Trustee in fulfilling its
duties hereunder (including its duties as tax return preparer).
(c) The Trustee shall prepare, sign, and file all of each REMIC's
federal and state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be
borne by the Trustee.
(d) The Trustee or its designee shall perform on behalf of each REMIC
all reporting and other tax compliance duties that are the responsibility of
each REMIC under the Code, the REMIC Provisions, or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, if required by the Code, the REMIC Provisions, or
other such guidance, the Trustee shall provide (i) to the Treasury or other
governmental authority such information as is necessary for the application of
any tax relating to the transfer of a Residual Certificate to any disqualified
person or organization and (ii) to the Certificateholders such information or
reports as are required by the Code or REMIC Provisions.
- ----------------------------
* Subject to change after review by Brown & Wood tax department.
(e) The Trustee and the Holders of Certificates shall take any action
or cause each REMIC to take any action necessary to create or maintain the
status of such REMIC as a REMIC under the REMIC Provisions and shall assist
each other as necessary to create or maintain such status. Neither the Trustee
nor the Holder of any Residual Certificate shall take any action, cause any
REMIC to take any action or fail to take (or fail to cause to be taken) any
action that, under the REMIC Provisions, if taken or not taken, as the case
may be, could (i) endanger the status of such REMIC as a REMIC or (ii) result
in the imposition of a tax upon such REMIC (including but not limited to the
tax on prohibited transactions as defined in Code Section 860F(a)(2) and the
tax on prohibited contributions set forth on Section 860G(d) of the Code)
(either such event, an "Adverse REMIC Event") unless the Trustee has received
an Opinion of Counsel (at the expense of the party seeking to take such
action) to the effect that the contemplated action will not endanger such
status or result in the imposition of such a tax. In addition, prior to taking
any action with respect to a REMIC or the assets therein, or causing such
REMIC to take any action, which is not expressly permitted under the terms of
this Agreement, any Holder of a Residual Certificate will consult with the
Trustee or its designee, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur with respect to such REMIC, and no such
Person shall take any such action or cause such REMIC to take any such action
as to which the Trustee has advised it in writing that an Adverse REMIC Event
could occur.
(f) Each Holder of a Residual Certificate shall pay when due any and
all taxes imposed on the related REMIC by federal or state governmental
authorities. To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Holder of the
Residual Certificate in such REMIC or, if no such amounts are available, out
of other amounts held in the Certificate Account, and shall reduce amounts
otherwise payable to holders of regular interests in such REMIC, as the case
may be.
(g) The Trustee shall, for federal income tax purposes, maintain
books and records with respect to each REMIC on a calendar year and on an
accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans if permitted by the Seller's Warranties and
Servicing Agreement.
(h) The Trustee shall not enter into any arrangement by which any
REMIC will receive a fee or other compensation for services.
Section 10.02. Prohibited Transactions and Activities. Neither the
Depositor nor the Trustee shall sell, dispose of, or substitute for any of the
Mortgage Loans, except in a disposition pursuant to (i) the foreclosure of a
Mortgage Loan, (ii) the bankruptcy of the Trust Fund, (iii) the termination of
each REMIC pursuant to Article VII of this Agreement, (iv) a substitution
pursuant to Article II of this Agreement or (v) a repurchase of Mortgage Loans
pursuant to Article II of this Agreement, nor acquire any assets for any
REMIC, nor sell or dispose of any investments in the Certificate Account for
gain, nor accept any contributions to any REMIC after the Closing Date, unless
it has received an Opinion of Counsel (at the expense of the party causing
such sale, disposition, or substitution) that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the status of such
REMIC as a REMIC or of the Certificates other than the Residual Certificates
as the regular interests therein, (b) affect the distribution of interest or
principal on the Certificates, (c) result in the encumbrance of the assets
transferred or assigned to the Trust Fund (except pursuant to the provisions
of this Agreement) or (d) cause such REMIC to be subject to a tax on
prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
The Trustee shall not consent to any modification of any material
term of any Mortgage Loan unless it has received an Opinion of Counsel (at the
expense of the party requesting such modification) to the effect that such
modification would not cause the Trust Fund to fail to qualify as a REMIC or
result in the imposition of any tax under Section 860(F)(a) or Section
860(G)(d) of the Code.
Section 10.03. Indemnification with Respect to Certain Taxes and Loss
of REMIC Status. In the event that any REMIC fails to qualify as a REMIC,
loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the Holder of the
related Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that the Trustee shall not be liable for any such Losses attributable
to the action or inaction of the Depositor, or the Holder of such Residual
Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual Certificate on which
the Trustee has relied. The foregoing shall not be deemed to limit or restrict
the rights and remedies of the Holder of such Residual Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action
or omission that is taken in accordance with and in compliance with the
express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any losses other than arising out of a negligent
performance by the Trustee of its duties and obligations set forth herein, and
(3) for any special or consequential damages to Certificateholders (in
addition to payment of principal and interest on the Certificates).
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
Section 11.03. Amendment . (a) This Agreement may be amended from
time to time by the Depositor and the Trustee, without notice to or the
consent of any of the Holders, (i) to cure any ambiguity, (ii) to cause the
provisions herein to conform to or be consistent with or in furtherance of the
statements made with respect to the Certificates, the Trust Fund or this
Agreement in any Offering Document; or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein, (iii) to
make any other provisions, with respect to matters or questions arising under
this Agreement or (iv) to add, delete, or amend any provisions to the extent
necessary or desirable to comply with any requirements imposed by the Code and
the REMIC Provisions. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel, adversely affect the
status of any REMIC created pursuant to this Agreement, nor shall such
amendment effected pursuant to clause (iii) of such sentence adversely affect
in any material respect the interests of any Holder without regard to the
Class 2-A3 Certificate Insurance Policy. Prior to entering into any amendment
without the consent of Holders pursuant to this paragraph, the Trustee may
require an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this
paragraph. Any such amendment shall be deemed not to adversely affect in any
material respect any Holder, if the Trustee receives written confirmation from
each Rating Agency that such amendment will not cause such Rating Agency (in
the case of the Class 2-A3 Certificates, determined without regard to the
Class 2-A3 Certificate Insurance Policy) to reduce the then current rating
assigned to the Certificates (and any Opinion of Counsel requested by the
Trustee in connection with any such amendment may rely expressly on such
confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than
66-2/3% of the Class Certificate Principal Amount (or Aggregate Notional
Amount) of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders; provided, however, that no such amendment shall be made unless the
Trustee receives an Opinion of Counsel, at the expense of the party requesting
the change, that such change will not adversely affect the status of any REMIC
as a REMIC or cause a tax to be imposed on such REMIC; and provided further,
that no such amendment may (i) reduce in any manner the amount of, or delay
the timing of, payments received on Mortgage Loans, which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid percentages of Class Certificate
Principal Amount (or Aggregate Notional Amount) of Certificates of each Class,
the Holders of which are required to consent to any such amendment without the
consent of the Holders of 100% of the Class Certificate Principal Amount (or
Aggregate Notional Amount) of each Class of Certificates affected thereby. For
purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, the case of any Class of Book-Entry Certificates, the
related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Holder, the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations
as the Trustee may prescribe.
Section 11.04. Voting Rights. Except to the extent that the consent
of all affected Certificateholders is required pursuant to this Agreement,
with respect to any provision of this Agreement requiring the consent of
Certificateholders representing specified percentages of aggregate outstanding
Certificate Principal Amount (or Notional Amount), Certificates owned by the
Depositor, the Trustee or the Servicer or Affiliates thereof are not to be
counted so long as such Certificates are owned by the Depositor, the Trustee
or the Servicer or Affiliates thereof.
Section 11.05. Provision of Information. (a) For so long as any of
the Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such
Certificateholder, upon the request of such Certificateholder or prospective
purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act. Any reasonable, out-of-pocket expenses incurred by the Trustee
in providing such information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or
documents requested, (i) a copy (excluding exhibits) of any report on Form 8-K
or Form 10-K filed with the Securities and Exchange Commission pursuant to
Section 9.02(c) and (ii) a copy of any document incorporated by reference in
the Prospectus. Any reasonable out-of-pocket expenses incurred by the Trustee
in providing copies of such documents shall be reimbursed by the Depositor.
(c) On each Distribution Date the Trustee shall deliver or cause to
be delivered by first class mail to the Depositor, Attention: Contract
Finance, a copy of the report delivered to Certificateholders pursuant to
Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
received by (a) in the case of the Depositor, Structured Asset Securities
Corporation, 200 Vesey Street, 12th Floor, New York, New York 10285,
Attention: Mark Zusy, (b) in the case of the Trustee, U.S. Bank National
Association, 180 East Fifth Street, St. Paul, Minnesota 55101 Attention:
Structured Finance (First Nationwide Trust 1999-1/ SASCO 1999-1) and (c) in
the case of the Class 2-A3 Certificate Insurer, MBIA Insurance Corporation,
113 King Street, Armonk, New York 10504, Attention: Insured Portfolio
Management - Structured Finance (IMP-SF), First Nationwide Trust
1999-1/Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1999-1, Class 2-A3 Certificates, or as to each party such
other address as may hereafter be furnished by such Party to the other parties
in writing. Any notice required or permitted to be mailed to a Holder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Holder receives such notice.
Section 11.08. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.09. Indulgences; No Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. (a) Subject to Section 11.14,
nothing in this Agreement or in the Certificates, express or implied, shall
give to any Person, other than the parties to this Agreement and their
successors hereunder and the Holders of the Certificates, any benefit or any
legal or equitable right, power, remedy or claim under this Agreement, except
to the extent specified in paragraph (b) of this Section 11.11.
(b) Notwithstanding any provision herein to the contrary, the parties
to this Agreement agree that it is appropriate, in furtherance of the intent
of such parties as set forth herein, that the Servicer receive the benefit of
the provisions of Section 9.03 hereof and of this Section 11.11 as an intended
third party beneficiary of this Agreement to the extent of such provisions.
The Trustee shall have the same obligations to the Servicer under Section 9.03
hereof as if the Servicer were a party to this Agreement, and the Servicer
shall have the same rights and remedies to enforce the provisions of Section
9.03 hereof and this Section 11.11 as if the Servicer were a party to this
Agreement.
Section 11.12. Special Notices to the Rating Agencies. (a) The
Depositor shall give, prompt notice to the Rating Agencies and to the Class
2-A3 Certificate Insurer of the occurrence of any of the following events of
which it has notice:
(i) any amendment to this Agreement pursuant to Section
11.03;
(ii) the appointment of any successor to the Servicer
pursuant to Section 6.14;
(iii) the making of a final payment on the Group 2
Certificates pursuant to Section 7.02;
(iv) the occurrence of an Event of Default under the
Seller's Warranties and Servicing Agreement;
(v) the termination of the rights and obligations of the
Servicer pursuant to the Seller's Warranties and Servicing Agreement;
and
(vi) the appointment of any successor Servicer under the
Seller's Warranties and Servicing Agreement.
(b) All notices to the Rating Agencies provided for in this Section
shall be in writing and sent by first class mail, telecopy or overnight
courier, as follows:
If to Fitch to:
One State Street Plaza
New York, New York 10004
If to S&P, to:
Standard & Poor's Ratings Services,
A division of The McGraw-Hill Companies, Inc.
26 Broadway, 15th Floor
New York, New York 10004
Attention: Residential Mortgages
(c) The Trustee shall deliver to the Rating Agencies reports prepared
pursuant to Section 4.03.
Section 11.13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
Section 11.14. Matters Relating to the Class 2-A3 Certificate
Insurance Policy. (a) All notices, statements, reports, certificates or
opinions required by this Agreement to be sent to any other party hereto or to
the Class 2-A3 Certificateholders shall also be sent, and any report or
statement sent by the Servicer to the Trustee in accordance with the Seller's
Warranties and Servicing Agreement shall be sent by the Trustee, to the Class
2-A3 Certificate Insurer at the following address:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management - Structured Finance
Re: First Nationwide Trust 1999-1/Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series
1999-1, Class 2-A3 Certificates
or such other address as the Class 2-A3 Certificate Insurer may hereafter
furnish to the Depositor and the Trustee.
(b) Notwithstanding any provision to the contrary, the parties to
this Agreement agree that it is appropriate, in furtherance of the interest of
such parties as set forth herein, the Class 2-A3 Certificate Insurer receive
the benefit of Sections 4.03, 5.02, 5.06 and 11.14 as an intended third party
beneficiary of this Agreement to the extent of such provisions.
(c) No purchase of the property of the Trust Fund pursuant to Section
7.01(b) shall occur if such purchase would result in a draw on the Class 2-A3
Certificate Insurance Policy, unless the Class 2-A3 Certificate Insurer has
consented to such purchase.
(d) All references herein to the rating of the Certificates shall be
without regard to the Class 2-A3 Certificate Insurance Policy.
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their
names to be signed hereto by their respective officers hereunto duly
authorized as of the day and year first above written.
STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor
By:/s/ Joseph J. Kelly
-------------------------
Name: Joseph J. Kelly
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:/s/ Eve D. Kaplan
-------------------------
Name: Eve D. Kaplan
Title: Vice President
For Purposes of Section 9.03 and 11.11,
accepted and agreed to by:
FIRST NATIONWIDE MORTGAGE CORPORATION
By:/s/ Robert M. Bodell
------------------------------------
Name: Robert M. Bodell
Title: Executive Vice President
<PAGE>
EXHIBIT A
- ---------
FORMS OF CERTIFICATES
<PAGE>
Exhibit B-1
-----------
FORM OF FINAL CERTIFICATION
------------
[Date]
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of
February 1, 1999 between Structured Asset Securities Corporation,
as Depositor and U.S. Bank National Association, as Trustee,
with respect to First Nationwide Trust 1999-1/Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 1999-1
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the
undersigned hereby certifies that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it (or the Custodian) has received:
(i) the original Mortgage Note endorsed without recourse in proper
form to the order of the Trustee;
(ii) a duly executed Assignment of Mortgage or assignment of security
agreement;
(iii) with respect to any Mortgage Loan other than a Cooperative
Mortgage Loan, the original recorded Mortgage, and with respect to any
Cooperative Mortgage Loan, the original recorded pledge and security
agreement, with evidence of recording indicated thereon; or, if, in connection
with any Mortgage Loan, the Depositor (or the Servicer or any of its
correspondents, at the direction of the Seller and the Depositor) cannot
deliver the Mortgage or pledge and security agreement with evidence of
recording thereon because such document has been lost, the Depositor (or the
Servicer or its correspondents, at the direction of the Seller and Depositor)
shall deliver or cause to be delivered to the Trustee, a photocopy of such
document (certified by the Servicer or its correspondents to be a true and
correct copy) together with a written Opinion of Counsel acceptable to the
Trustee and the Depositor that an original recorded Mortgage or pledge and
security agreement is not required to enforce the Trustee's interest in the
Mortgage Loan;
(iv) if applicable, such original intervening assignments
("Intervening Assignments"), as may be necessary to show a complete chain of
title to the Mortgage from the originator to the Trustee at the direction of
the Seller and the Depositor; or, as to any such Intervening Assignment which
cannot be delivered because such Intervening Assignment has been lost, a
photocopy of such Intervening Assignment and a certificate of the Servicer as
specified in Exhibit C-1 of the Seller's Warranties and Servicing Agreement.
(v) with respect to any Mortgage Loan other than a Cooperative Loan,
the original lender's Title Insurance Policy or a written commitment to issue
such Title Insurance Policy or, in lieu thereof, a copy of such Title
Insurance Policy;
(vi) the original of each assumption, modification or substitution
agreement, if any, relating to the Mortgage Loans (as and to the extent of
those Mortgage Loans specifically identified by the Servicer to be subject to
any assumption, modification or substitution;
(vii) with respect to any Cooperative Mortgage Loan, the original
Cooperative Loan Documents; and
(viii) the original additional collateral pledge and security
agreement executed in connection with each pledge of Additional Collateral,
assigned to the Trustee.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed
on the attachment hereto, it has reviewed the documents listed above and has
determined that each such document appears to be complete and, based on an
examination of such documents, the information set forth in the Mortgage Loan
Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is
qualified in all respects by the terms of said Trust Agreement.
[Custodian]
[[ ],
as Trustee]
By:________________________________
Name:
Title:
<PAGE>
Exhibit B-2
-----------
FORM OF ENDORSEMENT
Pay to the order of U.S. Bank National Association, as trustee (the
"Trustee") under a Trust Agreement dated as of February 1, 1999, between
Structured Asset Securities Corporation, as Depositor, and the Trustee
relating to First Nationwide Trust 1999-1/Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-1, without
recourse.
----------------------------------
[current signatory on note]
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT C
---------
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
---------
[Date]
[Addressed to Trustee
or, if applicable, custodian]
In connection with the administration of the mortgages held by you as
Trustee under a certain Trust Agreement dated as of _________________ 1, 199
____ between Structured Asset Securities Corporation, as Depositor, and you,
as Trustee (the "Trust Agreement"), the undersigned Servicer hereby requests a
release of the Mortgage File held by you as Trustee with respect to the
following described Mortgage Loan for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
Reason for requesting file:
1. Mortgage Loan paid in full. (The Servicer hereby certifies that
all amounts received in connection with the loan have been or will be credited
to the Collection Account or the Certificate Account (whichever is applicable)
pursuant to the Trust Agreement.)
2. Mortgage Loan repurchased. (The Servicer hereby certifies that the
Purchase Price has been credited to the Collection Account or the Certificate
Account (whichever is applicable) pursuant to the Trust Agreement.)
3. Mortgage Loan substituted. (The Servicer hereby certifies that a
Qualifying Substitute Mortgage Loan has been assigned and delivered to you
along with the related Mortgage File pursuant to the Trust Agreement.)
4. The Mortgage Loan is being foreclosed.
5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be
held by the undersigned in accordance with the provisions of the Trust
Agreement and will be returned to you within ten (10) days of our receipt of
the Mortgage File, except if the Mortgage Loan has been paid in full, or
repurchased or substituted for a Qualifying Substitute Mortgage Loan (in which
case the Mortgage File will be retained by us permanently) and except if the
Mortgage Loan is being foreclosed (in which case the Mortgage File will be
returned when no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to
them in the Trust Agreement.
----------------------------------
[Name of Servicer]
By:_______________________________
Name:
Title: Servicing Officer
<PAGE>
EXHIBIT D-1
------------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn,
deposes and says:
1. That he [she] is [title of officer] ___________
_____________ of [name of Purchaser] ________________________
_________________ (the "Purchaser"), a _______________________
[description of type of entity] duly organized and existing under the laws of
the [State of __________] [United States], on behalf of which he [she] makes
this affidavit.
2. That the Purchaser's Taxpayer Identification Number is
[ ].
3. That the Purchaser is not a "disqualified
organization" within the meaning of Section 860E(e)(5) of the Internal Revenue
Code of 1986, as amended (the "Code") and will not be a "disqualified
organization" as of [date of transfer], and that the Purchaser is not
acquiring a Residual Certificate (as defined in the Agreement) for the account
of, or as agent (including a broker, nominee, or other middleman) for, any
person or entity from which it has not received an affidavit substantially in
the form of this affidavit. For these purposes, a "disqualified organization"
means the United States, any state or political subdivision thereof, any
foreign government, any international organization, any agency or
instrumentality of any of the foregoing (other than an instrumentality if all
of its activities are subject to tax and a majority of its board of directors
is not selected by such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), or any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
federal income tax unless such organization is subject to the tax on unrelated
business income imposed by Code Section 511.
4. That the Purchaser is not, and on ___________________
[insert date of transfer of Residual Certificate to Purchaser] will not be,
and is not and on such date will not be investing the assets of, an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or a plan subject to Code Section 4975 or a person or
entity that is using the assets of any employee benefit plan or other plan to
acquire a Residual Certificate.
5. That the Purchaser hereby acknowledges that under
the terms of the Trust Agreement (the "Agreement") between Structured Asset
Securities Corporation and U.S. Bank National Association, as Trustee, dated
as of February 1, 1999, no transfer of the Residual Certificates shall be
permitted to be made to any person unless the Trustee has received a
certificate from such transferee to the effect that such transferee is not an
employee benefit plan subject to ERISA or a plan subject to Section 4975 of
the Code and is not using the assets of any employee benefit plan or other
plan to acquire Residual Certificates.
6. That the Purchaser does not hold REMIC residual
securities as nominee to facilitate the clearance and settlement of such
securities through electronic book-entry changes in accounts of participating
organizations (such entity, a "Book-Entry Nominee").
7. That the Purchaser does not have the intention to
impede the assessment or collection of any federal, state or local taxes
legally required to be paid with respect to such Residual Certificate.
8. That the Purchaser will not transfer a Residual
Certificate to any person or entity (i) as to which the Purchaser has actual
knowledge that the requirements set forth in paragraph 3, paragraph 6 or
paragraph 10 hereof are not satisfied or that the Purchaser has reason to
believe does not satisfy the requirements set forth in paragraph 7 hereof, and
(ii) without obtaining from the prospective Purchaser an affidavit
substantially in this form and providing to the Trustee a written statement
substantially in the form of Exhibit G to the Agreement.
9. That the Purchaser understands that, as the
holder of a Residual Certificate, the Purchaser may incur tax liabilities in
excess of any cash flows generated by the interest and that it intends to pay
taxes associated with holding such Residual Certificate as they become due.
10. That the Purchaser (i) is not a Non-U.S. Person
or (ii) is a Non-U.S. Person that holds a Residual Certificate in connection
with the conduct of a trade or business within the United States and has
furnished the transferor and the Trustee with an effective Internal Revenue
Service Form 4224 or successor form at the time and in the manner required by
the Code or (iii) is a Non-U.S. Person that has delivered to both the
transferor and the Trustee an opinion of a nationally recognized tax counsel
to the effect that the transfer of such Residual Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Residual Certificate will not be
disregarded for federal income tax purposes. "Non-U.S. Person" means an
individual, corporation, partnership or other person other than a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate that is subject to U.S. federal
income tax regardless of the source of its income, or a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States trustees have
authority to control all substantial decisions of the trust.
11. That the Purchaser agrees to such amendments of
the Trust Agreement as may be required to further effectuate the restrictions
on transfer of any Residual Certificate to such a "disqualified organization,"
an agent thereof, a Book-Entry Nominee, or a person that does not satisfy the
requirements of paragraph 7 and paragraph 10 hereof.
12. That the Purchaser consents to the designation of
the Trustee as its agent to act as "tax matters person" of the Trust Fund
pursuant to the Trust Agreement.
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this instrument
to be executed on its behalf, pursuant to authority of its Board of Directors,
by its [title of officer] this ____ day of __________, 19__.
---------------------------------
[name of Purchaser]
By:______________________________
Name:
Title:
Personally appeared before me the above-named [name of
officer] ________________, known or proved to me to be the same person who
executed the foregoing instrument and to be the [title of officer]
_________________ of the Purchaser, and acknowledged to me that he [she]
executed the same as his [her] free act and deed and the free act and deed of
the Purchaser.
Subscribed and sworn before me this _____ day of __________,
19__.
NOTARY PUBLIC
- ------------------------------
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
<PAGE>
EXHIBIT D-2
-----------
RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
-------------------
Date
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates Series 1999-1
_______________________ (the "Transferor") has reviewed the
attached affidavit of _____________________________ (the "Transferee"), and
has no actual knowledge that such affidavit is not true and has no reason to
believe that the information contained in paragraph 7 thereof is not true, and
has no reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to a Residual Certificate. In addition, the Transferor
has conducted a reasonable investigation at the time of the transfer and found
that the Transferee had historically paid its debts as they came due and found
no significant evidence to indicate that the Transferee will not continue to
pay its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT E
---------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
<PAGE>
EXHIBIT F
---------
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: First Nationwide Trust 1999-1/Structured
Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 1999-1
----------------------------------
Reference is hereby made to the Trust Agreement dated as of
___________ 1, 199 (the "Trust Agreement") between Structured Asset Securities
Corporation, as Depositor, and [ __________________________ ], as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Trust Agreement.
This letter relates to $_________ initial Certificate
Balance of Class _______ Certificates which are held in the form of Definitive
Certificates registered in the name of __________________________________ (the
"Transferor"). The Transferor has requested a transfer of such Definitive
Certificates for Definitive Certificates of such Class registered in the name
of [insert name of transferee].
In connection with such request, and in respect of such
Certificates, the Transferor hereby certifies that such Certificates are being
transferred in accordance with (i) the transfer restrictions set forth in the
Trust Agreement and the Certificates and (ii) Rule 144A under the Securities
Act to a purchaser that the Transferor reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for its own
account or for the account of a "qualified institutional buyer", which
purchaser is aware that the sale to it is being made in reliance upon Rule
144A, in a transaction meeting the requirements of Rule 144A and in accordance
with any applicable securities laws of any state of the United States or any
other applicable jurisdiction.
This certificate and the statements contained herein are
made for your benefit and the benefit of the Placement Agent and the
Depositor.
---------------------------------
[Name of Transferor]
By:______________________________
Name:
Title:
Dated: ___________, ____
<PAGE>
EXHIBIT G
---------
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
-----------
[Date]
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Mortgage Pass-Through Certificates, Series 1999-1 (the "Privately
Offered Certificates") of Structured Asset Securities Corporation (the
"Depositor"), we confirm that:
(1) We have received a copy of the Private Placement Memorandum dated
______________ , 199 relating to the Privately Offered Certificates
(the "Private Placement Memorandum"), and we understand that the
Privately Offered Certificates have not been, and will not be,
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we
should sell any Privately Offered Certificates within three years of
the later of the date of original issuance of the Privately Offered
Certificates or the last day on which such Privately Offered
Certificates are owned by the Depositor or any affiliate of the
Depositor (which includes the Placement Agent) we will do so only (A)
to the Depositor, (B) to "qualified institutional buyers" (within the
meaning of Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act ("QIBs"), (C) pursuant to an
exemption from registration in accordance with Rule 904 of Regulation
S under the Securities Act, (D) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act, or (E) to
an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act
that is not a QIB (an "Institutional Accredited Investor") which,
prior to such transfer, delivers to the Trustee under the Trust
Agreement dated as of February 1, 1999 between the Depositor and U.S.
Bank National Association, as Trustee (the "Trustee"), a signed
letter in the form of this letter; and we further agree, in the
capacities stated above, to provide to any person purchasing any of
the Privately Offered Certificates from us a notice advising such
purchaser that resales of the Privately Offered Certificates are
restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited
Investor, we will be required to furnish to the Trustee and the
Depositor a certification from such transferee in the form hereof to
confirm that the proposed sale is being made pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act. We further understand that the
Privately Offered Certificates purchased by us will bear a legend to
the foregoing effect.
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in
the Privately Offered Certificates, and we and any account for which
we are acting are each able to bear the economic risk of such
investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or
for one or more accounts (each of which is an Institutional
Accredited Investor) as to each of which we exercise sole investment
discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that
in accordance with ERISA, the Code and the Exemption, no Plan as to
which the Purchaser, the Depositor, any Servicer or Master Servicer
or the Trustee is a party in interest or disqualified person, and no
person acting on behalf of such a Plan may acquire such Certificate
unless the acquisition would constitute an exempt transaction under a
statutory exemption or any of the administrative exemptions issued by
the U.S. Department of Labor.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Trust Agreement.
<PAGE>
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
----------------------------------
[Purchaser]
By________________________________
Name:
Title:
<PAGE>
EXHIBIT H
---------
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is the __________________________ of
(the "Investor"), a [corporation duly organized] and existing under the laws
of __________, on behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee
benefit plan subject to Section 406 or Section 407 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), the Trustee of any
such plan or a person acting on behalf of any such plan nor a person using the
assets of any such plan or (2) if the Investor is an insurance company, such
Investor is purchasing such Certificates with funds contained in an "Insurance
Company General Account" (as such term is defined in Section v(e) of the
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60; or (y)
shall deliver to the Trustee and the Depositor an opinion of counsel (a
"Benefit Plan Opinion") satisfactory to the Trustee and the Depositor, and
upon which the Trustee and the Depositor shall be entitled to rely, to the
effect that the purchase or holding of such Certificate by the Investor will
not result in the assets of the Trust Fund being deemed to be plan assets and
subject to the prohibited transaction provisions of ERISA or the Code and will
not subject the Trustee or the Depositor to any obligation in addition to
those undertaken by such entities in the Trust Agreement, which opinion of
counsel shall not be an expense of the Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of
the Trust Agreement (the "Agreement") between Structured Asset Securities
Corporation, as Depositor, and U.S. Bank National Association, as Trustee,
dated February 1, 1999, no transfer of the ERISA-Restricted Certificates shall
be permitted to be made to any person unless the Depositor and Trustee have
received a certificate from such transferee in the form hereof.
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument
to be executed on its behalf, pursuant to proper authority, by its duly
authorized officer, duly attested, this ____ day of _______________, 199 .
---------------------------------
[Investor]
By:______________________________
Name:
Title:
ATTEST:
- ---------------------------
STATE OF )
)ss.:
COUNTY OF )
Personally appeared before me the above-named
_________________, known or proved to me to be the same person who
executed the foregoing instrument and to be the _________________ of the
Investor, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Investor.
Subscribed and sworn before me this _____ day of ___________
199__.
----------------------------------
NOTARY PUBLIC
My commission expires the
____ day of __________, 19__.
<PAGE>
EXHIBIT K
---------
CUSTODIAL AGREEMENT
<PAGE>
SCHEDULE A
- ----------
MORTGAGE LOAN SCHEDULE
<PAGE>
SCHEDULE B
- ----------
PRINCIPAL AMOUNT SCHEDULE
EXECUTIN COPY
- -------------------------------------------------------------------------------
MBIA INSURANCE CORPORATION,
as Insurer
LEHMAN CAPITAL,
as Seller
STRUCTURED ASSET SECURITIES COPORATION,
as Depositor
and
U. S. BANK NATIONAL ASSOCIATION,
as Trustee
INSURANCE AGREEMENT
$21,457,000
First Nationwide Trust 1999-1
Structured Asset Securities Corporation
Mortgage Pass-Through Certificates,
Series 1999-1
Class 2-A3 Certificates
Dated as of February 1, 1999
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Article I
DEFINITIONS
<TABLE>
<CAPTION>
<S> <C> <C>
Section 1.01. General Definitions................................................................................1
Section 1.02. Generic Terms......................................................................................3
Article II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations, Warranties and Covenants of the Seller and the Depositor..........................4
Section 2.02. Representations, Warranties and Covenants of Trustee...............................................8
Article III
THE POLICY; REIMBURSEMENT; SECURITY
Section 3.01. Agreement To Issue the Policy.....................................................................10
Section 3.02. Conditions Precedent to Issuance of the Policy....................................................10
Section 3.03. Payment of Fees and Premium.......................................................................11
Section 3.04. Payment Procedure.................................................................................11
Section 3.05. Reimbursement and Additional Payment Obligation of the Seller
and the Depositor.....................................................................................11
Section 3.06. Indemnification by the Seller and the Depositor...................................................12
Article IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement.................................................................13
Section 4.02. Waiver of Rights Further Assurances...............................................................14
Section 4.03. Obligations Absolute..............................................................................14
Section 4.04. Assignments; Reinsurance; Third-Party Rights......................................................14
Section 4.05. Liability of Insurer..............................................................................15
Section 4.06. Subrogation.......................................................................................15
Article V
DEFAULTS; REMEDIES
Section 5.01. Defaults..........................................................................................15
Section 5.02. Remedies; No Remedy Exclusive.....................................................................16
Section 5.03. Waivers...........................................................................................16
Article VI
MISCELLANEOUS
Section 6.01. Amendments, Changes and Modifications.............................................................17
Section 6.02. Notices...........................................................................................17
Section 6.03. Severability......................................................................................18
Section 6.04. Governing Law.....................................................................................18
Section 6.05. Consent to Jurisdiction and Venue, Etc............................................................18
Section 6.06. Consent of Insurer................................................................................19
Section 6.07. Counterparts......................................................................................19
Section 6.08. Headings..........................................................................................19
Section 6.09. WAIVER OF TRIAL BY JURY...........................................................................19
Section 6.10. Entire Agreement..................................................................................19
Section 6.11. Third Party Beneficiary...........................................................................19
</TABLE>
<PAGE>
INSURANCE AGREEMENT
THIS INSURANCE AGREEMENT is made as of February 1, 1999 by and among MBIA
INSURANCE CORPORATION (the "Insurer"), LEHMAN CAPITAL, a Division of Lehman
Brothers Holdings Inc., as Seller (the "Seller"), STRUCTURED ASSET SECURITIES
COPORATION, as Depositor (the "Depositor"), and U.S. BANK NATIONAL ASSOCIATION,
a national banking association, in its capacity as trustee under the Trust
Agreement (the "Trustee").
RECITALS:
WHEREAS, the Trust Agreement dated as of February 1, 1999 by and between
the Depositor and the Trustee (the "Trust Agreement") relating to the
$21,457,000 First Nationwide Trust 1999-1, Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-1 Class 2-A3
Certificates (the "Insured Certificates") provides for, among other things, the
issuance of mortgage backed certificates, representing fractional ownership
interests in the trust estate (the "Trust") established thereby;
WHEREAS, the Depositor has requested that the Insurer issue its
certificate guaranty insurance policy (the "Policy") to guarantee payment of
Insured Payments (as defined in the Policy) to the Trustee for the benefit of
the Owners of the Insured Certificates upon such terms and conditions as were
mutually agreed upon by the parties and subject to the terms and the conditions
of the Policy;
WHEREAS, the parties hereto desire to specify the conditions precedent to
the issuance of the Policy by the Insurer and to provide for certain other
matters;
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. The terms defined in this Article I
shall have the meanings provided herein for all purposes of this Agreement,
unless the context clearly requires otherwise, in both singular and plural
form, as appropriate. Capitalized terms used in this Agreement but not
otherwise defined herein will have the meanings assigned to such terms in the
Trust Agreement.
"Agreement" means this Insurance Agreement dated as of February 1, 1999,
including any amendments or any supplements hereto as herein permitted.
"Business Day" means any day other than (i) a Saturday or a Sunday (ii) a
day on which the Insurer is closed or (iii) a day on which banking institutions
in New York City or in the city in which the corporate trust office of the
Trustee under the Trust Agreement is located are authorized or obligated by law
or executive order to close.
"Commitment" means the Commitment, dated February 24, 1999 between the
Lehman Brothers, Inc. and the Insurer, relating to the Insured Certificates.
"Date of Issuance" means the date on which the Policy is issued as
specified therein.
"Event of Default" means any event of default set forth in Section 5.01
hereof.
"Financial Statements" means, with respect to the Seller and the Depositor
the balance sheets and the statements of income and retained earnings and the
notes thereto.
"Late Payment Rate" means the rate of interest publicly announced by
Citibank, N.A. at its principal office in New York, New York as its prime rate
(any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 3%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under law applicable to this Agreement limiting interest rates.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in the ability of such Person to perform its obligations under
any of the Transaction Documents.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
and any successor thereto, and, if such corporation shall for any reason no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized rating agency designated by
the Insurer.
"Offering Document" means the Prospectus dated January 15, 1999 and the
Prospectus Supplement thereto dated February 18, 1999 of the Depositor in
respect of the Insured Certificates (and any amendment or supplement thereto)
and any other offering document in respect of the Insured Certificates prepared
by the Depositor that makes reference to the Policy.
"Owner" means each Holder (as defined in the Trust Agreement) of an
Insured Certificate who, on the applicable distribution date, is entitled under
the terms of the Insured Certificates to payment thereunder.
"Person" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, limited
liability company, partnership or other organization or entity (whether
governmental or private).
"Premium" means the premium payable in accordance with Section 3.03
hereof.
"Premium Percentage" shall have the meaning set forth in paragraph 1(a) of
the Commitment.
"Registration Statement" means the Registration Statement on Form S-3 of
the Depositor relating to the Certificates.
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Servicing Agreement" means the Seller's Warranties and Servicing
Agreement dated as of February 1, 1999 between the Seller and the Servicer,
including any amendments and supplements thereto as therein and herein
permitted.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other
nationally recognized rating agency designated by the Insurer.
"Term of the Agreement" shall be determined as provided in Section 4.01
hereof.
"Transaction" means the transactions contemplated by the Transaction
Documents, including the transaction described in the Prospectus Supplement.
"Transaction Documents" means this Agreement, the Commitment, the Trust
Agreement, the Servicing Agreement, the Mortgage Loan Sale and Assignment
Agreement, the Underwriting Agreement, the Offering Document and the
Certificates.
"Trust Agreement" means the Trust Agreement dated as of February 1, 1999
between the Depositor and the Trustee, including any amendments and supplements
thereto as therein and herein permitted.
"Underwriter" means Lehman Brothers Inc.
Section 1.02. GENERIC TERMS. All words used herein shall be construed to
be of such gender or number as the circumstances require. This "Agreement"
shall mean this Agreement as a whole and as the same may, from time to time
hereafter, be amended, supplemented or modified. The words "herein," "hereby,"
"hereof," "hereto," "hereinabove" and "hereinbelow," and words of similar
import, refer to this Agreement as a whole and not to any particular paragraph,
clause or other subdivision hereof, unless otherwise specifically noted.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER AND
THE DEPOSITOR. Each of the Seller and the Depositor, represents and warrants
to, as of the Date of Issuance, and covenants with, the Insurer as follows:
(a) Due Organization and Qualification. Each of the Seller and the
Depositor are a corporation, duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation.
Each of the Seller and the Depositor is duly qualified to do business, is
in good standing and has obtained all licenses, permits, charters,
registrations and approvals (together, "approvals") necessary for the
conduct of its business as currently conducted and as described in the
Offering Document and the performance of its obligations under the
Transaction Documents, in each jurisdiction in which the failure to be so
qualified or to obtain such approvals would render any Transaction
Document unenforceable in any respect or would have a material adverse
effect upon the Transaction, the Owners or the Insurer.
(b) Power and Authority. Each of the Seller and the Depositor have
all necessary corporate power and authority to conduct its business as
currently conducted and, as described in the Offering Document, to
execute, deliver and perform its obligations under the Transaction
Documents and to consummate the Transaction.
(c) Due Authorization. The execution, delivery, and performance of
the Transaction Documents by the Seller and the Depositor have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents, or other action by or any notice to or
filing with any Person, including, without limitation, any governmental
entity or the Seller's or the Depositor's stockholders, which have not
previously been obtained or given by the Seller or the Depositor.
(d) Noncontravention. Neither the execution and delivery of the
Transaction Documents by the Seller or the Depositor, the consummation of
the transactions contemplated thereby nor the satisfaction of the terms
and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or violation of any
provision of the certificate of incorporation or bylaws of the Seller
or the Depositor or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to the Seller or the Depositor or any of its material
properties, including regulations issued by an administrative agency
or other governmental authority having supervisory powers over the
Seller and the Depositor;
(ii) constitutes a default by the Seller or the Depositor under
or a breach of any provision of any material loan agreement,
mortgage, indenture or other agreement or instrument to which the
Seller or the Depositor is a party or by which any of its or their
respective properties, which are individually or in the aggregate
material to the Seller or the Depositor, is or may be bound or
affected; or
(iii) results in or requires the creation of any lien upon or in
respect of any assets of the Seller or the Depositor, except as
contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Seller or the Depositor or
any of its or their subsidiaries, or any properties or rights of the
Seller or the Depositor or any of its or their subsidiaries, pending or,
to the Seller's, and the Depositor's knowledge, threatened, which, in any
case, could reasonably be expected to result in a Material Adverse Change
with respect to the Seller or the Depositor.
(f) Valid and Binding Obligation. The Transaction Documents to which
either the Seller or the Depositor are a party constitute, and when
executed by the Seller and the Depositor (if not previously) will
constitute, the legal, valid and binding obligations of the Seller and the
Depositor, as applicable, enforceable against the Seller and the Depositor
in accordance with their respective terms, except as the enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or limiting creditors' rights generally or
general equitable principles, as such relate to the Seller or the
Depositor.
(g) Financial Statements. The Financial Statements supplied, or
publicly available, to the Insurer prior to the Date of Issuance (i)
present fairly the financial condition and results of operations of the
Seller and the Depositor as of the dates and for the periods indicated and
(ii) have been prepared in accordance with generally accepted accounting
principles consistently applied, except as noted therein and subject to
year-end adjustments with respect to interim statements. Since the date of
such Financial Statements, there has been no Material Adverse Change in
such condition or operations of the Seller or the Depositor.
(h) Compliance With Law, Regulations, Etc. Except as disclosed in
writing to the Insurer or in the Offering Document, neither the Seller nor
the Depositor has notice or any reason to believe that any practice,
procedure or policy employed by the Seller or the Depositor in the conduct
of its business violates, any law, regulation, judgment or agreement
applicable to the Seller or the Depositor which, if enforced, would have a
material adverse effect on the ability of the Seller or the Depositor to
perform its obligations under the Transaction Documents. Except as
disclosed in writing to the Insurer or in the Offering Document, neither
the Seller nor the Depositor is in breach of or in default under any
applicable law or administrative regulation of any department, division,
agency or instrumentality which has jurisdiction over it or any applicable
judgment or decree or any loan agreement, note, resolution, certificate,
agreement or other instrument to which the Seller or the Depositor is a
party or is otherwise subject which would have a material adverse affect
on its or their ability to perform under the Transaction Documents.
(i) Delivery of Information. None of the Transaction Documents nor
any other documents, reports, notices, operating agreements, schedules,
certificates, statements or other writings (collectively, the
"Documents"), furnished to the Insurer by the Seller or the Depositor on
or before the Date of Issuance contain any statement of a material fact by
the Seller or the Depositor which was untrue or misleading in any material
respect when made. Since the furnishing of the Documents but prior to the
offering of the Insured Certificates, there has been no change nor any
development or event involving a prospective change which would render any
of the Transaction Documents untrue or misleading in a material respect.
(j) Continuing Information. The Seller or the Depositor shall deliver
to the Insurer concurrently with the delivery thereof to the Trustee the
statements, notices, reports or other information required by the Trust
Agreement to be delivered to the Insurer or the Certificateholders. Upon
the request of the Insurer, the Depositor shall furnish, with reasonable
promptness, any Financial Statements or data regarding the Trust.
(k) Access to Records; Discussions With Officers and Accountants. The
Depositor shall, upon the request of the Insurer, permit the Insurer, or
its authorized agent, at reasonable times and upon reasonable notice, to
inspect, the Depositor's books and records as they may relate to the
Certificates, the Mortgage Loans and the Depositor's obligations under the
Transaction Documents and to discuss the Depositor's affairs, finances and
accounts with an appropriate authorized officer of the Depositor.
(l) Notice of Material Events. The Seller and the Depositor shall be
obligated (which obligation shall be satisfied as to each if performed by
the Seller or the Depositor) promptly to inform the Insurer in writing of
the occurrence of any of the following to the extent any of the following
relate to it:
(i) the submission of any claim or the initiation or threat of
any legal process, litigation or administrative or judicial
investigation or rule making or disciplinary proceeding in any
federal, state or local court or before any arbitration board, or any
such proceeding threatened by any government agency, which, if
adversely determined, would have a material adverse effect on the
Seller , the Depositor, the Owners or the Insurer or would result in
a Material Adverse Change with respect to the Seller or the
Depositor;
(ii) the occurrence of any Default or Event of Default or of any
Material Adverse Change;
(iii) the commencement of any proceedings by or against the
Seller or the Depositor under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or other
similar law now or hereafter in effect or of any proceeding in which
a receiver, liquidator, conservator, trustee or similar official
shall have been, or may be, appointed or requested for the Seller or
the Depositor or any of its or their assets; or
(iv) the receipt of notice that (A) the Seller or the Depositor
is being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the conduct
of the Seller or the Depositor business is to be or may be suspended
or revoked, or (C) the Seller or the Depositor is to cease and desist
any practice, procedure or policy employed by the Seller or the
Depositor in the conduct of its business, and such cessation may
result in a Material Adverse Change with respect to the Seller or the
Depositor.
(m) Impairment of Rights. The Seller and the Depositor shall not take
any action, if such action will have a material adverse effect on the
Insurer's ability to enforce its rights under the Trust Agreement, or this
Agreement; provided, however, that this Section 2.01 (m) shall not
prohibit the Seller or the Depositor from taking any action it is required
to take pursuant to the Transaction Documents, any applicable law or order
of any court or regulatory authority with jurisdiction over the Seller,
the Depositor, the Transaction Documents or the Certificates.
(n) Securities Law Compliance. The Seller and the Depositor each
represent and warrant that neither the offer nor the sale of the
Certificates to the Underwriter has been or will be in violation of the
Securities Act or any federal or state securities laws. The Seller and the
Depositor each further represents and warrants that it is not required to
be registered as an "investment company" under the Investment Company Act
of 1940, as amended.
(o) Transcripts. The Seller and the Depositor shall, within 90 days
following the closing of the Transaction, provide each of the Insurer and
its counsel a final transcript containing the documents and opinions
executed in connection with the Transaction.
(p) Transaction Documents. Each of the representations and warranties
of the Seller and the Depositor contained in the Transaction Documents is
true and correct in all material respects, and the Seller and the
Depositor hereby make each such representation and warranty to, and for
the benefit of, the Insurer as if the same were set forth in full herein.
(q) Solvency; Fraudulent Conveyance. The Seller and the Depositor are
solvent and will not be rendered insolvent by the Transaction and, after
giving effect to the Transaction, neither the Seller nor the Depositor
will be left with an unreasonably small amount of capital with which to
engage in its business, nor does the Seller or the Depositor intend to
incur, or believe that it has incurred, debts beyond its ability to pay as
they mature. Neither of the Seller nor the Depositor contemplates the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of the Seller or the Depositor or
any of its or their assets. The amount of consideration being received by
the Depositor upon the sale of the Certificates to the Underwriter
constitutes reasonably equivalent value and fair consideration for the
interest in the Mortgage Loans evidenced by the Certificates. transferring
the Mortgage Loans to the Seller, the Seller is not transferring the
Mortgage Loans to the Depositor, the Depositor is not transferring the
Mortgage Loans to the Trust and the Depositor is not selling the
Certificates to the Underwriter, as provided in the Transaction Documents,
with any intent to hinder, delay or defraud any of the Seller's or the
Depositor's creditors.
(r) Compliance With Agreements and Applicable Laws. The Seller and
the Depositor shall comply in all material respects with the terms and
conditions of the Transaction Documents to which it is a party and shall
comply with all material requirements of any law, rule or regulation
applicable to it.
(s) Maintenance of Existence. The Seller and the Depositor, its or
their successors and assigns, shall maintain their corporate existence and
shall at all times continue to be duly organized under the laws of their
respective jurisdictions of organization and duly qualified and duly
authorized (as described in section 2.01(a), (b) and (c) hereof) and shall
conduct its business in accordance with the terms of its charter,
certificate or articles of incorporation and bylaws.
Section 2.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TRUSTEE. The
Trustee represents and warrants to, as of the Date of Issuance, and covenants
with the other parties hereto as follows:
(a) Due Organization and Qualification. The Trustee is a national
banking association, duly organized, validly existing and in good standing
under the laws of the United States. The Trustee is duly qualified to do
business, is in good standing and has obtained all licenses, permits,
charters, registrations and approvals (together, "approvals") necessary
for the conduct of its business as currently conducted and as described in
the Offering Document and the performance of its obligations under the
Transaction Documents, in each jurisdiction in which the failure to be so
qualified or to obtain such approvals would render any Transaction
Document unenforceable in any respect or would have a material adverse
effect upon the Transaction, the Owners or the Insurer.
(b) Due Authorization. The execution, delivery and performance of the
Transaction Documents by the Trustee have been duly authorized by all
necessary action and do not require any additional approvals or consents,
or other action by or any notice to or filing with any Person, including,
without limitation, any governmental entity or the Trustee's stockholders,
which have not previously been obtained or given by the Trustee.
(c) Noncontravention. Neither the execution and delivery of the
Transaction Documents by the Trustee, the consummation of the transactions
contemplated thereby nor the satisfaction of the terms and conditions of
the Transaction Documents:
(i) conflicts with or results in any breach or violation of any
provision of the certificate or articles of incorporation or bylaws
of the Trustee or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to the Trustee or any of its material properties,
including regulations issued by an administrative agency or other
governmental authority having supervisory powers over the Trustee;
(ii) constitutes a default by the Trustee under or a breach of
any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Trustee is a party or by which
any of its or their respective properties, which are individually or
in the aggregate material to the Trustee, is or may be bound or
affected; or
(iii) results in or requires the creation of any lien upon or in
respect of any assets of the Trustee, except as contemplated by the
Transaction Documents.
(d) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Trustee, or any of its
subsidiaries, or any properties or rights of the Trustee, or any of its
subsidiaries, pending or, to the Trustee's knowledge after reasonable
inquiry, threatened, which, in any case, could reasonably be expected to
result in a Material Adverse Change with respect to the Trustee.
(e) Valid and Binding Obligations. The Insured Certificates, when
executed, authenticated and issued in accordance with the Trust Agreement,
and the Transaction Documents (other than the Insured Certificates) to
which it is a party, when executed and delivered by the Trustee, will
constitute the legal, valid and binding obligations of the Trustee, as
applicable, enforceable in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles. The Trustee will not at
any time in the future deny that the Transaction Documents constitute the
legal, valid and binding obligations of the Trustee.
(f) Compliance With Law, Etc. No practice, procedure or policy
employed, or proposed to be employed, by the Trustee in the conduct of its
business violates any law, regulation, judgment, agreement, order or
decree applicable to any of them that, if enforced, could reasonably be
expected to result in a Material Adverse Change with respect to the
Trustee. The Trustee is not in breach of or in default under any
applicable law or administrative regulation of its respective jurisdiction
of incorporation, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other
instrument to which the Trustee is a party or is otherwise subject which,
if enforced, would have a material adverse effect on the ability of the
Trustee to perform its obligations under the Transaction Documents.
(g) Transaction Documents. Each of the representations and warranties
of the Trustee contained in the Transaction Documents is true and correct
in all material respects, and the Trustee hereby makes each such
representation and warranty to, and for the benefit of, the Insurer as if
the same were set forth in full herein.
(h) Compliance. The Trustee shall comply in all material respects
with the terms and conditions of the Transaction Documents to which it is
a party.
ARTICLE III
THE POLICY; REIMBURSEMENT; SECURITY
Section 3.01. AGREEMENT TO ISSUE THE POLICY. The Insurer agrees, subject
to the conditions set forth in Section 3.02 hereof, to issue the Policy on the
Date of Issuance.
Section 3.02. CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICY. The Seller,
the Depositor and the Underwriter shall have complied with the terms and
satisfied the conditions precedent set forth below:
(a) the Underwriter shall have paid or caused to be paid that portion
of a non-refundable Premium, if any, payable on the Date of Issuance in
accordance with Section 3.03 hereof;
(b) the Seller and the Depositor shall have complied with all
requirements of the Commitment;
(c) the Insurer shall have received true and correct copies of any
governmental approvals necessary for the transactions contemplated by this
Agreement and the Trust Agreement or a certificate to the effect that no
such approvals are necessary;
(d) the Insurer shall have received a certificate of an authorized
officer of the Seller and the Depositor certifying the name and true
signatures of the officers of the Seller and the Depositor executing the
Transaction Documents; and
(e) the Insurer shall have received confirmation that the risk
secured by the Policy constitutes a "AAA" risk by S&P and at least "Aaa"
by Moody's and that the Insured Certificates, when issued, will be rated
"AAA" by S&P without regard to the Policy.
Issuance of the Policy will be conclusive evidence of satisfaction or waiver
of any of the conditions set forth in this Section 3.02.
Section 3.03. PAYMENT OF FEES AND PREMIUM.
(a) In consideration of the issuance by the Insurer of the Policy,
the Insurer shall be entitled to receive a premium (the "Premium") in
accordance with the terms of the Commitment. The Premium shall be
calculated according to paragraph 1 of the Commitment. The Premium paid
hereunder shall be nonrefundable without regard to whether the Insurer
makes any payment under the Policy or any other circumstances relating to
the Insured Certificates or provision being made for payment of the
Insured Certificates prior to maturity. The Trustee shall make all
payments of Premium to be made by it by wire transfer to an account
designated by the Insurer by written notice to the Trustee.
(b) The Underwriter shall pay the fees of the Insurer's counsel in
connection with the Transaction, Moody's fees for the shadow rating, S&P's
fees and the cost of obtaining the Insurer's accountant's consent letter.
Section 3.04. PAYMENT PROCEDURE. All payments to be made to the Insurer
under this Agreement shall be made to the Insurer in lawful currency of the
United States of America in immediately available funds at the notice address
for the Insurer as specified in the Trust Agreement on the date when due.
Payments to be made to the Insurer under this Agreement shall bear interest at
the Late Payment Rate from the date when due to the date paid, provided that
reimbursement to the Insurer of Insured Payments shall be made from the assets
of the Trust in accordance with the terms of the Trust Agreement at the Late
Payment Rate. If the Trustee is required to pay any amounts to the Insurer from
moneys available therefor under the Trust Agreement and the Trustee fails
timely to pay any such amount at a time when such moneys are available, the
Trustee shall, from the Trustee's own funds, reimburse the Seller or the
Depositor, as applicable, for any resulting penalty interest if the Trustee's
failure was due to negligence, bad faith or willful misconduct.
Section 3.05. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION OF THE
SELLER AND THE DEPOSITOR.
(a) In accordance with the priorities established in Section 5.02 of
the Trust Agreement, the Insurer shall be entitled to reimbursement for
any payment made by the Insurer under the Policy, which reimbursement
shall be due and payable on the date that any amount is to be paid
pursuant to a Notice (as defined in the Policy), in an amount equal to the
amount to be so paid and all amounts previously paid that remain
unreimbursed, together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect of any
unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a
rate of interest equal to the Late Payment Rate.
(b) Notwithstanding anything in Section 3.03(a) to the contrary, the
Seller agrees to reimburse the Insurer for payments made under the Policy
arising as a result of the applicable Seller's failure to repurchase any
Mortgage Loan required to be repurchased pursuant to Section 1.04 of the
Mortgage Loan Sale and Assignment Agreement, together with interest on any
and all amounts remaining unreimbursed (to the extent permitted by law, if
in respect of any unreimbursed amounts representing interest) from the
date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(c) The Seller and the Depositor each agree to reimburse the Insurer,
immediately upon receipt of two Business Days' prior written notice, for
any and all charges, fees, costs and expenses that the Insurer may
reasonably pay or incur including, but not limited to, reasonable
attorneys' and accountants' fees and reasonable expenses, in connection
with (a) the enforcement, defense or preservation of any rights in respect
of any of the Transaction Documents, including defending or participating
in any litigation or proceeding (including any insolvency or bankruptcy
proceeding in respect of any Transaction participant or any affiliate
thereof) relating to any of the Transaction Documents, any party to any of
the Transaction Documents, in its capacity as such a party, or the
Transaction, provided that the foregoing arises out of the Seller's or the
Depositor's breach or alleged breach of its or their obligations under the
applicable Transaction Document or (b) any amendment of any Transaction
Document, whether or not executed or completed.
(d) The Seller and the Depositor agree to pay to the Insurer as
follows: any payments made by the Insurer on behalf of, or advanced to the
Seller or the Depositor, respectively, including, without limitation, any
amounts payable by the Seller or the Depositor pursuant to the
Certificates or any other Transaction Documents.
All such amounts are to be immediately due and payable without demand.
Section 3.06. INDEMNIFICATION BY THE SELLER AND THE DEPOSITOR.
(a) In addition to any and all rights of indemnification or any other
rights of the Insurer pursuant hereto or under law or equity, the Seller
and the Depositor and any successors thereto agree to pay, and to protect,
indemnify and save harmless, the Insurer and its officers, directors,
shareholders, employees, agents and each person, if any, who controls the
Insurer within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act from and against any and all
claims, losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or reasonable expenses (including,
without limitation, reasonable fees and expenses of attorneys, consultants
and auditors and reasonable costs of investigations) or obligations
whatsoever paid by the Insurer (herein collectively referred to as
"Liabilities") of any nature arising out of or relating to the
transactions contemplated by the Transaction Documents by reason of:
(i) any act or omission of the Seller or the Depositor, or the
allegation thereof, in connection with the offering, issuance, sale
or delivery of the Certificates other than by reason of false or
misleading information provided by the Insurer in writing for
inclusion in the Offering Document, which is contained in the caption
"The Class 2-A3 Certificate Insurance Policy" of the Offering
Document;
(ii) the misfeasance or malfeasance of, or negligence or theft
committed by, any director, officer, employee or agent of the Seller
or the Depositor;
(iii) the violation by the Seller or the Depositor of any
federal or state securities, banking or antitrust laws, rules or
regulations in connection with the issuance, offer and sale of the
Certificates or the transactions contemplated by the Transaction
Documents;
(iv) the violation by the Seller or the Depositor of any federal
or state laws, rules or regulations relating to the Transaction,
including without limitation the maximum amount of interest permitted
to be received on account of any loan of money or with respect to the
Mortgage Loans;
(v) the breach by the Seller or the Depositor of any of its
obligations under this Insurance Agreement or any of the other
Transaction Documents; and
(vi) the breach by the Seller or the Depositor of any
representation or warranty on the part of the Seller or the Depositor
contained in the Transaction Documents or in any certificate or
report furnished or delivered to the Insurer thereunder.
This indemnity provision and the provisions in Section 3.05 shall
survive the termination of this Insurance Agreement and shall survive
until the statute of limitations has run on any causes of action which
arise from one of these reasons and until all suits filed as a result
thereof have been finally concluded.
(b) Each of the Seller and the Depositor agree to pay to the Insurer
interest on any and all amounts required to be paid by the Seller or the
Depositor, including but not limited to those amounts described in Section
3.05 and this Section 3.06, from the date payable until payment thereof is
made in full. Such interest shall be payable at the Late Payment Rate per
annum.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall take
effect on the date on which the Policy is issued and shall remain in effect
until such time as the Insurer is no longer subject to a claim under the Policy
and all amounts payable by the Seller or the Depositor hereunder or under the
Trust Agreement and under the Certificates have been paid in full; provided,
however, that the provisions of Sections 3.05 and 3.06 shall survive any
termination of this Agreement.
Section 4.02. WAIVER OF RIGHTS FURTHER ASSURANCES.
(a) Excepting at such times as a default in payment under the Policy
shall exist or shall have occurred, none of the Trustee, the Seller or the
Depositor shall grant any waiver of rights under any of the Transaction
Documents to which any of them is a party without the prior written
consent of the Insurer, (unless such waiver is expressly permitted in the
applicable Transaction Document) and any such waiver without the prior
written consent of the Insurer shall be null and void and of no force or
effect.
(b) To the extent permitted by law, the Trustee, the Seller and the
Depositor agree that they will, from time to time, following good faith
negotiations in connection therewith, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto
and such further instruments as the Insurer may request and as may be
required in the Insurer's judgment to effectuate the intention of or
facilitate the performance of this Insurance Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE. The obligations of the Seller, the
Depositor and the Trustee hereunder shall be absolute and unconditional, and
shall not be subject to, and the Seller, the Depositor and the Trustee hereby
waive (a) presentment and demand for payment, (b) notices in connection with
delivery and acceptance hereof or notices in connection with performance,
default or enforcement of payment hereunder and (c) its rights of, abatement,
diminution, postponement or deduction, or to any defense other than payment, or
to any right of setoff or recoupment arising out of any breach under any of the
Transaction Documents, by any party thereto or any beneficiary thereof, or out
of any obligation at any time owing to the Seller, the Depositor or the
Trustee. Nothing herein shall be construed as prohibiting the Seller, the
Depositor or the Trustee from pursuing any rights or remedies it may have
against any other person or entity in a separate legal proceeding. The
obligations of the Seller, the Depositor and the Trustee hereunder are absolute
and unconditional and will be paid or performed strictly in accordance with
this Agreement.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.
(a) This Agreement shall be a continuing obligation of the Seller and
the Depositor and shall (i) be binding upon the Seller and the Depositor,
its or their successors and assigns and (ii) inure to the benefit of and
be enforceable by the Insurer and its successors, transferees and assigns.
Neither the Seller nor the Depositor may assign this Agreement, or
delegate any of its rights or obligations hereunder, without the prior
written consent of the Insurer.
(b) The Insurer shall have the right to give participations in its
rights under this Agreement and to enter into contracts of reinsurance
with respect to the Policy and each such participant or reinsurer shall be
entitled to the benefit of any representation, warranty, covenant and
obligation of the Seller or the Depositor hereunder as if such participant
or reinsurer was a party hereto; provided that no such grant of
participation shall operate to relieve the Insurer of any of its
obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or pledge to
any bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Insurer in connection therewith any
rights of the Insurer under the Transaction Documents or with respect to
any real or personal property or other interests pledged to the Insurer,
or in which the Insurer has a security interest, in connection with the
Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or
claim, express or implied, upon any person, including, particularly, any
Holder of a Certificate, other than the Insurer, against the Seller and
the Depositor and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive benefit of
the parties hereto and their successors. Neither the Trustee nor any
Holder of a Certificate shall have any right to payment from the premium
paid pursuant to Section 3.03 hereof.
Section 4.05. LIABILITY OF INSURER.The Insurer shall not be responsible
for any act or omission of the Trustee with respect to its use of the Policy.
Neither the Insurer nor any of its officers, directors or employees shall be
liable or responsible for: (a) the use which may be made of the Policy by or
for any acts or omissions of the Trustee in connection therewith; or (b) the
validity, sufficiency, accuracy or genuineness of documents, or of any
endorsement(s) thereon, submitted by any person in connection with a claim
under the Policy, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged, unless the Insurer
has actual knowledge thereof. In furtherance and not in limitation of the
foregoing, the Insurer may accept documents that appear on their face to be in
order, without responsibility for further investigation.
Section 4.06. SUBROGATION. To the extent of any payments under the Policy,
the Insurer shall be fully subrogated to any remedies against the Seller or the
Depositor or in respect of the Mortgage Loans available to the Trustee under
the Trust Agreement. The Trustee acknowledges such subrogation and, further,
agrees to execute such instruments prepared by the Insurer and to take such
reasonable actions as, in the sole judgment of the Insurer, are necessary to
evidence such subrogation and to perfect the rights of the Insurer to receive
any moneys paid or payable under the Trust Agreement.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) any representation or warranty made by the Seller or the
Depositor under this Agreement shall prove to be untrue or incomplete in
any material respect; provided, however, that if the Seller or the
Depositor effectively cures any such defect in any representation or
warranty under such agreement within the time period specified in such
agreement as the cure period therefor, such defect shall not in and of
itself constitute an Event of Default hereunder; or
(b) either the Seller or the Depositor shall fail to pay to the
Insurer when due any amount payable by the Seller or the Depositor under
this Agreement, or the Trust Agreement, unless such amounts are paid in
full within the applicable cure period explicitly provided for under such
agreement; or
(c) the occurrence of an Event of Default under Section 10.01 of the
Servicing Agreement (as defined therein).
Section 5.02. REMEDIES; NO REMEDY EXCLUSIVE.
(a) Upon the occurrence of an Event of Default, the Insurer may
exercise any one or both of the rights and remedies set forth below:
(i) exercise any rights and remedies under this Agreement or the
Trust Agreement, as applicable, in accordance with their terms; or
(ii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then
due and thereafter to become due under this Agreement, or to enforce
performance and observance of any obligation, agreement or covenant
of the Seller or the Depositor under this Agreement or the Trust
Agreement, as applicable.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to
other remedies given under the Transaction Documents or existing at law or
in equity. No delay or omission to exercise any right or power accruing
under the Transaction Documents upon the happening of any event set forth
in Section 5.01 hereof shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In
order to entitle the Insurer to exercise any remedy reserved to the
Insurer in this Article, it shall not be necessary to give any notice,
other than such notice as may be expressly required in this Article.
Section 5.03. WAIVERS.
(a) No failure by any of the parties to exercise, and no delay by any
of the parties in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by any of the parties of any right hereunder
shall not preclude the exercise of any other right, and the remedies
provided herein to each of the parties are declared in every case to be
cumulative and not exclusive of any remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting
forth the terms, conditions and extent of such waiver signed by the
Insurer and delivered to the Seller and the Depositor. Unless such writing
expressly provides to the contrary, any waiver so granted shall extend
only to the specific event or occurrence which gave rise to the Event of
Default so waived and not to any other similar event or occurrence which
occurs subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement may be
amended, changed, modified, altered or terminated only by written instrument or
written instruments signed by the Insurer, the Trustee, the Seller and the
Depositor. The Seller, the Depositor and the Insurer also agree to provide
prior written notification to Moody's and S&P of any amendment to this
Agreement.
Section 6.02. NOTICES. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered or
telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-Structured
Finance (IPM-SF)
First Nationwide Trust 1999-1 Structured
Asset Securities Corporation
Mortgage Pass-Through Certificates,
Series 1999-1 Class 2-A3 Certificates
Telecopy No.: (914) 765-3810
Confirmation: (914) 765-3781
(in each case in which notice or other
communication to the Insurer refers to an Event of
Default, a claim on the Policy or with respect to
which failure on the part of the Insurer to respond
shall be deemed to constitute consent or
acceptance, then a copy of such notice or other
communication should also be sent to the attention
of each of the general counsel and the Insurer and
shall be marked to indicate "URGENT MATERIAL
ENCLOSED.")
(b) To the Depositor:
Structured Asset Securities Corporation
200 Vesey Street, 12th Floor
3 World Financial Center
New York, NY 10285
Attention: Structured Finance/ SASCO 1999-1
Telecopy No.: 212-526-7209
Confirmation: 212-526-7000
(c) To the Trustee:
U.S. Bank National Association
180 East Fifth Street
St. Paul, MN 55101
Attention: Structured Finance (First Nationwide Trust 1999-1/
Sasco1999-1)
(d) To the Seller:
Lehman Capital
200 Vesey Street, 12th Floor
3 World Financial Center
New York, NY 10285
Attention: Christopher Epes/Lehman Brothers (Legal)
Telecopy No.: 212-526-3721
Confirmation: 212-526-7000
Section 6.03. SEVERABILITY. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
the parties hereto agree that such holding shall not invalidate or render
unenforceable any other provision hereof. The parties hereto further agree that
the holding by any court of competent jurisdiction that any remedy pursued by
any party hereunder is unavailable or unenforceable shall not affect in any way
the ability of any party to pursue any other remedy available to it.
Section 6.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED,
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.05. CONSENT TO JURISDICTION AND VENUE, ETC. The parties hereto
irrevocably (i) agree that any suit, action or other legal proceeding arising
out of or relating to this Agreement may be brought in a court of record in the
Borough of Manhattan, City of New York, State of New York or in the Courts of
the United States of America located in such state, (ii) consent to the
jurisdiction of each such court in any such suit, action or proceeding and
(iii) waive any objection which it may have to the laying of venue of any such
suit, action or proceeding in any of such courts and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum.
Nothing in this Section 6.05 shall limit or affect the right of the
Insurer to serve legal process in any manner permitted by law or to start legal
proceedings relating to any Transaction Document against any party hereto or
its or their respective property in the courts of any jurisdiction.
Section 6.06. CONSENT OF INSURER. In the event that the Insurer's consent
is required under the terms hereof or any term of the Trust Agreement, it is
understood and agreed that, except as otherwise provided expressly herein or
therein, the determination whether to grant or withhold such consent shall be
made solely by the Insurer in its absolute discretion. The Insurer hereby
agrees that it will respond to any request for consent in a timely manner,
taking into consideration the business of the Depositor.
Section 6.07. COUNTERPARTS. This Agreement may be executed in counterparts
by the parties hereto, and each such counterpart shall be considered an
original and all such counterparts shall constitute one and the same
instrument.
Section 6.08. HEADINGS. The headings of sections contained in this
Agreement are provided for convenience only. They form no part of this
Agreement and shall not affect its construction or interpretation. All
references to sections or subsections of this Agreement refer to the
corresponding sections or subsections of this Agreement.
Section 6.09. WAIVER OF TRIAL BY JURY. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, AMONG OTHER THINGS, THIS WAIVER.
Section 6.10. ENTIRE AGREEMENT. This Agreement and the Policy set forth
the entire agreement between the parties with respect to the subject matter
thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date
hereof in respect of such subject matter.
Section 6.11. THIRD PARTY BENEFICIARY. Each of the parties hereto
acknowledges that the Insurer shall be an express third party beneficiary of
the Trust Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all
as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By /s/ Lisa A Wilson
----------------------------------
Title Assistant Secretary
STRUCTURED ASSET SECURITIES COPORATION,
as Depositor
By /s/ Neal Leonard
----------------------------------
Title Managing Director
LEHMAN CAPITAL, as Seller
By /s/ Joseph J. Kelly
----------------------------------
Title Authorized Signatory
U. S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Tamara M. Schultz-Fugh
----------------------------------
Title Assistant Vice President
FIRST NATIONWIDE 1999-1
Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1999-1
INSURANCE AGREEMENT
SIGNATURE PAGE
=============================================================================
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
SELLER
and
STRUCTURED ASSET SECURITIES CORPORATION
PURCHASER
MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT
Dated as of February 1, 1999
=============================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
1.01. Sale of Mortgage Loans............................................1
1.02. Delivery of Documents.............................................2
1.03. Review of Documentation...........................................2
1.04. Representations and Warranties of Lehman Capital..................2
1.05. Grant Clause......................................................6
1.06 Assignment by Depositor...........................................6
ARTICLE II
MISCELLANEOUS PROVISIONS
2.01. Binding Nature of Agreement; Assignment...........................7
2.02. Entire Agreement..................................................7
2.03. Amendment.........................................................7
2.04. Governing Law.....................................................8
2.05. Severability of Provisions........................................8
2.06. Indulgences; No Waivers...........................................8
2.07. Headings Not to Affect Interpretation.............................8
2.08. Benefits of Agreement.............................................8
2.09. Counterparts......................................................8
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
<PAGE>
This MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT is executed by and
between Lehman Capital, A Division of Lehman Brothers Holdings Inc. ("Lehman
Capital"), and Structured Asset Securities Corporation (the "Depositor"), and
acknowledged by First Nationwide Mortgage Corporation ("FNMC"), as of the 1st
day of February, 1999.
All capitalized terms not defined herein shall have the same meanings
assigned to such terms in that certain Trust Agreement (the "Trust Agreement"),
dated as of February 1, 1999, between the Depositor and U.S. Bank, National
Association, as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, pursuant to each of the FNMCs' Warranties and Servicing
Agreement, as purchaser, dated as of February 1, 1999 (the "Sale and Servicing
Agreement"), between Lehman Capital, and FNMC, as seller and servicer, FNMC
sold to Lehman Capital, and Lehman Capital purchased from the FNMC, certain
mortgage loans identified on the Mortgage Loan Schedule attached hereto as
Schedule A (the "Mortgage Loans"), and FNMC agreed to service such Mortgage
Loans according to the provisions thereof;
WHEREAS, pursuant to Section 12.10 of the Sale and Servicing Agreement,
the parties thereto agreed that, following the execution of such agreement,
Lehman Capital would (i) sell the Mortgage Loans to the Depositor, and (ii)
assign all of its rights and interest under the Sale and Servicing Agreement,
and delegate all of its obligations thereunder, to the Depositor, as if the
Depositor had been a party to the Sale and Servicing Agreement;
WHEREAS, Lehman Capital and the Depositor acknowledge and agree that the
Depositor will assign all of its rights and delegate all of its obligations
hereunder to the Trustee, and that each reference herein to the Depositor is
intended, unless otherwise specified, to mean the Depositor or the Trustee, as
assignee, whichever is the owner of the Mortgage Loans from time to time; and
WHEREAS, Lehman Capital desires to sell, without recourse, all of its
right, title and interest in the Mortgage Loans to the Depositor, to assign all
of its rights and interest under the Sale and Servicing Agreement, and to
delegate all of its obligations thereunder, to the Depositor.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Lehman Capital and the Depositor agree as
follows:
ARTICLE I.
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans. Concurrently with the execution and
delivery of this Agreement, Lehman Capital does hereby transfer, assign, set
over, deposit with and otherwise convey to the Depositor, without recourse, all
the right, title and interest of Lehman Capital in and to the Mortgage Loans
identified on Schedule A hereto, having an aggregate principal balance as of
the Cut-off Date of $833,936,659. Such conveyance includes, without limitation,
the right to all distributions of principal and interest received by Capital
pursuant to the Sale and Servicing Agreement on or with respect to the Mortgage
Loans on and after February 1, 1999 (other than payments of principal and
interest due on or before such date), and all such payments due after such date
but received prior to such date and intended by the related Mortgagors to be
applied after such date, together with all of Lehman Capital's right, title and
interest in and to each related account and all amounts from time to time
credited to and the proceeds of such account, any REO Property and the proceeds
thereof, Lehman Capital's rights under any Insurance Policies related to the
Mortgage Loans, and Lehman Capital's security interest in any collateral
pledged to secure the Mortgage Loans, including the Mortgaged Properties, any
Additional Collateral and any proceeds of the foregoing.
Concurrently with the execution and delivery of this Agreement, Lehman
Capital hereby assigns to the Depositor all of its rights and interest under
the Sale and Servicing Agreement, and delegates to the Depositor all of its
obligations under the Sale and Servicing Agreement. Concurrently with the
execution hereof, the Depositor tenders the purchase price of $833,936,659
(including accrued interest). The Depositor hereby accepts such assignment and
delegation, and shall be entitled to exercise all such rights of Lehman Capital
under the Sale and Servicing Agreement, as if the Depositor had been a party to
the Sale and Servicing Agreement.
Section 1.02. Delivery of Documents. (a) In connection with such transfer
and assignment of the Mortgage Loans hereunder, Lehman Capital does hereby
deliver, or cause to be delivered, to the Depositor (or its designee) the
documents or instruments with respect to each Mortgage Loan (each a "Mortgage
File") so transferred and assigned, as specified in the Sale and Servicing
Agreement.
(b) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the related Mortgage Files, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Servicer for such purpose have been
so deposited.
Section 1.03. Review of Documentation. The Depositor, by execution and
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by U.S. Bank Trust National Association (the "Trustee"), or its custodian. The
Trustee or its custodian is required to review, within 45 days following the
Closing Date, the Mortgage File. If in the course of such review the Trustee or
its custodian identifies any Material Defect, Lehman Capital shall be obligated
to cure such defect or to repurchase the related Mortgage Loan from the
Depositor (or, at the direction of and on behalf of the Depositor, from the
Trust Fund), or to substitute a Qualifying Substitute Mortgage Loan therefor,
in each case to the same extent and in the same manner as the Depositor is
obligated to the Trustee and the Trust Fund under Section 2.02(c) of the Trust
Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. (a) Lehman
Capital hereby represents and warrants to the Depositor that as of the date
hereof that:
(i) Lehman Capital is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and has full corporate power and authority to own its property, to
carry on its business as presently conducted, and to enter into and perform its
obligations under this Agreement;
(ii) the execution and delivery by Lehman Capital of this
Agreement have been duly authorized by all necessary corporate action on the
part of Lehman Capital; neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on Lehman Capital or its
properties or the certificate of incorporation or bylaws of Lehman Capital;
(iii) the execution, delivery and performance by Lehman Capital
of this Agreement and the consummation of the transactions contemplated hereby
do not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except such as has been
obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by
Lehman Capital and, assuming due authorization, execution and delivery by the
Depositor, constitutes a valid and binding obligation of Lehman Capital
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of the rights of creditors
generally and (B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at law; and
(v) there are no actions, suits or proceedings pending or, to
the knowledge of Lehman Capital, threatened or likely to be asserted against or
affecting Lehman Capital, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the transactions
contemplated by this Agreement or (B) with respect to any other matter which in
the judgment of Lehman Capital will be determined adversely to Lehman Capital
and will if determined adversely to Lehman Capital materially and adversely
affect it or its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its obligations under
this Agreement.
(b) The representations and warranties of FNMC with respect to the
related Mortgage Loans in the Sale and Servicing Agreement were made as of the
date specified in the Sale and Servicing Agreement. To the extent that any
fact, condition or event with respect to a Mortgage Loan constitutes a breach
of both (i) a representation or warranty of FNMC under the Sale and Servicing
Agreement and (ii) a representation or warranty of Lehman Capital under this
Agreement, the only right or remedy of the Depositor shall be the right to
enforce the obligations of FNMC under any applicable representation or warranty
made by it. The Depositor acknowledges and agrees that the representations and
warranties of Lehman Capital in this Section 1.04(b) are applicable only to
facts or conditions that arise or events that occur subsequent to the date as
of which the representation and warranties with respect to the related Mortgage
Loans in the Sale and Servicing Agreement were made, and which do not
constitute a breach of any representation or warranty made by FNMC in Section
3.02 of the Sale and Servicing Agreement. Lehman Capital shall have no
obligation or liability with respect to any breach of a representation or
warranty made by it with respect to the Mortgage Loans if the fact, condition
or event constituting such breach also constitutes a breach of a representation
or warranty made by FNMC in Section 3.02 of the Sale and Servicing Agreement,
without regard to whether FNMC fulfills its contractual obligations in respect
of such representation or warranty. Subject to the foregoing, Lehman Capital
represents and warrants upon delivery of the Mortgage Loans to the Depositor
hereunder, as to each, that:
(i) The information set forth with respect to the Mortgage Loans
on the Mortgage Loan Schedule provides an accurate listing of the Mortgage
Loans, and the information with respect to each Mortgage Loan on the Mortgage
Loan Schedule is true and correct in all material respects at the date or dates
respecting which such information is given;
(ii)There are no defaults in complying with the terms of any
Mortgage, and Lehman Capital has no notice as to any taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing but which have
not been paid;
(iii) Each Mortgage requires all buildings or other improvements
on the related Mortgaged Property to be 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 related Mortgaged Property is
located pursuant to insurance policies conforming to the requirements of the
guidelines of FNMA or FHLMC. If upon origination of the Mortgage Loan, the
Mortgaged Property was in an area identified in the Federal Register 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 Flood Insurance
Administration is in effect which policy conforms to the requirements of the
current guidelines of the Federal Flood Insurance Administration. All
individual insurance polices contain a standard mortgagee clause naming FNMC
and its successors and assigns as mortgagee, and all premiums thereon have been
paid. Each Mortgage obligates the related Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state law or
regulation, each Mortgagor has been given an opportunity to choose the carrier
of the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering the common facilities of a planned
unit development. The hazard insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of the Depositor upon the
consummation of the transactions contemplated by this Agreement.
(iv) Each Mortgage has not been satisfied, cancelled,
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 release, cancellation,
subordination or recision;
(v) Each Mortgage evidences a valid, subsisting, enforceable and
perfected first lien on the related Mortgaged Property (including all
improvements on the Mortgaged Property). The lien of the Mortgage is subject
only to: (1) liens of current real property taxes and assessments not yet due
and payable and, if the related Mortgaged Property is a condominium unit, any
lien for common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public record as of
the date of recording of such Mortgage acceptable to mortgage lending
institutions in the area in which the related Mortgaged Property is located and
specifically referred to in the lender's Title Insurance Policy or attorney's
opinion of title and abstract of title delivered to the originator of such
Mortgage Loan, and (3) such other matters to which like properties are commonly
subject which do not, individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the Mortgage. Any
security agreement, chattel mortgage or equivalent document related to, and
delivered to the Trustee in connection with, a Mortgage Loan establishes a
valid, subsisting and enforceable first lien on the property described therein
and the Depositor has full right to sell and assign the same to the Trustee;
(vi) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Depositor, Lehman Capital was the sole owner of record
and holder of each Mortgage Loan, and Lehman Capital had good and marketable
title thereto, and has full right to transfer and sell each Mortgage Loan to
the Depositor free and clear, except as described in paragraph (v) above, of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement;
(vii) Each Mortgage Loan is covered by either (i) an attorney's
opinion of title and abstract of title the form and substance of which is
generally acceptable to mortgage lending institutions originating mortgage
loans in the locality where the related Mortgaged Property is located or (ii)
an ALTA mortgagee Title Insurance Policy or other generally acceptable form of
policy of insurance, issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the originator
of the Mortgage Loan, and its successors and assigns, as to the first priority
lien of the Mortgage in the original principal amount of the Mortgage Loan
(subject only to the exceptions described in paragraph (v) above. If the
Mortgaged Property is a condominium unit located in a state in which a title
insurer will generally issue an endorsement, then the related Title Insurance
Policy contains an endorsement insuring the validity of the creation of the
condominium form of ownership with respect to the project in which such unit is
located. With respect to any Title Insurance Policy, the originator is the sole
insured of such mortgagee Title Insurance Policy, such mortgagee Title
Insurance Policy is in full force and effect and will inure to the benefit of
the Depositor upon the consummation of the transactions contemplated by this
Agreement, no claims have been made under such mortgagee Title Insurance Policy
and no prior holder of the related Mortgage, including Lehman Capital, has
done, by act or omission, anything that would impair the coverage of such
mortgagee Title Insurance Policy;
(viii) To the best of Lehman Capital's knowledge, no foreclosure
action is being threatened or commenced with respect to any Mortgage Loan.
There is no proceeding pending for the total or partial condemnation of any
Mortgaged Property (or, in the case of a Cooperative Loan, the related
cooperative unit) and each such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, so
as to have a material adverse effect on the value of the related Mortgaged
Property as security for the related Mortgage Loan or the use for which the
premises were intended;
(ix) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under the law could give rise to such liens) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;
(x) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
similar institution which is supervised and examined by a Federal or State
authority, or by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to sections 203 and 211 of the National Housing Act; and
(xi) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G of the Code and Treas. Reg. ss.1.860G-2.
It is understood and agreed that the representations and warranties set
forth herein survive delivery of the Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Depositor. Upon discovery by either
Lehman Capital or the Depositor of a breach of any of the foregoing
representations and warranties that adversely and materially affects the value
of the related Mortgage Loan, and that does not also constitute a breach of a
representation or warranty of FNMC under Section 3.02 of the Sale and Servicing
Agreement, the party discovering such breach shall give prompt written notice
to the other party. Within 60 days of the discovery of any such breach, Lehman
Capital shall either (a) cure such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect thereof from
the Depositor at the applicable Purchase Price or (c) within the two-year
period following the Closing Date, substitute a Qualifying Substitute Mortgage
Loan for the affected Mortgage Loan.
Section 1.05. Grant Clause. It is intended that the conveyance of Lehman
Capital's right, title and interest in and to Mortgage Loans and other property
conveyed pursuant to this Agreement shall constitute, and shall be construed
as, a sale of such property and not a grant of a security interest to secure a
loan. However, if such conveyance is deemed to be in respect of a loan, it is
intended that: (1) the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement; (2) Lehman Capital hereby
grants to the Depositor a first priority security interest in all of Lehman
Capital's right, title and interest in, to and under, whether now owned or
hereafter acquired, such Mortgage Loans and other property; and (3) this
Agreement shall constitute a security agreement under applicable law.
Section 1.06. Assignment by Depositor. The Depositor shall have the right,
upon notice to but without the consent of Lehman Capital, to assign, in whole
or in part, its interest under this Agreement, with respect to the Mortgage
Loans to the Trustee, and the Trustee then shall succeed to all rights of the
Depositor under this Agreement. All references to the Depositor in this
Agreement shall be deemed to include its assignee or designee, specifically
including the Trustee.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof.
Section 2.03. Amendment. (a) This Agreement may be amended from time to
time by Lehman Capital and the Depositor, without notice to or the consent of
any of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund, the Trust Agreement or
this Agreement in any Offering Document; or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement or (iv) to add, delete, or amend any provisions to the
extent necessary or desirable to comply with any requirements imposed by the
Code and the REMIC Provisions. No such amendment effected pursuant to clause
(iii) of the preceding sentence shall adversely affect in any material respect
the interests of any Holder. Any such amendment shall be deemed not to
adversely affect in any material respect any Holder, if the Trustee receives
written confirmation from each Rating Agency that such amendment will not cause
such Rating Agency to reduce the then current rating assigned to the
Certificates (and any Opinion of Counsel requested by the Trustee in connection
with any such amendment may rely expressly on such confirmation as the basis
therefor).
(b) This Agreement may also be amended from time to time by Lehman
Capital and the Depositor with the consent of the Holders of not less than
66-2/3% of the Class Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which
are required to be distributed on any Certificate without, the consent of the
Holder of such Certificate or (ii) reduce the aforesaid percentages of Class
Certificate Principal Amount (or Percentage Interest) of Certificates of each
Class, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Class Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby.
For purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of any Class of Book-Entry Certificates, the
related Certificate Owners.
(c) It shall not be necessary for the consent of Holders under this
Section 2.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Section 2.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 2.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 2.06. Indulgences; No Waivers. Neither the failure nor any delay
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.
Section 2.07. Headings Not to Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 2.08. Benefits of Agreement. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties to this Agreement and
their successors hereunder, any benefit or any legal or equitable right, power,
remedy or claim under this Agreement.
Section 2.09. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, Lehman Capital and the Depositor have caused their
names to be signed hereto by their respective duly authorized officers as of
the date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By:/s/ Joseph J. Kelly
------------------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
STRUCTURED ASSET SECURITIES CORPORATION
By:/s/ Stanley P. Labanowski
------------------------------------
Name: Stanley P. Labanowski
Title: Vice President
<PAGE>
SCHEDULE A
MORTGAGE LOAN SCHEDULE
EXECUTION COPY
==============================================================================
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.,
Purchaser
and
FIRST NATIONWIDE MORTGAGE CORPORATION,
Company
---------------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
Dated as of February 1, 1999
---------------------------------------------
Conventional Residential Fixed Rate Mortgage Loans
Group No. [1999-FN-01]
==============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
<S> <C> <C>
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files; Maintenance of Servicing
Files......................................................................................13
Section 2.02 Books and Records; Transfers of Mortgage Loans...............................................13
Section 2.03 Custodial Agreement: Delivery of Documents..................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.......................................................15
Section 3.02 Representations and Warranties Regarding Individual Mortgage Loans...........................17
Section 3.03 Remedies for Breach of Representations and Warranties........................................26
Section 3.04 Restrictions and Requirements Applicable in the Event that a Mortgage Loan is
Acquired by a REMIC........................................................................28
Section 3.05 Repurchase of Delinquent Mortgage Loan.......................................................29
Section 3.06 Repurchase of REO Properties.................................................................29
Section 3.07 Purchaser Representations and Warranties.....................................................29
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer...................................................................31
Section 4.02 Liquidation of Mortgage Loans................................................................33
Section 4.03 Collection of Mortgage Loan Payments.........................................................34
Section 4.04 Establishment of and Deposits to Custodial Account...........................................34
Section 4.05 Permitted Withdrawals From Custodial Account.................................................35
Section 4.06 Establishment of and Deposits to Escrow Account..............................................37
Section 4.07 Permitted Withdrawals From Escrow Account....................................................37
Section 4.08 Payment of Taxes, Insurance and Other Charges................................................38
Section 4.09 Protection of Accounts.......................................................................39
Section 4.10 Maintenance of Hazard Insurance..............................................................39
Section 4.11 Maintenance of Mortgage Impairment Insurance.................................................40
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance..............................41
Section 4.13 Inspections..................................................................................41
Section 4.14 Restoration of Mortgaged Property............................................................42
Section 4.15 Maintenance of PMI Policy; Claims............................................................42
Section 4.16 Title, Management and Disposition of REO Property............................................43
Section 4.17 Real Estate Owned Reports....................................................................44
Section 4.18 Liquidation Reports..........................................................................45
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property...............................45
Section 4.20 Retained Yield and Prepayment Penalties......................................................45
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances..................................................................................47
Section 5.02 Statements to Purchaser and Seller...........................................................47
Section 5.03 Monthly Advances by Company..................................................................48
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property..............................................................50
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files......................................50
Section 6.03 Penalties for Prepayment.....................................................................51
Section 6.04 Servicing Compensation.......................................................................51
Section 6.05 Annual Statement as to Compliance............................................................52
Section 6.06 Annual Independent Public Accountants'Servicing Report.......................................52
Section 6.07 Right to Examine Company Records.............................................................52
ARTICLE VII
AGENCY TRANSFER; PASS-THROUGH TRANSFER
Section 7.01 Removal of Mortgage Loans from Inclusion Under this Agreement Upon an Agency
Transfer, or a Pass-Through Transfer on One or More Reconstitution Dates...................53
Section 7.02 Bringdown of Representations and Warranties..................................................54
Section 7.03 Purchaser's Repurchase and Indemnification Obligations.......................................54
ARTICLE VIII
COMPANY TO COOPERATE
Section 8.01 Provision of Information.....................................................................56
Section 8.02 Financial Statements; Servicing Facility.....................................................56
ARTICLE IX
THE COMPANY
Section 9.01 Indemnification; Third Party Claims..........................................................57
Section 9.02 Merger or Consolidation of the Company.......................................................57
Section 9.03 Limitation on Liability of Company and Others................................................58
Section 9.04 Limitation on Resignation and Assignment by Company..........................................58
ARTICLE X
DEFAULT
Section 10.01 Events of Default............................................................................61
Section 10.02 Waiver of Defaults...........................................................................62
ARTICLE XI
TERMINATION
Section 11.01 Termination..................................................................................63
Section 11.02 Termination Without Cause....................................................................63
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.........................................................................64
Section 12.02 Amendment....................................................................................65
Section 12.03 Governing Law................................................................................65
Section 12.04 Duration of Agreement........................................................................65
Section 12.05 Notices......................................................................................65
Section 12.06 Severability of Provisions...................................................................66
Section 12.07 Relationship of Parties......................................................................66
Section 12.08 Execution; Successors and Assigns............................................................66
Section 12.09 Recordation of Assignments of Mortgage.......................................................66
Section 12.10 Assignment by Purchaser......................................................................67
Section 12.11 No Personal Solicitation.....................................................................67
<PAGE>
EXHIBITS
EXHIBIT A-1 POOL 1 MORTGAGE LOAN SCHEDULE
EXHIBIT A-2 POOL 2 MORTGAGE LOAN SCHEDULE
EXHIBIT A-3 POOL 3 MORTGAGE LOAN SCHEDULE
EXHIBIT B-1 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B-2 CONTENTS OF EACH SERVICING FILE
EXHIBIT C CUSTODIAL AGREEMENT
EXHIBIT D-1 FORM OF CUSTODIAL ACCOUNT
CERTIFICATION
EXHIBIT D-2 FORM OF CUSTODIAL ACCOUNT
LETTER AGREEMENT
EXHIBIT E-1 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT E-2 FORM OF ESCROW ACCOUNT
LETTER AGREEMENT
EXHIBIT F FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
</TABLE>
<PAGE>
This is a Seller's Warranties and Servicing Agreement for
conventional fixed rate residential first mortgage loans, dated and effective
as of February 1, 1999, and is executed between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., as purchaser (the "Purchaser"), and First
Nationwide Mortgage Corporation, as seller and servicer (the "Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the
Company and the Company has agreed to sell to the Purchaser certain Mortgage
Loans which have an aggregate outstanding principal balance as of the close of
business on the Cut-off Date, after deduction of principal payments due on or
before such date of $833,936,660.06;
WHEREAS, each of the Mortgage Loans is secured by a mortgage,
deed of trust or other security instrument creating a first lien on a
residential dwelling located in the jurisdiction indicated on the Mortgage Loan
Schedule, which is annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the
manner of delivery of the Mortgage Loans to Purchaser and the management,
servicing and control of the Mortgage Loans by the Company, as servicer.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Purchaser and the
Company agree as follows:
ARTICLE I
<PAGE>
DEFINITIONS
Whenever used herein, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loan in the jurisdiction where the related Mortgaged Property is located.
Agency Transfer: The sale or transfer by Purchaser of some or
all of the Mortgage Loans to FNMA under its Cash Purchase Program or its MBS
Swap Program (Special Servicing Option) or to FHLMC under its Freddie Mac Cash
Program or Gold PC Program, retaining the Company as "servicer thereunder".
Agreement: This Seller's Warranties and Servicing Agreement
and all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor
thereto.
Ancillary Income: All income derived from the Mortgage Loans
(other than Servicing Fees, Retained Yield and Prepayment Penalties), including
but not limited to, late charges, fees received with respect to checks or bank
drafts returned by the related bank for non-sufficient funds, assumption fees,
optional insurance administrative fees and all other incidental fees and
charges.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice
of transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Breach: As defined in Section 3.03.
Business Day: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions in the States of
New York and Maryland are authorized or obligated by law or executive order to
be closed.
Closing Date: February 1, 1999.
Code: The Internal Revenue Code of 1986, as it may be amended
from time to time or any successor statute thereto, and applicable U.S.
Department of the Treasury regulations issued pursuant thereto.
Company: First Nationwide Mortgage Corporation, or its
successor in interest or assigns, or any successor to the Company under this
Agreement appointed as herein provided.
Condemnation Proceeds: All awards or settlements in respect
of a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Custodial Account: The separate account or accounts created
and maintained pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of
the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents which is annexed hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or
its successor in interest or assigns, or any successor to the Custodian under
the Custodial Agreement as provided therein.
Cut-off Date: February 1, 1999.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased
by the Company in accordance with the terms of this Agreement and which is, in
the case of a substitution pursuant to Section 3.03, replaced or to be replaced
with a Qualified Substitute Mortgage Loan.
Determination Date: The 10th day (or if such 10th day is not
a Business Day, the Business Day immediately following) of any month, beginning
in March 1999.
Disqualified Organization: An organization defined as such in
Section 860E(e) of the Code.
Due Date: The day of the month on which the Monthly Payment
is due on a Mortgage Loan, exclusive of any days of grace. With respect to the
Mortgage Loans for which payment from the Mortgagor is due on a day other than
the first day of the month, such Mortgage Loans will be treated as if the
Monthly Payment is due on the first day of the month following the actual Due
Date.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the Remittance
Date and ending in the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Business Day prior to the Remittance Date in each month:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, or any agency or instrumentality of
the United States of America the obligations of which are backed by
the full faith and credit of the United States of America; and
(ii) federal funds, demand and time deposits in, certificates
of deposits of, or bankers' acceptances issued by, any depository
institution or trust company incorporated or organized under the laws
of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state banking
authorities, so long as at the time of such investment or contractual
commitment providing for such investment the commercial paper or other
short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company
which is the principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such holding company)
are rated in one of two of the highest ratings by each of Standard &
Poor's, Fitch and Moody's and the long-term debt obligations of such
holding company) are rated in one of two of the highest ratings, by
each of Standard & Poor's, Fitch and Moody's, and the long-term debt
obligations of such depository institution or trust company (or, in
the case of a depository institution or trust company which is the
principal subsidiary of a holding company, the long-term debt
obligations of such holding company) are rated in one of two of the
highest ratings, by each of Standard & Poor's, Fitch and Moody's;
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
Errors and Omissions Insurance Policy: An errors and
omissions insurance policy to be maintained by the Company pursuant to Section
4.12.
Escrow Account: The separate account or accounts created and
maintained pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, mortgage insurance premiums, fire and
hazard insurance premiums, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage, applicable law or
any other related document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 10.01.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the
Company pursuant to Section 4.12.
First Remittance Date: March 18, 1999.
Fitch: Fitch IBCA, Inc., or its successor in interest.
FNMA: The Federal National Mortgage Association, or any
successor thereto.
FNMA Guides: The FNMA Selling Guide and the FNMA Servicing
Guide and all amendments or additions thereto.
Insurance Proceeds: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage
Loan, the ratio of the Stated Principal Balance of the Mortgage Loan as of the
date of origination (unless otherwise indicated) to the lesser of (a) the
Appraised Value of the Mortgaged Property and (b) if the Mortgage Loan was made
to finance the acquisition of the related Mortgaged Property, the purchase
price of the Mortgaged Property, expressed as a percentage.
Master Servicer: The person, if any, designated as "Master
Servicer" under a Reconstitution Agreement.
Monthly Advance: The portion of Monthly Payment delinquent
with respect to each Mortgage Loan at the close of business on the
Determination Date required to be advanced by the Company pursuant to Section
5.03 on the Business Day immediately preceding the Remittance Date of the
related month.
Moody's: Moody's Investors Service, or its successor in
interest.
Monthly Payment: The scheduled monthly payment of principal
and interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on an unsubordinated
estate in fee simple in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan referred to in Exhibit B-1 annexed hereto, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment
or blanket hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on
a Mortgage Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the
subject of this Agreement, each Mortgage Loan originally sold and subject to
this Agreement being identified on the Mortgage Loan Schedule, which Mortgage
Loan includes without limitation the Mortgage File, and as they apply to the
period from and after the Cut-off Date, all the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The documents required to be
delivered pursuant to this Agreement.
Mortgage Loan Remittance Rate: With respect to each Mortgage
Loan, the annual rate of interest remitted to the Purchaser, which shall be
equal to the Mortgage Interest Rate minus the Servicing Fee Rate and minus the
Retained Yield Rate, if any.
Mortgage Loan Schedule: The schedules of Mortgage Loans
annexed hereto as Exhibits A-1, A-2 and A-3, such schedule setting forth the
following information with respect to each Mortgage Loan: (1) the Company's
Mortgage Loan identifying number; (2) the Mortgagor's name; (3) the street
address of the Mortgaged Property including the city, state and the zip code;
(4) a code indicating whether the Mortgaged Property is a single family
residence, a 2-4 family residence, a condominium unit or a unit in a planned
unit development; (5) the original months to maturity or the remaining months
to maturity from the Cut-off Date, in any case based on the original
amortization schedule, and if different, the maturity expressed in the same
manner but based on the actual amortization schedule; (6) the Loan-to-Value
Ratio at origination; (7) the Mortgage Interest Rate as of the Cut-off Date;
(8) the date on which the Mortgage Loan was originated; (9) the stated maturity
date; (10) the amount of the Monthly Payment; (11) the next due date of the
Mortgage Loan; (12) the original principal amount of the Mortgage Loan; (13)
the principal balance of the Mortgage Loan as of the close of business on the
Cut-off Date, after deduction of payments of principal due on or before the
Cut-off Date, whether or not collected; (14) the Mortgage Loan purpose type;
(15) the occupancy status of the Mortgaged Property at the time of origination;
(16) the Mortgagor's FICO or other similar credit score; (17) a code indicating
if there is PMI insurance and (18) a code indicating the loan documentation
type. With respect to the Mortgage Loans in the aggregate, the Mortgage Loan
Schedule shall set forth the following information, as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the current aggregate outstanding principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Interest Rate
of the Mortgage Loans; and (4) the weighted average maturity of the Mortgage
Loans.
Mortgage Note: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
Mortgaged Property: The real property and all improvements
thereon securing repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Nonrecoverable Advance: With respect to any Mortgage Loan,
any Monthly Advance or proposed Monthly Advance which, in the judgment of
Company, may not be ultimately recoverable by the Company from Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds or otherwise.
Officer's Certificate: A certificate signed by the Chairman
of the Board or the Vice Chairman of the Board or the President or a Vice
President or an Assistant Vice President and by the Treasurer or the Secretary
or one of the Assistant Treasurers or Assistant Secretaries of the Company, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
an employee of the Company, reasonably acceptable to the Purchaser, provided
that any Opinion of Counsel relating to (a) qualification of the Mortgage Loans
in a REMIC or (b) compliance with the REMIC Provisions, must be an opinion of
counsel who (i) is in fact independent of the Company (or any successor
servicer) and any master servicer of the Mortgage Loans, (ii) does not have any
material direct or indirect financial interest in the Company (or any successor
servicer) or any master servicer of the Mortgage Loans or in an affiliate of
either and (iii) is not connected with the Company (or any successor servicer)
or any master servicer of the Mortgage Loans as an officer, employee, director
or person performing similar functions.
Pass-Through Transfer: The sale or transfer of some or all of
the Mortgage Loans to a trust to be formed as part of a publicly-issued and/or
privately placed, rated or unrated, mortgage pass-through transaction,
retaining the Company as "servicer" (with or without a master servicer)
thereunder.
Person: Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
PMI Policy: A policy of primary mortgage guaranty insurance
issued by a Qualified Insurer, as required by this Agreement with respect to
certain Mortgage Loans.
Pool 1 Mortgage Loans: 30-year fixed rate Mortgage Loans with
prepayment penalties listed in Exhibit A-1 hereto.
Pool 2 Mortgage Loans: 15-year fixed rate Mortgage Loans with
prepayment penalties listed in Exhibit A-2 hereto.
Pool 3 Mortgage Loans: 15-year fixed rate Mortgage Loans with
no prepayment penalties listed in Exhibit A-3 hereto.
Prepayment Interest Shortfall Amount: With respect to any
Mortgage Loan that was subject to a Principal Prepayment in full or in part
during any Principal Prepayment Period, the amount of interest (net the related
Servicing Fee) that would have accrued on the amount of such Principal
Prepayment during the period commencing on the date as of which such Principal
Prepayment was applied to such Mortgage Loan and ending on the day immediately
preceding the next succeeding Due Date, inclusive.
Prepayment Penalty: With respect to each Pool 1 and Pool 2
Mortgage Loan, the penalty payable by the Mortgagor if the Mortgagor prepays
such Mortgage Loan which shall have a term as disclosed in the Mortgage Loan
Schedule.
Prime Rate: The prime rate announced to be in effect from
time to time, as published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent
to the month of prepayment.
Principal Prepayment Period: The month preceding the month in
which the related Remittance Date occurs.
Purchaser: Lehman Capital, A Division of Lehman Brothers
Holdings Inc. or its successor in interest or any successor to the Purchaser
under this Agreement as herein provided.
Qualified Depository: A depository the accounts of which are
insured by the FDIC through the BIF or the SAIF and the short-term debt
obligations of which are rated A-1 or better by Standard & Poor's, provided,
however, that prior to a Pass-through Transfer, California Federal Bank, a
Federal Savings Bank shall be deemed a "Qualified Depository" and from and
after a Pass-through Transfer, California Federal Bank, a Federal Savings Bank
shall be deemed a "Qualified Depository" only if it is acceptable to the Rating
Agencies which are rating such Pass-through Transfer.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA or FHLMC.
Qualified Substitute Mortgage Loan: A mortgage loan eligible
to be substituted by the Company for a Deleted Mortgage Loan which must, on the
date of such substitution, (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate principal balance), not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan; (ii) have a Mortgage Loan Remittance Rate
not less than and not more than 2% greater than the Mortgage Loan Remittance
Rate of the Deleted Mortgage Loan; (iii) have a remaining term to maturity not
greater than and not more than one year less than that of the Deleted Mortgage
Loan; (iv) comply with each representation and warranty set forth in Sections
3.01 and 3.02; and (v) have a Loan-to-Value Ratio as of the date of such
substitution not greater than that of the related Deleted Mortgage Loan.
Rating Agency: Any of Fitch, Moody's or Standard & Poor's,
Duff & Phelps or their respective successors designated by the Purchaser.
Reconstitution Agreements: The agreement or agreements
entered into by the Purchaser, the Company (if applicable), FNMA or FHLMC or
certain third parties on the Reconstitution Date(s) with respect to any or all
of the Mortgage Loans serviced hereunder, in connection with an Agency Transfer
or a Pass-Through Transfer as set forth in Section 7.01, including, but not
limited to, (i) a FNMA Mortgage Selling and Servicing Contract, a Pool Purchase
Contract, and any and all servicing agreements and tri-party agreements
reasonably required by FNMA with respect to a FNMA Transfer, (ii) a Purchase
Contract and all purchase documents associated therewith as set forth in the
Freddie Mac Sellers' & Servicers' Guide, and any and all servicing agreements
and tri-party agreements reasonably required by FHLMC with respect to a FHLMC
Transfer, and (iii) a Pooling and Servicing Agreement and/or a
subservicing/master servicing agreement and related custodial/trust agreement
and related documents with respect to a Pass-Through Transfer. Such agreement
or agreements shall prescribe the rights and obligations of the Company in
servicing the related Mortgage Loans and shall provide for servicing
compensation to the Company (calculated on a weighted average basis for all the
related Mortgage Loans as of the Reconstitution Date), net of any guarantee
fees due FNMA or FHLMC, if applicable, at least equal to the Servicing Fee due
the Company in accordance with this Agreement and, in addition, shall provide
that the Company, as seller hereunder, shall be entitled to continue to receive
Retained Yield and Prepayment Penalties as provided in Section 4.20 following
the related Reconstitution Date. The form of relevant Reconstitution Agreement
to be entered into by the Purchaser and/or master servicer or trustee and the
Company with respect to Pass-Through Transfers shall be reasonably satisfactory
in form and substance to the Purchaser and the Company (giving due regard to
any rating or master servicing requirements) and the representations and
warranties and servicing provisions contained therein shall be substantially
similar to those contained in this Agreement, unless otherwise mutually agreed
by the parties; provided, however, that the Company shall not be required to
make any additional representations or warranties or to update or bring-down
any representations and warranties herein, except the representations and
warranties set forth in Section 3.01 hereof.
Reconstitution Date: The date or dates on which any or all of
the Mortgage Loans serviced under this Agreement shall be subject to an Agency
Transfer or a Pass-Through Transfer pursuant to Section 7.01 hereof.
Record Date: The close of business on the last Business Day
of the month preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating to a REMIC, which appear at Section 860A through 860G of Subchapter M
of Chapter 1, Subtitle A of the Code, and related provisions, and regulations,
rulings or pronouncements promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Date: The 18th day (or if such 18th day is not a
Business Day, the first Business Day immediately following) of any month,
beginning with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO
Property.
REO Disposition Proceeds: All amounts received with respect
to an REO Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on
behalf of the Purchasers through foreclosure or by deed in lieu of foreclosure,
as described in Section 4.16.
Repurchase Price: With respect to any Mortgage Loan, a price
equal to (a) the sum of (i) the Stated Principal Balance of the Mortgage Loan,
(ii) interest on such Stated Principal Balance at the Mortgage Loan Remittance
Rate from the date on which interest has last been paid and distributed to the
Purchaser to the date of repurchase, and (iii) unreimbursed Monthly Advances,
and Servicing Advances, if any, minus (b) amounts received in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase. Notwithstanding the foregoing, if the
date of repurchase is on a date other than the last day of a Principal
Prepayment Period, then the Company shall pay, in lieu of the interest
specified in clause (ii) above, interest at the Mortgage Loan Remittance Rate
from the date on which interest has last been paid and distributed to the
Purchaser through the last day of the Principal Prepayment Period.
Retained Yield: With respect to each Mortgage Loan, the
amount of annual yield retained by the Company as seller, which shall, for a
period of one full month, be equal to one-twelfth of the product of (a) the
applicable Retained Yield Rate and (b) the outstanding principal balance of
such Mortgage Loan, or with respect to an REO Property, the outstanding balance
of the related Mortgage Loan immediately prior to its conversion to REO
Property. Such yield shall be payable monthly, computed on the basis on the
same principal amount and period respecting which any related interest payment
on a Mortgage Loan is computed. The Retained Yield is payable exclusively from
(except as provided in Section 4.20) the interest portion (including recoveries
with respect to interest from Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds) of each Monthly Payment collected by the Company, or as
otherwise provided in Section 4.20.
Retained Yield Rate: With respect to each Pool 1 Mortgage
Loan, a percentage per annum equal to the lesser of (a) the related Mortgage
Interest Rate minus the sum of 6.50% and the Servicing Fee Rate, and (b) 0.50%
per annum. With respect to each Pool 2 Mortgage Loan, a percentage per annum
equal to the lesser of (a) the related Mortgage Interest Rate minus the sum of
6.25% and the Servicing Fee Rate, and (b) 0.50% per annum. With respect to each
Pool 3 Mortgage Loan, a percentage per annum equal to the lesser of (a) the
related Mortgage Interest Rate minus the sum of 6.25% and the Servicing Fee
Rate, and (b) 0.25% per annum.
SAIF: The Savings Association Insurance Fund, or any
successor thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of
1933, as amended.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses other than Monthly Advances (including
reasonable attorneys' fees and disbursements) incurred in the performance by
the Company of its servicing obligations, including, but not limited to, the
cost of (a) the preservation, restoration and protection of the Mortgaged
Property, (b) any enforcement or judicial proceedings, including foreclosures,
(c) the management and liquidation of any REO Property and (d) compliance with
the obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan or REO
Property, the amount of the monthly fee the Purchaser shall pay to the Company,
which shall, for a period of one full month, be equal to one-twelfth of the
product of (a) the Servicing Fee Rate and (b) the outstanding principal balance
of such Mortgage Loan or with respect to an REO Property, the outstanding
principal balance of the related Mortgage Loan immediately prior to its
conversion to REO Property. Such fee shall be payable monthly, computed on the
basis of the same principal amount and period respecting which any related
interest payment on a Mortgage Loan is computed. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and the Servicing Fee is
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds, to the extent permitted by Section 4.05) of
each Monthly Payment collected by the Company, or as otherwise provided under
Section 4.05.
Servicing Fee Rate: With respect to each Mortgage Loan, a
rate per annum equal to 0.25%.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Company consisting of the items set forth on Exhibit B-2
attached hereto.
Servicing Officer: Any officer of the Company involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Company to the
Purchaser upon request, as such list may from time to time be amended.
Standard & Poor's: Standard & Poor's Ratings Services, or its
successor in interest.
Stated Principal Balance: As to each Mortgage Loan, and
determination date (i) the principal balance of the Mortgage Loan at the
Cut-off Date after giving effect to payments of principal due on or before such
date, whether or not received, minus (ii) all amounts previously distributed to
the Purchaser with respect to the related Mortgage Loan representing payments
or recoveries of principal and all Monthly Advances in lieu thereof.
Subservicer: Any Subservicer which is subservicing the
Mortgage Loans pursuant to a Subservicing Agreement. Any subservicer shall meet
the qualifications set forth in Section 4.01.
Subservicing Agreement: An agreement between the Company and
a Subservicer for the servicing of the Mortgage Loans.
Trust Agreement: The Trust Agreement entered into in
connection with a Pass-Through Transfer between the Trustee and the depositor
thereunder.
Trustee: The person designated as "Trustee" under the Trust
Agreement, or its successor in interest or assigns.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of
Mortgage Files; Maintenance of Servicing Files.
The Company, simultaneously with the execution and delivery
of this Agreement, does hereby sell, transfer, assign, set over and convey to
the Purchaser, without recourse, but subject to the terms of this Agreement,
all the right, title and interest of the Company in and to the Mortgage Loans
(other than any amounts representing Retained Yield and Prepayment Penalties),
including all interest and principal received on or with respect to the
Mortgage Loans (other than payments of principal and interest due on the
Mortgage Loans on or before the Cut-off Date). Pursuant to Section 2.03, the
Company has delivered the Mortgage Loan Documents to the Custodian.
The contents of each Servicing File are and shall be held in
trust by the Company for the benefit of the Purchaser as the owner thereof. The
possession of each Servicing File by the Company is at the will of the
Purchaser for the sole purpose of servicing the related Mortgage Loan, and such
retention and possession by the Company is in a custodial capacity only. Upon
the sale of the Mortgage Loans the ownership of each Mortgage Note, the related
Mortgage and the related Mortgage File and Servicing File shall vest
immediately in the Purchaser, and the ownership of all records and documents
with respect to the related Mortgage Loan prepared by or which come into the
possession of the Company shall vest immediately in the Purchaser and shall be
retained and maintained by the Company, in trust, at the will of the Purchaser
and only in such custodial capacity. Each Servicing File shall be identified in
the Company's records as being owned by the Purchaser and shall be easily
retrieved from other servicing files for mortgage loans which are not the
Mortgage Loans. The Company shall release its custody of the contents of any
Servicing File only in accordance with written instructions from the Purchaser,
unless such release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 3.03 or 6.02.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the
Purchaser all rights arising out of the Mortgage Loans including but not
limited to all funds received by the Company on or in connection with the
Mortgage Loans, shall be received and held by the Company in trust for the
benefit of the Purchaser as owner of the Mortgage Loans, but subject to the
terms of this Agreement and the Company may, at the option of the Purchaser
retain record title to the related Mortgages for the sole purpose of
facilitating the servicing and the supervision of the servicing of the Mortgage
Loans.
The sale of each Mortgage Loan shall be reflected on the
Company's balance sheet and other financial statements as a sale of assets by
the Company. The Company shall be responsible for maintaining, and shall
maintain books and records for each Mortgage Loan, which may be in the form of
electronic media, and shall be marked clearly to reflect the ownership of each
Mortgage Loan by the Purchaser. In particular, the Company shall maintain in
its possession, and shall furnish to the Purchaser upon demand, reasonably
satisfactory evidence of compliance with all federal, state and local laws,
rules and regulations. To the extent that original documents are not required
for purposes of realization of Liquidation Proceeds or Insurance Proceeds,
documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques so long as the Company
complies with the requirements of the FNMA Selling and Servicing Guide, as
amended from time to time.
The Company shall keep at its servicing office books and
records in which, subject to such reasonable regulations as it may prescribe,
the Company shall note on its books and records any transfers of Mortgage
Loans. No transfer of a Mortgage Loan may be made unless such transfer is in
compliance with the provisions of Section 12.10. For the purposes of this
Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. Upon receipt of
notice of any transfer and a copy of the instrument of transfer or assignment
and assumption agreement pursuant to Section 12.10, the Company shall mark its
books and records to reflect the ownership of the Mortgage Loans of such
transferee Purchaser.
Section 2.03 Custodial Agreement: Delivery of Documents.
Pursuant to the Custodial Agreement delivered to the
Purchaser contemporaneously with the delivery of this Agreement, the Company
shall deliver and release to the Custodian, at least four (4) Business Days
prior to the Closing Date, those Mortgage Loan Documents as set forth on
Exhibit B-1.
The Custodian has certified its receipt of all such Mortgage
Loan Documents as evidenced by the Initial Certification of the Custodian in
the form annexed to the Custodial Agreement.
The Company shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within 30
days of their execution, provided, however, that the Company shall provide to
the Custodian with a certified true copy certified by a Servicing Officer of
the Company of any such document submitted for recordation within 30 days of
its execution, and shall provide the original of any document submitted for
recordation within thirty days of receipt of such original recorded document
from the relevant public recording office.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company represents and warrants to the Purchaser that as
of the Closing Date:
(a) Due Organization and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in compliance with
the laws of any such state to the extent necessary to ensure the enforceability
of the related Mortgage Loan and the servicing of such Mortgage Loan in
accordance with the terms of this Agreement; the Company has the full corporate
power and authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Company and the consummation of the transactions contemplated
hereby have been duly and validly authorized; this Agreement evidences the
valid, binding and enforceable obligation of the Company; and all requisite
corporate action has been taken by the Company to make this Agreement valid and
binding upon the Company in accordance with its terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Company, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Company pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the Mortgage Loans by the Company, the sale of
the Mortgage Loans to the Purchaser or the transactions contemplated hereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Company's charter or by-laws or any legal
restriction or any agreement or instrument to which the Company is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Company or its property is
subject, or impair the ability of the Purchaser to realize on the Mortgage
Loans, or impair the value of the Mortgage Loans;
(d) Ability to Service. The Company is an approved
seller/servicer of conventional residential mortgage loans for FNMA or FHLMC,
with the facilities, procedures, and experienced personnel necessary for the
sound servicing of mortgage loans of the same type as the Mortgage Loans. The
Company is in good standing to sell mortgage loans to and service mortgage
loans for FNMA or FHLMC, and no event has occurred, including but not limited
to a change in insurance coverage, which would make the Company unable to
comply with FNMA or FHLMC eligibility requirements or which would require
notification to either FNMA or FHLMC;
(e) Reasonable Servicing Fee. The Company acknowledges and
agrees that the Servicing Fee, as calculated at the Servicing Fee Rate,
represents reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Company, for accounting and tax
purposes, as compensation for the servicing and administration of the Mortgage
Loans pursuant to this Agreement;
(f) Ability to Perform. The Company 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. The Company is solvent and the sale
of the Mortgage Loans is not undertaken to hinder, delay or defraud any of the
Company's creditors;
(g) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Company which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Company, or in any material impairment of the right or ability of
the Company to carry on its business substantially as now conducted, or in any
material liability on the part of the Company, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the Company
contemplated herein, or which would be likely to impair materially the ability
of the Company to perform under the terms of this Agreement;
(h) No Consent Required. No consent, approval, authorization
or order of any court or governmental agency or body is required for the
execution, delivery and performance by the Company of or compliance by the
Company with this Agreement or the sale of the Mortgage Loans as evidenced by
the consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Closing Date;
(i) Selection Process. The Mortgage Loans were selected from
among the outstanding fixed rate one- to four- family mortgage loans in the
Company's portfolio at the Closing Date as to which the representations and
warranties set forth in Section 3.02 could be made and such selection was not
made in a manner so as to affect adversely the interests of the Purchaser;
(j) No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a fact
necessary to make the statements contained therein not misleading in any
material respect;
(k) Sale Treatment. The Company has determined that the
disposition of the Mortgage Loans pursuant to this Agreement will be afforded
sale treatment for accounting and tax purposes;
(l) Financial Statements. The Company has delivered to the
Purchaser financial statements as to its last three complete fiscal years and
any later quarter ended more than 60 days prior to the execution of this
Agreement. All such financial statements fairly present the pertinent results
of operations and changes in financial position at the end of each such period
of the Company and its subsidiaries and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as set forth in the notes thereto. There has been no
change in the business, operations, financial condition, properties or assets
of the Company since the date of the Company's financial statements that would
have a material adverse effect on its ability to perform its obligations under
this Agreement;
(m) No Brokers' Fees. The Company has not dealt with any
broker, investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage Loans;
and
(n) Fair Consideration. The consideration received by the
Company upon the sale of the Mortgage Loans under this Agreement constitutes
fair consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02 Representations and Warranties Regarding
Individual Mortgage Loans.
As to each Mortgage Loan, the Company hereby represents and
warrants to the Purchaser that as of the Closing Date:
(a) Mortgage Loans as Described. The information set forth in
the Mortgage Loan Schedules is complete, true and correct in all material
respects as of the date specified in the Mortgage Loan Schedule;
(b) Payments Current. All payments required to be made up to
and including the January 1, 1999 payment on the Mortgage Loan under the terms
of the Mortgage Note have been made and credited. Except with respect to the
Mortgage Loans identified by numbers 0015526130, 0015535958 and 0015461700, no
payment required under the Mortgage Loan has been delinquent at any time in the
past 12 months.
(c) No Outstanding Charges. There are no defaults in
complying with the terms of the Mortgages, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid
prior to any termination or penalty therefore, or an escrow of funds has been
established in an amount sufficient to pay for every such item which remains
unpaid and which has been assessed but is not yet due and payable. The Company
has not advanced funds, or induced, solicited or knowingly received any advance
of funds by a party other than the Mortgagor, directly or indirectly, for the
payment of any amount required under the Mortgage Loan, except for interest
accruing from the date of the Mortgage Note or date of disbursement of the
Mortgage Loan proceeds, whichever is greater, to the day which precedes by one
month the Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note
and Mortgage have not been impaired, waived, altered or modified in any
respect, except by a written instrument which has been recorded, if necessary
to protect the interests of the holder of the Mortgage Loan, and which has been
delivered to the Custodian. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related PMI Policy and the
title insurer, to the extent required by the policy, and its terms are
reflected on the Mortgage Loan Schedule. No Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement approved by
the issuer of any related PMI Policy and the title insurer, to the extent
required by the policy, and which assumption agreement is part of the Mortgage
Loan File delivered to the Custodian and the terms of which are reflected in
the Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Note and the Mortgage are not
subject to any right of rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including without limitation the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage,
all buildings or other improvements 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 Section 4.10. If upon origination of the Mortgage Loan, the
Mortgaged Property was in an area identified in the Federal Register 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 Section 4.10. All
individual insurance policies contain a standard mortgagee clause naming the
Company and its successors and assigns as mortgagee, and all premiums thereon
have been paid. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier
of the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering the common facilities of a planned
unit development. The hazard insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of the Purchaser upon the
consummation of the transactions contemplated by this Agreement. The Company
has not engaged in, and has no knowledge of the Mortgagor's or any
Subservicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either, including without
limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by the Company;
(g) Compliance with Applicable Laws. Any and all requirements
of any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, and the Company shall maintain in its
possession, and shall furnish to the Purchaser upon demand, reasonably
satisfactory evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. 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 release, cancellation, subordination or rescission. The Company has not
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to perform such action would cause the Mortgage Loan to be in default,
nor has the Company waived any default resulting from any action or inaction by
the Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged
Property is located in the state identified in the Mortgage Loan Schedule and
consists of a parcel of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an individual
condominium unit in a low-rise condominium project, or an individual unit in a
planned unit development, provided, however, that any condominium project or
planned unit development shall conform with the applicable underwriting
standards of the Seller which were in place at the time of the origination of
such Mortgage Loan, and no residence or dwelling is a mobile home or a
manufactured dwelling. As of origination, no portion of the Mortgaged Property
was used for commercial purposes;
(j) Valid First Lien. The Mortgage is a valid, subsisting and
enforceable and perfected first lien on the Mortgaged Property. The lien of the
Mortgage is subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record as
of the date of recording acceptable to mortgage lending
institutions generally and specifically referred to in
the lender's title insurance policy delivered to the
originator of the Mortgage Loan and (i) referred to or to
otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (ii) which do not
adversely affect the Appraised Value of the Mortgaged
Property set forth in such appraisal; and
(3) 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 Mortgage Loan establishes and creates a valid,
subsisting and enforceable first lien and first priority security interest on
the property described therein and the Company 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 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;
(k) Pool Characteristics. As of the Cut-off Date, with
respect to aggregate outstanding principal balance of all Mortgage Loans, (a)
no more than 0.37% are secured by real property improved by two- to four-family
dwellings, (b) no more than 4.22% are secured by real property improved by
individual condominium units, (c) no more than 20.32% are secured by real
property improved by an individual unit in a planned unit development, and (d)
at least 75.08% are secured by real property with a detached one-family
residence erected thereon. When measured by principal balance as of the Cut-off
Date, no more than 1.7% of the Mortgage Loans are secured by Mortgaged
Properties located in the same United States postal zip code. The Pool 1
Mortgage Loans have a weighted average remaining term of 356.65 months. The
Pool 2 Mortgage Loans have a weighted average remaining term of 175.65 months.
The Pool 3 Mortgage Loans have a weighted average remaining term of 175.71
months. The average principal balance of the Mortgage Loans on the Cut-off Date
was $333,308. With respect to 99.99% of the Mortgage Loans of which a FICO
score is known, the weighted average FICO score is 739.4. As of the Cut-off
Date, with respect to the aggregate unpaid principal balance of the Mortgage
Loans; (i) no more than 21.12% were originated pursuant to the Seller's reduced
documentation program; and (ii) at least 78.88% of the Mortgage Loans were
originated under a full documentation program. With respect to the aggregate
unpaid balance of the Mortgage Loans as of the Cut-off Date, and the occupancy
status of the related Mortgaged Properties at the time of origination, (i) not
more than 0.48% of the Mortgaged Properties were owner-occupied second homes;
(ii) not more than 0.76% of the Mortgaged Properties were investor properties;
and (iii) at least 98.76% of the Mortgaged Properties were owner-occupied
primary residences. With respect to the aggregate unpaid principal balance of
all the Mortgage Loans as of the Cut-off Date, the Mortgaged Properties are
located as follows (i) 91.99% are located in California, with the remaining
8.01% being geographically dispersed. With respect to the aggregate unpaid
principal balance of the Mortgage Loans as of the Cut-off Date, (i) not more
than 20.93% were cash-out refinance mortgage loans; (ii) not more than 44.28%
were rate-term refinance mortgage loans; and (iii) at least 34.79% were
purchase money mortgage loans.
(l) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage are genuine, and each is the legal, valid and binding obligation of
the maker thereof enforceable in accordance with its terms. All parties to the
Mortgage Note and the Mortgage and any other related agreement had legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage and any other related agreement, and the
Mortgage Note and the Mortgage have been duly and properly executed by such
parties. The documents, instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the information and statements therein not misleading. No
fraud was committed in connection with the origination of the Mortgage Loan;
(m) Full Disbursement of Proceeds. The proceeds of the
Mortgage Loan have been fully disbursed and there is no requirement for future
advances thereunder, and any and all requirements as to completion of any
on-site or off-site improvement and as to disbursements of any escrow funds
therefor have been complied with, provided that, with respect to improvements
which can not be made as of the origination date because of weather related
reasons, an escrow fund sufficient to make such improvements is held by the
Company. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor is
not entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage;
(n) Ownership. The Company is the sole owner of record and
holder of the Mortgage Loan. The Mortgage Loan is not assigned or pledged, and
the Company has good and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan therein to the Purchaser free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement;
(o) Doing Business. All parties which have had any interest
in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest, were)
(1) in compliance with any and all applicable licensing requirements of the
laws of the state wherein the Mortgaged Property is located, and (2) either (a)
organized under the laws of such state, or (b) qualified to do business in such
state or are exempt from such qualification, or (c) federal savings and loan
associations or national banks having principal offices in such state, or (d)
not doing business in such state;
(p) LTV, PMI Policy. No Mortgage Loan has a LTV equal to or
greater than 95%. The original LTV of the Mortgage Loan either was not more
than 80% or there is a PMI Policy in effect which shall insure payment defaults
until the loan-to-value ratio of such Mortgage Loan is reduced to 80% and which
satisfies all of FNMA's requirements therefore and such PMI Policy is issued by
a primary mortgage insurer having a claims paying ability rate acceptable to
FNMA. All provisions of such PMI Policy have been and are being complied with,
such policy is in full force and effect, and all premiums due thereunder have
been paid. No action, inaction, or event has occurred and no state of facts
exists that has resulted or will result, in the exclusion from, denial of, or
defense to coverage. Any Mortgage Loan subject to a PMI Policy obligates the
Mortgagor thereunder to maintain the PMI Policy and to pay all premiums and
charges in connection therewith. The Mortgage Interest Rate for the Mortgage
Loan as set forth on the Mortgage Loan Schedule is net of any such insurance
premium;
(q) Title Insurance. The Mortgage Loan is covered by either
(i) an attorney's opinion of title and abstract of title the form and substance
of which is acceptable to mortgage lending institutions making mortgage loans
in the area where the Mortgaged Property is located or (ii) an ALTA lender's
title insurance policy or other generally acceptable form of policy of
insurance acceptable to FNMA or FHLMC, issued by a title insurer acceptable to
FNMA or FHLMC and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Company, its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan, subject only to the exceptions contained
in clauses (1), (2) and (3) of paragraph (j) of this Section 3.02 and against
any loss by reason of the invalidity or unenforceability of the lien resulting
from the provisions of the mortgage providing for adjustment to the Mortgage
Interest Rate and Monthly Payment. Where required by state law or regulation,
the Mortgagor has been given the opportunity to choose the carrier of the
required mortgage title insurance. Additionally, such lender's title insurance
policy affirmatively insures ingress and egress, and against encroachments by
or upon the Mortgaged Property or any interest therein. The Company 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 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 Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such lender's title insurance
policy including without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity, and no
such unlawful items have been received, retained or realized by the Company;
(r) No Defaults. 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 neither the Company nor its predecessors have waived any
default, breach, violation or event of acceleration;
(s) No Mechanics' Liens. There are no mechanics' or similar
liens or claims which have been filed for work, labor or material (and no
rights are outstanding that under the law could give rise to such liens)
affecting the related Mortgaged Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage;
(t) Location of Improvements; No Encroachments. All
improvements which were considered in determining the Appraised Value of the
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. No improvement located on or being part
of the Mortgaged Property is in violation of any applicable zoning law or
regulation;
(u) Origination: Payment Terms. At the time the Mortgage Loan
was originated, the originator was a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act or a savings and loan association, a savings bank, a commercial
bank or similar banking institution which was supervised and examined by a
Federal or State authority or a mortgage banker or broker licensed or
authorized to do business in the jurisdiction in which the related Mortgaged
Property is located, applying the same standards and procedures used by the
Company in originating Mortgage Loans directly. The Mortgage Interest Rate is
fixed. The Mortgage Note is payable on the first day of each month in equal
monthly installments of principal and interest, with interest calculated and
payable in arrears, sufficient to amortize the Mortgage Loan fully by the
stated maturity date, over an original term of not more than thirty years from
commencement of amortization, with a principal balance at origination of no
more than $1,000,000 and no less than $30,000, and a Stated Principal Balance
of at least $29,588.33. Each Mortgage Loan has a Mortgage Interest Rate of not
less than 6.00% and not more than 8.125%. The stated remaining term of the
Mortgage Loan is between 117 months and 360 months;
(v) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan will be able to deliver good
and merchantable title to the Mortgaged Property. There is no homestead or
other exemption available to a Mortgagor which would interfere with the right
to sell the Mortgaged Property at a trustee's sale or the right to foreclose
the Mortgage;
(w) Conformance with Underwriting Standards. The Mortgage
Loans were underwritten either in accordance with the Seller's underwriting
guidelines at the time that the Mortgage Loan was originated or in general
accordance with prudent secondary market standard underwriting guidelines.
(x) Occupancy of the Mortgaged Property. As of the
origination date the Mortgaged Property was lawfully occupied under applicable
law. As of the origination date, all inspections, licenses and certificates
required by applicable law to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities if required by such authorities for the use and occupancy of the
Mortgaged Property.
(y) No Additional Collateral. The Mortgage Note is not and
has not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in (j) above;
(z) Deeds of Trust. 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 Purchasers
to the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
(aa) Acceptable Investment. The Company has no knowledge of
any circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can reasonably
be expected to cause private institutional investors to regard the Mortgage
Loan as an unacceptable investment, cause the Mortgage Loan to become
delinquent, or adversely affect the value or marketability of the Mortgage
Loan;
(bb) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents set forth in
Exhibit B-1 have been delivered to the Custodian. The Company is in possession
of a complete, true and accurate Mortgage File in compliance with Exhibit B-1,
except for such documents the originals of which have been delivered to the
Custodian;
(cc) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimus planned unit development) such condominium or planned unit development
project meets the Company's underwriting guidelines.
(dd) Transfer of Mortgage Loans. 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;
(ee) Due on Sale. The Mortgage contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance
of the Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee thereunder;
(ff) No Buydown Provisions; No Graduated Payments or
Contingent Interests. The Mortgage Loan does not contain provisions pursuant to
which Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Company, the Mortgagor or anyone on behalf
of the Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions currently in effect which may constitute a
"buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other contingent
interest feature;
(gg) Consolidation of Future Advances. Any future advances
made 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 Mortgage Loan;
(hh) Mortgaged Property Undamaged. There is no proceeding,
pending or threatened, for the total or partial condemnation of the Mortgaged
Property. The Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended;
(ii) Collection Practices; Escrow Deposits. The origination
and collection practices used with respect to the Mortgage Loan have been in
accordance with Accepted Servicing Practices, and have been in all respects in
compliance with all applicable laws and regulations. With respect to Mortgage
Loans for which an Escrow Account is established, all escrow deposits and
Escrow Payments are in the possession of the Company and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. With respect to Mortgage Loans for which
an Escrow Account is established, all Escrow Payments have been collected in
full compliance with state and federal law. With respect to Mortgage Loans for
which an Escrow Account is established, an escrow of funds is not prohibited by
applicable law and has been established in an amount sufficient to pay (subject
to the customary and routine accruals and adjustments) for every item which
remains unpaid and has been assessed, but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Company have
been capitalized under the Mortgage or the Mortgage Note;
(jj) Appraisal. The Mortgage File contains an appraisal of
the related Mortgage Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Company, who had no
interest, direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof; and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of Title XI of the Federal Institutions Reform, Recovery, and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated;
(kk) Soldiers' and Sailors' Relief Act. The Mortgagor has not
notified the Company, and the Company has no knowledge of any relief requested
or allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act
of 1940;
(ll) Environmental Matters. To the Company's knowledge, the
Mortgaged Property is free from any and all toxic or hazardous substances and
there exists no violation of any local, state or federal environmental law,
rule or regulation. To the Company's knowledge, there is no pending action or
proceeding directly involving any Mortgaged Property of which the Company is
aware in which compliance with any environmental law, rule or regulation is an
issue; and to the best of the Company's knowledge, nothing further remains to
be done to satisfy in full all requirements of each such law, rule or
regulation consisting a prerequisite to use and enjoyment of said property;
(mm) Prepayment Penalties. Each Pool 1 Mortgage Loan and Pool
2 Mortgage Loan contains a Prepayment Penalty in an amount as specified in the
related Mortgage Loan Documents and in the Mortgage Loan Schedule.
(nn) No Construction Loans. No Mortgage Loan was made in
connection with (i) the construction or rehabilitation of a Mortgaged Property
or (ii) facilitating the trade-in or exchange of a Mortgaged Property;
(oo) Denial of Insurance. No action, inaction, or event has
occurred and no state of fact exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable pool insurance policy, special hazard insurance policy, PMI Policy
or bankruptcy bond, irrespective of the cause of such failure of coverage. In
connection with the placement of any such insurance, no unlawful commission,
fee, or other compensation has been or will be received by the Company or any
designee of the Company or any corporation in which the Company had a financial
interest at the time of placement of such insurance; and
(pp) Regarding the Mortgagor. The Mortgagor is one or more
natural persons and/or trustees for an Illinois land trust or a trustee under a
"living trust" and such "living trust" is in compliance with FNMA guidelines
for such trusts.
Section 3.03 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and 3.02 shall survive the sale of the
Mortgage Loans to the Purchaser and the delivery of the Mortgage Loan Documents
to the Custodian and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note
or Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either the Company or the Purchaser of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser
therein, or which materially and adversely affects the interests of Purchaser
in the related Mortgage Loan in the case of a representation and warranty
relating to a particular Mortgage Loan (in the case of any of the foregoing, a
"Breach"), the party discovering such Breach shall give prompt written notice
to the other. In the event that the title policy insuring the lien of any
Mortgage does not run to the benefit of the Purchaser and its successors and
assigns; upon notice thereof, the Company shall pay for any necessary title
policy endorsement to provide that such title policy covers the Purchaser and
its successors and assigns.
Within 60 days of the earlier of either discovery by or
notice to the Company of any Breach of a representation or warranty, the
Company shall use its best efforts promptly to cure such Breach in all material
respects and, if such Breach cannot be cured, the Company shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price. In
the event that a Breach shall involve any representation or warranty set forth
in Section 3.01, and such Breach cannot be cured within 60 days of the earlier
of either discovery by or notice to the Company of such Breach, all of the
affected Mortgage Loans shall, at the Purchaser's option, be repurchased by the
Company at the Repurchase Price. However, if the Breach shall involve a
representation or warranty set forth in Section 3.02 and the Company discovers
or receives notice of any such Breach within two years of the Closing Date, the
Company shall, at the Company's option, rather than repurchase the Mortgage
Loan as provided above, remove such Mortgage Loan (a "Deleted Mortgage Loan")
and substitute in its place a Qualified Substitute Mortgage Loan or Loans,
provided that any such substitution shall be effected not later than two years
after the Closing Date. Notwithstanding the foregoing, no such substitution
shall be made unless the Purchaser has received an Opinion of Counsel (at the
expense of the Company) that such substitution will not adversely affect the
status of any REMIC established in connection with a Pass-Through Transfer as a
REMIC or cause any such REMIC to be deemed to have engaged in a "prohibited
transaction" under the REMIC Provisions. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Section 3.03 shall be
accomplished by deposit in the Custodial Account of the amount of the
Repurchase Price for distribution to Purchaser on the next scheduled Remittance
Date, after deducting therefrom any amount received in respect of such
repurchased Mortgage Loan or Loans and being held in the Custodial Account for
future distribution.
At the time of repurchase or substitution, the Purchaser and
the Company shall arrange for the reassignment of the Deleted Mortgage Loan to
the Company and the delivery to the Company of any documents held by the
Custodian relating to the Deleted Mortgage Loan. In the event of a repurchase
or substitution, the Company shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the
Deleted Mortgage Loan from this Agreement, and, in the case of substitution,
identify a Qualified Substitute Mortgage Loan and amend the Mortgage Loan
Schedule to reflect the addition of such Qualified Substitute Mortgage Loan to
this Agreement. In connection with any such substitution, the Company shall be
deemed to have made as to such Qualified Substitute Mortgage Loan the
representations and warranties set forth in this Agreement except that all such
representations and warranties set forth in this Agreement shall be deemed made
as of the date of such substitution. The Company shall effect such substitution
by delivering to the Custodian for such Qualified Substitute Mortgage Loan the
documents required by Section 2.03, with the Mortgage Note endorsed as required
by Section 2.03. No substitution will be made in any calendar month after the
Determination Date for such month. The Company shall deposit in the Custodial
Account the Monthly Payment less the Servicing Fee due on such Qualified
Substitute Mortgage Loan or Loans in the month following the date of such
substitution. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall be retained by the Company.
For the month of substitution, distributions to Purchaser shall include the
Monthly Payment due on any Deleted Mortgage Loan in the month of substitution,
and the Company shall thereafter be entitled to retain all amounts subsequently
received by the Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes a Qualified
Substitute Mortgage Loan for a Deleted Mortgage Loan, the Company shall
determine the amount (if any) by which the aggregate principal balance of all
Qualified Substitute Mortgage Loans as of the date of substitution is less than
the aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month
of substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
It is understood and agreed that the obligations of the
Company set forth in this Section 3.03 to cure, substitute for or repurchase a
defective Mortgage Loan constitute the sole remedies of the Purchaser
respecting a Breach of the representations and warranties contained in Sections
3.01 and 3.02.
Any cause of action against the Company relating to or
arising out of the Breach of any representations and warranties made in
Sections 3.01 and 3.02 shall accrue as to any Mortgage Loan upon (i) discovery
of such Breach by the Purchaser or notice thereof by the Company to the
Purchaser, (ii) failures by the Company to cure such Breach or repurchase such
Mortgage Loan as specified above, and (iii) demand upon the Company by the
Purchaser for compliance with this Agreement.
Section 3.04 Restrictions and Requirements Applicable in the
Event that a Mortgage Loan is Acquired by a REMIC.
In the event that any Mortgage Loan is held by a REMIC,
notwithstanding any contrary provision of this Agreement, the following
provisions shall apply:
The Company shall dispose of any REO Property as soon as
possible and shall sell such REO Property in any event within three years after
title has been taken to such REO Property, unless (i) the Master Servicer and
the Purchaser shall have been supplied with an Opinion of Counsel to the effect
that the holding by the REMIC of such Mortgaged Property subsequent to such
three-year period (and specifying the period beyond such three-year period for
which the Mortgaged Property may be held) will not result in the imposition of
taxes on "prohibited transactions" of the REMIC as defined in Section 860F of
the Code, or cause the REMIC to fail to qualify as a REMIC, in which case the
REMIC may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel), or (ii) the Master Servicer (or, if
there is no Master Servicer, the Company) shall have applied for, prior to the
expiration of such three-year period, an extension of such three-year period in
the manner contemplated by Section 856(e)(3) of the Code, in which case the
three-year period shall be extended by the applicable period. If a period
longer than three years is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Company shall report monthly to the
Master Servicer (or, if there is no Master Servicer, the Purchaser) as to the
progress being made in selling such REO Property.
Notwithstanding any other provision of this Agreement, no
Mortgaged Property held by a REMIC shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of
the REMIC or sold in such a manner or pursuant to any terms that would (i)
cause such Mortgaged Property to fail to qualify at any time as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code, (ii) subject
the REMIC to the imposition of any federal or state income taxes on "net income
from foreclosure property" with respect to such Mortgaged Property within the
meaning of 860G(c) of the Code, or (iii) cause the sale of such Mortgaged
Property to result in the receipt by the Trust of any income from non-permitted
assets as described in section 860F(a)(2)(B) of the Code, unless the Company
has agreed to indemnify and hold harmless the Trust with respect to the
imposition of any taxes.
Section 3.05 Repurchase of Delinquent Mortgage Loan.
The Company, at its option, may (but is not obligated to)
repurchase from the Purchaser, on any date during a Principal Prepayment
Period, (a) any Mortgage Loan that is delinquent in payment by three or more
Monthly Payments or (b) any Mortgage Loan with respect to which there has been
initiated legal action or other proceedings for the foreclosure of the related
Mortgaged Property either judicially or non-judicially. If it elects to make
any such repurchase, the Company shall repurchase such Mortgage Loan with its
own funds at a price equal to the Repurchase Price for such Mortgage Loan.
Section 3.06 Repurchase of REO Properties.
The Company, at its option, may (but is not obligated to)
repurchase from the Purchaser, on any date during a Prepayment Period any REO
Property. If it elects to make any such repurchase, the Company shall purchase
such REO Property with its own funds at a price equal to the then fair market
value for such REO Property, calculated on the basis of the average of two
independent appraisals (obtained at the expense of the Company) of such REO
Property.
Section 3.07 Purchaser Representations and Warranties.
The Purchaser represents and warrants to the Company that as
of the Closing Date:
(a) Due Organization and Authority. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all licenses necessary to carry on its
business as now being conducted; the Purchaser has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement by the
Purchaser and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement evidences the valid, binding
and enforceable obligation of the Purchaser; and all requisite corporate action
has been taken by the Purchaser to make this Agreement valid and binding upon
the Purchaser in accordance with its terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Purchaser, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Purchaser pursuant to this Agreement
are not subject to the bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the Mortgage Loans by the Purchaser, or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Purchaser's charter
or by-laws or any legal restriction or any agreement or instrument to which the
Purchaser is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the
Purchaser or its property is subject;
(d) Ability to Perform. The Purchaser 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. The Purchaser is solvent and the
sale of the Mortgage Loans is not undertaken to hinder, delay or defraud any of
the Purchaser's creditors;
(e) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Purchaser which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Purchaser, or in any material impairment of the right or ability
of the Purchaser to carry on its business substantially as now conducted, or in
any material liability on the part of the Purchaser, or which would draw into
question the validity of this Agreement or of any action taken or to be taken
in connection with the obligations of the Purchaser contemplated herein, or
which would be likely to impair materially the ability of the Purchaser to
perform under the terms of this Agreement; and
(f) Sale Treatment. The Purchaser has determined that the
disposition of the Mortgage Loans pursuant to this Agreement will be afforded
sale treatment for accounting and tax purposes.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, as an independent contractor, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Company may deem necessary or desirable, consistent
with the terms of this Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Company's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Purchasers, provided, however, that the Company shall
not make any future advances with respect to a Mortgage Loan and (unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is,
in the judgment of the Company, imminent) the Company shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, defer or forgive the payment of principal or interest, reduce or
increase the outstanding principal balance (except for actual payments of
principal) or change the final maturity date on such Mortgage Loan or would
constitute an alteration, substitution or release of any of the collateral
securing a Mortgage Loan other than in connection with a payment in full of the
Mortgage Loan. In the event of any such modification which permits the deferral
of interest or principal payments on any Mortgage Loan other than any such
modification which constitutes a permanent reduction of interest or principal
payments on any Mortgage Loan, the Company shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.03, the difference
between (a) such month's principal and one month's interest at the Mortgage
Interest Rate minus the Servicing Fee Rate on the unpaid principal balance of
such Mortgage Loan and (b) the amount paid by the Mortgagor. The Company shall
be entitled to reimbursement for such advances to the same extent as for all
other advances made pursuant to Section 5.03. Without limiting the generality
of the foregoing, the Company shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself and the Purchasers, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. Within a reasonable time
following receipt from the Company, the Purchaser and each subsequent Purchaser
shall execute and deliver to the Company any powers of attorney and other
documents necessary or appropriate to enable the Company to carry out its
servicing and administrative duties under this Agreement. In servicing and
administering the Mortgage Loans, the Company shall employ procedures
(including collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, giving due consideration to Accepted Servicing Practices
where such practices do not conflict with the requirements of this Agreement.
The Mortgage Loans may be subserviced by the Subservicer on
behalf of the Company in accordance with the servicing provisions of this
Agreement, provided that the Subservicer is a FNMA-approved lender or a FHLMC
seller/servicer in good standing, and no event has occurred, including but not
limited to a change in insurance coverage, which would make it unable to comply
with the eligibility requirements for lenders imposed by FNMA or for
seller/servicers imposed by FHLMC, or which would require notification to FNMA
or FHLMC. The Company may perform any of its servicing responsibilities
hereunder or sub-contract limited functions under its supervision or may cause
the Subservicer to perform any such servicing responsibilities on its behalf,
but the use by the Company of the Subservicer or any subcontractor shall not
release the Company from any of its obligations hereunder and the Company shall
remain responsible hereunder for all acts and omissions of the Subservicer as
fully as if such acts and omissions were those of the Company. The Company
shall pay all fees and expenses of the Subservicer from its own funds, and the
Subservicer's fee shall not exceed the Servicing Fee.
At the cost and expense of the Company, without any right of
reimbursement from the Custodial Account, the Company shall be entitled to
terminate the rights and responsibilities of the Subservicer and arrange for
any servicing responsibilities to be performed by a successor Subservicer
meeting the requirements in the preceding paragraph, provided, however, that
nothing contained herein shall be deemed to prevent or prohibit the Company, at
the Company's option, from electing to service the related Mortgage Loans
itself. In the event that the Company's responsibilities and duties under this
Agreement are terminated pursuant to Section 9.01 or 10.01, and if requested to
do so by the Purchaser, the Company shall at its own cost and expense terminate
the rights and responsibilities of the Subservicer as soon as is reasonably
possible. The Company shall pay all fees, expenses or penalties necessary in
order to terminate the rights and responsibilities of the Subservicer from the
Company's own funds without reimbursement from the Purchaser.
Notwithstanding any of the provisions of this Agreement
relating to agreements or arrangements between the Company and the Subservicer
or any reference herein to actions taken through the Subservicer or otherwise,
the Company shall not be relieved of its obligations to the Purchaser and shall
be obligated to the same extent and under the same terms and conditions as if
it alone were servicing and administering the Mortgage Loans. The Company shall
be entitled to enter into an agreement with the Subservicer for indemnification
of the Company by the Subservicer and nothing contained in this Agreement shall
be deemed to limit or modify such indemnification.
Any Subservicing Agreement and any other transactions or
services relating to the Mortgage Loans involving the Subservicer shall be
deemed to be between the Subservicer and Company alone, and the Purchaser shall
have no obligations, duties or liabilities with respect to the Subservicer
including no obligation, duty or liability of Purchaser to pay the
Subservicer's fees and expenses. For purposes of distributions and advances by
the Company pursuant to this Agreement, the Company shall be deemed to have
received a payment on a Mortgage Loan when the Subservicer has received such
payment.
The Company shall maintain with respect to each Mortgage Loan
and shall make available for inspection during normal business hours upon
reasonable notice by the Purchaser or its designee the related Servicing File
during the time the Purchaser retains ownership of a Mortgage File and
thereafter in accordance with applicable laws and regulations.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and
not postponed pursuant to Section 4.01 is not paid when the same becomes due
and payable, or in the event the Mortgagor fails to perform any other covenant
or obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Company shall determine prudently to be in the
best interest of Purchaser, and (4) is consistent with any related PMI Policy.
In the event that any payment due under any Mortgage Loan is not postponed
pursuant to Section 4.01 and remains delinquent for a period of 90 days or any
other default continues for a period of 90 days beyond the expiration of any
grace or cure period, the Company shall commence foreclosure proceedings. In
such connection, the Company shall from its own funds make all necessary and
proper Servicing Advances, provided, however, that the Company shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration or preservation of any Mortgaged Property, unless it shall
determine (a) that such preservation, restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Purchaser after
reimbursement to itself for such expenses and (b) that such expenses will be
recoverable by it either through Liquidation Proceeds (respecting which it
shall have priority for purposes of withdrawals from the Custodial Account
pursuant to Section 4.05) or through Insurance Proceeds (respecting which it
shall have similar priority).
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure,
in the event the Company has reasonable cause to believe that a Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, or if the
Purchaser otherwise requests an environmental inspection or review of such
Mortgaged Property conducted by a qualified inspector shall be arranged for by
Company at Purchaser's expense. Upon completion of the inspection, the Company
shall promptly provide the Purchaser with a written report of the environmental
inspection.
In the event that the environmental inspection report
indicates that the Mortgaged Property is contaminated by hazardous or toxic
substances or wastes, the Company shall not proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, and the Company shall be
reimbursed for all Servicing Advances made with respect to the related
Mortgaged Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and
interest on all Mortgage Loans are paid in full, the Company shall proceed
diligently to collect all payments due under each of the Mortgage Loans when
the same shall become due and payable and shall take special care in
ascertaining and estimating Escrow Payments and all other charges that will
become due and payable with respect to the Mortgage Loan and the Mortgaged
Property, to the end that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial
Account.
The Company shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled as instructed
by the Purchaser; provided, that, if the Custodial Account contains any funds
of the Company pursuant to Section 4.20, then the title of such account shall
reflect that it is held for the benefit of "the Purchaser and the Company, as
their interests may appear." The Custodial Account shall be established with a
Qualified Depository acceptable to the Purchaser. Any funds deposited in the
Custodial Account shall at all times be fully insured to the full extent
permitted under applicable law. Funds deposited in the Custodial Account may be
drawn on by the Company in accordance with Section 4.05. The creation of any
Custodial Account shall be evidenced by a certification in the form of Exhibit
D-1 hereto, in the case of an account established with the Company, or by a
letter agreement in the form of Exhibit D-2 hereto, in the case of an account
held by a depository other than the Company. A copy of such certification or
letter agreement shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
The Company shall deposit in the Custodial Account on a daily
basis, and retain therein, the following collections received by the Company
and payments made by the Company after the Cut-off Date, other than payments of
principal and interest due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage
Loans, including all Principal Prepayments (but net of any related
Prepayment Penalties, unless otherwise provided in Section 4.20);
(ii) all payments on account of interest on the Mortgage
Loans adjusted to the Mortgage Loan Remittance Rate (or, if otherwise
provided in Section 4.20, net of the Servicing Fee Rate);
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial
Account pursuant to Section 4.01, 4.09, 5.03, or 6.02;
(vii) any amounts payable in connection with the repurchase
of any Mortgage Loan pursuant to Section 3.03 and all amounts
required to be deposited by the Company in connection with a
shortfall in principal amount of any Qualified Substitute Mortgage
Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment in full or
in part, the Prepayment Interest Shortfall Amount, if any, for the
Principal Prepayment Period. Such deposit shall be made from the
Company's own funds, without reimbursement therefor, up to a maximum
amount per month of the aggregate of the Servicing Fees actually
received for such month for the Mortgage Loans;
(ix) any amounts required to be deposited by the Company
pursuant to Section 4.11 in connection with the deductible clause in
any blanket hazard insurance policy; and
(x) any amounts received with respect to or related to any
REO Property and all REO Disposition Proceeds pursuant to Section
4.16.
The foregoing requirements for deposit into the Custodial
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, Ancillary Income need not be
deposited by the Company into the Custodial Account. Any interest paid on funds
deposited in the Custodial Account by the depository institution shall accrue
to the benefit of the Company and the Company shall be entitled to retain and
withdraw such interest from the Custodial Account pursuant to Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in
the manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the
Company's funds made pursuant to Section 5.03, the Company's right to
reimburse itself pursuant to this subclause (ii) being limited to
amounts received on the related Mortgage Loan which represent late
payments of principal and/or interest respecting which any such
advance was made (including Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds with respect to such Mortgage Loan),
it being understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser
except where the Company is required to repurchase a Mortgage Loan
pursuant to Section 3.03 or 6.02, the Company's right to such
reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to such sections and all other amounts
required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iii) to reimburse itself for unreimbursed Servicing
Advances, and for any unpaid Servicing Fees, the Company's right to
reimburse itself pursuant to this subclause (iii) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as
may be collected by the Company from the Mortgagor or otherwise
relating to the Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Company's right thereto shall be prior
to the rights of Purchaser, except that where the Company is required
to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, in
which case the Company's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to be paid
to the Purchaser with respect to such Mortgage Loan;
(iv) to reimburse itself, following a final liquidation of a
Mortgage Loan (or, upon determination that the Company is not
permitted pursuant to Section 4.02 to foreclose upon or accept a deed
in lieu of foreclosure with respect to a Mortgage Property because of
hazardous or toxic substances or wastes contamination), for any
outstanding Nonrecoverable Advances and outstanding Servicing
Advances with respect to such Mortgage Loan, not previously
reimbursed pursuant to clause (ii) or clause (iii) above, it being
understood, in the case of any such reimbursement, that such right
thereto shall be prior to the rights of the Purchaser.
(v) to pay itself interest on funds deposited in the
Custodial Account;
(vi) to reimburse itself for expenses incurred and
reimbursable to it pursuant to Sections 9.01 and 9.03;
(vii) to pay any amount required to be paid pursuant to
Section 4.16 related to any REO Property, it being understood that,
in the case of any such expenditure or withdrawal related to a
particular REO Property, the amount of such expenditure or withdrawal
from the Custodial Account shall be limited to amounts on deposit in
the Custodial Account with respect to the related REO Property;
(viii) to reimburse itself or to pay the Company, as seller
hereunder, any amounts due in accordance with Section 4.20 and
Section 5.01;
(ix) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodial Account is interest bearing,
on each Remittance Date, the Company shall withdraw all funds from the
Custodial Account except for those amounts which, pursuant to Section 5.01, the
Company is not obligated to remit on such Remittance Date. The Company may use
such withdrawn funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan constituting Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts, titled as instructed by the Purchaser. The Escrow Accounts shall be
established with a Qualified Depository or shall be in an account or accounts
the deposits of which are insured by the FDIC to the limits established by such
corporation to the extent that amounts so deposited are fully insured, in a
manner which shall provide maximum available insurance thereunder. Funds
deposited in the Escrow Account may be drawn on by the Company in accordance
with Section 4.07. The creation of any Escrow Account shall be evidenced by a
certification in the form of Exhibit E-1 hereto, in the case of an account
established with the Company, or by a letter agreement in the form of Exhibit
E-2 hereto, in the case of an account held by a depository other than the
Company. A copy of such certification shall be furnished to the Purchaser and,
upon request, to any subsequent Purchaser.
The Company shall deposit in the Escrow Account or Accounts
on a daily basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items
as required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds which are to be applied to the restoration or
repair of any Mortgaged Property.
The Company shall make withdrawals from the Escrow Account
only to effect such payments as are required under this Agreement, as set forth
in Section 4.07. The Company shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing
or that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made
by the Company only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made
by the Company pursuant to Section 4.08 with respect to a related
Mortgage Loan, but only from amounts received on the related Mortgage
Loan which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in
excess of the amounts required under the terms of the related
Mortgage Loan;
(iv) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in accordance with
the terms of the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the
Escrow Account; and
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall
maintain accurate records reflecting the status of ground rents and taxes and
any other item which may become a lien senior to the lien of the related
Mortgage and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect or cause to be effected
payment thereof prior to the applicable penalty or termination date. To the
extent that a Mortgage does not provide for Escrow Payments, the Company shall
determine that any such payments are made by the Mortgagor prior to the
applicable penalty or termination date. The Company assumes full responsibility
for (a) the timely payment of all such bills and shall effect timely payment of
all such charges irrespective of each Mortgagor's faithful performance in the
payment of same or the making of the Escrow Payments, and the Company shall
make Servicing Advances from its own funds to effect such payments and (b) any
penalties or late charges incurred in connection with such bills and any other
charges (including, without limitation, assessments, water rates or sewer
rents) which may become a lien against the Mortgaged Property without
reimbursement therefore.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Escrow
Account to a different Qualified Depository from time to time. Such transfer
shall be made only upon obtaining the consent of the Purchaser, which consent
shall not be withheld unreasonably.
The Company shall bear any expenses, losses or damages
sustained by the Purchaser because the Custodial Account and/or the Escrow
Account are not demand deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow
Account may at the option of the Company be invested in Eligible Investments.
Any such Eligible Investment shall mature no later than the Business Day prior
to the Remittance Date next following the date of such Eligible Investment,
provided, however, that if such Eligible Investment is an obligation of a
Qualified Depository (other than the Company) that maintains the Custodial
Account or the Escrow Account, then such Eligible Investment may mature on such
Remittance Date. Any such Eligible Investment shall be made in the name of the
Company in trust for the benefit of the Purchaser. All income on or gain
realized from any such Eligible Investment shall be for the benefit of the
Company and may be withdrawn at any time by the Company. Any losses incurred in
respect of any such investment shall be deposited in the Custodial Account or
the Escrow Account, by the Company out of its own funds immediately as
realized.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage
Loan hazard insurance such that all buildings upon the Mortgaged Property are
insured by a generally acceptable insurer rated either A:VI or better in the
current Best's Key Rating Guide ("Best's") or acceptable to FNMA and/or FHLMC
against loss by fire, hazards of extended coverage and such other hazards as
are customary in the area where the Mortgaged Property is located, in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor or the loss
payee from becoming a co-insurer.
If upon origination of the Mortgage Loan, the related
Mortgaged Property was located in an area identified in the Federal Register by
the Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Company shall cause to be
maintained for such Mortgage Loan a flood insurance policy meeting the
requirements of the guidelines in effect from time to time of the Federal
Insurance Administration in an amount representing coverage equal to the lesser
of (i) the minimum amount required, under the terms of coverage, to compensate
for any damage or loss on a replacement cost basis (or the unpaid balance of
the mortgage if replacement cost coverage is not available for the type of
building insured) and (ii) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended. If at any time
during the term of the Mortgage Loan, the Company determines in accordance with
applicable law and pursuant to the FNMA Guides that a Mortgaged Property is
located in a special flood hazard area and is not covered by flood insurance or
is covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Company shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Company shall immediately
force place the required flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project,
the Company shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with then current FNMA or FHLMC requirements, and secure from the
owner's association its agreement to notify the Company promptly of any change
in the insurance coverage or of any condemnation or casualty loss that may have
a material effect on the value of the Mortgaged Property as security.
The Company shall cause to be maintained on each Mortgaged
Property such other additional special hazard insurance as may be required
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance, or pursuant to the
requirements of any PMI Policy insurer, or as may be required to conform with
Accepted Servicing Practices.
All policies required hereunder shall name the Company as
loss payee and shall be endorsed with standard or union mortgagee clauses,
without contribution, which shall provide for at least 30 days prior written
notice of any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom
of choice in selecting either his insurance carrier or agent, provided,
however, that the Company shall not accept any such insurance policies from
insurance companies unless such companies are rated A:VI in Best's or
acceptable FNMA and/or FHLMC and are licensed to do business in the
jurisdiction in which the Mortgaged Property is located. The Company shall
determine that such policies provide sufficient risk coverage and amounts, that
they insure the property owner, and that they properly describe the property
address.
Pursuant to Section 4.04, any amounts collected by the
Company under any such policies (other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the related
Mortgaged Property, or property acquired in liquidation of the Mortgage Loan,
or to be released to the Mortgagor, in accordance with the Company's normal
servicing procedures as specified in Section 4.14) shall be deposited in the
Custodial Account subject to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a
blanket policy insuring against losses arising from fire and hazards covered
under extended coverage on all of the Mortgage Loans, then, to the extent such
policy provides coverage in an amount equal to the amount required pursuant to
Section 4.10 and otherwise complies with all other requirements of Section
4.10, it shall conclusively be deemed to have satisfied its obligations as set
forth in Section 4.10. Any amounts collected by the Company under any such
policy relating to a Mortgage Loan shall be deposited in the Custodial Account
subject to withdrawal pursuant to Section 4.05. Such policy may contain a
deductible clause, in which case, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with Section
4.10, and there shall have been a loss which would have been covered by such
policy, the Company shall deposit in the Custodial Account at the time of such
loss the amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Company's funds, without
reimbursement therefor. Upon request of any Purchaser, the Company shall cause
to be delivered to such Purchaser a certified true copy of such policy and a
statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without 30 days' prior written notice to such
Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and
Omissions Insurance.
The Company shall maintain with responsible companies, at its
own expense, a blanket Fidelity Bond and an Errors and Omissions Insurance
Policy, with broad coverage on all officers, employees or other persons acting
in any capacity requiring such persons to handle funds, money, documents or
papers relating to the Mortgage Loans ("Company Employees"). Any such Fidelity
Bond and Errors and Omissions Insurance Policy shall be in the form of the
Financial Institution Bond Form 22 - Fidelity Bond American International
Specialty Lines Insurance Policy Form ("5713) 5/93") Mortgage Banker Broker E&O
and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such bond and insurance policy
shall be at least equal to the corresponding amounts required by FNMA. Upon the
request of any Purchaser, the Company shall cause to be delivered to such
Purchaser a certificate of insurance of the insurer and the surety including a
statement from the surety and the insurer that such fidelity bond and insurance
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
Section 4.13 Inspections.
The Company shall inspect the Mortgaged Property as often as
deemed necessary by the Company to assure itself that the value of the
Mortgaged Property is being preserved. In addition, if any Mortgage Loan is
more than 60 days delinquent, the Company immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices or as may be required by the primary mortgage
guaranty insurer. The Company shall keep a written or electronic report of each
such inspection.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser
prior to releasing any Insurance Proceeds or Condemnation Proceeds to the
Mortgagor to be applied to the restoration or repair of the Mortgaged Property
if such release is in accordance with Accepted Servicing Practices. At a
minimum, the Company shall comply with the following conditions in connection
with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent
verification of completion of repairs and issuance of any required
approvals with respect thereto;
(ii) the Company shall take all steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited
to requiring waivers with respect to mechanics' and materialmen's
liens;
(iii) if the Mortgage Loan is not included in a Pass-Through
Transfer, the Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow
Account.
(v) If the Purchaser is named as an additional loss payee,
the Company is hereby empowered to endorse any loss draft issued in
respect of such a claim in the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
With respect to each Mortgage Loan with an LTV in excess of
80%, the Company shall, without any cost to the Purchaser, maintain or cause
the Mortgagor to maintain in full force and effect a PMI Policy insuring that
portion of the Mortgage Loan in excess of 75% of value, and shall pay or shall
cause the Mortgagor to pay the premium thereon on a timely basis, until the LTV
of such Mortgage Loan is reduced to 80%. In the event that such PMI Policy
shall be terminated, the Company shall obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Company shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company shall not
take any action which would result in noncoverage under any applicable PMI
Policy of any loss which, but for the actions of the Company would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 6.01, the Company shall
promptly notify the insurer under the related PMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
PMI Policy and shall take all actions which may be required by such insurer as
a condition to the continuation of coverage under such PMI Policy. If such PMI
Policy is terminated as a result of such assumption or substitution of
liability, the Company shall obtain a replacement PMI Policy as provided above.
In connection with its activities as servicer, the Company
agrees to prepare and present, on behalf of itself and the Purchaser, claims to
the insurer under any PMI Policy in a timely fashion in accordance with the
terms of such PMI Policy and, in this regard, to take such action as shall be
necessary to permit recovery under any PMI Policy respecting a defaulted
Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the Company
under any PMI Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
Section 4.16 Title, Management and Disposition of REO
Property.
In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Purchaser, or in the event the Purchaser
is not authorized or permitted to hold title to real property in the state
where the REO Property is located, or would be adversely affected under the
"doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an opinion of counsel obtained by the Company from any
attorney duly licensed to practice law in the state where the REO Property is
located. The Person or Persons holding such title other than the Purchaser
shall acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Purchaser shall furnish the Servicer, upon written
request, with any powers of attorney empowering the Servicer or any Subservicer
to execute and deliver instruments of satisfaction or cancellation or of
partial or full release or discharge or to foreclose upon or otherwise
liquidate Mortgaged Property in accordance with the provisions hereof, and
shall execute and deliver such other documents as the Servicer may reasonably
request and which are necessary or appropriate to enable the Servicer to
service and administer the Mortgage Loans and to carry out its duties
hereunder.
The Company shall manage, conserve, protect and operate each
REO Property for the Purchaser solely for the purpose of its prompt disposition
and sale. The Company, either itself or through an agent selected by the
Company, shall manage, conserve, protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Company shall attempt to
sell the same (and may temporarily rent the same) for a period not greater than
three years, except as otherwise provided below, on such terms and conditions
as the Company deems to be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within three years after title has been taken to such REO Property, unless (i)
a REMIC election has been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (ii) the Company determines,
and gives an appropriate notice to the Purchaser to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than three years is permitted under the foregoing sentence and is
necessary to sell any REO Property, (i) the Company shall report monthly to the
Purchaser as to the progress being made in selling such REO Property and (ii)
if, with the written consent of the Purchaser, a purchase money mortgage is
taken in connection with such sale, such purchase money mortgage shall name the
Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate participation agreement
among the Company and Purchaser shall be entered into with respect to such
purchase money mortgage.
The Company shall also maintain on each REO Property fire and
hazard insurance with extended coverage in amount which is equal to the
outstanding principal balance of the related Mortgage Loan (as reduced by any
amount applied as a reduction of principal at the time of acquisition of the
REO Property) and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the
Company at such price, and upon such terms and conditions, as the Company deems
to be in the best interests of the Purchaser. The proceeds of sale of the REO
Property shall be promptly deposited in the Custodial Account. As soon as
practical thereafter the expenses of such sale shall be paid and the Company
shall reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees, unreimbursed Monthly Advances made pursuant to Section 5.03,
and a one time REO Property disposition fee of $800 for each REO Property sold
hereunder. On the Remittance Date immediately following the Principal
Prepayment Period in which such sale proceeds are received the net cash
proceeds of such sale remaining in the Custodial Account shall be distributed
to the Purchaser.
The Company shall withdraw from the Custodial Account funds
necessary for the proper operation, management and maintenance of the REO
Property, including the cost of maintaining any hazard insurance pursuant to
Section 4.10 and the fees of any managing agent of the Company, a Subservicer,
or the Company itself. The REO management fee shall be an amount that is
reasonable and customary in the area where the Mortgaged Property is located.
The Company shall make monthly distributions on each Remittance Date to the
Purchaser of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
4.16 and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section
5.02, the Company shall furnish to the Purchaser on or before the Remittance
Date each month a statement with respect to any REO Property covering the
operation of such REO Property for the previous month and the Company's efforts
in connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as the Purchaser shall
reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Purchaser pursuant to a deed in lieu of foreclosure,
the Company shall submit to the Purchaser a liquidation report with respect to
such Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of
Mortgaged Property.
Following the foreclosure sale or abandonment of any
Mortgaged Property, the Company shall report such foreclosure or abandonment as
required pursuant to Section 6050J of the Code.
Section 4.20 Retained Yield and Prepayment Penalties.
(i) If the servicer hereunder is a successor to the Company
(in such capacity, the "Servicer"), then the Servicer shall segregate
and hold all Prepayment Penalties and Retained Yield collected for
the benefit of the Company, as seller hereunder (in such capacity,
the "Seller"), separate and apart from any of the Servicer's own
funds and general assets and shall remit such amounts to the
Custodial Account in accordance with Section 4.04. Funds deposited in
the Custodial Account for the benefit of the Seller shall be
withdrawn by the Servicer only in accordance with Section 4.05 and
subsection (iv) below. Under Section 4.04, the Servicer is entitled
to receive any interest paid and investment income on funds in the
Custodial Account. Notwithstanding such provision, on each Remittance
Date the Servicer shall remit to the Seller a portion of such
interest or other investment income (calculated based on a fraction,
the numerator of which is the amount of Prepayment Penalties and
Retained Yield held in the Custodial Account on the Business Day
prior to the Remittance Date and the denominator of which is the
total amount of funds held in such account on such date).
(ii) All Prepayment Penalties and Retained Yield shall be for
the account of the Seller and shall not be payable to the Servicer as
servicing compensation.
(iii) In connection with each Monthly Advance made by the
Servicer in accordance with Section 5.03 of this Agreement, the
Servicer shall remit to the Seller on the Remittance Date on which
such Monthly Advance is remitted to the Purchaser an amount equal to
the Retained Yield with respect to the related Mortgage Loan.
(iv) The Servicer shall withdraw from the Custodial Account
(unless both the Servicer and the Seller are first Nationwide
Mortgage Corporation) and remit to the Seller on each Remittance Date
(a) all Prepayment Penalties collected by the Servicer during the
preceding Principal Prepayment Period, (b) the aggregate Retained
Yield (computed on the basis of the same principal amount and period
respecting which any related interest payment on a Mortgage Loan is
computed) for such Remittance Date, and (c) a proportionate amount
(calculated as provided above) of all investment income and interest
on the funds held in the Custodial Account for the benefit of the
Seller not previously remitted to the Seller.
(v) The Servicer shall be entitled to withdraw funds from the
Custodial Account from time to time to reimburse itself for any
Retained Yield advanced by it to the Seller in accordance with
subsection (iii) above, such right to reimbursement being limited to
amounts received on the related Mortgage Loan including any late
collections, Liquidation Proceeds, REO Disposition Proceeds,
Condemnation Proceeds and Insurance Proceeds.
(vi) The Seller shall have the right, without the consent of
the Servicer or the Purchaser, to assign, in whole or in part, its
right to receive all Retained Yield and Prepayment Penalties with
respect to some or all of the Mortgage Loans. All references to
Seller shall be deemed to include its assignees hereunder. However,
in no event shall more than three such assignments be made during the
term of this Agreement. The Seller shall give written notice of any
such assignment to the Servicer, which notice shall include an
address for notice to the assignee Seller and wire transfer
instructions for remittances to the assignee Seller.
(vii) If (i) the Servicer fails to remit to the Seller any
payment required to be made by it to the Seller under the terms of
this Section 4.20, which failure continues unremedied for a period of
five Business Days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given by
the Seller to the Servicer, or (ii) the Servicer fails to duly
observe or perform in any material respect any other of the covenants
or agreements on the part of the Servicer set forth in this Section
4.20 or in Section 5.02, the breach of which has a material adverse
effect and which continues unremedied for a period of sixty days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given by the Seller to the
Servicer, then, and in each and every such case, the Seller shall be
entitled to exercise whatever rights the Seller may have at law or
equity to damages, including injunctive relief and specific
performance. In addition, the Servicer shall indemnify the Seller and
hold it harmless from and against any and all losses, penalties,
fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting or arising
from any material breach by the Servicer of its obligations to the
Seller set forth in this Section 4.20 or in Section 5.02, and the
Servicer shall promptly pay to Seller all such amounts upon written
demand by the Seller. Any cause of action relating to or arising out
of any such breach shall accrue upon delivery of the Seller's written
demand for payment to the Servicer.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire
transfer of immediately available funds to the Purchaser (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the Custodial
Account pursuant to Section 4.05) plus (b) all Monthly Advances, if any, which
the Company is obligated to distribute pursuant to Section 5.03, minus (c) any
amounts attributable to Principal Prepayments, Liquidation Proceeds and
Insurance Proceeds received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section
4.04(viii), and minus (d) any amounts attributable to Monthly Payments
collected but due on a Due Date or Dates subsequent to the first day of the
month of the Remittance Date, which amounts shall be remitted on the Remittance
Date next succeeding the Due Period for such amounts, and minus (e) any amounts
attributable to Retained Yield and Prepayment Penalties deposited in the
Custodial Account pursuant to Section 4.20.
With respect to any remittance received by the Purchaser
after the second Business Day following the Business Day on which such payment
was due, the Company shall pay to the Purchaser interest on any such late
payment at an annual rate equal to the Prime Rate, adjusted as of the date of
each change, plus three percentage points, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited in
the Custodial Account by the Company on the date such late payment is made and
shall cover the period commencing with the day following such second Business
Day and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with the distribution payable
on the next succeeding Remittance Date. The payment by the Company of any such
interest shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Company.
Section 5.02 Statements to Purchaser and Seller.
Not later than the Remittance Date, the Company shall furnish
to the Purchaser and, if Company is not then the servicer, to the Company a
Monthly Remittance Advice, with a trial balance report attached thereto, in the
form of Exhibit F annexed hereto in hard copy and in standard Alltel/CPI tape
or transmission format, as amended from time to time by Alltel (unless the
Company and the Purchaser otherwise mutually agree to use another reporting
format), as to the preceding remittance and the period ending on the preceding
Determination Date. In the event that a subsequent Purchaser requests the
Company to use a reporting format not otherwise mutually agreed to between the
Company and the prior Purchaser that is not the standard Alltell/CPI tape or
transmission format, and such other format is not otherwise being used by the
Company, then the Company need not agree to the use of such format unless it
receives from the Purchaser compensation for the Company's costs of obtaining
and implementing such format.
In addition, not more than 60 days after the end of each
calendar year, the Company shall furnish to each Person who was a Purchaser at
any time during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Company shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Company pursuant to any requirements of the Internal Revenue
Code as from time to time are in force.
The Company shall prepare any and all tax, information
statements or other filings required to be delivered to any governmental taxing
authority or to any Purchaser pursuant to any applicable law with respect to
the Mortgage Loans and the transactions contemplated hereby. In addition, the
Company shall provide each Purchaser with such information concerning the
Mortgage Loans as is necessary for such Purchaser to prepare its federal income
tax return as any Purchaser may reasonably request from time to time.
Notwithstanding anything herein to the contrary, with respect
to any Mortgage Loan which is held by a REMIC, the Company shall not be
required to prepare or file any tax return for the REMIC.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance
Date, the Company shall deposit in the Custodial Account from its own funds an
amount equal to all Monthly Payments (with interest adjusted to the Mortgage
Interest Rate minus the Servicing Fee Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close
of business on the immediately preceding Determination Date or which were
deferred pursuant to Section 4.01. The Company's obligation to make such
Monthly Advances as to any Mortgage Loan will continue through the last Monthly
Payment due prior to the payment in full of the Mortgage Loan, or through the
last Remittance Date prior to the Remittance Date for the distribution of all
Liquidation Proceeds and other payments or recoveries (including Insurance
Proceeds and Condemnation Proceeds) with respect to the Mortgage Loan.
The Company shall be obligated to make Monthly Advances in
accordance with the provisions of this Agreement; provided however, that such
obligation with respect to any Mortgage Loan shall cease if the Company
determines, in its reasonable opinion, that Monthly Advances with respect to
such Mortgage Loan are Nonrecoverable Advances. In the event that the Company
determines that any such advances are Nonrecoverable Advances, the Company
shall provide the Purchaser with a certificate signed by two Servicing Officers
evidencing such determination.
If a Monthly Advance is required hereunder, the Company shall
on the Remittance Date immediately following the related Determination Date
either (i) deposit in the Custodial Account an amount equal to such Monthly
Advance, (ii) cause to be made an appropriate entry in the records of the
Custodial Account that funds in such account being held for future distribution
or withdrawal have been, as permitted by this Section 5.03, used by the Company
to make such Monthly Advance and remit such funds to the Purchaser or (iii)
make Monthly Advances in the form of any combination of clauses (i) and (ii)
aggregating the amount of such Monthly Advance. Any funds being held in the
Custodial Account for future distribution to Purchaser and so used shall be
replaced by the Company from its own funds by deposit in the Custodial Account
on or before any future Remittance Date in which such funds would be due to the
Purchaser.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any
"due-on-sale" provision contained in any Mortgage or Mortgage Note and to deny
assumption by the person to whom the Mortgaged Property has been or is about to
be sold whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains liable on the Mortgage and the Mortgage Note. When
the Mortgaged Property has been conveyed by the Mortgagor, the Company shall,
to the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Company shall not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related PMI Policy,
if any.
If the Company reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Company shall enter
into (i) an assumption and modification agreement with the person to whom such
property has been conveyed, pursuant to which such person becomes liable under
the Mortgage Note and the original Mortgagor remains liable thereon or (ii) in
the event the Company is unable under applicable law to require that the
original Mortgagor remain liable under the Mortgage Note and the Company has
the prior consent of the primary mortgage guaranty insurer, a substitution of
liability agreement with the purchaser of the Mortgaged Property pursuant to
which the original Mortgagor is released from liability and the purchaser of
the Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note. In connection with any such assumption, none of the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan
or the outstanding principal amount of the Mortgage Loan shall be changed.
To the extent that any Mortgage Loan is assumable, the
Company shall inquire diligently into the creditworthiness of the proposed
transferee, and shall use the underwriting criteria for approving the credit of
the proposed transferee which are used by FNMA with respect to underwriting
mortgage loans of the same type as the Mortgage Loans. If the credit of the
proposed transferee does not meet such underwriting criteria, the Company
diligently shall, to the extent permitted by the Mortgage or the Mortgage Note
and by applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of
Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Company of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Company shall notify the Purchaser in
the Monthly Remittance Advice as provided in Section 5.02, and upon deposit of
such payment in full in the Custodial Account may request the release of any
Mortgage Loan Documents. Such request for release by the Company shall be in
the form used in connection with a FNMA or FHLMC request for release of
documents.
If the Company satisfies or releases a Mortgage without first
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Company otherwise prejudice any rights the Purchaser may have under
the mortgage instruments, upon written demand of the Purchaser, the Company
shall repurchase the related Mortgage Loan at the Repurchase Price by deposit
thereof in the Custodial Account within 2 Business Days of receipt of such
demand by the Purchaser. The Company shall maintain the Fidelity Bond and
Errors and Omissions Insurance Policy as provided for in Section 4.12 insuring
the Company against any loss it may sustain with respect to any Mortgage Loan
not satisfied in accordance with the procedures set forth herein.
Section 6.03 Penalties for Prepayment.
Each Pool 1 Mortgage Loan and Pool 2 Mortgage Loan contains a
Prepayment Penalty in an amount as specified in the related Mortgage Loan
Documents and the Mortgage Loan Schedule. The Company shall, as to each such
Mortgage Loan and to the extent permitted by applicable law, collect from each
Mortgagor who prepays principal the amount of the Prepayment Penalty as
permitted in the related Mortgage Loan Documents unless the collection of such
Prepayment Penalty would result in extreme hardship to the Mortgagor, and in
such case the Company shall provide the Purchaser with a certificate signed by
a Servicing Officer certifying that after considering the circumstances
presented by the Mortgagor, the Company has determined, in its reasonable
judgment, that the Prepayment Penalty is appropriately waived. The Company
shall retain, or, if there is a successor to the Company as servicer, the
servicer shall pay to the Company, all such Prepayment Penalties received in
connection with any Mortgage Loan, in accordance with Section 4.20.
Section 6.04 Servicing Compensation.
As compensation for its services hereunder, the Company shall
be entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amount of its Servicing Fee, less any
amounts payable by the Company pursuant to Section 4.04 (viii). The Servicing
Fee shall be payable monthly and shall be computed on the basis of the same
unpaid principal balance and for the period respecting which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee shall be
payable only at the time of and with respect to those Mortgage Loans for which
payment is in fact made of the entire amount of the Monthly Payment. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and payable
solely from, the interest portion of such Monthly Payments collected by the
Company or as otherwise provided in Section 4.05.
Additional servicing compensation in the form of Ancillary
Income shall be retained by the Company. The Company shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement thereof except as
specifically provided for herein.
Section 6.05 Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before
March 31 each year beginning March 31, 2000, an Officer's Certificate, stating
that (i) a review of the activities of the Company during the preceding
calendar year and of performance under this Agreement has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Company has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.06 Annual Independent Public Accountants' Servicing
Report.
On or before March 31st of each year beginning March 31,
2000, the Company, at its expense, shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a statement to each Purchaser to the effect that such
firm has examined certain documents and records relating to the servicing of
mortgage loans which the servicer is servicing, including the Mortgage Loans,
and that, on the basis of such examination conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers,
nothing has come to their attention which would indicate that such servicing
has not been conducted in compliance with Accepted Servicing Practices, except
for (i) such exceptions as such firm shall believe to be immaterial, and (ii)
such other exceptions as shall be set forth in such statement.
Section 6.07 Right to Examine Company Records.
The Purchaser shall have the right to examine and audit any
and all of the books, records, or other information of the Company, whether
held by the Company or by another on its behalf, with respect to or concerning
this Agreement or the Mortgage Loans, during business hours or at such other
times as may be reasonable under applicable circumstances, upon reasonable
advance notice.
ARTICLE VII
AGENCY TRANSFER; PASS-THROUGH TRANSFER
Section 7.01 Removal of Mortgage Loans from Inclusion Under
this Agreement Upon an Agency Transfer, or a Pass-Through Transfer on One or
More Reconstitution Dates.
The Purchaser and the Company agree that with respect to some
or all of the Mortgage Loans, from time to time the Purchaser shall, subject to
Section 2.02, effect an Agency Transfer or Pass-Through Transfer, in each case
retaining the Company as the servicer thereof, or as applicable the
"seller/servicer". In connection with such Agency Transfer or Pass-Through
Transfer, the Purchaser intends (1) to sell some or all of the Mortgage Loans
and other property purchased by the Purchaser from the Company pursuant to this
Agreement and any related mortgage loan purchase agreement and (2) to assign
all of its rights and delegate all of its obligations under this Agreement. The
Company acknowledges and agrees that (1) such sales, assignments and
delegations may be effected in a series of transactions, (2) the ultimate
beneficiary thereof will be the Trustee in a Pass-Through Transfer or other
applicable transferee and (3) the Trustee in a Pass-Through Transfer or other
applicable transferee shall have the right to enforce all of the obligations of
the Company under this Agreement as if for such purpose the Trustee were the
Purchaser hereunder, including but not limited to the rights to enforce the
representations and warranties and the servicing obligations of the Company.
All references to the Purchaser herein shall, unless otherwise specified, be
deemed to refer to the initial Purchaser hereunder and to each assignee
thereof, and of such assignee, expressly including, without limitation, the
Trustee.
The Company shall cooperate with the Purchaser in connection
with the above-described transactions. In that connection, the Company shall
provide to the Trustee or a third party, as the case may be: any and all
information and appropriate verification of information which may be reasonably
available to the Company, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request or as are reasonably
believed necessary by the Trustee, such third party, any master servicer, or
any rating agency, as the case may be, in connection with such transactions, at
reasonable out-of-pocket expense to the Purchaser (unless such information is
otherwise required to be provided by the Company hereunder). In furtherance of
the foregoing, the Company shall deliver, to the extent available, information
as to its delinquency, foreclosure and loss experience for the immediately
preceding three year period in each case, with respect to mortgage loans owned
by it and such mortgage loans serviced for others during such period.
In the event the Purchaser has elected to have the Company
hold record title to the Mortgages, prior to the Reconstitution Date the
Company or its designee shall prepare an Assignment of Mortgage in blank from
the Company, acceptable to the Trustee, for each Mortgage Loan that is part of
the Agency Transfer or Pass-Through Transfer and shall pay all preparation and
recording costs associated therewith so long as such Assignment of Mortgage has
not previously been recorded at the expense of the Company. The Company shall
execute each Assignment of Mortgage, track such Assignments of Mortgage to
ensure they have been recorded and deliver them as required by the Trustee,
upon the Company's receipt thereof. Additionally, the Company shall prepare and
execute, at the direction of the Purchaser, any note endorsements in connection
with an Agency Transfer or Pass-Through Transfer.
All Mortgage Loans not sold or transferred pursuant to an
Agency Transfer or Pass-Through Transfer and any Mortgage Loans repurchased by
the Purchaser pursuant to Section 7.02 hereof, shall be subject to this
Agreement and shall continue to be serviced in accordance with the terms of
this Agreement and with respect thereto this Agreement shall remain in full
force and effect.
Section 7.02 Bringdown of Representations and Warranties.
In connection with the Agency Transfer or Pass-Through
Transfer, the Company shall be deemed to have repeated each of the applicable
representations and warranties set forth in Section 3.01 as of the closing date
of the Agency Transfer or Pass-Through Transfer.
Section 7.03 Purchaser's Repurchase and Indemnification
Obligations.
Upon receipt by the Company of notice from FNMA, FHLMC or the
trustee of a breach of any Purchaser representation or warranty contained in
any Reconstitution Agreement or a request by FNMA, FHLMC or the trustee, as the
case may be, for the repurchase of any Mortgage Loan transferred to FNMA or
FHLMC pursuant to an Agency Transfer or to a trustee pursuant to a Pass-Through
Transfer, the Company shall promptly notify the Purchaser of same and shall, at
the direction of the Purchaser, use its best efforts to cure and correct any
such breach and to satisfy the requests or concerns of FNMA, FHLMC, or the
trustee related to such deficiencies of the related Mortgage Loans transferred
to FNMA, FHLMC, or the trustee.
The Purchaser shall repurchase from the Company any Mortgage
Loan transferred to FNMA or FHLMC pursuant to an Agency Transfer or to a
trustee pursuant to a Pass-Through Transfer with respect to which the Company
has been required by FNMA, FHLMC, or the trustee to repurchase due to a breach
of a representation or warranty made by the Purchaser with respect to the
Mortgage Loans, or the servicing thereof prior to the transfer date to FNMA,
FHLMC, or the trustee in any Reconstitution Agreement and not due to a Breach
of the Company's representations or obligations thereunder. The repurchase
price to be paid by the Purchaser to the Company shall equal that repurchase
price paid by the Company to FNMA, FHLMC, or the third party purchaser plus all
reasonable costs and expenses borne by the Company in connection with the cure
of such breach of a representation or warranty made by the Purchaser and in
connection with the repurchase of such Mortgage Loan from FNMA, FHLMC, or the
trustee, including, but not limited to, reasonable and necessary attorneys'
fees.
At the time of repurchase, the Custodian and the Company
shall arrange for the reassignment of the repurchased Mortgage Loan to the
Purchaser according to the Purchaser's instructions and the delivery to the
Custodian of any documents held by FNMA, FHLMC, or the trustee with respect to
the repurchased Mortgage Loan pursuant to the related Reconstitution Agreement.
In the event of a repurchase, the Company shall, simultaneously with such
reassignment, give written notice to the Purchaser that such repurchase has
taken place, and amend the Mortgage Loan Schedule to reflect the addition of
the repurchased Mortgage Loan to this Agreement.
ARTICLE VIII
COMPANY TO COOPERATE
Section 8.01 Provision of Information.
During the term of this Agreement, the Company shall furnish
to the Purchaser such periodic, special, or other reports or information, and
copies or originals of any documents contained in the Servicing File for each
Mortgage Loan, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Purchaser, any regulatory
requirement pertaining to the Purchaser or the purposes of this Agreement. All
such reports, documents or information shall be provided by and in accordance
with all reasonable instructions and directions which the Purchaser may give.
The Company shall execute and deliver all such instruments
and take all such action as the Purchaser may reasonably request from time to
time, in order to effectuate the purposes and to carry out the terms of this
Agreement.
Section 8.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the
Purchaser may make available to a prospective Purchaser a Consolidated
Statement of Operations of the Company for the most recently completed five
fiscal years or such lesser period the Company has been in existence for which
such a statement is available, as well as a Consolidated Statement of Condition
at the end of the last two fiscal years covered by such Consolidated Statement
of Operations. The Company also shall make available the most recent comparable
interim statements to the extent any such statements have been prepared by or
on behalf of the Company (and are available upon request to members or
stockholders of the Company or to the public at large). If it has not already
done so, the Company shall furnish promptly to the Purchaser copies of the
statement specified above.
Upon reasonable notice during normal business hours, the
Company also shall make available to Purchaser or prospective Purchaser a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Company or the financial
statements of the Company, and to permit any prospective Purchaser to inspect
the Company's servicing facilities or those of any Subservicer for the purpose
of satisfying such prospective Purchaser that the Company and any Subservicer
have the ability to service the Mortgage Loans as provided in this Agreement.
ARTICLE IX
THE COMPANY
Section 9.01 Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser and hold it
harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other costs, fees and expenses that the Purchaser may sustain in any
way related to the failure of the Company to perform its duties and service the
Mortgage Loans in material compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 7.01. The Company
shall notify the Purchaser reasonably promptly if a claim is made by a third
party with respect to this Agreement or any Reconstitution Agreement, shall
notify FNMA, FHLMC, or the Trustee reasonably promptly with respect to any
claim made by a third party with respect to any Reconstitution Agreement, shall
assume (with the prior written consent of the Purchaser or such Trustee, as
applicable) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Purchaser or such Trustee,
as applicable, in respect of such claim. The Company shall follow any
reasonable written instructions received from the Purchaser in connection with
such claim. In addition, in connection with any claim made by a third party
against the Purchaser or the Trustee with respect to any Mortgage Loan, the
Company shall notify the Purchaser or the Trustee reasonably promptly following
the receipt of such claim and shall assume the defense of any such claim, pay
all expenses in connection therewith, including counsel fees, and shall
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Purchaser, the Trustee or the Company. In any such event, the
Company shall be reimbursed from the Custodial Account for all amounts advanced
by it hereunder except when the claim is in any way related to the Company's
indemnification obligation in accordance with the first sentence of this
Section 9.01.
Section 9.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights
and franchises as a corporation, and shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any person into which the Company may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Company shall be a party, or any Person succeeding
to the business of the Company, shall be the successor of the Company
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, provided, however, that the successor or surviving Person
shall be an institution either (i) having a net worth of not less than
$25,000,000 or whose deposits are insured by the FDIC through the BIF or the
SAIF, and (ii) which is a FNMA-approved company in good standing. If any such
merger, conversion or consolidation occurs after a Reconstitution Date, in
addition to the foregoing, there must be delivered to the Purchaser a letter
from each of the Rating Agencies to the effect that such merger, conversion or
consolidation will not result in a qualification, withdrawal or downgrade of
the then-current rating of any of the Certificates.
Section 9.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers,
employees or agents of the Company shall be under any liability to the
Purchaser for any action taken or for refraining from the taking of any action
in good faith pursuant to this Agreement, or for errors in judgment, provided,
however, that this provision shall not protect the Company or any such person
against any Breach of warranties or representations made herein, or failure to
perform its obligations in strict compliance with any standard of care set
forth in this Agreement, or any liability which would otherwise be imposed by
reason of any breach of the terms and conditions of this Agreement. The Company
and any director, officer, employee or agent of the Company may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Company shall not
be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Company may, with the consent
of the Purchaser, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Company shall be reimbursed from the Custodial
Account for the reasonable legal expenses and costs of such action unless such
action results from the Company's willful misconduct, bad faith or negligence
in the performance of its duties hereunder.
Section 9.04 Limitation on Resignation and Assignment by
Company.
The Purchaser has entered into this Agreement with the
Company and subsequent Purchasers will purchase the Mortgage Loans in reliance
upon the independent status of the Company, and the representations as to the
adequacy of its servicing facilities, plant, personnel, records and procedures,
its integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Company shall neither assign this Agreement or the servicing
hereunder or, except as provided herein or in Section 9.02, delegate its rights
or duties hereunder or any portion hereof to other than a Subservicer or sell
or otherwise dispose of all or substantially all of its property or assets
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.
The Company shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Company and the Purchaser
(such consent of Purchaser not to be unreasonably withheld) or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by
an Opinion of Counsel to such effect delivered to the Purchaser which Opinion
of Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section
9.04, in the event that the Company either shall assign this Agreement or the
servicing responsibilities hereunder or delegate its duties hereunder or any
portion thereof (to other than a Subservicer) or, except as provided in Section
9.02, sell or otherwise dispose of all or substantially all of its property or
assets without the prior written consent of the Purchaser as provided herein,
then the Purchaser shall have the right to terminate this Agreement upon notice
given as set forth in Section 9.01, without any payment of any penalty or
damages and without any liability whatsoever to the Company or any third party.
Notwithstanding the foregoing provisions, the Company may
resign or assign its rights as servicer hereunder without Purchaser's consent
if the following conditions are met:
There must be delivered to the Purchaser a letter from each
of the Rating Agencies to the effect that such transfer of servicing or sale or
disposition of assets will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Certificates (if such
resignation or assignment occurs following a Reconstitution Date). In addition,
the ability of the Company to assign its rights and delegate its duties under
this Agreement to a successor servicer shall be subject to the following
conditions:
(i) Such successor servicer must be qualified to service
loans for FNMA or FHLMC;
(ii) Such successor servicer must have a net worth of not
less than $15,000,000;
(iii) Such successor servicer must execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory
to the Trustee, that contains an assumption by such successor
servicer of the due and punctual performance and observance of each
servicing covenant and condition to be performed and observed by the
Company under this Agreement;
(iv) The Company shall, at its cost and expense, take such
steps that may be necessary or appropriate to effectuate and evidence
the transfer of the servicing of the Mortgage Loans to such successor
servicer, including, but not limited to, the following: (a) to the
extent required by the terms of the Mortgage Loans and by applicable
federal and state laws and regulations, the Company shall timely mail
to each obligor under a Mortgage Loan any required notices or
disclosures describing the transfer of servicing of the Mortgage
Loans to the successor servicer; (b) prior to the effective date of
such transfer of servicing, the Company shall transmit to any related
insurer notification of such transfer of servicing, (c) on or prior
to the effective date of such transfer of servicing the Company shall
deliver to the successor servicer all Servicing Files and any related
records or materials; (d) on or prior to the effective date of such
transfer of servicing, the Company shall transfer to the successor
servicer all funds held by the Company in respect of the Mortgage
Loans, other than amounts payable to the Company pursuant to this
Agreement; (e) on or prior to the effective date of such transfer of
servicing, the Company shall remit to the Purchaser the amount of any
Monthly Advance made by the Company on any prior date out of amounts
held in a Custodial Account for future distribution and not yet paid
into such Custodial Account by the Company; (f) the Company shall,
after the effective date of the transfer of servicing to the
successor servicer, continue to forward to such successor servicer,
within one Business Day of receipt, the amount of any payments or
other recoveries received by the Company in respect of the Mortgage
Loans, and the Company shall notify the successor servicer of the
source and proper application of each such payment or recovery; (g)
the Company shall, after the effective date of transfer of servicing
to the successor servicer, continue to cooperate with the successor
servicer to facilitate such transfer in such manner and to such
extent as the successor servicer may reasonably request.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on
the part of the Company:
(i) any failure by the Company, as servicer, to remit to the
Purchaser any payment required to be made under the terms of this
Agreement which continues unremedied for a period of five days after
the date upon which written notice of such failure, requiring the
same to be remedied, shall have been given to the Company by the
Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on the part
of the Company set forth in this Agreement or in the Custodial
Agreement which continues unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Company by the Purchaser
or by the Custodian; or
(iii) failure by the Company, as servicer, to maintain its
license to do business in any jurisdiction where the Mortgaged
Property is located to the extent required by applicable law; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
including bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such decree or order
shall have remained in force undischarged or unstayed for a period of
60 days; or
(v) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings
of or relating to the Company or of or relating to all or
substantially all of its property; or
(vi) the Company shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency, bankruptcy or reorganization
statute, make an assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations or cease its normal
business operations for three Business Days; or
(vii) the Company, as servicer, ceases to meet the
qualifications of a FNMA lender; or
(viii) the Company fails to maintain a minimum net worth of
$25,000,000; or
(ix) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts, without the consent
of the Purchaser, to sell or otherwise dispose of all or
substantially all of its property or assets or to assign this
Agreement or its servicing responsibilities hereunder or to delegate
its duties hereunder or any portion thereof (to other than a
Subservicer) in violation of Section 9.04.
In each and every such case, so long as an Event of Default
shall not have been remedied, in addition to whatsoever rights the Purchaser
may have at law or equity to damages, including injunctive relief and specific
performance, the Purchaser, by notice in writing to the Company, may terminate
all the rights and obligations of the Company as servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof.
Upon receipt by the Company of such written notice, all
authority and power of the Company as servicer under this Agreement, whether
with respect to the Mortgage Loans or otherwise, shall pass to and be vested in
the successor appointed pursuant to Section 12.01. Upon written request from
any Purchaser, the Company shall prepare, execute and deliver to the successor
servicer designated by the Purchaser any and all documents and other
instruments, place in such successor's possession all Mortgage Files, and do or
cause to be done all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, including but not limited to the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, at the Company's sole expense. The Company shall cooperate with the
Purchaser and such successor in effecting the termination of the Company's
responsibilities and rights as servicer hereunder, including without
limitation, the transfer to such successor servicer for administration by it of
all cash amounts which shall at the time be credited by the Company to the
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by
the Company in the performance of its obligations as servicer hereunder and its
consequences. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of
the final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or the disposition of any REO Property with respect to
the last Mortgage Loan and the remittance of all funds due hereunder; or (ii)
mutual consent of the Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
With respect to each Mortgage Loan which has not been subject
to a Pass-Through Transfer, beginning three years after the Closing Date, the
Purchaser may terminate, at its sole option, any rights the Company may have
hereunder as servicer, without cause as provided in this Section 11.02 upon
thirty (30) days notice to the Company. Any such notice of termination as
servicer shall be in writing and delivered to the Company by registered mail as
provided in Section 12.05.
Upon the termination of servicing without cause hereunder,
the Purchaser shall pay to the Company a termination fee equal to 1.50% of the
outstanding principal balance of such Mortgage Loans in which the servicing is
being terminated.
Notwithstanding any such termination as servicer, the Company
shall nonetheless continue to be entitled to receive Retained Yield and
Prepayment Penalties as provided in this Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and
duties as servicer under this Agreement pursuant to Sections 9.04, 10.01, 11.01
(ii) or 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations as servicer under
this Agreement, or (ii) appoint a successor servicer having the characteristics
set forth in clauses (i) through (iii) of Section 9.02 and which shall succeed
to all rights and assume all of the responsibilities, duties and liabilities of
the Company as servicer under this Agreement prior to the termination of
Company's responsibilities, duties and liabilities under this Agreement. In
connection with such appointment and assumption, the Purchaser may make such
arrangements for the compensation of such successor servicer out of payments on
Mortgage Loans as it and such successor shall agree (not to exceed the
Servicing Fee). In the event that the Company's duties, responsibilities and
liabilities as servicer under this Agreement should be terminated pursuant to
the aforementioned sections, the Company shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor. The resignation or removal of the Company
as servicer pursuant to the aforementioned sections shall not become effective
until a successor servicer shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the
provisions of such Sections 3.01, 3.02, 3.03 and 8.01 shall be applicable to
the Company notwithstanding any such sale, assignment, resignation or
termination of the Company, or the termination of this Agreement.
Any successor servicer appointed as provided herein shall
execute, acknowledge and deliver to the Company and to the Purchaser an
instrument accepting such appointment, wherein the successor servicer shall
make the representations and warranties set forth in Section 3.01, except for
subsections (f), (h), (i) and (k) thereof, whereupon such successor servicer
shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Company, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Company as servicer or termination of this Agreement
pursuant to Section 9.04, 10.01, 11.01 or 11.02 shall not affect any claims
that any Purchaser may have against the Company arising out of the Company's
actions or failure to act prior to any such termination or resignation.
Notwithstanding any such termination as servicer, the Company shall nonetheless
continue to be entitled to receive Retained Yield and Prepayment Penalties as
provided in this Agreement.
The Company shall deliver promptly to the successor servicer
the funds in the Custodial Account and Escrow Account and all Mortgage Files
and related documents and statements held by it hereunder and the Company shall
account for all such funds and shall execute and deliver such instruments and
do such other things as may reasonably be required to more fully and
definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company as servicer.
Upon a successor servicer's acceptance of appointment as
such, the Company shall notify by mail the Purchaser of such appointment in
accordance with the procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the
Company and the Purchaser by written agreement signed by the Company and the
Purchaser.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until
terminated as herein provided. This Agreement shall continue notwithstanding
transfers of the Mortgage Loans by the Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
First Nationwide Mortgage Corporation
5280 Corporate Drive
Frederick, Maryland 21701
Attn: John P. Jukoski, Jr.
First Vice President - Secondary Marketing
copies to:
First Nationwide Mortgage Corporation
5280 Corporate Drive
Frederick, MD 21701
Attn: Stephen E. Simcock, Esq.
Chief Counsel
or such other address as may hereafter be furnished to the Purchaser in writing
by the Company;
(ii) if to Purchaser:
Lehman Capital, a Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
12th Floor
200 Vesey Street,
New York, New York 10285-0800
Attention: Contract Finance
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions
or terms of this Agreement shall be held invalid for any reason whatsoever,
then such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this Agreement
and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to
create a partnership or joint venture between the parties hereto and the
services of the Company shall be rendered as an independent contractor and not
as agent for the Purchaser.
Section 12.08 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same agreement. Subject to Section 9.04,
this Agreement shall inure to the benefit of and be binding upon the Company
and the Purchaser and their respective successors and assigns.
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the
Assignments of Mortgage is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected at the Company's expense in the event recordation is either
necessary under applicable law or requested by the Purchaser at its sole option
so long as such recordation is the initial recordation of an assignment of the
Mortgage Loan since the sale to the Purchaser of such Mortgage Loan.
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right from time to time to sell
and transfer one or more of the Mortgage Loans and to assign its rights and
obligations as Purchaser hereunder in respect of such Mortgage Loans, provided,
however, that (i) the transferee will not be deemed to be a Purchaser hereunder
binding upon the Company unless such transferee shall agree in writing (which
shall be substantially in the form of the assignment and assumption agreement
attached hereto as Exhibit G, unless such transfer is a Pass-Through Transfer)
to be bound by the terms of this Agreement and to assume the obligations of the
Purchaser hereunder with respect to the Mortgage Loans sold and transferred to
such transferee, and a copy of the instrument of transfer or assignment and
assumption agreement executed by the transferring and transferee Purchasers
shall have been delivered to the Company; and (ii) the number of transferees
shall be limited (unless the Purchaser shall have obtained the prior written
consent of the Company, which consent shall not be unreasonably withheld) to
(a) one Pass-Through Transfer of all or substantially all of the Mortgage
Loans, and the related transfers necessary to effectuate the Pass-Through
Transfer and (b) no more than two (2) other transfers of Mortgage Loans, such
that, at any one time, there are no more than two (2) Purchasers of Mortgage
Loans in addition to the Trustee under a Pass-Through Transfer (other than the
Company or any affiliate or transferee of the Company). Upon such assignment of
rights and assumption of obligations, the assignee or designee shall accede to
the rights and obligations hereunder of the Purchaser with respect to such
Mortgage Loans and the Purchaser as assignor shall be released from all
obligations hereunder with respect to such Mortgage Loans from and after the
date of such assignment and assumption. All references to the Purchaser in this
Agreement shall be deemed to include its permitted assignee or designee, and
any permitted assignee or designee thereof. Each transferring Purchaser shall
provide such reasonable notice to the Company of such Purchaser's intent to
transfer and sell any Mortgage Loans to any transferee so as to enable the
Company to perform its obligations hereunder with respect to such transferred
Mortgage Loans. In the event that the notice does not timely permit the Company
to make any required remittance under Section 5.01 or to provide a copy of any
monthly report required by Section 5.02 to such transferee Purchaser, then the
Company shall not be liable to the transferee Purchaser for the first month
following such transfer and sale if it makes such remittance and provides such
monthly remittance report to the transferring Purchaser.
Section 12.11 No Personal Solicitation.
The Company agrees that it shall not solicit any Mortgagors
(in writing or otherwise) to refinance any of the Mortgage Loans; provided that
mass advertising or mailing (such as placing advertisements on television, on
radio, in magazines or in newspapers, as well as information contained in
Seller's voice communication system and coupon book or general mailings or
other affiliated bank services) that is not exclusively directed towards the
Mortgagors shall not constitute "solicitation" and shall not violate this
covenant.
IN WITNESS WHEREOF, the Company and the Purchaser have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
(Purchaser)
By: /s/ Jack E. Desens
---------------------------------------
Name: Jack E. Desens
Title: Authorized Signatory
FIRST NATIONWIDE MORTGAGE
CORPORATION
(Seller)
By: /s/ Robert M. Bodell
---------------------------------------
Name: Robert M. Bodell
Title: Executive Vice President
<PAGE>
EXHIBIT A-1
POOL 1 MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT A-2
POOL 2 MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT A-3
POOL 3 MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT B-1
MORTGAGE FILE
(a) The original Mortgage Note bearing all intervening
endorsements and including any riders to the Mortgage Note, endorsed "Pay to
the order of ___________________ without recourse and signed in the name of the
previous owner by an authorized officer;
(b) the original of any guarantee executed in connection with
the Mortgage Note (if any);
(c) the original Mortgage with evidence of recording thereon,
or copies certified by the related recording office or if the original Mortgage
has not yet been returned from the recording office, a copy certified by the
Company indicating that such Mortgage has been delivered for recording. The
return directions for the original Mortgage should indicate, when recorded,
mail to the Company;
(d) the originals of all assumption, modification,
consolidation or extension agreements, (or, if an original of any of these
documents has not been returned from the recording office, a copy thereof
certified by the Company, the original to be delivered to the Company forthwith
after return from such recording office) with evidence of recording thereon, if
any;
(e) the original Assignment of Mortgage as appropriate, in
recordable form, for each Mortgage Loan assigned in blank or as specified by
the initial Purchaser;
(f) the originals of any intervening recorded Assignments of
Mortgage, showing a complete chain of assignment from origination to the
Company, including warehousing assignments, with evidence of recording thereon
(or, if an original intervening Assignment of Mortgage has not been returned
from the recording office, a copy thereof certified by the Company, the
original to be delivered to the Custodian forthwith after return from such
recording office);
(g) the original mortgage title insurance policy, or copy of
title commitment (or in appropriate jurisdictions, attorney's opinion of title
and abstract of title); and
(h) the original primary mortgage insurance certificate, if
any or copy of mortgage insurance certificate.
In the event an Officer's Certificate of the Company is
delivered to the Custodian because of a delay caused by the public recording
office in returning any recorded document, the Company shall deliver to the
Custodian, within 60 days of the Closing Date, an Officer's Certificate which
shall (i) identify the recorded document, (ii) state that the recorded document
has not been delivered to the Custodian due solely to a delay caused by the
public recording office, (iii) state the amount of time generally required by
the applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian. The Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv) above.
An extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
<PAGE>
EXHIBIT B-2
CONTENTS OF EACH SERVICING FILE
With respect to each Mortgage Loan, the Servicing File shall
include each of the following items, which shall be available for inspection by
the Purchaser and any prospective Purchaser, and which shall be retained by the
Company in the Servicing File (or other file or electronic media) pursuant to
the Seller's Warranties and Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. A copy of each document contained in the Mortgage File.
2. Any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage.
3. Residential loan application.
4. Mortgage Loan closing statement.
5. Verification of employment and income.
6. Verification of acceptable evidence of source and
amount of downpayment.
7. If applicable, credit report on the Mortgagor.
8. Residential appraisal report.
9. Photograph of the Mortgaged Property.
10. If applicable, survey of the Mortgaged Property.
11. Copy of each instrument necessary to complete
identification of any exception set forth in the
exception schedule in the title policy, i.e., map or
plat, restrictions, easements, sewer agreements,
home association declarations, etc.
12. All required disclosure statements required to be
disclosed to borrowers at the time of application or
origination, as applicable for the Mortgage Loan.
13. If available, termite report, structural engineer's
report, water potability and septic certification.
14. Sales contract.
15. In accordance with customary industry practice, tax
receipts, insurance premium receipts, ledger sheets,
payment history from date of origination, insurance
claim files, correspondence, current and historical
computerized data files, and all other processing,
underwriting and closing papers and records which
are customarily contained in a mortgage loan file
and which are required to document the Mortgage Loan
or to service the Mortgage Loan.
<PAGE>
EXHIBIT D-1
CUSTODIAL ACCOUNT CERTIFICATION
_____________________, 199__
First Nationwide Mortgage Corporation hereby certifies that
it has established the account described below as a Custodial Account pursuant
to Section 4.04 of the Seller's Warranties and Servicing Agreement, dated as of
February 1, 1999, Conventional Residential Fixed Rate Mortgage Loans, Group
_________.
Title of Account: First Nationwide Mortgage Corporation in trust for the
Purchaser, [Group 99-FN-01].
Account Number:
Address of office or branch
of the Company at
which Account is maintained:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
FIRST NATIONWIDE MORTGAGE
CORPORATION
Company
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
<PAGE>
EXHIBIT D-2
CUSTODIAL ACCOUNT LETTER AGREEMENT
___________, 1999
To:
--------------------------
--------------------------
--------------------------
(the "Depository")
As Company under the Seller's Warranties and Servicing
Agreement, dated as of February 1, 1999, Conventional Residential Fixed Rate
Mortgage Loans, Group _________ (the "Agreement"), we hereby authorize and
request you to establish an account, as a Custodial Account pursuant to Section
4.04 of the Agreement, to be designated as "First Nationwide Mortgage
Corporation, in trust for the Purchaser - Conventional Residential Fixed Rate
Mortgage Loans - [Group 99-FN-01]." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Company. You may refuse
any deposit which would result in violation of the requirement that the account
be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
FIRST NATIONWIDE MORTGAGE
CORPORATION
Company
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
The undersigned, as Depository, hereby certifies that the
above described account has been established under Account Number __________,
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above. The full amount deposited at any
time in the account will be insured by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF").
---------------------------------
Depository
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
<PAGE>
EXHIBIT E-1
ESCROW ACCOUNT CERTIFICATION
___________, 1999
First Nationwide Mortgage Corporation hereby certifies that it has established
the account described below as an Escrow Account pursuant to Section 4.06 of
the Seller's Warranties and Servicing Agreement, dated as of February 1, 1999,
Conventional Residential Fixed Rate Mortgage Loans, Group [99-FN-01].
Title of Account: "First Nationwide Mortgage Corporation, in trust for the
Purchaser, Group [99-FN-01], and various Mortgagors."
Account Number:
Address of office or branch
of the Company at
which Account is maintained:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
February 1, 1999
FIRST NATIONWIDE MORTGAGE
CORPORATION
Company
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
<PAGE>
CWT\NYLIB1\338747.6
EXHIBIT E-2
ESCROW ACCOUNT LETTER AGREEMENT
___________, 1999
To:
--------------------------
--------------------------
--------------------------
(the "Depository")
As Company under the Seller's Warranties and Servicing
Agreement, dated as of February 1, 1999, Conventional Residential Fixed Rate
Mortgage Loans, Group [99-FN-01] (the "Agreement"), we hereby authorize and
request you to establish an account, as an Escrow Account pursuant to Section
4.07 of the Agreement, to be designated as "First Nationwide Mortgage
Corporation, in trust for the Purchaser - Conventional Residential Fixed Rate
Mortgage Loans - Group [99-FN-01]." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Company. You may refuse
any deposit which would result in violation of the requirement that the account
be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
FIRST NATIONWIDE MORTGAGE
CORPORATION
Company
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
<PAGE>
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ______, at the office of the
Depository indicated above, and agrees to honor withdrawals on such account as
provided above. The full amount deposited at any time in the account will be
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
---------------------------------
Depository
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
<PAGE>
EXHIBIT F
MONTHLY REMITTANCE ADVICE
1) Standard CPI Reports:
T62C--Monthly Accounting Report
T62E--Liquidation Report
S50Y--Private Pool Detail Report
S214--Summary of Paid in Full Collections
S215--Summary of Collections
P139--Trial Balance
2) Standard CPI Tape Format:
SPNB Scheduled Balance Tape
SPNB Determination Diskette/P45K
At such times as the Company is no longer the servicer under the Agreement, the
Monthly Remittance Advice also shall include (i) the aggregate Retained Yield
to be remitted to the Company on the Remittance Date, (ii) the aggregate
Prepayment Penalties collected by the servicer during the preceding calendar
month, and (iii) a list of the Mortgage Loans for which Prepayment Penalties
are being remitted (including with respect to each Mortgage Loan, the loan
number, borrower name and dollar amount of Prepayment Penalties collected for
such Mortgage Loan).
<PAGE>
EXHIBIT G
ASSIGNMENT AND ASSUMPTION
_________________, 199_
ASSIGNMENT AND ASSUMPTION, dated __________, between
__________________________________, a ___________________ corporation having an
office at __________________ ("Assignor") and
_________________________________, a __________________ corporation having an
office at __________________ ("Assignee"):
For and in consideration of the sum of TEN DOLLARS ($10.00)
and other valuable consideration the receipt and sufficiency of which hereby
are acknowledged, and of the mutual covenants herein contained, the parties
hereto hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to
Assignee all of the right, title and interest of Assignor, as purchaser, in, to
and under that certain Seller's Warranties and Servicing Agreement,
Conventional Residential Fixed Rate Mortgage Loans, Group No. [1999-FN-01] (the
"Seller's Warranties and Servicing Agreement"), dated as of February 1 1999, by
and between Lehman Capital, A Division of Lehman Brothers Holdings Inc. (the
"Purchaser"), and First Nationwide Mortgage Corporation (the "Company"), and
the Mortgage Loans Group No. [1999-FN-01] delivered thereunder by the Company
to the Assignor.
2. The Assignor warrants and represents to, and covenants
with, the Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans
with the full right to transfer the Mortgage Loans free from any and all claims
and encumbrances whatsoever;
b. The Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other defenses available to the
Company with respect to the Seller's Warranties and Servicing Agreement or the
Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under,
or agreed to any amendment or other modification of, the Seller's Warranties
and Servicing Agreement, the Custodial Agreement or the Mortgage Loans,
including without limitation the transfer of the servicing obligations under
the Seller's Warranties and Servicing Agreement. The Assignor has no knowledge
of, and has not received notice of, any waivers under or amendments or other
modifications of, or assignments of rights or obligations under, the Seller's
Warranties and Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans under the
Securities Act of 1933 (the "33 Act") or which would render the disposition of
the Mortgage Loans a violation of Section 5 of the 33 Act or require
registration pursuant thereto.
3. The Assignee warrants and represents to, and covenants
with, the Assignor and the Company (and the Assignee agrees that the Company
shall be a third-party beneficiary with respect to such representations,
warranties and covenants, with the right to enforce the same against the
Assignee as though the Company were a party hereto) that:
a. The Assignee agrees to be bound, as Purchaser, by all of
the terms, covenants and conditions of the Seller's Warranties and Servicing
Agreement, the Mortgage Loans and the Custodial Agreement, and from and after
the date hereof, the Assignee assumes for the benefit of each of the Company
and the Assignor all of the Assignor's obligations as Purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not
been registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the
Mortgage Loans are in excess of $250,000 and will be paid by cash remittance of
the full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for
investment for its own account only and not for any other person. In this
connection, neither the Assignee nor any Person authorized to act therefor has
offered the Mortgage Loans by means of any general advertising or general
solicitation within the meaning of Rule 502(c) of U.S. Securities and Exchange
Commission Regulation D, promulgated under the 1933 Act;
e. The Assignee considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested from the Assignor or the
Company;
g. Neither the Assignee nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar
security with, any person in any manner which would constitute a distribution
of the Mortgage Loans under the 33 Act or which would render the disposition of
the Mortgage Loans a violation of Section 5 of the 33 Act or require
registration pursuant thereto, nor will it act, nor has it authorized or will
it authorize any person to act, in such manner with respect to the Mortgage
Loans; and
h. Either: (1) the Assignee is not an employee benefit plan
("Plan") within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a plan (also "Plan") within the
meaning of section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"),
and the Assignee is not directly or indirectly purchasing the Mortgage Loans on
behalf of, investment manager of, as named fiduciary of, as Trustee of, or with
assets of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will
not result in a prohibited transaction under section 406 of ERISA or section
4975 of the Code.
(i) The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreement is:
---------------------------------
---------------------------------
---------------------------------
Attention:
-----------------------
The Assignee's wire transfer instructions for purposes of all
remittances and payments related to the Mortgage Loans and the Seller's
Warranties and Servicing Agreement are:
---------------------------------
---------------------------------
---------------------------------
IN WITNESS WHEREOF, the parties have caused this Assignment
and Assumption to be executed by their duly authorized officers as of the date
first above written.
- -------------------------------- ----------------------------------
Assignor Assignee
By: By:
----------------------------- -------------------------------
Its: Its:
---------------------------- ------------------------------
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of February
1, 1999, by and between Lehman Capital, a Division of Lehman Brothers Holdings
Inc., having an office at American Express Tower 8th Floor, World Financial
Center, 200 Vesey Street, New York, New York 10285 (the "Purchaser") and First
Nationwide Mortgage Corporation, having an office at 5280 Corporate Drive,
Frederick, Maryland 21703 (the "Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to
purchase, certain conventional residential fixed rate mortgage loans (the
"Mortgage Loans") described on the Closing Schedule (as defined herein) on a
servicing retained basis as described herein;
WHEREAS, the Mortgage Loans shall be delivered as whole loans;
WHEREAS, the parties intend hereby to set forth the terms and
conditions upon which the proposed transactions will be effected;
NOW THEREFORE, in consideration of the promises and the mutual
agreements set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have
the respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and
Servicing Agreement").
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and the
Purchaser agrees to purchase on a servicing retained basis, Mortgage Loans
having an aggregate principal balance on the Cut-off Date in an amount as set
forth in the Purchase Price and Terms Letter, from the Purchaser to the Seller,
dated as of January 11, 1999 (the "Purchase Price and Terms Letter"), or in
such other amount as agreed by the Purchaser and the Seller as evidenced by the
actual aggregate principal balance of the Mortgage Loans accepted by the
Purchaser on the Closing Date. The Mortgage Loans will be delivered pursuant to
a Seller's Warranties and Servicing Agreement, Group [1999-FN-01] between the
Purchaser and the Seller.
SECTION 3. Mortgage Schedules. The Seller has provided the Purchaser
with certain information constituting a preliminary listing of each of the Pool
1 Mortgage Loans, Pool 2 Mortgage Loans and Pool 3 Mortgage Loans to be
purchased under this Agreement (the "Preliminary Mortgage Schedule"). The
Purchaser shall select from among the Mortgage Loans listed on the Preliminary
Mortgage Schedule such Mortgage Loans that satisfy the pool parameters for
Group [1999-FN-01] as set forth in the Purchase Price and Terms Letter (subject
to a variance of + or - 5%) and shall create a schedule for Group [1999-FN-01]
listing such Mortgage Loans substantially in the form attached hereto as
Exhibit 5. Following such selection and any additional adjustments as specified
in the following paragraph, and prior to the Closing Date, the Seller and the
Purchaser shall agree upon a final mortgage schedule for each of the Pool 1
Mortgage Loans, Pool 2 Mortgage Loans and Pool 3 Mortgage Loans for Group
[1999-FN-01] (the "Closing Schedule"), setting forth all of the Mortgage Loans
to be purchased under this Agreement. The Closing Schedule shall include, for
each Mortgage Loan, the information contained in the definition of "Mortgage
Loan Schedule" under the Seller's Warranties and Servicing Agreement. The
Closing Schedule shall be used as the Mortgage Loan Schedule under the related
Seller's Warranties and Servicing Agreement.
The Seller shall deliver the proposed Closing Schedule to the
Purchaser four (4) Business Days prior to the Closing Date. The proposed
Closing Schedule shall be adjusted on or before the Closing Date as follows:
(a) the Seller shall delete (i) those Mortgage Loans identified by the
Purchaser prior to the Closing Date as not conforming to its requirements (ii)
those Mortgage Loans which have been prepaid in full prior to the Cut-off Date,
or as to which the representations and warranties of the Seller (as described
in Section 6 hereof) cannot be made as of the Closing Date; and (b) the Seller
shall substitute, for those Mortgage Loans deleted in (a) above, those Mortgage
Loans acceptable to the Purchaser to the extent necessary to comply with
Section 2 of the Purchase Price and Terms Letter.
SECTION 4. Purchase Price. The purchase price for each of the Pool 1
Mortgage Loans, Pool 2 Mortgage Loans and Pool 3 Mortgage Loans (the "Purchase
Price") shall be the related percentage of par as stated in the Purchase Price
and Terms Letter, multiplied by the aggregate principal balance, as of the
Cut-off Date, of the Mortgage Loans listed on the related Closing Schedule,
after application of scheduled payments of principal due on or before the
Cut-off Date whether or not collected.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the aggregate
principal amount of the Mortgage Loans as of the Cut-off Date at the weighted
average Mortgage Loan Remittance Rate from the Cut-off Date through the day
prior to the Closing Date, inclusive.
The Purchaser shall be entitled to (1) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected after
the Cut-off Date (provided, however, that all scheduled payments of principal
due on or before the Cut-off Date and collected by the Seller under the
Seller's Warranties and Servicing Agreement after the Cut-off Date shall belong
to the Seller), and (3) all payments of interest on the Mortgage Loans at the
Mortgage Loan Remittance Rate (minus that portion of any such payment which is
allocable to the period prior to the Cut-off Date). The principal balance of
each Mortgage Loan as of the Cut-off Date is determined after application of
payments of principal due on or before the Cut-off Date whether or not
collected. Therefore, payments of scheduled principal and interest prepaid for
a due date beyond the Cut-off Date shall not be applied to the principal
balance as of the Cut-off Date. Such prepaid amounts (minus interest at the
Servicing Fee Rate) shall be the property of the Purchaser. The Seller shall
deposit any such prepaid amounts into the Custodial Account, which account is
established under the Seller's Warranties and Servicing Agreement for the
benefit of the Purchaser, for subsequent remittance by the Seller to the
Purchaser.
SECTION 5. Examination of Mortgage Files. Prior to the Closing Date,
the Seller shall (a) deliver to the Purchaser or its designee in escrow, for
examination, for each Mortgage Loan, the Mortgage Loan Documents described on
Exhibit B-1 to the Seller's Warranties and Servicing Agreement, and (b) make
the Mortgage Files available to the Purchaser for examination at the Seller's
offices or such other location as shall otherwise be agreed upon by the
Purchaser and the Seller. Such examination may be made by the Purchaser, or by
any prospective purchaser of the Mortgage Loans from the Purchaser, at any time
before or after the Closing Date upon prior reasonable notice to the Seller. If
the Purchaser makes such examination prior to the Closing Date and identifies
any Mortgage Loans which do not conform to its requirements, such Mortgage
Loans shall be deleted from the Closing Schedule, and, pursuant to Section 3 of
this Agreement, may be replaced by substitute Mortgage Loans acceptable to the
Purchaser. The Purchaser may, at its option and without notice to the Seller,
purchase all or part of the Mortgage Loans without conducting any partial or
complete examination. The fact that the Purchaser or any prospective purchaser
of the Mortgage Loans has conducted or has failed to conduct any partial or
complete examination of the Mortgage Files shall not affect the Purchaser's (or
any of its successor's) rights to demand repurchase, substitution or other
relief as provided under the related Seller's Warranties and Servicing
Agreement.
SECTION 6. Representations, Warranties and Agreements of Seller. The
Seller agrees and acknowledges that it shall, as a condition to the
consummation of the transactions contemplated hereby, make the representations
and warranties specified in Sections 3.01 and 3.02 of the Seller's Warranties
and Servicing Agreement, as of the date specified in the Seller's Warranties
and Servicing Agreement. The Seller, without conceding that the Mortgage Loans
are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
a) neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of any
Mortgage Loans, any interest in any Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to any
Mortgage Loans, any interest in any Mortgage Loans or any other similar
security with, any person, other than the Purchaser, in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the Mortgage
Loans under the Securities Act of 1933 (the "1933 Act") or which would render
the disposition of any Mortgage Loans a violation of Section 5 of the 1933 Act
or require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any person to act, in such manner with respect
to the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone else
who might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. Representations, Warranties and Agreement of Purchaser.
The Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall
have been deemed to have been made as of the Closing Date:
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account
only and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
d) the Purchaser has been furnished with all information regarding
the Mortgage Loans which it has requested from the Seller or the Company; and
e) neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan, any
interest in any Mortgage Loan or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of any
Mortgage Loan, any interest in any Mortgage Loan or any other similar security
from, or otherwise approached or negotiated with respect to any Mortgage Loan,
any interest in any Mortgage Loan or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the 1933 Act or which
would render the disposition of any Mortgage Loan a violation of Section 5 of
the 1933 Act or require registration pursuant thereto, nor will it act, nor has
it authorized or will it authorize any person to act, in such manner with
respect to the Mortgage Loans.
SECTION 8. Closing. The closing for the purchase and sale of the
Mortgage Loans, shall take place on the Closing Date. At the Purchaser's
option, the Closing shall be either: by telephone, confirmed by letter or wire
as the parties shall agree; or conducted in person, at such place as the
parties shall agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under
this Agreement and under the Seller's Warranties and Servicing
Agreement shall be true and correct as of the Closing Date and
no event shall have occurred which, with notice or the passage
of time, would constitute a default under this Agreement or an
Event of Default under the Seller's Warranties and Servicing
Agreement;
b) the Purchaser and the Seller shall have received, or the
Purchaser's attorneys shall have received in escrow, 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 and released to the Custodian
under the Seller's Warranties and Servicing Agreement all
documents required pursuant to the related Custodial Agreement;
and
d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price, plus accrued interest pursuant
to Section 3 of this Agreement, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 9. Closing Documents. With respect to Group [1999-FN-01] the
Closing Documents shall consist of fully executed originals of the following
documents:
1. the Seller's Warranties and Servicing Agreement for Group
[1999-FN-01], dated as of the Cut-off Date, in two
counterparts;
2. a Custodian's Certification, as required under the
Custodial Agreement;
3. a Custodial Account Certification or Custodial Account
Letter Agreement as required under the Seller's Warranties
and Servicing Agreement;
4. an Escrow Account Certification or Escrow Account Letter
Agreement, as required under the Seller's Warranties and
Servicing Agreement (if required); and
5. an Officer's Certificate, in the form of Exhibit 1 hereto,
including all attachments thereto;
6. an Opinion of Counsel of the Seller in the form of Exhibit
2 hereto;
7. if applicable, a Security Release Certification, in the
form of Exhibit 3 hereto (for a Seller which is a member of
the Federal Home Loan Bank System), executed by the
applicable regional Federal Home Loan Bank and, if
applicable, in the form of Exhibit 4 hereto executed by any
other person, as requested by the Purchaser, if any of the
Mortgage Loans have at any time been subject to any
security interest, pledge or hypothecation for the benefit
of such person;
8. a Certificate of other evidence of merger or change of
name, signed or stamped by the applicable regulatory
authority, if any of the Mortgage Loans were acquired by
the Seller by merger or acquired or originated by the
Seller while conducting business under a name other than
its present name;
9. The Escrow Agreement, dated as of February 1, 1999,
executed among Lehman Capital as Purchaser, First
Nationwide Mortgage Corporation as Seller and Cadwalader,
Wickersham & Taft, as the Escrow Agent; and
10. The Assignment and Assumption Agreement, dated as of
February 11, 1999, between Lehman Capital, as the Assignor,
and First Nationwide Mortgage Corporation, as the Assignee,
relating to the Custodial Agreement.
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen and the legal fees and expenses of its attorneys and all custodial
fees and expenses. All other costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including recording fees for the
initial recordation of assignments of mortgage to Purchaser or its designee and
the Seller's attorney's fees, shall be paid by the Seller.
SECTION 11. Servicing. The Mortgage Loans shall be serviced by the
Seller in accordance with the terms of the Seller's Warranties and Servicing
Agreement. The Seller shall be entitled to servicing fees calculated as
provided therein.
SECTION 12. Mandatory Delivery, Grant of Security Interest. The sale
and delivery on the Closing Date of the Mortgage Loans described on the Closing
Schedule is mandatory, it being specifically understood and agreed that each
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 (including damages to prospective
purchasers of the Mortgage Loans) in the event of the Seller's failure to
deliver the Mortgage Loans on or before the Closing Date. The Seller hereby
grants to the Purchaser a lien on and a continuing security interest in each
Mortgage Loan and each document and instrument evidencing each such Mortgage
Loan to secure the performance by the Seller of its obligation hereunder, and
the Seller agrees that it holds such Mortgage Loans in custody for the
Purchaser subject to the Purchaser's (i) right to reject any Mortgage Loan
under the terms of this Agreement and to require another Mortgage Loan to be
substituted therefor, and (ii) obligation to pay the Purchase Price for the
Mortgage Loans. 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.
SECTION 13. Protection of Confidential Information. The Seller shall
keep confidential and shall not divulge to any party, without the Purchaser's
prior written consent, the price paid by the Purchaser for the Mortgage Loans,
except to the extent that it is appropriate for the Seller to do so in working
with legal counsel, courts, auditors, taxing authorities or other governmental
agencies.
SECTION 14. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed, by registered or certified mail, return receipt requested, or, if by
other means, when received by the other party at the address in Section 12.05
of the Seller's Warranties and Servicing Agreement, or such other address as
may hereafter be furnished to the other party by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been received on the
date delivered to or received at the premises of the addressee (as evidenced,
in the case of registered or certified mail, by the date noted on the return
receipt).
SECTION 15. Severability Clause. Any part, provision, representation
or warranty of this Agreement which is prohibited or which 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 which is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which
prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this Agreement
shall deprive any party of the economic benefit intended to be conferred by
this Agreement, the parties shall negotiate, in good-faith, to develop a
structure the economic effect of which is as close as possible to the economic
effect of this Agreement without regard to such invalidity.
SECTION 16. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
SECTION 17. Place of Delivery and Governing Law. This Agreement shall
be deemed in effect when a fully executed counterpart thereof is received by
the Purchaser in the State of New York and shall be deemed to have been made in
the State of New York. The Agreement shall be construed in accordance with the
laws of the State of New York and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with the laws of the State
of New York, except to the extent preempted by Federal law.
SECTION 18. Further Agreements. The Purchaser and the Seller each
agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
SECTION 19. Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling on a
servicing retained basis, an undivided 100% ownership interest in the Mortgage
Loans and not a debt instrument of the Seller or another security. Accordingly,
the parties hereto each intend to treat the transaction for Federal income tax
purposes as a sale by the Seller, and a purchase by the Purchaser, of the
Mortgage Loans. Moreover, the arrangement under which the Mortgage Loans are
held shall be consistent with classification of such arrangement as a grantor
trust in the event it is not found to represent direct ownership of the
Mortgage Loans. The Purchaser shall have the right to review the Mortgage Loans
and the related Mortgage Files to determine the characteristics of the Mortgage
Loans which shall affect the Federal income tax consequences of owning the
Mortgage Loans and the Seller shall cooperate with all reasonable requests made
by the Purchaser in the course of such review.
SECTION 20. Successors and Assigns; Assignment of Purchase Agreement.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Seller and the Purchaser and the respective successors and assigns of the
Seller and the Purchaser. This Agreement shall not be assigned, pledged or
hypothecated by the Seller to a third party without the consent of the
Purchaser.
SECTION 21. Waivers; Other Agreements. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 23. General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions
of this Agreement;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 24. Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 25. Entire Agreement. This Agreement and the Seller's
Warranties and Servicing Agreement contain the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof and thereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof and thereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
(Purchaser)
By:/s/ Jack E. Desens
---------------------------------
Name: Jack E. Desens
Title: Authorized Signatory
FIRST NATIONWIDE MORTGAGE
CORPORATION
(Seller)
By:/s/ Robert M. Bodell
---------------------------------
Name:Robert M. Bodell
Title: Executive Vice President
<PAGE>
EXHIBIT 1
COMPANY'S OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected
[Vice] President of First Nationwide Mortgage Corporation, a corporation
organized under the laws of the state of Delaware, (the "Company") and further
as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy
of the charter of the Company which is in full force and effect on the
date hereof and which has been in effect without amendment, waiver,
rescission or modification since February __, 1999.
2. Attached hereto as Exhibit B is a true, correct and complete copy
of the bylaws of the Company which are in effect on the date hereof and
which have been in effect without amendment, waiver, rescission or
modification since February __, 1999.
3. Attached hereto as Exhibit C is an original certificate of good
standing of the Company, issued within ten days of the date hereof, and no
event has occurred since the date thereof which would impair such
standing.
4. Attached hereto as Exhibit D is a certificate of the Company's
assistant secretary regarding the Company's authority to execute and
deliver each of the Purchase Agreement, the Seller's Warranties and
Servicing Agreement, and the Custodial Agreement by original signature,
and to endorse the Mortgage Notes and execute the Assignments of Mortgages
by original [or facsimile] signature. The portion of the Company's
Corporate Policy Manual referred to therein is in effect on the date
hereof and have been in effect without amendment, waiver rescission or
modification since January 27, 1997.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by the Company
with the Mortgage Loan Purchase Agreement, dated as of February __, 1999
(the "Purchase Agreement"), by and between the Company and Lehman Capital,
a Division of Lehman Brothers Holdings Inc. (the "Purchaser"), the
Seller's Warranties and Servicing Agreement, dated as of February ___,
1999, by and between the Company and the Purchaser (the "Seller's
Warranties and Servicing Agreement") and the Custodial Agreement dated as
of February __, 1999 (the "Custodial Agreement") by and among the Company,
the Purchaser and First Trust National Association (the "Custodian")] or
the sale of the mortgage loans or the consummation of the transactions
contemplated by the Agreements; or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
6. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of the Purchase Agreement, the Seller's
Warranties and Servicing Agreement and the Custodial Agreement, conflicts
or will conflict with or results or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of
the Company, the terms of any indenture or other agreement or instrument
to which the Company is a party or by which it is bound or to which it is
subject, or any statute or order, rule, regulations, writ, injunction or
decree of any court, governmental authority or regulatory body to which
the Company is subject or by which it is bound.
7. To the best of my knowledge, there is no action, suit, proceeding
or investigation pending or threatened against the Company which, in my
judgment, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial
condition, properties or assets of the Company or in any material
impairment of the right or ability of the Company to carry on its business
substantially as now conducted or in any material liability on the part of
the Company or which would draw into question the validity of the Purchase
Agreement, the Seller's Warranties and Servicing Agreement, the Custodial
Agreement or the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would be
likely to impair materially the ability of the Company to perform under
the terms of the Purchase Agreement, the Seller's Warranties and Servicing
Agreement or the Custodial Agreement.
8. The Company is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement, the Seller's
Warranties and Servicing Agreement and the Custodial Agreement.
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: By:
----------------------------- ----------------------------
Name:
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of First
Nationwide Mortgage Corporation, hereby certify that ____________ is the duly
elected, qualified and acting [Vice] President of the Company and that the
signature appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By:
----------------------------- ----------------------------
Name:
Title: [Assistant] Secretary
<PAGE>
EXHIBIT 1
Company's Officer's Certificate
Name Title Signature
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<PAGE>
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLER]
(date)
Lehman Capital, a Division of
Lehman Brothers Holdings Inc.
American Express Tower, 8th Floor
World Financial Center
New York, New York 10285-0800
Dear Sirs:
You have requested my opinion, as First Vice President and Counsel to
First Nationwide Mortgage Corporation (the "Company"), with respect to certain
matters in connection with the sale by the Company of the Mortgage Loans
pursuant to that certain Purchase Agreement by and between the Company and
Lehman Capital, a Division of Lehman Brothers Holdings Inc. (the "Purchaser")
dated as of _______ , (the "Purchase Agreement") which sale is in the form of
whole Mortgage Loans delivered pursuant thereto, and to a Seller's Warranties
and Servicing Agreement, Group [1999-FN-01] dated as of ______, 1999 by and
between the Company and the Purchaser (the "Seller's Warranties and Servicing
Agreement") being executed contemporaneously with a Custodial Agreement by and
among the Company, the Purchaser and First Trust National Association (the
"Custodian") (the "Custodial Agreement"). Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase Agreement and the
Seller's Warranties and Servicing Agreement.
I have examined the following documents:
1. the Purchase Agreement;
2. the Seller's Warranties and Servicing Agreement;
3. the form of Assignment of Mortgage;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon
the representations and warranties of thte Company contained in the Purchase
Agreement and in the Seller's Warranties and Servicing Agreement. I have
assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware and
is qualified to transact business in, and is in good standing
under, the laws of the state of Maryland.
2. The Company has the power to engage in the transactions
contemplated by the Purchase Agreement and the Seller's
Warranties and Servicing Agreement and all requisite power,
authority and legal right to execute and deliver the Purchase
Agreement, the Seller's Warranties and Servicing Agreement, the
Custodial Agreement, and to perform and observe the terms and
conditions of such instruments.
3. Each of the Purchase Agreement, the Seller's Warranties and
Servicing Agreement, and the Custodial Agreement has been duly
authorized, executed and delivered by the Company and is a
legal, valid and binding agreement enforceable in accordance
with its respective terms against the Company, subject to
bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of
the rules of equity, including those respecting the availability
of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder or with
the Purchaser's ownership of the Mortgage Loans.
4. The Company has been duly authorized to allow its President to
execute any and all documents by original signature in order to
complete the transactions contemplated by the Purchase
Agreement, the Seller's Warranties and Servicing Agreement, and
the Custodial Agreement, and any of its officers, by original
[or facsimile] signature in order to execute the endorsements to
the Mortgage Notes and the Assignments of Mortgages, and the
original [or facsimile] signature of the officer at the Company
executing the endorsements to the Mortgage Notes and the
Assignments of Mortgages represents the legal and valid
signature of said officer of the Company.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Company of or
compliance by the Company with the Purchase Agreement, the
Seller's Warranties and Servicing Agreement, the Custodial
Agreement or the sale and delivery of the Mortgage Loans or the
consummation of the transactions contemplated by the Purchase
Agreement and the Seller's Warranties and Servicing Agreement;
or (ii) any required consent, approval, authorization or order
has been obtained by the Company.
6. Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Purchase Agreement, the
Seller's Warranties and Servicing Agreement, the Custodial
Agreement or the Mortgage Loans conflicts or will conflict with
or results or will result in a breach of or constitutes or will
constitute a default under the charter or by-laws of the
Company, the terms of any indenture or other agreement or
instrument to which the Company is a party or by which it is
bound or to which it is subject, or violates any statute or
order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which the
Company is subject or by which it is bound.
7. There is no action, suit, proceeding or investigation pending
or, to the best of my knowledge, threatened against the Company
which, in my judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets
of the Company or in any material impairment of the right or
ability of the Company to carry on its business substantially as
now conducted or in any material liability on the part of the
Company or which would draw into question the validity of the
Purchase Agreement, the Mortgage Loans, the Seller's Warranties
and Servicing Agreement, [the Custodial Agreement] or the
Mortgage Loans or of any action taken or to be taken in
connection with the transactions contemplated thereby, or which
would be likely to impair materially the ability of the Company
to perform under the terms of the Purchase Agreement, the
Mortgage Loans, the Custodial Agreement or the Seller's
Warranties and Servicing Agreement.
8. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement and the Seller's
Warranties and Servicing Agreement is sufficient fully to
transfer to the Purchaser all right, title and interest of the
Company thereto as noteholder and mortgagee.
9. The Mortgages have been duly assigned and the Mortgage Notes
have been duly endorsed as provided in the Custodial Agreement.
The Assignments of Mortgage are in recordable form, except for
the insertion of the name of the assignee, and upon the name of
the assignee being inserted, are acceptable for recording under
the laws of the state where each related Mortgaged Property is
located. The endorsement of the Mortgage Notes, the delivery to
the Custodian of the Assignments of Mortgage, and the delivery
of the original endorsed Mortgage Notes to the Custodian are
sufficient to permit the Purchaser to avail itself of all
protection available under applicable law against the claims of
any present or future creditors of the Company, and are
sufficient to prevent any other sale, transfer, assignment,
pledge or hypothecation of the Mortgages and the Mortgage Notes
by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans as
contemplated in the Transaction Documents may rely on this opinion as if it
were addressed to them as of its date.
Very truly yours,
--------------------------------
Brian J. Evans
First Vice President and Counsel
<PAGE>
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
___________________, 199_
Federal Home Loan Bank of
- -------------------------
- -------------------------
- -------------------------
- -------------------------
Attention: ---------------------------------------
---------------------------------------
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that First Nationwide Mortgage
Corporation, a [state] [federally] chartered savings and loan association [in
the state of ___________] (the "Association") has committed to sell to Lehman
Capital, a Division of Lehman Brothers Holdings Inc. ("LCC") under a Purchase
Agreement dated as of February __, 1999, certain mortgage loans originated by
the Association. The Association warrants that the mortgage loans to be sold to
LCC are in addition to and beyond any collateral required to secure advances
made by you to the Association.
The Association acknowledges that the mortgage loans to be sold to
LCC shall not be used as additional or substitute collateral for advances made
by you. LCC understands that the balance of the Association's mortgage loan
portfolio may be used as collateral or additional collateral for advances made
by you, and confirms that it has no interest therein.
Execution of this letter by the Federal Home Loan Bank of
_________________________ shall constitute a full and complete release of any
security interest, claim, or lien which the Federal Home Loan Bank of
_____________________ may have against the mortgage loans to be sold to LCC.
Very truly yours,
First Nationwide Mortgage Corporation
By:
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Name:
----------------------------------------
Title:
----------------------------------------
Date:
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Acknowledged and approved:
FEDERAL HOME LOAN BANK OF
- ------------------------------------
By:
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Name:
----------------------------------------
Title:
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Date:
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<PAGE>
EXHIBIT 4
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
The financial institution named below hereby relinquishes any and all right,
title and interest it may have in all Mortgage Loans to be purchased by Lehman
Capital, a Division of Lehman Brothers Holdings Inc. from the Company named
below pursuant to that certain Purchase Agreement, dated as of February __,
1999, and certifies that all notes, mortgages, assignments and other documents
in its possession relating to such Mortgage Loans have been delivered and
released to the Company named below or its designees, as of the date and time
of the sale of such Mortgage Loans to Lehman Capital, a Division of Lehman
Brothers Holdings Inc.
Name and Address of Financial Institution
(name)
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--------------------------------------------
(Address)
By:
----------------------------------------
<PAGE>
II. Certification of Release
The Company named below hereby certifies to Lehman Capital, a
Division of Lehman Brothers Holdings Inc. that, as of the date and time of the
sale of the abovementioned Mortgage Loans to Lehman Capital, a Division of
Lehman Brothers Holdings Inc., the security interests in the Mortgage Loans
released by the abovenamed financial institution comprise all security
interests relating to or affecting any and all such Mortgage Loans. The Company
warrants that, as of such time, there are and will be no other security
interests affecting any or all of such Mortgage Loans.
First Nationwide Mortgage Corporation
By:
----------------------------------------
Title:
--------------------------------------
Date:
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<PAGE>
EXHIBIT 5
SCHEDULE OF MORTGAGE LOANS
<PAGE>
EXHIBIT 6
FIRST NATIONWIDE MORTGAGE CORPORATION
CERTIFICATE OF ASSISTANT SECRETARY
I, Brian J. Evans, do certify that:
1. I am a duly appointed, qualified and acting Assistant Secretary of
First Nationwide Mortgage Corporation (the "Corporation") and I am duly
empowered to execute this Certificate on behalf of the Corporation.
2. The Corporation is a wholly owned subsidiary of California Federal
Bank, a Federal Savings Bank ("Bank").
3. The Corporate Policy Manual adopted by the Bank at its Board of
Directors meeting on January 27, 1997 and by the Corporation on July 21, 1997
authorizes the Corporation's President engage in transactions for the purchase
and sale of whole loans in amounts up to $500,000,000 without further Board of
Directors approval and to execute any and all purchase and sale agreements and
other documents necessary to effectuate a transaction.
4. The persons listed below are duly appointed, qualified and acting
officers of the Corporation and hold the offices and titles listed opposite
their names.
Walter C. Klein, Jr. President
IN WITNESS WHEREOF, I executed this Certificate and affixed the seal
of the Corporation on __________, 1999.
---------------------------------
Brian J. Evans
Assistant Secretary
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of February 11, 1999,
by and between Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
having its offices at 3 World Financial Center, New York, New York 10285
("Assignor") and First Nationwide Mortgage Corporation, having an office at
5280 Corporate Drive, Frederick MD 21701 ("Assignee"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee, all of
the right, title and interest of Assignor, as initial Servicer (the "Initial
Servicer") with respect to the mortgage loans identified on Exhibit A hereto
(the "Mortgage Loans") under that certain Custodial Agreement, dated as of
February 1, 1993, as amended by (a) that certain Amendment to Custodial
Agreement with respect to Mortgage Loans secured by Co-op shares; (b) that
certain Amendment to Custodial Agreement with respect to FHA insured Mortgage
Loans; and (c) that certain Amendment Number 3 to Custodial Agreement dated as
of July 7, 1995 (the "Agreement"), by and between Lehman Capital Corporation,
as owner and initial servicer, and U.S. Bank Trust, formerly known as First
Trust National Association (the "Custodian").
The Assignor specifically reserves any and all right, title and interest
and all obligations of the "Owner" under the Agreement and of the Assignor with
respect to any mortgage loans subject to the Agreement which are not the
Mortgage Loans set forth on Exhibit A hereto and are not the subject of this
Assignment and Assumption Agreement.
2. The Assignor warrants and represents to, and covenants with, the
Assignee that with respect to the Mortgage Loans:
a. The Assignor is assigning its interest as Initial Servicer under
the Agreement for the sole purpose of permitting the Assignee as servicer of
the Mortgage Loans, to act as Servicer under the Agreement; and
b. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Agreement. The Assignor
has no knowledge of, and has not received notice of, any defaults, waivers
under or amendments or other modifications of, or assignments of rights or
obligations under the Agreement.
3. The Assignee warrants and represents to, and covenants with, the
Assignor and the Custodian pursuant to the Agreement that the Assignee agrees
to be bound by all of the terms, covenants and conditions of the Agreement
relating to the Initial Servicer applicable after the Closing Date, and from
and after the Closing Date, the Assignee assumes for the benefit of the
Assignor all of the Assignor's obligations as Initial Servicer thereunder.
4. Nothing herein shall obligate the Assignee to pay any of the fees and
expenses of the Custodian, which shall remain the sole obligation of the
Assignor, nor shall the Assignee make or be obligated to make any
representation and warranties regarding the Mortgage Loans in this Assignment
and Assumption Agreement or the Agreement. All expenses incurred by the
Custodian, at the request of the Assignee, which are not contemplated by the
Custodial Agreement or that certain Seller's Warranties and Servicing Agreement
dated February 1, 1999 between Assignor and Assignee and which are not approved
by the Assignor shall be paid the Assignee.
5. With respect to the Mortgage Loans, by acknowledging below, the
Custodian hereby agrees that it will honor a request of release made by the
Assignee on a form acceptable to FNMA in lieu of the form attached to the
Custodial Agreement as Exhibit 3 thereto.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers as of the
date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
(Assignor)
By:/s/ Joseph J. Kelly
-------------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
FIRST NATIONWIDE MORTGAGE
CORPORATION
(Assignee)
By:/s/ Robert M. Bodell
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Name: Robert M. Bodell
Title: Executive Vice President
ACKNOWLEDGED BY:
U.S. BANK TRUST
(Custodian)
By:/s/ Judy Spahn
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Name: Judy Spahn
Title: Assistant Vice President
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
