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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported): July 30, 1999
STRUCTURED ASSET MORTGAGE INVESTMENTS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-51279 13-3633241
- ---------------------------- ------------- ------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
245 Park Avenue
New York, New York 10167
- --------------------- ----------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 272-1000
- -----------------------------------------------------------------
Item 5. Other Events.
On July 30, 1999, a Pooling and Servicing Agreement was entered into,
dated as of July 1, 1999 (the "Pooling Agreement"), by and among Structured
Asset Mortgage Investments Inc., as Seller, GMAC Mortgage Corporation, as
Servicer, and Norwest Bank Minnesota, National Association, as Trustee. The
Pooling Agreement is annexed hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
Exhibit 99.1. Pooling and Servicing Agreement, dated as of July 1,
1999, by and among Structured Asset Mortgage Investments
Inc., as Seller, GMAC Mortgage Corporation, as Servicer, and
Norwest Bank Minnesota, National Association, as Trustee.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRUCTURED ASSET MORTGAGE INVESTMENTS, INC.
By: /s/ Sara Bonesteel
----------------------------------------
Name: Sara Bonesteel
Title: Vice President
Dated: August 16, 1999
Exhibit Index
Exhibit
99.1. Pooling and Servicing Agreement, dated as of July 1, 1999, by and
among Structured Asset Mortgage Investments Inc., as Seller, GMAC
Mortgage Corporation, as Servicer, and Norwest Bank Minnesota,
National Association, as Trustee.
EXHIBIT 99.1
EXECUTION COPY
===============================================================================
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
as Seller,
GMAC MORTGAGE CORPORATION,
as Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
_________________________________
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 1999
_________________________________
Mortgage Pass-Through Certificates
Series 1999-J1
===============================================================================
<PAGE>
Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.01.Defined Terms....................................................6
Section 1.02.Determination of LIBOR..........................................31
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01.Conveyance of Mortgage Loans....................................33
Section 2.02.Acceptance of the Trust Fund by the Trustee.....................36
Section 2.03.Representations, Warranties and Covenants of the Servicer.......37
Section 2.04.Representations and Warranties of the Originator and Seller.....38
Section 2.05.Issuance of Certificates Evidencing Interests in the
Trust Fund......................................................40
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01.Servicer to Service Mortgage Loans..............................41
Section 3.02.Subservicing; Enforcement of the Obligations of Subservicers....41
Section 3.03.Collection of Certain Mortgage Loan Payments....................42
Section 3.04.Establishment of Custodial Accounts.............................42
Section 3.05.Deposits in the Custodial Account...............................43
Section 3.06.Permitted Withdrawals From the Custodial Account................44
Section 3.07.Investment of Funds in the Custodial Account....................45
Section 3.08.Transfer of Accounts............................................45
Section 3.09.Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.................................................45
Section 3.10.Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies..............................................46
Section 3.11.Enforcement of Due-on-Sale Clauses; Assumption Agreements.......47
Section 3.12.Realization Upon Defaulted Mortgage Loans.......................48
Section 3.13.Trustee to Cooperate; Release of Mortgage Files.................50
Section 3.14.Documents, Records and Funds in Possession of
the Servicer to be Held for the Trustee.........................51
Section 3.15.Servicing Compensation..........................................51
Section 3.16.Access to Certain Documentation.................................52
Section 3.17.Annual Statement as to Compliance...............................52
Section 3.18.Annual Independent Public Accountants' Servicing Statement;
Financial Statements............................................52
Section 3.19.Errors and Omissions Insurance; Fidelity Bonds..................53
Section 3.20.[Reserved]......................................................53
Section 3.21.Additional Obligations of the Seller............................53
Section 3.22.Periodic Filings with the Securities and Exchange Commission;
Additional Information..........................................53
Section 3.23.Rights of the Seller and the Trustee in Respect of the
Servicer........................................................54
Section 3.24.Trustee to Act as Servicer......................................54
Section 3.25.Certificate Account.............................................54
Section 3.26.Permitted Withdrawals from the Certificate Account..............55
Section 3.27.Investment of Funds in the Certificate Account..................55
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01.Certificate Account; Distributions..............................56
Section 4.02.Statements to Certificateholders................................63
Section 4.03.Remittance Reports; Monthly Advances by the Servicer;
Liquidation Reports.............................................65
Section 4.04.Allocation of Realized Losses...................................66
Section 4.05.Information Reports to Be Filed by the Servicer.................67
Section 4.06.Compliance with Withholding Requirements........................67
ARTICLE V
THE CERTIFICATES
Section 5.01.The Certificates................................................68
Section 5.02.Registration of Transfer and Exchange of Certificates...........69
Section 5.03.Mutilated, Destroyed, Lost or Stolen Certificates...............73
Section 5.04.Persons Deemed Owners...........................................73
ARTICLE VI
THE SERVICER
Section 6.01.Liability of the Servicer.......................................74
Section 6.02.Merger, Consolidation or Conversion of the Servicer.............74
Section 6.03.Limitation on Liability of the Servicer and Others..............74
Section 6.04.Limitation on Resignation of the Servicer.......................75
Section 6.05.Sale and Assignment of Servicing................................75
ARTICLE VII
DEFAULT
Section 7.01.Events of Default...............................................76
Section 7.02.Trustee to Act; Appointment of Successor........................77
Section 7.03.Notification to Certificateholders..............................78
Section 7.04.List of Certificateholders......................................78
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01.Duties of Trustee...............................................79
Section 8.02.Certain Matters Affecting The Trustee...........................80
Section 8.03.Trustee Not Liable for Certificates Or Mortgage Loans...........81
Section 8.04.Trustee May Own Certificates....................................82
Section 8.05.Fees And Expenses...............................................82
Section 8.06.Eligibility Requirements For Trustee............................82
Section 8.07.Insurance.......................................................83
Section 8.08.Resignation And Removal Of The Trustee..........................83
Section 8.09.Successor Trustee...............................................83
Section 8.10.Merger Or Consolidation Of Trustee..............................84
Section 8.11.Appointment Of Co-Trustee Or Separate Trustee...................84
Section 8.12.Servicer Shall Provide Information As Reasonably Required.......85
Section 8.13.Federal Information Returns and Reports to Certificateholders...85
ARTICLE IX
TERMINATION
Section 9.01.Termination Upon Repurchase or Liquidation of All
Mortgage Loans or upon Purchase of Certificates.................86
Section 9.02.Additional Termination Requirements.............................87
ARTICLE X
REMIC PROVISIONS
Section 10.01.REMIC Administration...........................................89
Section 10.02.Prohibited Transactions and Activities.........................91
Section 10.03.Tax Indemnification............................................91
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01.Amendment......................................................92
Section 11.02.Recordation of Agreement; Counterparts.........................93
Section 11.03.Limitation on Rights of Certificateholders.....................93
Section 11.04.Governing Law..................................................94
Section 11.05.Notices........................................................94
Section 11.06.Severability of Provisions.....................................94
Section 11.07.Successors and Assigns; Third Party Beneficiary................94
Section 11.08.Article and Section Headings...................................94
Section 11.09.Notice to Rating Agencies......................................95
EXHIBIT A-1 -Form of Class A Certificate..................................A-1-1
EXHIBIT A-2 -Form of Class X Certificate and Class PO Certificate.........A-2-1
EXHIBIT A-3 -Form of Class R Certificate..................................A-3-1
EXHIBIT B -Form of Class B Certificate....................................B-1
EXHIBIT C -[Reserved] ...............................................C-1
EXHIBIT D -Form of Remittance Report......................................D-1
EXHIBIT E -Request for Release............................................E-1
EXHIBIT F-1 -Form of Investor Representation Letter.......................F-1-1
EXHIBIT F-2 -Form of Transferor Representation Letter.....................F-2-1
EXHIBIT F-3 -Form of Rule 144A Investment Representation..................F-3-1
EXHIBIT F-4 -Transferor Certificate for Transfers of Residual
Certificates.................................................F-4-1
EXHIBIT F-5 -Transfer Affidavit and Agreement for Transfers of Residual
Certificates.................................................F-5-1
EXHIBIT F-6 -Form of ERISA Representation Letter..........................F-6-1
EXHIBIT G -Mortgage Loan Schedule.........................................G-1
EXHIBIT H -Pricing and Prepayment Certificate.............................H-1
EXHIBIT I -Schedule of Discount Fractions.................................I-1
EXHIBIT J -Custodial Account Letter Agreement.............................J-1
EXHIBIT K -Escrow Account Letter Agreement................................K-1
EXHIBIT L -Planned and Targeted Balance Schedules.........................L-1
EXHIBIT M -Form of Trustee Initial Certification..........................M-1
EXHIBIT N -Form of Trustee Final Certification............................N-1
This Pooling and Servicing Agreement (the "Agreement"), dated as of July
1, 1999, among STRUCTURED ASSET MORTGAGE INVESTMENTS INC., as Seller (the
"Seller"), GMAC MORTGAGE CORPORATION, as Servicer (the "Servicer") and NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Seller intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest
in the Mortgage Loans (as defined herein). The Trust Fund for federal income
tax purposes will consist of two REMICs. The Lower Tier REMIC will consist of
all of the assets constituting the Trust Fund and will be evidenced by the
Lower Tier REMIC Regular Interests (which will be uncertificated and will
represent the "regular interests" in the Lower Tier REMIC) and the Lower Tier
Interest as the single "residual interest" in the Lower Tier REMIC. The Trustee
will hold the Lower Tier REMIC Regular Interests. The Upper Tier REMIC will
consist of the Lower Tier REMIC Regular Interests and will be evidenced by the
Regular Certificates (which will represent the "regular interests" in the Upper
Tier REMIC) and the Upper Tier Interest as the single "residual interest" in
the Upper Tier REMIC. The Class R Certificates will represent beneficial
ownership of the Lower Tier Interest and the Upper Tier Interest. Solely for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the
Distribution Date immediately following the maturity date for the Mortgage Loan
with the latest maturity date in the Mortgage Pool has been designated as the
"latest possible maturity date" for the Certificates.
As of the Cut-off Date, the Mortgage Loans have an aggregate Stated
Principal Balance equal to $234,934,526.
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess
thereof in which such Classes shall be issuable (except that one Certificate of
each Class of Certificates may be issued in a different amount):
<TABLE>
<CAPTION>
Initial Certificate Integral Multiples
Principal Pass-Through Minimum in Excess of
Balance Rate Denomination Minimum
______________ ___________________ ____________ ____________ ___________________
<S> <C> <C> <C> <C>
Class A-1 $ 5,450,000 6.40% $1,000 $1
Class A-2 18,655,000 6.75% $1,000 $1
Class A-3 39,647,000 6.75% $1,000 $1
Class A-4 6,701,000 6.75% $1,000 $1
Class A-5 (1) 6.75% $1,000 $1
Class A-6 37,100,000 6.30% $1,000 $1
Class A-7 34,582,000 6.75% $1,000 $1
Class A-8 9,540,000 (2) $1,000 $1
Class A-9 (1) (3) $1,000 $1
Class A-10 8,250,000 6.75% $1,000 $1
Class A-11 39,641,546 7.00% $1,000 $1
Class A-12 1,468,205 (4) $1,000 $1
Class A-13 2,750,000 6.75% $1,000 $1
Class A-14 18,795,000 6.75% $1,000 $1
Class X (5) (6) $1,000 $1
Class PO 1,782,620 (4) $1,000 $1
Class R(7) 100 6.75% $100(8) N/A
Class B-1(9) 5,520,900 6.75% $25,000 $1
Class B-2(9) 1,997,000 6.75% $25,000 $1
Class B-3(9) 1,057,200 6.75% $25,000 $1
Class B-4(9) 1,057,200 6.75% $100,000 $1,000
Class B-5(9) 352,400 6.75% $100,000 $1,000
Class B-6(9) 587,354 6.75% $100,000 $1,000
</TABLE>
__________________
(1) Notional amount (initially $282,593 for the Class A-5 Certificates and
$9,540,000 for the Class A-9 Certificates). This class pays only interest,
calculated on a notional amount which is not paid.
(2) This class pays interest at a rate equal to an adjustable pass-through
rate (initially 5.32% per annum for the first Distribution Date) equal to
LIBOR plus 0.40% per annum, subject to a minimum rate of 0.40% per annum
and a maximum rate of 8.50% per annum.
(3) This class pays only interest, calculated on a notional amount which is
not paid, at an adjustable pass-through rate (initially 3.18% per annum
for the first Distribution Date) equal to 8.10% per annum minus LIBOR,
subject to a minimum rate of 0.00% per annum and a maximum rate of 8.10%
per annum.
(4) This class pays only principal.
(5) Notional amount (initially $148,413,408). This class pays only interest,
calculated on a notional amount which is not paid, at a rate equal to the
weighted average of the excess of (a) the Net Mortgage Rates on each
Non-Discount Mortgage Loan over (b) 6.75% per annum.
(6) The pass-through rate for the initial interest accrual period is
approximately 0.3105% per annum.
(7) The Class R Certificates will represent the beneficial ownership of the
Lower Tier Interest (described in the table below) and the Upper Tier
Interest. The initial principal balance and interest rate applicable to
the Upper Tier Interest shall be equal to the initial Certificate
Principal Balance and Pass-Through Rate, respectively, of the Class R
Certificates.
(8) The Class R Certificates will be issued as a single certificate with a
$100 Certificate Principal Balance.
(9) This class is a subordinate certificate.
Principal of and interest on the Lower Tier REMIC Regular Interests and
the Lower Tier Interest shall be allocated to the Corresponding Classes of
Certificates in the manner set forth in the following table:
<TABLE>
<CAPTION>
Corresponding Class of Certificates (1)
---------------------------------------
Lower Tier Allocation of Allocation of
REMIC Interest Initial Principal Balance Interest Rate Principal Interest
- -------------- ------------------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
1 5,450,000 6.40% A-1 A-1, A-5
2 18,655,000 6.75% A-2 A-2
3 39,647,000 6.75% A-3 A-3
4 6,701,000 6.75% A-4 A-4
5 37,100,000 6.30% A-6 A-6
6 34,582,000 6.75% A-7 A-7
7 9,540,000 8.50% A-8 A-8, A-9
8 8,250,000 6.75% A-10 A-10
9 39,641,546 7.00% A-11 A-11
10 1,468,205 0% A-12 (2)
11 2,750,000 6.75% A-13 A-13
12 18,795,000 6.75% A-14 A-14
13 (3) (4) N/A X
14 1,782,620 0% PO (2)
15 5,520,900 6.75% B-1 B-1
16 1,997,000 6.75% B-2 B-2
17 1,057,200 6.75% B-3 B-3
18 1,057,200 6.75% B-4 B-4
19 352,400 6.75% B-5 B-5
20 587,354 6.75% B-6 B-6
21(5) 100 6.75% Upper Tier Upper Tier
Lower Tier(5) (6) (6) R R
</TABLE>
_______________
1) The amount of principal and interest allocable from a Lower Tier REMIC
Regular Interest to its Corresponding Class of Certificates on any
Distribution Date shall be 100% except in the case of Lower Tier REMIC
Interests 1 and 7.
2) Lower Tier REMIC Regular Interests 10 and 14 are "principal only"
interests and are not entitled to distributions of interest.
3) Lower Tier REMIC Interest 13 has no principal balance and accrues interest
on a Notional Amount. The Notional Amount of Lower Tier REMIC Interest 13
with respect to any Distribution Date will be equal to the Notional Amount
of the Class X Certificates with respect to such Distribution Date.
4) The Interest Rate for Lower Tier REMIC Interest 13 for any Distribution
Date will be equal to the Pass Through Rate applicable to the Class X
Certificates with respect to such Distribution Date.
5) The beneficial ownership of the Upper Tier Interest and the Lower Tier
Interest is represented by the Class R Certificates.
6) The Lower Tier Interest will have no principal balance and will not bear
interest.
Set forth below are designations of Classes of Certificates to the
categories used herein:
<TABLE>
<CAPTION>
<S> <C>
Accrual Classes.........................The Class A-10, Class A-13 and Class A-14 Certificates.
Book-Entry Certificates.................All Classes of Certificates other than the Physical Certificates.
Class A Certificates................... The Class A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9, A-10, A-11, A-12, A-13
and A-14 Certificates.
ERISA-Restricted
Certificates............................The Residual Certificates and the Subordinate Certificates.
Floating Rate Certificates..............The Class A-8 Certificates.
Planned Principal
Classes.................................The Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates.
Targeted Principal
Classes.................................The Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11
and Class A-12 Certificates.
Support Certificates....................The Class A-13 Certificates.
Inverse Floating Rate
Certificates............................The Class A-9 Certificates.
LIBOR Certificates......................The Floating Rate and the Inverse Floating Rate Certificates.
Interest Only Certificates..............The Class A-5, Class A-9 and Class X Certificates.
Notional Amount
Certificates............................The Class A-5, Class A-9 and Class X Certificates.
Offered Certificates....................The Senior Certificates and the Offered Subordinate Certificates.
Offered Subordinate Certificates........The Class B-1, Class B-2, and Class B-3 Certificates.
Physical Certificates...................The Residual and the Private Certificates.
Planned Principal Classes...............The Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates.
Principal Only
Certificates............................The Class A-12 and Class PO Certificates.
Private Certificates....................The Class B-4, Class B-5 and Class B-6 Certificates.
Rating Agencies.........................Moody's and DCR.
Regular Certificates....................All Classes of Certificates, other than the Residual Certificates.
Residual Certificates...................The Class R Certificates.
Senior Certificates.....................The Class A, Class X, Class PO and Residual Certificates.
Subordinate Certificates................The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates.
</TABLE>
WITNESSETH
In consideration of the mutual agreements herein contained, the Seller,
the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
-------------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article.
Accretion Termination Dates: The Class A-10 Accretion Termination Date,
-----------------------------
the Class A-13 Accretion Termination Date and the Class A-14 Accretion
Termination Date.
Accrual Distribution Amounts: The Class A-10 Accrual Distribution Amount,
-----------------------------
the Class A-13 Accrual Distribution Amount and the Class A-14 Accrual
Distribution Amount.
Accrued Certificate Interest: With respect to each Distribution Date, (a)
----------------------------
in the case of each class of Offered Certificates (other than the Interest Only
Certificates and Principal Only Certificates), interest accrued for the
preceding Interest Accrual Period on the Certificate Principal Balance of the
Certificates of such class immediately prior to such Distribution Date at the
related Pass-Through Rate and (b) in the case of the Interest Only
Certificates, interest accrued for the preceding Interest Accrual Period on the
Notional Amount at the then-applicable Pass-Through Rate Accrued Certificate
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months. In each case Accrued Certificate Interest on any Class of
Certificates will be reduced by the amount of (i) Prepayment Interest
Shortfalls, if any, which are not covered by the Servicer with a payment of
Compensating Interest pursuant to Section 3.25 with respect to such
Distribution Date, (ii) the interest portion (adjusted to the related Net
Mortgage Rate) of Realized Losses (including Excess Special Hazard Losses,
Excess Fraud Losses, Excess Bankruptcy Losses and Extraordinary Losses) not
allocated solely to one or more Classes of Certificates pursuant to Section
4.04 and (iii) any other interest shortfalls not covered by the subordination
provided by the Class B Certificates, including interest that is not
collectible from the Mortgagor pursuant to the Relief Act or similar
legislation or regulations as in effect from time to time with all such
reductions allocated among all of the Certificates in proportion to their
respective amounts of Accrued Certificate Interest payable on such Distribution
Date which would have resulted absent such reductions. In addition to that
portion of the reductions described in the preceding sentence that are
allocated to any Class of Class B Certificates, Accrued Certificate Interest on
any Class of the Class B Certificates, as applicable, will be reduced by the
interest portion (adjusted to the related Net Mortgage Rate) of the portion of
Realized Losses that are allocated solely to the Class B Certificates, as
applicable, pursuant to Section 4.04. The Principal Only Certificates do not
have a Pass-Through Rate and are not entitled to Accrued Certificate Interest.
Agreement: This Pooling and Servicing Agreement and all amendments hereof.
---------
Amount Held for Future Distribution: As to any Distribution Date, the
------------------------------------
total of the amounts held in the Custodial Account at the close of business on
the preceding Determination Date which were received after the Cut-off Date on
account of (i) Liquidation Proceeds, Insurance Proceeds, and Partial Principal
Prepayments received or made in the month of such Distribution Date, (ii) Full
Principal Prepayments received after the 15th day of the month in which such
Distribution Date occurs, and (iii) payments which represent early receipt of
Scheduled Monthly Payments due on a date or dates subsequent to the related Due
Date.
Anniversary: Each anniversary of July 1.
-----------
Assignment: An assignment of Mortgage, notice of transfer or equivalent
----------
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
Available Distribution Amount: With respect to any Distribution Date, an
-------------------------------
amount equal to (a) the sum of (i) the balance on deposit in the Custodial
Account as of the close of business on the related Determination Date and (ii)
the aggregate amount of any Monthly Advances made and all amounts required to
be paid by the Servicer pursuant to Sections 3.10, 3.25 and 4.03 by deposits
into the Custodial Account or the Certificate Account, reduced by (b) the sum,
as of the close of business on the related Determination Date, of (i) Scheduled
Monthly Payments collected but due during a Due Period subsequent to the Due
Period ending on the first day of the month in which such Distribution Date
occurs, (ii) Partial Principal Prepayment received on or after the first day of
the month in which such Distribution Date occurs, (iii) Full Principal
Prepayment received after the 15th day of the month in which such Distribution
Date occurs, (iv) any other amounts reimbursable or payable to the Servicer
pursuant to Section 3.06, (v) the Servicing Fee payable on such Distribution
Date, (vi) the Trustee Fee payable to the Trustee on such Distribution Date and
(vii) Insurance Proceeds, Liquidation Proceeds, Principal Prepayments, REO
Proceeds and the proceeds of Mortgage Loan purchases made pursuant to Section
2.02, 2.04, 3.11 or 3.12, in each case received or made in the month in which
such Distribution Date occurs.
Bankruptcy Amount: As of any date of determination prior to the first
------------------
Anniversary, an amount equal to the excess, if any, of (A) $100,000 over (B)
the aggregate amount of Bankruptcy Losses allocated solely to one or more
specific Classes of Certificates in accordance with Section 4.04. As of any
date of determination on or after the first Anniversary, an amount equal to the
excess, if any, of the lesser of (a) the Bankruptcy Amount calculated as of the
close of business on the Business Day immediately preceding the most recent
Anniversary coinciding with or preceding such date of determination (or, if
such date of determination is an Anniversary, the Business Day immediately
preceding such date of determination) (for purposes of this definition, the
"Relevant Anniversary") and (b) the greater of (i) $100,000 and (ii) 0.0006
times the aggregate principal balance of all the Mortgage Loans in the Mortgage
Pool as of the Relevant Anniversary having a Loan-to-Value Ratio at origination
which exceeds 75%.
The Bankruptcy Amount may be further reduced by the Servicer (including
accelerating the manner in which such coverage is reduced) provided that prior
to any such reduction, the Servicer shall (i) obtain written confirmation from
each Rating Agency that such reduction shall not reduce the rating assigned to
any Class of Certificates by such Rating Agency below the lower of the
then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency and (ii) provide a copy of such written
confirmation to the Trustee.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
---------------
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient Valuation
---------------
or Debt Service Reduction as reported by the Servicer or by any other party
hereto.
Book-Entry Certificate: Any Certificate registered in the name of the
-----------------------
Depository or its nominee, and initially, all Classes of Certificates other
than the Physical Certificates.
Business Day: Any day other than a Saturday, a Sunday or a day on which
-------------
banking institutions in Minnesota, Pennsylvania or New York (and such other
state or states in which the Custodial Account or the Certificate Account are
at the time located) or in the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to
close.
Cash Liquidation: As to any Defaulted Mortgage Loan (other than a Mortgage
----------------
Loan as to which an REO Acquisition occurred), a determination by the Servicer
that it has received all Insurance Proceeds, Liquidation Proceeds and other
payments or cash recoveries which the Servicer reasonably and in good faith
expects to be finally recoverable with respect to such Mortgage Loan.
Certificate: Any Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
-----------
Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class A-12,
Class A-13, Class A-14, Class X, Class PO, Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5, Class B-6 or Class R Certificate.
Certificate Account: The trust account or accounts created and maintained
--------------------
pursuant to Section 3.25, which shall be entitled "Norwest Bank Minnesota,
National Association, in trust for registered holders of Structured Asset
Mortgage Investments Inc., Mortgage Pass-Through Certificates, Series 1999-J1",
and which account or accounts must each be an Eligible Account.
Certificateholder or Holder: The Person in whose name a Certificate is
----------------- ------
registered in the Certificate Register, except that, only a Permitted
Transferee shall be a holder of a Residual Certificate for any purposes hereof
and, solely for the purposes of giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Seller or the Servicer or any
affiliate thereof shall be deemed not to be outstanding and the Voting Rights
to which such Certificate is entitled shall not be taken into account in
determining whether the requisite percentage of Voting Rights necessary to
effect any such consent has been obtained, except as otherwise provided in
Section 11.01. The Trustee shall be entitled to rely upon a certification of
the Seller or the Servicer in determining if any Certificates are registered in
the name of the respective affiliate. All references herein to "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners as they may
indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
------------------
who is the beneficial owner of such Certificate, as reflected on the books of
an indirect participating brokerage firm for which a Depository Participant
acts as agent, if any, and otherwise on the books of a Depository Participant,
if any, and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to any Certificate other than
------------------------------
Notional Amount Certificates on any date of determination, an amount equal to
(i) the Initial Certificate Principal Balance of such Certificate as specified
on the face thereof, plus an amount equal to the aggregate Accrued Certificate
Interest added to the Certificate Principal Balance of such Certificates on
each Distribution Date on or prior to the related Accretion Termination Dates,
minus (ii) the sum of (a) the aggregate of all amounts previously distributed
with respect to such Certificates (or any predecessor Certificate) and applied
to reduce the Certificate Principal Balance thereof pursuant to Section 4.01,
and (b) the aggregate of all reductions in Certificate Principal Balance deemed
to have occurred in connection with Realized Losses which were previously
allocated to such Certificate (or any predecessor Certificate) pursuant to
Section 4.04. With respect to each Class B Certificate, on any date of
determination, an amount equal to (i) the Initial Certificate Principal Balance
of such Class B Certificate as specified on the face thereof, minus (ii) the
sum of (x) the aggregate of all amounts previously distributed with respect to
such Certificate (or any predecessor Certificate) and applied to reduce the
Certificate Principal Balance thereof pursuant to Section 4.01 and (y) the
aggregate of all reductions in Certificate Principal Balance deemed to have
occurred in connection with Realized Losses which were previously allocated to
such Certificate (or any predecessor Certificate) pursuant to Section 4.04;
provided, that the Certificate Principal Balance of each Class B Certificate of
those Class B Certificates outstanding with the highest numerical designation
at any given time shall be calculated to equal the Percentage Interest
evidenced by such Certificate times the excess, if any, of (A) the then
aggregate Stated Principal Balance of the Mortgage Loans over (B) the then
aggregate Certificate Principal Balance of all other Classes of Certificates
then outstanding. The Notional Amount Certificates have no Certificate
Principal Balance.
Certificate Register: The register maintained pursuant to Section 5.02.
--------------------
Class: Collectively, all of the Certificates bearing the same designation.
-----
Class A Certificate: Any one of the Class A-1, Class A-2, Class A-3, Class
-------------------
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A-11, Class A-12, Class A-13 or Class A-14 Certificates, each executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A-1 and each evidencing an interest designated as a "regular
interest" in the Lower Tier REMIC for purposes of the REMIC Provisions.
Class A-10 Accretion Termination Date: The earlier to occur of (i) the
---------------------------------------
Distribution Date on which the Certificate Principal Balance of the Class A-10
has been reduced to zero and (ii) the Credit Support Depletion Date.
Class A-10 Accrual Distribution Amount: With respect to each Distribution
---------------------------------------
Date preceding the Class A-10 Accretion Termination Date, an amount equal to
the amount of Accrued Certificate Interest on the Class A-10 Certificates for
such Distribution Date.
Class A-13 Accretion Termination Date: The earlier to occur of (i) the
----------------------------------------
Distribution Date on which the Certificate Principal Balance of the Class A-13
Certificates has been reduced to zero and (ii) the Credit Support Depletion
Date.
Class A-13 Accrual Distribution Amount: With respect to each Distribution
---------------------------------------
Date preceding the Class A-13 Accretion Termination Date, an amount equal to
the amount of Accrued Certificate Interest on the Class A-13 Certificates for
such Distribution Date.
Class A-14 Accretion Termination Date: The earlier to occur of (i) the
----------------------------------------
Distribution Date on which the Certificate Principal Balance of the Class A-14
has been reduced to zero and (ii) the Credit Support Depletion Date.
Class A-14 Accrual Distribution Amount: With respect to each Distribution
---------------------------------------
Date preceding the Class A-14 Accretion Termination Date, an amount equal to
the amount of Accrued Certificate Interest on the Class A-14 Certificates for
such Distribution Date.
Class B Certificate: Any of the Class B-1 Certificates, Class B-2
---------------------
Certificates, Class B-3 Certificates, Class B-4 Certificates, Class B-5
Certificates or Class B-6 Certificates.
Class B Percentage: The Class B-1 Percentage, Class B-2 Percentage, Class
------------------
B-3 Percentage, Class B-4 Percentage, Class B-5 Percentage and Class B-6
Percentage.
Class B-1 Certificate: Any one of the Class B-1 Certificates executed,
----------------------
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section
4.04 and evidencing an interest designated as a "regular interest" in the Lower
Tier REMIC for purposes of the REMIC Provisions.
Class B-1 Percentage: With respect to any Distribution Date, the lesser of
--------------------
100% and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class B-1 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date).
Class B-2 Certificate: Any one of the Class B-2 Certificates executed,
----------------------
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Certificates and Class B-1
Certificates with respect to distributions and the allocation of Realized
Losses as set forth in Section 4.04 and evidencing an interest designated as a
"regular interest" in the Lower Tier REMIC for purposes of the REMIC
Provisions.
Class B-2 Percentage: With respect to any Distribution Date, the lesser of
--------------------
100% and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class B-2 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (and related
REO Properties) (other than the related Discount Fraction of each Discount
Mortgage Loan) immediately prior to such Distribution Date.
Class B-2 Prepayment Distribution Trigger: With respect to any
------------------------------------------------
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class B-2 Certificates, Class B-3 Certificates, Class B-4 Certificates, Class
B-5 Certificates and Class B-6 Certificates immediately prior to such
Distribution Date divided by the aggregate Stated Principal Balance of all of
the Mortgage Loans (and related REO Properties) immediately prior to such
Distribution Date is greater than or equal to 2.15%.
Class B-3 Certificate: Any one of the Class B-3 Certificates executed,
----------------------
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Certificates, Class B-1
Certificates and Class B-2 Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04 and evidencing an
interest designated as a "regular interest" in the Lower Tier REMIC for
purposes of the REMIC Provisions.
Class B-3 Percentage: With respect to any Distribution Date, the lesser of
--------------------
100% and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class B-3 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (and related
REO Properties) (other than the related Discount Fraction of each Discount
Mortgage Loan) immediately prior to such Distribution Date.
Class B-3 Prepayment Distribution Trigger: With respect to any
------------------------------------------------
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the aggregate Certificate Principal Balance of the Class
B-3 Certificates, Class B-4 Certificates, Class B-5 Certificates and Class B-6
Certificates immediately prior to such Distribution Date divided by the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date is greater than or
equal to 1.30%.
Class B-4 Certificate: Any one of the Class B-4 Certificates executed,
----------------------
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Certificates, Class B-1
Certificates, Class B-2 Certificates and Class B-3 Certificates with respect to
distributions and allocation of Realized Losses as set forth in Section 4.04
and evidencing an interest designated as a "regular interest" in the Lower Tier
REMIC for purposes of the REMIC Provisions.
Class B-4 Percentage: With respect to any Distribution Date, the lesser of
--------------------
100% and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class B-4 Certificates
immediately prior to such date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.
Class B-4 Prepayment Distribution Trigger: With respect to any
------------------------------------------------
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class B-4 Certificates, Class B-5 Certificates and Class B-6 Certificates
immediately prior to such Distribution Date divided by the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
immediately prior to such Distribution Date is greater than or equal to 0.85%.
Class B-5 Certificate: Any one of the Class B-5 Certificates executed,
----------------------
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates and Class B-4
Certificates with respect to distributions and the allocation of Realized
Losses as set forth in Section 4.04 and evidencing an interest designated as a
"regular interest" in the Lower Tier REMIC for purposes of the REMIC
Provisions.
Class B-5 Percentage: With respect to any Distribution Date, the lesser of
--------------------
100% and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class B-5 Certificates
immediately prior to such date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.
Class B-5 Prepayment Distribution Trigger: With respect to any
------------------------------------------------
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class B-5 Certificates and Class B-6 Certificates immediately prior to such
Distribution Date divided by the aggregate Stated Principal Balance of all of
the Mortgage Loans (and related REO Properties) immediately prior to such
Distribution Date is greater than or equal to 0.40%.
Class B-6 Certificate: Any one of the Class B-6 Certificates executed,
----------------------
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Certificates, Class B-1
Certificates Class B-2 Certificates, Class B-3 Certificates, Class B-4
Certificates and Class B-5 Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04 and evidencing an
interest designated as a "regular interest" in the Lower Tier REMIC for
purposes of the REMIC Provisions.
Class B-6 Percentage: With respect to any Distribution Date, the lesser of
--------------------
100% and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class B-6 Certificates
immediately prior to such date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.
Class B-6 Prepayment Distribution Trigger: With respect to any
------------------------------------------------
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class B-6 Certificates immediately prior to such Distribution Date divided by
the aggregate Stated Principal Balance of all of the Mortgage Loans (and
related REO Properties) immediately prior to such Distribution Date is greater
than or equal to 0.25%.
Class PO Certificate: Any one of the Class PO Certificates executed by the
--------------------
Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A-2 and evidencing an interest designated as a
"regular interest" in the Lower Tier REMIC for purposes of the REMIC
Provisions.
Class PO Collection Shortfalls: With respect to the Cash Liquidation or
-------------------------------
REO Disposition of a Discount Mortgage Loan and any Distribution Date, the
excess of the amount described in Section 4.01(c)(fourth)(C)(1) over the amount
described in Section 4.01(c)(fourth)(C)(2).
Class PO Principal Distribution Amount: As defined in Section
---------------------------------------------
4.01(c)(fourth).
Class R Certificate: Any one of the Class R Certificates executed by the
-------------------
Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A-3 and evidencing an interest designated as a
"residual interest" in the Upper Tier REMIC and Lower Tier REMIC for purposes
of the REMIC Provisions.
Class X Certificate: Any one of the Class X Certificates executed by the
-------------------
Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A-2 and evidencing an interest designated as a
"regular interest" in the Lower Tier REMIC for purposes of the REMIC
Provisions.
Closing Date: July 30, 1999.
------------
Code: The Internal Revenue Code of 1986, as amended.
----
Collateral Value: The appraised value of a Mortgaged Property based upon
-----------------
the lesser of (i) the appraisal (as reviewed and approved by the Seller) made
at the time of the origination of the related Mortgage Loan, or (ii) the sales
price of such Mortgaged Property at such time of origination. With respect to a
Mortgage Loan the proceeds of which were used to refinance an existing mortgage
loan, the appraised value of the Mortgaged Property based upon the appraisal
(as reviewed and approved by the Seller) obtained at the time of refinancing.
Commission: The Securities and Exchange Commission.
----------
Compensating Interest: With respect to any Distribution Date, an amount
----------------------
(but not in excess of the Servicing Fee for such Distribution Date) equal to
Prepayment Interest Shortfalls resulting from Principal Prepayments during the
related Prepayment Period.
Corporate Trust Office: The principal corporate trust office of the
------------------------
Trustee at which at any particular time its corporate trust business related to
this Agreement shall be administered, which office at the date of the execution
of this Agreement is located at Sixth and Marquette, Minneapolis, Minnesota
55479-1026, ref: SAMI 1999-J1.
Credit Support Depletion Date: The first Distribution Date on which the
------------------------------
Senior Percentage equals 100%.
Custodial Account: The account or accounts created and maintained pursuant
-----------------
to Section 3.04 in the name of a depository institution, as custodian for the
holders of the Certificates, into which the amounts set forth in Section 3.05
shall be deposited directly. Any such account or accounts shall be an Eligible
Account.
Custodian: Norwest Bank Minnesota, National Association.
---------
Cut-off Date: July 1, 1999.
------------
DCR: Duff & Phelps Credit Rating Co., or its successor in interest.
---
Debt Service Reduction: With respect to any Mortgage Loan, a reduction in
----------------------
the Scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
Defaulted Mortgage Loan: means any Mortgage Loan as to which the Mortgagor
-----------------------
has failed to make unexcused three (3) or more consecutive Scheduled Monthly
Payments.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
--------------------
court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
Scheduled Monthly Payment that constitutes a permanent forgiveness of
principal, which valuation or reduction results from a proceeding under the
Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
----------------------
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a
-----------------------
Qualified Substitute Mortgage Loan.
Depository: The Depository Trust Company, or any successor Depository
----------
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(5) of the Uniform Commercial Code of the State of New York and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.
Depository Participant: A broker, dealer, bank or other financial
-----------------------
institutions or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: The 15th day (or if such 15th day is not a Business
-------------------
Day, the Business Day immediately preceding such 15th day) of the month of the
related Distribution Date.
Discount Fraction: With respect to each Discount Mortgage Loan, the
------------------
fraction expressed as a percentage, the numerator of which is 6.75% minus the
Net Mortgage Rate (or the initial Net Mortgage Rate with respect to any
Discount Mortgage Loans as to which the Mortgage Rate is modified pursuant to
Section 3.03) for such Mortgage Loan and the denominator of which is 6.75%. The
Discount Fraction with respect to each Discount Mortgage Loan is set forth on
Exhibit I attached hereto.
Discount Mortgage Loan: Any Mortgage Loan having a Net Mortgage Rate (or
------------------------
initial Net Mortgage Rate) of less than 6.75% per annum and any Mortgage Loan
deemed to be a Discount Mortgage Loan pursuant to the definition of Qualified
Substitute Mortgage Loan.
Disqualified Organization: Any organization defined as a "disqualified
--------------------------
organization" under Section 860E(e)(5) of the Code, which includes any of the
following: (i) the United States, any State or political subdivision thereof,
any possession of the United States, or any agency or instrumentality of any of
the foregoing (other than an instrumentality which is a corporation if all of
its activities are subject to tax and, except for the Freddie Mac, a majority
of its board of directors is not selected by such governmental unit), (ii) a
foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the holding of an Ownership Interest in a Class R
Certificate by such Person may cause any REMIC or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Class R
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
Distribution Date: The 25th day of any month, or if such 25th day is not a
-----------------
Business Day, the Business Day immediately following such 25th day, commencing
in August 1999.
Due Date: The first day of the month of the related Distribution Date.
--------
Due Period: With respect to any Distribution Date, the period commencing
----------
on the second day of the month preceding the month of such Distribution Date
(or, with respect to the first Due Period, the day following the Cut-off Date)
and ending on the related Due Date.
Eligible Account: Either (i) an account or accounts maintained with a
-----------------
federal or state chartered depository institution the accounts of which are
insured by the FDIC (to the limits established by the FDIC) and the short-term
debt ratings and the long-term deposit ratings of which are rated in one of the
two highest rating categories by the Rating Agencies or (ii) a trust account or
accounts maintained with a federal or state chartered depository institution or
trust company with trust powers acting in its fiduciary capacity or (iii) an
account or accounts of a depository institution acceptable to the Rating
Agencies (as evidenced in writing by the Rating Agencies that use of any such
account as the Custodial Account or the Certificate Account will not have an
adverse effect on the then-current ratings assigned to the Classes of the
Certificates then rated by the Rating Agencies). Eligible Accounts may bear
interest.
Eligible Funds: On any Distribution Date, the portion, if any, of the
---------------
Available Distribution Amount remaining after reduction by the sum of (i) the
aggregate amount of Accrued Certificate Interest on the Senior Certificates,
(ii) the Senior Principal Distribution Amount, (iii) the Class PO Principal
Distribution Amount (determined without regard to Section 4.01(c)(fourth)(E)
hereof) and (iv) the aggregate amount of Accrued Certificate Interest on the
Subordinate Certificates.
Escrow Account: The account or accounts created and maintained pursuant to
--------------
Section 3.09.
Event of Default: One or more of the events described in Section 7.01.
----------------
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof, which
-----------------------
exceeds the then applicable Bankruptcy Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, which exceeds the
-----------------
then applicable Fraud Loss Amount.
Excess Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
---------------------------
any Liquidation Proceeds in excess of the sum of (1) the Stated Principal
Balance of such Mortgage Loan and accrued but unpaid interest at the related
Mortgage Rate through the related Liquidation Date, and (2) related liquidation
expenses, to the extent that such amount is not required by law to be paid to
the related Mortgagor.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion thereof,
---------------------------
that exceeds the then applicable Special Hazard Amount.
Extraordinary Events: Any of the following conditions with respect to a
---------------------
Mortgaged Property or Mortgage Loan causing or resulting in a loss which causes
the liquidation of such Mortgage Loan:
(a) losses which are otherwise covered by the fidelity bond and the
errors and omissions insurance policy maintained pursuant to Section 3.19,
but are in excess of the coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, or remote or be in
whole or in part caused by, contributed to or aggravated by a peril
covered by the definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war, including
action in hindering, combating or defending against an actual, impending
or expected attack;
1. by any government or sovereign power, de jure or de facto, or
by any authority maintaining or using military, naval or air forces;
or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(d) any weapon of war employing atomic fission or radioactive force
whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any government
or public authority; or risks of contraband or illegal transportation or
trade.
Extraordinary Losses: Any loss incurred on a Mortgage Loan caused by or
---------------------
resulting from an Extraordinary Event.
FDIC: Federal Deposit Insurance Corporation or any successor.
----
Final Disposition: With respect to a Defaulted Mortgage Loan is deemed to
-----------------
have occurred upon a determination by the Servicer that it has received all
Insurance Proceeds, Liquidation Proceeds and other payments or cash recoveries
which the Servicer reasonably and in good faith expects to be finally
recoverable with respect to such Mortgage Loan.
Freddie Mac: Freddie Mac (formerly the Federal Home Loan Mortgage
------------
Corporation) or any successor.
Fraud Loss Amount: As of any date of determination after the Cut-off Date,
-----------------
an amount equal to: (Y) prior to the third Anniversary, an amount equal to
1.00% of the aggregate outstanding principal balance of all of the Mortgage
Loans as of the Cut-off Date minus the aggregate amount of Fraud Losses
allocated solely to one or more specific Classes of Certificates in accordance
with Section 4.04 since the Cut-off Date up to such date of determination and
(Z) from the third to the fifth Anniversary, an amount equal to (1) the lesser
of (a) the Fraud Loss Amount as of the most recent anniversary of the Cut-off
Date and (b) 0.50% of the aggregate outstanding principal balance of all of the
Mortgage Loans as of the most recent Anniversary minus (2) the Fraud Losses
allocated solely to one or more specific Classes of Certificates in accordance
with Section 4.04 since the most recent Anniversary up to such date of
determination. On and after the fifth Anniversary, the Fraud Loss Amount shall
be zero.
The Fraud Loss Amount may be further reduced by the Servicer (including
accelerating the manner in which such coverage is reduced) provided that prior
to any such reduction, the Servicer shall (i) obtain written confirmation from
each Rating Agency that such reduction shall not reduce the rating assigned to
any Class of Certificates by such Rating Agency below the lower of the
then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency and (ii) provide a copy of such written
confirmation to the Trustee.
Fraud Losses: Losses on Mortgage Loans as to which there was fraud in the
------------
origination of such Mortgage Loan as reported by the Servicer or by any other
party hereto.
Full Principal Prepayment: Any Principal Prepayment made by a Mortgagor of
-------------------------
the entire principal balance of the Mortgage Loan.
Funding Date: With respect to each Mortgage Loan, the date on which funds
------------
were advanced by or on behalf of the Seller and interest began to accrue
thereunder.
Hazard Insurance Policy: Each hazard insurance policy required to be
-------------------------
maintained pursuant to Section 3.10.
Indemnified Persons: The Trustee, its officers, directors, agents and
--------------------
employee and any separate co-trustee and its officers, directors, agents and
employees.
Initial Certificate Principal Balance: With respect to each Class of
----------------------------------------
Regular Certificates, the Certificate Principal Balance of such Class of
Certificates as of the Cut-off Date as set forth in the Preliminary Statement
hereto.
Initial Notional Amount: With respect to the Notional Amount Certificates,
-----------------------
the Notional Amount thereof as of the Cut-off Date.
Insurance Policy: With respect to any Mortgage Loan, any insurance policy
----------------
(including a Primary Insurance Policy) which is required to be maintained from
time to time under this Agreement in respect of such Mortgage Loan.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
-------------------
pursuant to any Hazard Insurance Policy, any title insurance policy or any
other insurance policy covering a Mortgage Loan, to the extent such proceeds
are not applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Servicer
would follow in servicing mortgage loans held for its own account.
Interest Accrual Period: With respect to each Distribution Date and (i)
-----------------------
each Class of Certificates other than the LIBOR Certificates, the calendar
month preceding the month in which such Distribution Date occurs, beginning in
July 1999, and (ii) each Class of LIBOR Certificates, the period beginning on
the preceding Distribution Date (or, in the case of the first Distribution
Date, the Closing Date) and ending on the day preceding such Distribution Date.
Interest Shortfall: With respect to any Distribution Date, an amount equal
------------------
to the aggregate shortfall, if any, in collections of interest (adjusted to the
related Net Mortgage Rates) on Mortgage Loans resulting from (a) Full Principal
Prepayments received after the 15th day of the month in which such Distribution
Date occurs, (b) Partial Principal Prepayments received on or after the first
day of the month in which such Distribution Date occurs to the extent applied
after the first day of the month in which such Distribution Date occurs and (c)
interest payments on certain of the Mortgage Loans being limited pursuant to
the provisions of the Relief Act.
Late Collections: With respect to any Mortgage Loan, all amounts received
----------------
during any Due Period, whether as late payments of Scheduled Monthly Payments
or as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent
late payments or collections of Scheduled Monthly Payments due but delinquent
for a previous Due Period and not previously recovered.
LIBOR: With respect to any Distribution Date and the Pass-Through Rates on
-----
the LIBOR Certificates, the arithmetic mean of the London interbank offered
rate quotations of reference banks (which will be selected by the Trustee after
consultation with the Servicer) for one-month U.S. dollar deposits, expressed
on a per annum basis, determined in accordance with Section 1.02.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
-------------------
a day on which banking institutions in the city of London, England are required
or authorized by law to be closed.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received by
--------------------
the Servicer in connection with the taking of an entire Mortgaged Property by
exercise of the power of eminent domain or condemnation or in connection with
the liquidation of a Defaulted Mortgage Loan through trustee's sale,
foreclosure sale or otherwise, other than amounts received in respect of any
REO Property.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
--------------------
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Collateral Value of the related Mortgaged Property.
Lost Note Affidavit: With respect to any Mortgage Note, an original lost
--------------------
note affidavit from the Seller stating that the original Mortgage Note was
lost, misplaced or destroyed, together with a copy of the related Mortgage
Note.
Lower Tier Interest: The sole class of "residual interest" in the Lower
--------------------
Tier REMIC.
Lower Tier REMIC: As described in the Preliminary Statement.
----------------
Lower Tier REMIC Interest: Any one of the Lower Tier REMIC Regular
----------------------------
Interests or the Lower Tier Interest.
Lower Tier REMIC Regular Interest: Any one of the "regular interests" in
---------------------------------
the Lower Tier REMIC described in the Preliminary Statement.
Maturity Date: The latest possible maturity date, solely for purposes of
-------------
Section 1.860G-1(a)(4)(iii) of the Treasury regulations, by which (i) the
Certificate Principal Balance of each Class of Certificates (other than the
Notional Amount Certificates) or (ii) the Notional Amount of the Notional
Amount Certificate would be reduced to zero, which is August 25, 2029, the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan.
Monthly Advance: As to any Mortgage Loan, any advance or principal and
----------------
interest made by the Servicer on any Distribution Date pursuant to Section
4.03.
Moody's: Moody's Investors Service, Inc., or its successor in interest.
-------
Mortgage: The mortgage, deed of trust or any other instrument securing the
--------
Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
-------------
a particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to this Agreement; provided, that whenever the term
"Mortgage File" is used to refer to documents actually received by the Trustee,
such term shall not be deemed to include such additional documents required to
be added unless they are actually so added.
Mortgage Loan: Each of the mortgage loans, transferred and assigned to the
-------------
Trustee pursuant to Section 2.01 or Section 2.04 and from time to time held in
the Trust Fund (including any Qualified Substitute Mortgage Loans), the
Mortgage Loans so transferred, assigned and held being identified in the
Mortgage Loan Schedule. As used herein, the term "Mortgage Loan" includes the
related Mortgage Note and Mortgage.
Mortgage Loan Accrued Interest: With respect to each Mortgage Loan and
--------------------------------
each Due Date, the aggregate amount of interest accrued at the Mortgage Rate in
respect of such Mortgage Loan since the preceding Due Date (or in the case of
the initial Due Date, since the Cut-off Date) to but not including such Due
Date with respect to which the Mortgage Loan Accrued Interest is being
calculated in accordance with the terms of such Mortgage Loan, after giving
effect to any previous Principal Prepayments, Deficient Valuation or Debt
Service Reduction in respect of such Mortgage Loan.
Mortgage Loan Purchase Agreements: The Mortgage Loan Purchase Agreement
----------------------------------
dated as of June 16, 1999, and the Mortgage Loan Purchase Agreement dated as of
July 16, 1999, in both cases between GMAC Mortgage Corporation, as seller, and
Bear Stearns Mortgage Capital Corporation, as purchaser, and all amendments
thereof and supplements thereto.
Mortgage Loan Schedule: As of any date of determination, the schedule of
----------------------
Mortgage Loans included in the Trust Fund. The initial schedule of Mortgage
Loans with accompanying information transferred on the Closing Date to the
Trustee as part of the Trust Fund for the Certificates, attached hereto as
Exhibit G (as amended from time to time to reflect the addition of Qualified
Substitute Mortgage Loans) (and, for purposes of the Trustee pursuant to
Section 2.02, in computer-readable form as delivered to the Trustee), which
list shall set forth the following information with respect to each Mortgage
Loan:
(i) the loan number and name of the Mortgagor;
(ii) the street address, city, state and zip code of the Mortgaged
Property;
(iii) the original term to maturity;
(iv) the original principal balance and the original Mortgage Rate;
(v) the first payment date;
(vi) the type of Mortgaged Property;
(vii) the Scheduled Monthly Payment in effect as of the Cut-off Date;
(viii) the principal balance as of the Cut-off Date;
(ix) the Mortgage Rate as of the Cut-off Date and the Pool Strip
Rate;
(x) the occupancy status;
(xi) the purpose of the Mortgage Loan;
(xii) the Collateral Value of the Mortgaged Property;
(xiii) [Reserved];
(xiv) the paid-through date of the Mortgage Loan;
(xv) the Servicing Fee Rate;
(xvi) the Net Mortgage Rate for such Mortgage Loan;
(xvii) the documentation type.
The Mortgage Loan Schedule may be in the form of more than one schedule,
collectively setting forth all of the information required.
Mortgage Note: The note or other evidence of the indebtedness of a
--------------
Mortgagor under a Mortgage Loan.
Mortgage Rate: With respect to any Mortgage Loan, the annual rate at which
-------------
interest accrues on such Mortgage Loan.
Mortgaged Property: The underlying property securing a Mortgage Loan.
------------------
Mortgagor: The obligor or obligors on a Mortgage Note.
---------
Net Mortgage Rate: With respect to each Mortgage Loan Due Date, a per
-------------------
annum rate of interest equal to the Mortgage Rate on such Mortgage Loan less
the sum of the Servicing Fee Rate and the Trustee Fee Rate.
Non-Discount Mortgage Loan: Any Mortgage Loan having a Net Mortgage Rate
----------------------------
greater than or equal to 6.75% per annum.
Nonrecoverable Advance: Any Monthly Advance or Servicing Advance
------------------------
previously made or proposed to be made in respect of a Mortgage Loan which, in
the good faith judgment of the Servicer will not or, in the case of a proposed
Monthly Advance or Servicing Advance, would not be ultimately recoverable from
related Late Collections, Insurance Proceeds, Liquidation Proceeds or REO
Proceeds. The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed Monthly Advance or Servicing Advance would
constitute a Nonrecoverable Advance, shall be evidenced by a certificate of a
Servicing Officer delivered to the Seller and the Trustee.
Non-United States Person: Any Person other than a United States Person.
------------------------
Notional Amount: With respect to (a) the Class A-5 Certificates as of any
---------------
Distribution Date, 35/675 times the Certificate Principal Balance of the Class
A-1 Certificates, and (b) with respect to the Class A-9 Certificates as of any
Distribution Date, the Certificate Principal Balance of the Class A-8
Certificates. The Notional Amount of the Class X Certificates as of any
Distribution Date is equal to the aggregate Stated Principal Balance of the
Non-Discount Mortgage Loans immediately prior to such date.
Officer's Certificate: A certificate signed by the Chairman of the Board,
---------------------
the Vice Chairman of the Board, the President or a vice president or assistant
vice president or other authorized officer of the Seller or the Servicer and
delivered to the Seller and Trustee.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
------------------
the Seller or the Servicer, reasonably acceptable to the Trustee; except that
any opinion of counsel relating to (a) the qualification of any account
required to be maintained pursuant to this Agreement as an Eligible Account,
(b) the qualification of the Trust Fund as a REMIC, (c) compliance with the
REMIC Provisions or (d) resignation of the Servicer pursuant to Section 6.04
must be an opinion of counsel who (i) is in fact independent of the Seller and
the Servicer, (ii) does not have any direct financial interest or any material
indirect financial interest in the Seller or the Servicer or in an affiliate of
either and (iii) is not connected with the Seller or the Servicer as an
officer, employee, director or person performing similar functions.
Original Senior Percentage: The fraction, expressed as a percentage, the
--------------------------
numerator of which is the aggregate Initial Certificate Principal Balance of
the Senior Certificates (other than the Class PO Certificates) and the
denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans (other than the Discount Fraction of the Discount Mortgage Loans), which
is approximately 95.5% as of the Closing Date.
Originator: GMAC Mortgage Corporation, or any successor thereto.
----------
OTS: The Office of Thrift Supervision, or any successor thereto.
---
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan (including
--------------------------
an REO Property) which was not the subject of a Full Principal Prepayment, Cash
Liquidation or REO Disposition and which was not purchased prior to such Due
Date pursuant to Sections 2.02, 2.04 or 3.11.
Ownership Interest: As to any Certificate, any ownership or security
-------------------
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
Partial Principal Prepayment: Any Principal Prepayment made by a Mortgagor
----------------------------
which is not a Full Principal Prepayment.
Pass-Through Rate: With respect to each related class of Certificates, a
------------------
rate equal to the rate set forth in the Preliminary Statement hereto. The
Principal Only Certificates do not have a Pass-Through Rate.
Percentage Interest: With respect to any Certificate (other than a Class R
-------------------
Certificate), the undivided percentage ownership interest in the related Class
evidenced by such Certificate, which percentage ownership interest shall be
equal to the Initial Certificate Principal Balance thereof or Initial Notional
Amount (in the case of the Notional Amount Certificates) divided by the
aggregate Initial Certificate Principal Balance or Initial Notional Amount, as
applicable, of all of the Certificates of the same Class. With respect to a
Class R Certificate, the interest in distributions to be made with respect to
such Class evidenced thereby, expressed as a percentage, as stated on the face
of each such Certificate.
Permitted Investment: One or more of the following:
--------------------
(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; provided that obligations of
Freddie Mac or Fannie Mae shall be Permitted Investments only if, at the
time of investment, they are rated in one of the two highest rating
categories by the Rating Agencies;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated 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, provided that the commercial paper and/or the
short-term deposit rating and/or the long-term unsecured debt obligations
or deposits of such depository institution or trust company at the time of
such investment or contractual commitment providing for such investment
are rated in one of the two highest rating categories by the Rating
Agencies and (b) any other demand or time deposit or certificate of
deposit that is fully insured by the FDIC;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed by an 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, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (ii)(a) above;
(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 that are rated in one of the two highest rating
categories by the Rating Agencies at the time of such investment or
contractual commitment providing for such investment; provided, however,
that securities issued by any particular corporation will not be Permitted
Investments to the extent that investments therein will cause the then
outstanding principal amount of securities issued by such corporation and
held as Permitted Investments to exceed 10% of the aggregate outstanding
principal balances and amounts of all the Permitted Investments;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof)
which are rated in one of the two highest rating categories by the Rating
Agencies;
(vi) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each of the Rating
Agencies;
(vii) any money market funds the collateral of which consists of
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 (which may include repurchase obligations secured by collateral
described in clause (i)) and other securities and which money market funds
are rated in one of the two highest rating categories by the Rating
Agencies; and
(viii) GMAC Variable Denomination Adjustable Rate Demand Notes
constituting unsecured, senior debt obligations of General Motors
Acceptance Corporation as outlined in the prospectus dated June 17, 1998
and rated by Moody's in its highest short-term rating category available
and rated at least "D-1" by DCR;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal
and interest payments derived from obligations underlying such instrument and
the principal and interest payments with respect to such instrument provide a
yield to maturity greater than 120% of the yield to maturity at par of such
underlying obligations.
Permitted Transferee: Any transferee of a Residual Certificate other than
--------------------
a Disqualified Organization, a Non-United States Person or an "electing large
partnership" (as defined in Section 775 of the Code).
Person: Any individual, corporation, partnership, joint venture,
------
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Planned Principal Balance: With respect to each Class of Planned Principal
-------------------------
Certificates, the amount set forth for such Class in Schedule L hereto for the
respective Distribution Date.
Pool Strip Rate: With respect to any Distribution Date and any
-----------------
Non-Discount Mortgage Loan, the Net Mortgage Rate thereon minus 6.75%, but not
less than 0.00%.
Prepayment Assumption: represents an assumed rate of prepayment each month
---------------------
relative to the then outstanding principal balance of a pool of new mortgage
loans. A 100% Prepayment Assumption assumes a constant prepayment rate of 0.2%
per annum of the then outstanding principal balance of such mortgage loans in
the first month of the life of the mortgage and an additional 0.2% per annum in
each month thereafter (for example, 0.4% per annum in the second month) until
the thirtieth month. Beginning in the thirtieth month and in each month
thereafter during the life of the mortgage loans, a 100% Prepayment Assumption
assumes a constant prepayment rate of 6% per annum.
Prepayment Distribution Percentage: With respect to any Distribution Date
----------------------------------
and each Class of Class B Certificates, under the applicable circumstances set
forth below, the respective percentages set forth below:
(i) For any Distribution Date on which any Class B Certificates are
outstanding:
(a) in the case of the Class of Class B Certificates then
outstanding with the lowest numerical designation and each other
Class of Class B Certificates for which the related Prepayment
Distribution Trigger has been satisfied, a fraction, expressed as a
percentage, the numerator of which is the Certificate Principal
Balance of such Class immediately prior to such date and the
denominator of which is the sum of the Certificate Principal Balances
immediately prior to such date of (1) the Class of Class B
Certificates then outstanding with the lowest numerical designation
and (2) all other Classes of Class B Certificates for which the
respective Prepayment Distribution Triggers have been satisfied; and
(b) in the case of each other Class of Class B Certificates for
which the Prepayment Distribution Triggers have not been satisfied,
0%; and
(ii) Notwithstanding the foregoing, if the application of the
foregoing percentages on any Distribution Date as provided in Section 4.01
(determined without regard to the proviso to the definition of
"Subordinate Principal Distribution Amount") would result in a
distribution in respect of principal of any Class or Classes of Class B
Certificates in an amount greater than the remaining Certificate Principal
Balance thereof (any such class, a "Maturing Class"), then: (a) the
Prepayment Distribution Percentage of each Maturing Class shall be reduced
to a level that, when applied as described above, would exactly reduce the
Certificate Principal Balance of such Class to zero; (b) the Prepayment
Distribution Percentage of each other Class of Class B Certificates (any
such Class, a "Non-Maturing Class") shall be recalculated in accordance
with the provisions in paragraph (i) above, as if the Certificate
Principal Balance of each Maturing Class had been reduced to zero (such
percentage as recalculated, the "Recalculated Percentage"); (c) the total
amount of the reductions in the Prepayment Distribution Percentages of the
Maturing Class or Classes pursuant to clause (a) of this sentence,
expressed as an aggregate percentage, shall be allocated among the
Non-Maturing Classes in proportion to their respective Recalculated
Percentages (the portion of such aggregate reduction so allocated to any
Non-Maturing Class, the "Adjustment Percentage"); and (d) for purposes of
such Distribution Date, the Prepayment Distribution Percentage of each
Non-Maturing Class shall be equal to the sum of (1) the Prepayment
Distribution Percentage thereof, calculated in accordance with the
provisions in paragraph (i) above as if the Certificate Principal Balance
of each Maturing Class had not been reduced to zero, plus (2) the related
Adjustment Percentage.
Prepayment Distribution Trigger: The Class B-2 Prepayment Distribution
---------------------------------
Trigger, Class B-3 Prepayment Distribution Trigger, Class B-4 Prepayment
Distribution Trigger, Class B-5 Prepayment Distribution Trigger or Class B-6
Prepayment Distribution Trigger.
Prepayment Interest Shortfall: As to any Distribution Date and any
-------------------------------
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Full Principal Prepayment during the related Prepayment
Period, an amount equal to the excess of one month's interest at the Net
Mortgage Rate on the Stated Principal Balance of such Mortgage Loan over the
amount of interest (adjusted to the Net Mortgage Rate) actually paid by the
Mortgagor in the related Due Period to the date of such Full Principal
Prepayment or (b) a Partial Principal Prepayment during the related Prepayment
Period, an amount equal to one month's interest at the Net Mortgage Rate on the
amount of such Partial Principal Prepayment; provided, however, that
notwithstanding any provision above to the contrary, no Prepayment Interest
Shortfall shall arise with respect to a Full Principal Prepayment received by
the Servicer on or before the 15th day of the month in which such Distribution
Date occurs and remitted to the Trustee on the related Remittance Date.
Prepayment Period: As to any Distribution Date, (i) in the case of a Full
------------------
Principal Prepayment, the one month period ending on the 15th day of the month
in which such Distribution Date occurs and (ii) in the case of a Partial
Principal Prepayment, the calendar month preceding the month in which such
Distribution Date occurs.
Primary Insurance Policy: Any primary policy of mortgage guaranty
--------------------------
insurance, or any replacement policy therefor providing coverage for certain
Mortgage Loans included in the Trust Fund with Loan-to-Value Ratios in excess
of 80.00%.
Principal Only Certificates: Any one of the Class A-12 Certificates or
----------------------------
Class PO Certificates.
Principal Prepayment: Any payment of principal made by the Mortgagor 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.
Purchase Price: With respect to any Mortgage Loan (or REO Property)
---------------
required to be purchased pursuant to Section 2.02, 2.04 or 3.11, an amount
equal to 100% of the Stated Principal Balance of such Mortgage Loan as of the
date of repurchase, plus accrued interest thereon at the related Net Mortgage
Rate through and including the end of the month of repurchase, plus any
unreimbursed Monthly Advances or Servicing Advances with respect to such
Mortgage Loan.
Qualified Insurer: Any insurance company duly qualified as such under the
-----------------
laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by the
-------------------------------------
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officer's Certificate delivered to the
Trustee, (i) have an outstanding principal balance, after deduction of the
principal portion of the monthly payment due in the month of substitution (or
in the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate outstanding principal balance, after such
deduction), not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be paid to the Servicer for
deposit in the Custodial Account in the month of substitution); (ii) have a
Mortgage Rate and a Net Mortgage Rate no lower than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively, of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a
Loan-to-Value Ratio at the time of substitution no higher than that of the
Deleted Mortgage Loan at the time of substitution; (iv) have a remaining term
to stated maturity not greater than (and not more than one year less than) that
of the Deleted Mortgage Loan; (v) comply with each representation and warranty
set forth in Section 2.04 hereof; and (vi) have a Pool Strip Rate equal to or
greater than that of the Deleted Mortgage Loan. Notwithstanding any other
provisions herein, (x) with respect to any Qualified Substitute Mortgage Loan
substituted for a Deleted Mortgage Loan which was a Discount Mortgage Loan,
such Qualified Substitute Mortgage Loan shall be deemed to be a Discount
Mortgage Loan and to have a Discount Fraction equal to the Discount Fraction of
the Deleted Mortgage Loan and (y) in the event that the "Pool Strip Rate" of
any Qualified Substitute Mortgage Loan as calculated pursuant to the definition
of "Pool Strip Rate" is greater than the Pool Strip Rate of the related Deleted
Mortgage Loan (i) the Pool Strip Rate of such Qualified Substitute Mortgage
Loan shall be equal to the Pool Strip Rate of the related Deleted Mortgage Loan
for purposes of calculating the Pass-Through Rate for the Notional Amount
Certificates and (ii) the excess of the Pool Strip Rate on such Qualified
Substitute Mortgage Loan as calculated pursuant to the definition of "Pool
Strip Rate" over the Pool Strip Rate on the related Deleted Mortgage Loan shall
be payable to the Class R Certificates pursuant to Section 4.01 hereof.
Rate Adjustment Date: With respect to each Distribution Date and the LIBOR
--------------------
Certificates, the second LIBOR Business Day immediately preceding the
commencement of the related Interest Accrual Period on which banks are open for
dealing in foreign currency and exchange in London, England.
Rating Agency: Moody's and DCR or each of their successors. If such
--------------
agencies and their successors are no longer in existence, "Rating Agency" shall
be such nationally recognized statistical rating agency, or other comparable
Person, designated by the Seller, notice of which designation shall be given to
the Trustee and Servicer. References herein to the two highest long term debt
rating categories of a Rating Agency shall mean "AA" or better in the case of
DCR, and "Aa" or better in the case of Moody's and references herein to the
highest short-term debt rating of a Rating Agency shall mean "A-1+" in the case
of Moody's, and "D-1+" in the case of DCR, and in the case of any other Rating
Agency such references shall mean such rating categories without regard to any
plus or minus.
Realized Loss: With respect to each Mortgage Loan or REO Property as to
--------------
which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan as of
the date of Cash Liquidation or REO Disposition, plus (ii) interest (and REO
Imputed Interest, if any) at the Net Mortgage Rate from the Due Date as to
which interest was last paid or advanced to Certificateholders up to the date
of the Cash Liquidation or REO Disposition on the Stated Principal Balance of
such Mortgage Loan outstanding during each Due Period that such interest was
not paid or advanced, minus (iii) the proceeds, if any, received during the
month in which such Cash Liquidation or REO Disposition occurred, to the extent
applied as recoveries of interest at the Net Mortgage Rate and to principal of
the Mortgage Loan, net of the portion thereof reimbursable to the Servicer with
respect to related Monthly Advances and Servicing Advances not previously
reimbursed. With respect to each Mortgage Loan which has become the subject of
a Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.
Record Date: The last Business Day of the month immediately preceding the
-----------
month of the related Distribution Date.
Reference Bank Rate: With respect to any Interest Accrual Period, as
--------------------
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of a percent) of the offered rates for United States dollar deposits
for one month which are offered by the reference banks selected by the Trustee
after consultation with the Servicer, as of 11:00 A.M., London, England time,
on the LIBOR Business Day prior to the immediately preceding Distribution Date
to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the aggregate Certificate Principal Balance of
the LIBOR Certificate then outstanding; provided that at least two such
reference banks provide such rate. If fewer than two offered rates appear, the
Reference Bank Rate will be the arithmetic mean (rounded upwards if necessary
to the nearest 1/16%) of the rates quoted by one or more major banks in New
York City, selected by the Trustee after consultation with the Servicer, as of
11:00 a.m., New York time, on such date for loans in U.S. Dollars to leading
European banks for a period of one month in the amounts approximately equal to
the aggregate Certificate Principal Balance of the LIBOR Certificates then
outstanding. If no such quotations can be obtained, the rate shall be LIBOR for
the prior Distribution Date, or in the case of the first Rate Adjustment Date,
4.92%; provided however, if, under the priorities described above, LIBOR for a
Distribution Date would be based on LIBOR for the previous Distribution Date
for the third consecutive Distribution Date, the Trustee shall select an
alternative comparable index (over which the Trustee has no control), used for
determining one-month Eurodollar lending rates that is calculated and published
(or otherwise made available) by an independent party.
Regular Certificate: Any of the Certificates other than a Residual
--------------------
Certificate.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
----------
amended.
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
-----------------
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 24th day of the related month, or if such day is not
----------------
a Business Day, the Business Day immediately preceding such 24th day.
Remittance Report: A report prepared by the Servicer pursuant to Section
------------------
4.03 providing the information set forth in Exhibit D attached hereto.
REO Acquisition: The acquisition by the Servicer on behalf of the Trustee
---------------
for the benefit of the Certificateholders of any REO Property pursuant to
Section 3.12.
REO Disposition: The receipt by the Servicer of Insurance Proceeds,
----------------
Liquidation Proceeds and other payments and recoveries (including proceeds of a
final sale) which the Servicer expects to be finally recoverable from the sale
or other disposition of the REO Property.
REO Imputed Interest: As to any REO Property, for any period, an amount
---------------------
equivalent to interest (at the Mortgage Rate that would have been applicable to
the related Mortgage Loan had it been outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date of acquisition thereof (as such
balance is reduced pursuant to Section 3.12 by any income from the REO Property
treated as a recovery of principal).
REO Proceeds: Proceeds, net of directly related expenses, received in
------------
respect of any REO Property (including, without limitation, proceeds from the
rental of the related Mortgaged Property and of any REO Disposition), which
proceeds are required to be deposited into the Custodial Account as and when
received.
REO Property: A Mortgaged Property acquired by the Servicer on behalf of
------------
the Trust Fund through foreclosure or deed-in-lieu of foreclosure in connection
with a Defaulted Mortgage Loan.
Request for Release: A release signed by a Servicing Officer, in the form
-------------------
of Exhibit E attached hereto.
Residual Certificate: The Class R Certificates.
--------------------
Responsible Officer: Any officer assigned to the Corporate Trust Division
--------------------
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any one of the above designated officers and having direct
responsibility for the administration of this Agreement or any other officer of
the Trustee to whom matters under this Agreement may be referred.
Scheduled Monthly Payment: With respect to any Mortgage Loan, the
---------------------------
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor from time to time under the related Mortgage Note as
originally executed (after adjustment, if any, for Principal Prepayments and
for Deficient Valuations occurring prior to such Due Date, and after any
adjustment by reason of any bankruptcy or similar proceeding or any moratorium
or similar waiver or grace period).
Seller: Structured Asset Mortgage Investments Inc., or its successor in
------
interest.
Senior Accelerated Distribution Percentage: With respect to any
------------------------------------------------
Distribution Date, the percentage indicated below:
<TABLE>
<CAPTION>
Senior Accelerated Distribution Date Distribution Percentage
- ----------------------------------- ---------------------------------------------------------
<S> <C>
August 1999 through July 2004 100%
August 2004 through July 2005 Senior Percentage, plus 70% of the Subordinate Percentage
August 2005 through July 2006 Senior Percentage, plus 60% of the Subordinate Percentage
August 2006 through July 2007 Senior Percentage, plus 40% of the Subordinate Percentage
August 2007 through July 2008 Senior Percentage, plus 20% of the Subordinate Percentage
August 2008 and thereafter Senior Percentage,
</TABLE>
provided, however, (i) that any scheduled reduction to the Senior Accelerated
Distribution Percentage described above shall not occur as of any Distribution
Date unless either (a)(1)(x) the outstanding principal balance of Mortgage
Loans delinquent 60 days or more (including foreclosure and REO Property)
averaged over the last six months as a percentage of the aggregate outstanding
Certificate Principal Balance of the Class B Certificates, is less than 50%, or
(y) the outstanding principal balance of Mortgage Loans delinquent 60 days or
more (including foreclosure and REO Property) averaged over the last six
months, as a percentage of the aggregate outstanding principal balance of all
Mortgage Loans averaged over the last six months, does not exceed 2% and (2)
Realized Losses on the Mortgage Loans to date for such Distribution Date if
occurring during the sixth, seventh, eighth, ninth or tenth year (or any year
thereafter) after the Closing Date are less than 30%, 35%, 40%, 45% or 50%,
respectively, of the sum of the Initial Certificate Principal Balances of the
Class B Certificates or (b) (1) the aggregate outstanding principal balance of
the Mortgage Loans delinquent 60 days or more (including foreclosure and REO
Property) averaged over the last six months, as a percentage of the aggregate
outstanding principal balance of all Mortgage Loans averaged over the last six
months, does not exceed 4% and (2) Realized Losses on the Mortgage Loans on or
prior to such Distribution Date, if occurring during the sixth, seventh,
eighth, ninth or tenth year (or any year thereafter) after the Closing Date,
are less than 10%, 15%, 20%, 25% or 30%, respectively of the sum of the Initial
Certificate Principal Balances of the Class B Certificates and (ii) that for
any Distribution Date on which the Senior Percentage is greater than the
Original Senior Percentage, the Senior Accelerated Distribution Percentage for
such Distribution Date shall be 100%. Notwithstanding the foregoing, upon the
reduction of the aggregate Certificate Principal Balance of the Senior
Certificates other than the Class PO Certificates to zero, the Senior
Accelerated Distribution Percentage will equal 0%.
Senior Certificate: Any of the Class A, Class PO, Class X or Class R
-------------------
Certificates.
Senior Interest Distribution Amount: As defined in Section 4.01(b)(i).
-----------------------------------
Senior Percentage: As of any Distribution Date, the lesser of 100% and a
------------------
fraction, expressed as a percentage, the numerator of which is the aggregate
Certificate Principal Balance of the Senior Certificates (other than the Class
PO Certificates) immediately prior to such Distribution Date and the
denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans or related REO Properties (other than the Discount Fraction of
the Discount Mortgage Loans) immediately prior to such Distribution Date.
Senior Principal Distribution Amount: As to any Distribution Date, the
--------------------------------------
lesser of (a) the balance of the Available Distribution Amount remaining after
the distribution of all amounts required to be distributed pursuant to Section
4.01(b)(i) and (b) the sum of the amounts required to be distributed to the
Class A Certificates and Class R Certificates on such Distribution Date
pursuant to Section 4.01(b)(ii), (xv) and (xvi).
Servicer: GMAC Mortgage Corporation, or any successor servicer appointed
--------
as herein provided.
Servicing Advances: All customary, reasonable and necessary "out of
-------------------
pocket" costs and expenses incurred in connection with a default, delinquency
or other unanticipated event in the performance by the Servicer of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.09 and Section 3.10.
Servicing Fee: As to each Mortgage Loan, an amount, payable out of any
--------------
payment of interest on the Mortgage Loan, equal to the product of (a) the
Servicing Fee Rate and (b) the Stated Principal Balance of such Mortgage Loan
for the calendar month preceding the month in which the payment is due
(alternatively, in the event such payment of interest accompanies a Full
Principal Prepayment made by the Mortgagor, interest at the Servicing Fee Rate
for the number of days covered by such payment of interest).
Servicing Fee Rate: 0.25% per annum.
------------------
Servicing Officer: Any officer of the Servicer involved in, or responsible
-----------------
for, the administration and servicing of the Mortgage Loans, whose name and
specimen signature appear on a list of servicing officers furnished to the
Trustee by the Servicer, as such list may from time to time be amended.
Special Hazard Amount: As of any Distribution Date, an amount equal to
----------------------
$4,223,271 (the initial "Special Hazard Amount") minus the sum of (i) the
aggregate amount of Special Hazard Losses allocated solely to one or more
Classes of Certificates in accordance with Section 4.04 and (ii) the Adjustment
Amount (as defined below) as most recently calculated. For each Anniversary,
the Adjustment Amount shall be calculated and shall be equal to the amount, if
any, by which the amount calculated in accordance with the preceding sentence
(without giving effect to the deduction of the Adjustment Amount for such
Anniversary) exceeds the greater of (A) the greatest of (i) twice the
outstanding principal balance of the Mortgage Loan in the Trust Fund which has
the largest outstanding principal balance on the Distribution Date immediately
preceding such anniversary, (ii) the product of 1.00% multiplied by the
outstanding principal balance of all Mortgage Loans on the Distribution Date
immediately preceding such anniversary and (iii) the aggregate outstanding
principal balance (as of the immediately preceding Distribution Date) of the
Mortgage Loans in any single five-digit California zip code area with the
largest amount of Mortgage Loans by aggregate principal balance as of such
Anniversary and (B) the greater of (i) the product of 0.50% multiplied by the
outstanding principal balance of all Mortgage Loans on the Distribution Date
immediately preceding such Anniversary multiplied by a fraction, the numerator
of which is equal to the aggregate outstanding principal balance (as of the
immediately preceding Distribution Date) of all of the Mortgage Loans secured
by Mortgaged Properties located in the State of California divided by the
aggregate outstanding principal balance (as of the immediately preceding
Distribution Date) of all of the Mortgage Loans, expressed as a percentage, and
the denominator of which is equal to 38.03% (which percentage is equal to the
percentage of Mortgage Loans initially secured by Mortgaged Properties located
in the State of California) and (ii) the aggregate outstanding principal
balance (as of the immediately preceding Distribution Date) of the largest
Mortgage Loan secured by a Mortgaged Property located in the State of
California.
The Special Hazard Amount may be further reduced by the Servicer
(including accelerating the manner in which coverage is reduced) provided that
prior to any such reduction, the Servicer shall (i) obtain written confirmation
from each Rating Agency that such reduction shall not reduce the rating
assigned to any Class of Certificates by such Rating Agency below the lower of
the then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency and (ii) provide a copy of such written
confirmation to the Trustee.
Special Hazard Loss: Any Realized Loss not in excess of the cost of the
--------------------
lesser of repair or replacement of a Mortgaged Property suffered by such
Mortgaged Property on account of direct physical loss as reported by the
Servicer or by any other party hereto, exclusive of (i) any loss of a type
covered by a Hazard Insurance Policy or a flood insurance policy required to be
maintained in respect of such Mortgaged Property pursuant to Section 3.10,
except to the extent of the portion of such loss not covered as a result of any
coinsurance provision and (ii) any Extraordinary Loss.
Special Hazard Percentage: As of each Anniversary, the greater of (i)
---------------------------
1.00% and (ii) the largest percentage obtained by dividing the aggregate
outstanding principal balance (as of the immediately preceding Distribution
Date) of the Mortgage Loans secured by Mortgaged Properties located in a
single, five-digit zip code area in the State of California by the outstanding
principal balance of all the Mortgage Loans as of such immediately preceding
Distribution Date.
Startup Day: The day designated as such pursuant to Article X hereof.
-----------
Stated Principal Balance: With respect to any Mortgage Loan or related REO
------------------------
Property at any given time, (i) the principal balance of the Mortgage Loan
outstanding as of the Cut-off Date, after application of principal payments due
on or before such date, whether or not received, minus (ii) the sum of (a) the
principal portion of the Scheduled Monthly Payments due with respect to such
Mortgage Loan or REO Property during each Due Period ending prior to the most
recent Distribution Date which were received or with respect to which a Monthly
Advance was made, and (b) all Principal Prepayments with respect to such
Mortgage Loan or REO Property, and all Insurance Proceeds, Liquidation Proceeds
and net income from a REO Property to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan or REO Property, which were distributed pursuant to Section 4.01
on any previous Distribution Date, and (c) any Realized Loss with respect
thereto allocated pursuant to Section 4.04 for any previous Distribution Date.
Subordinate Certificate: Any of the Class B-1, Class B-2, Class B-3, Class
-----------------------
B-4, Class B-5 or Class B-6 Certificates.
Subordinate Percentage: As of any date of determination, a percentage
-----------------------
equal to 100% minus Senior Percentage as of such date.
Subordinate Principal Distribution Amount: With respect to any
-----------------------------------------------
Distribution Date and each Class of Class B Certificates, the sum of (i) the
product of (x) the related Class B Percentage for such Class and (y) the
aggregate of the amounts calculated for such Distribution Date under clauses
(1), (2) and (3) of Section 4.01(b)(ii)(Y)(A); (ii) such Class's pro rata
share, based on the Certificate Principal Balance of each Class of Class B
Certificates then outstanding, of the principal collections described in
Section 4.01(b)(ii)(Y)(B)(b) (without giving effect to the Senior Accelerated
Distribution Percentage), to the extent such collections are not otherwise
distributed to the Senior Certificates; (iii) the product of (x) the related
Prepayment Distribution Percentage and (y) the aggregate of all Full Principal
Prepayments and Partial Principal Prepayments received in the related
Prepayment Period (other than the related Discount Fraction of such Full
Principal Prepayments and Partial Principal Prepayments with respect to a
Discount Mortgage Loan) to the extent not payable to the Senior Certificates;
and (iv) any amounts described in clauses (i), (ii) and (iii) as determined for
any previous Distribution Date, that remain undistributed to the extent that
such amounts are not attributable to Realized Losses which have been allocated
to a subordinate Class of Class B Certificates; provided, however, that such
amount shall in no event exceed the outstanding Certificate Principal Balance
of such Class of Certificates immediately prior to such date.
Targeted Principal Balance: With respect to each Class of Targeted
----------------------------
Principal Certificates, the amount set forth for such Class in Schedule L
hereto for the respective Distribution Date.
Tax Returns: The federal income tax return on Internal Revenue Service
-----------
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of any REMIC due to their classification as REMICs under the
REMIC Provisions, together with any and all other information, reports or
returns that may be required to be furnished to the Certificateholders or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation or
--------
other form of assignment of any Ownership Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
----------
Interest in a Certificate.
Trustee: Norwest Bank Minnesota, National Association, or its successor in
-------
interest, or any successor trustee appointed as herein provided.
Trustee Fee: As to each Mortgage Loan, an amount, payable monthly out of
-----------
any payment of interest on the Mortgage Loan, equal to the product of (a) the
Trustee Fee Rate and (b) the Stated Principal Balance of such Mortgage Loan for
the calendar month preceding the month in which the payment is due.
Trustee Fee Rate: A per annum rate equal to 0.0120%.
----------------
Trust Fund: The segregated pool of assets, with respect to which a REMIC
----------
election is to be made, consisting of: (i) each Mortgage Loan (exclusive of
payments of principal and interest due on or before the Cut-off Date, if any,
received by the Servicer which shall not constitute an asset of the Trust Fund)
as from time to time are subject to this Agreement and all payments under and
proceeds of such Mortgage Loans (exclusive of any prepayment fees and late
payment charges received on the Mortgage Loans), together with all documents
included in the related Mortgage File, subject to Section 2.01; (ii) such funds
or assets as from time to time are deposited in the Custodial Account or the
Certificate Account and belonging to the Trust Fund; (iii) any REO Property;
(iv) the Hazard Insurance Policies, if any, the Primary Insurance Policies, if
any, and all other Insurance Policies with respect to the Mortgage Loans; and
(v) the Seller's interest in respect of the representations and warranties made
by the Seller in the Mortgage Loan Purchase Agreement as assigned to the
Trustee pursuant to Section 2.04 hereof.
Uninsured Cause: Any cause of damage to property subject to a Mortgage
----------------
such that the complete restoration of such property is not fully reimbursable
by the Hazard Insurance Policies or flood insurance policies required to be
maintained pursuant to Section 3.10.
United States Person: A citizen or resident of the United States, a
----------------------
corporation or a partnership (including an entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States or any State thereof or the
District of Columbia (except, in the case of a partnership, to the extent
provided in regulations) or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more such United States Persons have the authority to
control all substantial decisions of the trust. To the extent prescribed in
regulations by the Secretary of the Treasury, which have not yet been issued, a
trust which was in existence on August 20, 1996 (other than a trust treated as
owned by the grantor under subpart E of part I of subchapter J of chapter 1 of
the Code), and which was treated as a United States person on August 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence.
Upper Tier Interest: the sole class of "residual interest" in the
---------------------
Upper-Tier REMIC.
Upper Tier REMIC: As described in the Preliminary Statement.
----------------
Voting Rights: The portion of the voting rights of all of the Certificates
-------------
which is allocated to any Certificate. At all times during the term of this
Agreement, 98% of all of the Voting Rights shall be allocated among Holders of
the Regular Certificates (other than the Class X Certificates) on the basis of
the Certificate Principal Balances thereof, 1% of all Voting Rights shall be
allocated to the Holders of the Class X Certificates, and the Holders of the
Class R Certificates shall be entitled to 1% of all of the Voting Rights,
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
Section 1.02. Determination of LIBOR.
----------------------
LIBOR applicable to the calculation of the Pass-Through Rates on the LIBOR
Certificates for any Interest Accrual Period (other than the initial Interest
Accrual Period) will be determined on each Rate Adjustment Date as follow:
For any Interest Accrual Period other than the first Interest Accrual
Period, the rate for United States dollar deposits for one month which appears
on the Telerate Screen Page 3750 as of 11:00 A.M., London, England time, on the
second LIBOR Business Day prior to the first day of such Interest Accrual
Period. For the first Interest Accrual Period, LIBOR equals 4.92% with respect
to the LIBOR Certificates. If such rate does not appear on such page (or such
other page as may replace that page on that service, or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates as
may be reasonably selected by the Trustee after consultation with the
Servicer), the rate will be the Reference Bank Rate. If no such quotations can
be obtained and no Reference Bank rate is available, LIBOR will be LIBOR
applicable to the preceding Distribution Date; provided however, if, under the
priorities described above, LIBOR for a Distribution Date would be based on
LIBOR for the previous Distribution Date for the third consecutive Distribution
Date, the Trustee shall select an alternative comparable index (over which the
Trustee has no control), used for determining one-month Eurodollar lending
rates that is calculated and published (or otherwise made available) by an
independent party.
The establishment of LIBOR by the Trustee on any Rate Adjustment Date and
the Trustee's subsequent calculation of the Pass-Through Rates applicable to
the LIBOR Certificates for the relevant Interest Accrual Period, in the absence
of manifest error, will be final and binding.
Promptly following each Rate Adjustment Date the Trustee shall supply the
Servicer and the Seller with the results of its determination of LIBOR on such
date. Furthermore, the Trustee will supply to any Certificateholder so
requesting by telephone the Pass-Through Rates on the LIBOR Certificates for
the current and the immediately preceding Interest Accrual Periods.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
----------------------------
The Seller, as of the Closing Date, and concurrently with the execution
and delivery hereof, does hereby assign, transfer, sell, set over and otherwise
convey to the Trustee without recourse all the right, title and interest of the
Seller in and to the Mortgage Loans identified on the Mortgage Loan Schedule
(exclusive of any prepayment fees and late payment charges received thereon)
and all other assets included or to be included in the Trust Fund for the
benefit of the Certificateholders. Such assignment includes all principal and
interest received by the Seller on or with respect to the Mortgage Loans (other
than payment of principal and interest due on or before the Cut-off Date).
In connection with such transfer and assignment, the Seller has caused the
Originator to deliver to, and deposit with the Trustee, as Custodian, the
following documents or instruments:
(i) the original Mortgage Note endorsed without recourse in blank or
in the name of Trustee or its designee, and signed by an authorized
officer, with all intervening endorsements showing a complete chain of
title from the originator to the Person endorsing it to the Trustee. If
the Mortgage Loan was acquired by the endorser in a merger, the
endorsement must be by " , successor by merger to [name of predecessor]".
If the Mortgage Loan was acquired or originated by the endorser while
doing business under another name, the endorsement must be by " formerly
known as [previous name]".
(ii) the original of any guarantee executed in connection with the
Mortgage Note;
(iii) the Mortgage with evidence of recording thereon or evidence
that the Mortgage has been sent for recording;
(iv) any rider executed in connection with the related Mortgage Note
or Mortgage;
(v) an original Assignment or Assignments of Mortgage (which may be
included in a blanket assignment or assignments) in blank or in the name
of Trustee or its designee, and signed by an authorized officer, which
assignment shall be in form and substance acceptable for recording. If the
Mortgage Loan was acquired by the assignor in a merger, the assignment
must be by " , successor by merger to [name of predecessor]". If the
Mortgage Loan was acquired or originated by the assignor while doing
business under another name, the assignment must be by
"____________________ formerly known as [previous name]";
(vi) originals of all intervening assignments of mortgage, which
together with the Assignment of Mortgage, shows a complete chain of title
from the originator to the Person assigning it to the Trustee, with
evidence of recording thereon;
(vii) [Reserved];
(viii) the original mortgagee policy of title insurance, including
riders and endorsements thereto, or if the policy has not yet been issued,
(i) a written commitment or interim binder for title issued by the title
insurance or escrow company dated as of the date the Mortgage Loan was
funded, with a statement by the title insurance company, or closing
attorney that the priority of the lien of the related Mortgage during the
period between the date of the funding of the related Mortgage Loan and
the date of the related title policy (which title policy shall be dated
the date of recording of the related Mortgage) is insured or (ii) a
preliminary title report issued by a title insurer in anticipation of
issuing a title insurance policy which evidences existing liens and gives
a preliminary opinion as to the absence of any encumbrance on title to the
Mortgaged Property, except liens to be removed on or before purchase by
the Mortgagor or which constitute customary exceptions acceptable to
lenders generally;
(ix) [Reserved];
(x) a certified true copy of any power of attorney, if applicable;
and
(xi) originals of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage.
In the event that in connection with any Mortgage Loan the Originator
cannot deliver (a) the original recorded Mortgage (or evidence of submission to
the recording office), (b) all interim recorded assignments or (c) the original
lender's title insurance policy (together with all riders thereto) satisfying
the requirements of clause (iii), (vi), (vii) or (viii) above, respectively,
concurrently with the execution and delivery hereof because such document or
documents have not been returned from the applicable public recording office in
the case of clause (iii), (vi) or (vii) above, or because the title policy has
not been delivered to either the Originator or the Seller by the title insurer
in the case of clause (viii) above, the Seller shall cause the Originator to
use its best efforts to deliver to the Trustee, in the case of clause (iii),
(vi) or (vii) above, such original Mortgage, such interim assignment, with
evidence of recording indicated thereon upon receipt thereof from the public
recording office, or a copy thereof, certified, if appropriate, by the relevant
recording office, but in no event shall any such delivery of the original
Mortgage and each such interim assignment or a copy thereof, certified, if
appropriate, by the relevant recording office, or the original lender's title
policy be made later than one (1) year following the applicable closing date
under each of the Mortgage Loan Purchase Agreements; provided, however, in the
event the Originator is unable to deliver by such dates each Mortgage and each
such interim assignment by reason of the fact that any such documents have not
been returned by the appropriate recording office, or, in the case of each such
interim assignment, because the related Mortgage has not been returned by the
appropriate recording office, the Seller shall cause the Originator to deliver
such documents to the Trustee as promptly as possible upon receipt thereof and,
in any event, within 540 days following the applicable closing date under each
of the Mortgage Loan Purchase Agreements.
The Seller shall cause the Originator to forward or cause to be forwarded
to the Trustee (a) from time to time additional original documents evidencing
an assumption or modification of a Mortgage Loan and (b) any other documents
required to be delivered by the Seller or the Originator to the Trustee. In the
event that the original Mortgage is not delivered and in connection with the
payment in full of the related Mortgage Loan and the public recording office
requires the presentation of a "lost instruments affidavit and indemnity" or
any equivalent document, because only a copy of the Mortgage can be delivered
with the instrument of satisfaction or reconveyance, the Servicer shall execute
and deliver or cause to be executed and delivered such a document to the public
recording office. In the case where a public recording office retains the
original recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, the Seller shall cause the Originator
to deliver to the Trustee a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
As promptly as practicable subsequent to such transfer and assignment, and
in any event, within one hundred eighty (180) days thereafter, (i) the Trustee
shall affix the Trustee's name to each Assignment, as the assignee thereof,
(ii) the Servicer shall cause such Assignment to be in proper form for
recording in the appropriate public office for real property records and (iii)
the Servicer shall cause to be delivered for recording in the appropriate
public office for real property records such Assignments to the Trustee,
provided that with respect to any Assignment as to which the Servicer has not
received the information required to prepare such Assignment in recordable
form, the Servicer's obligation to do so and to deliver the same for such
recording shall be as soon as practicable after receipt of such information and
in any event within thirty (30) days after receipt thereof and provided,
further, that the Servicer need not cause to be recorded any Assignment which
relates to a Mortgage Loan in any jurisdiction for which the Trustee has
received an Opinion of Counsel satisfactory to the Rating Agencies to the
effect that under the laws of such jurisdiction the recordation of such
Assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan.
If any assignment is lost or returned unrecorded to the Trustee or
Custodian because of any defect therein, the Originator is required, as
described in each of the Mortgage Loan Purchase Agreements, to prepare a
substitute assignment or cure such defect, as the case may be, and the Seller
shall instruct the Originator to cause such assignment to be recorded in
accordance with this Section.
All original documents relating to the Mortgage Loans which are not
delivered to the Trustee or Custodian are and shall be held by the Servicer in
trust for the benefit of the Trustee on behalf of the Certificateholders.
Except as may otherwise expressly be provided herein, none of the Seller,
the Servicer or the Trustee shall assign, sell, dispose of or transfer any
interest in the Trust Fund or any portion thereof, or permit the Trust Fund or
any portion thereof to be subject to any lien, claim, mortgage, security
interest, pledge or other encumbrance of, any other Person.
It is intended that the conveyance of the Mortgage Loans by the Seller to
the Trustee as provided in this Section be, and be construed as, a sale of the
Mortgage Loans as provided for in this Section by the Seller to the Trustee for
the benefit of the Certificateholders. It is, further, not intended that such
conveyance be deemed a pledge of the Mortgage Loans by the Seller to the
Trustee to secure a debt or other obligation of the Seller. However, in the
event that the Mortgage Loans are held to be property of the Seller, or if for
any reason this Agreement is held or deemed to create a security interest in
the Mortgage Loans, then it is intended that, (i) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction; (ii) the conveyance provided for in this Section shall
be deemed to be (1) a grant by the Seller to the Trustee of a security interest
in all of the Seller's right (including the power to convey title thereto),
title and interest, whether now owned or hereafter acquired, in and to (A) the
Mortgage Loans, including the Mortgage Notes, the Mortgages, any related
Insurance Policies and all other documents in the related Mortgage Files, (B)
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof, and (C) all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts from time to time held or
invested in the Certificate Account or the Custodial Account, whether in the
form of cash, instruments, securities or other property and (2) an assignment
by the Seller to the Trustee of any security interest in any and all of the
Seller's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to the property
described in the foregoing clauses (1)(A) through (C); (iii) the possession by
the Trustee or its agent of Mortgage Notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" or possession by a purchaser or
a person designated by such secured party, for purposes of perfecting the
security interest pursuant to the New York Uniform Commercial Code and the
Uniform Commercial Code of any other applicable jurisdiction (including,
without limitation, Sections 9-115, 9-305, 8-102, 8-301, 8-501 and 8-503
thereof); and (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Trustee for the purpose of perfecting such security interest under applicable
law. The Seller and, at the Seller's direction, the Trustee shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of this Agreement.
Section 2.02. Acceptance of the Trust Fund by the Trustee.
-------------------------------------------
The Trustee acknowledges receipt (subject to any exceptions noted in the
Initial Certification described below), of the documents referred to in Section
2.01 and all other assets included in the definition of "Trust Fund" and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will hold
such other assets included in the definition of "Trust Fund" (to the extent
delivered or assigned to the Trustee), in trust for the exclusive use and
benefit of all present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders, to review
each Mortgage File on or before the Closing Date to verify that such Mortgage
File includes a Mortgage Note and to execute and deliver, or cause to be
executed and delivered, to the Seller and the Servicer an initial certification
substantially in the form annexed hereto as Exhibit M. In conducting such
review, the Trustee will ascertain whether all required documents have been
executed and received, and whether those documents relate, determined on the
basis of the Mortgagor name, original principal balance and loan number, to the
Mortgage loans it has received. The Trustee shall not be under any duty or
obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable or appropriate for the represented purpose or that they have
actually been recorded, or they are in recordable form or that they are other
than what they purport to be on their face.
Within 180 days of the Closing Date the Trustee will review, for the
benefit of the Certificateholders, the Mortgage Files delivered to it and will
execute and deliver to the Seller and the Servicer a final certification
substantially in the form annexed hereto as Exhibit N. In conducting such
review, the Trustee will ascertain whether an original of each document
required to be recorded has been returned from the recording office with
evidence of recording thereon or a certified copy has been obtained from the
recording office.
If, in the process of reviewing the Mortgage Files and preparing the
certifications referred to above, the Trustee finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, the Trustee shall promptly notify the Originator, the
Servicer and the Seller. The Trustee shall promptly notify the Servicer and the
Originator of such defect and request that the Originator cure any such defect
within 90 days from the date on which the Originator was notified of such
defect, and if the Originator does not cure such defect in all material
respects during such period, the Trustee shall request on behalf of the
Certificateholders that the Originator either (i) substitute for such Mortgage
Loan a Qualified Substitute Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.04, or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price within 90 days after the date on which the Originator was notified of
such defect; provided that if such defect would cause the Mortgage Loan to be
other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code,
any such cure, substitution or repurchase must occur within 90 days from the
date such breach was discovered. It is understood and agreed that the
obligation of the Originator to cure a material defect in, or substitute for,
or purchase any Mortgage Loan as to which a material defect in a constituent
document exists shall constitute the sole remedy respecting such defect
available to Certificateholders or the Trustee on behalf of Certificateholders.
The Purchase Price for the purchased Mortgage Loan shall be deposited or caused
to be deposited upon receipt by the Servicer in the Custodial Account and, upon
receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee shall release or cause to be released to the
Originator the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Originator shall require as necessary to vest in the Originator ownership of
any Mortgage Loan released pursuant hereto and at such time the Trustee shall
have no further responsibility with respect to the related Mortgage File.
Section 2.03. Representations, Warranties and Covenants of the Servicer.
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The Servicer hereby represents and warrants to and covenants with the
Seller and the Trustee for the benefit of Certificateholders that:
(i) The Servicer is a validly existing corporation in good standing
under the laws of the state of its organization and is qualified to
transact business in, is in good standing under the laws of, and possesses
all licenses necessary for the conduct of its business in, each state in
which any Mortgaged Property is located or is otherwise exempt or not
required under applicable law to effect such qualification or license and
no demand for such qualification or license has been made upon the
Servicer by any such state, and in any event the Servicer is in compliance
with the laws of each such State to the extent necessary to ensure the
enforceability of each Mortgage Loan and the servicing of the Mortgage
Loans in accordance with the terms of this Agreement;
(ii) The Servicer has full power and authority to execute, deliver
and perform, and to enter into and consummate all transactions
contemplated by this Agreement and to conduct its business as presently
conducted, has duly authorized the execution, delivery and performance of
this Agreement, has duly executed and delivered this Agreement, and this
Agreement constitutes a legal, valid and binding obligation of the
Servicer, enforceable against it in accordance with its terms 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;
(iii) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated thereby and hereby, or the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with any of the terms, conditions or provisions of
the Servicer's articles of incorporation or by-laws or materially conflict
with or result in a material breach of any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to
which the Servicer 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 material violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject;
(iv) There is no litigation pending or threatened with respect to the
Servicer which, in the Servicer's reasonable opinion, is reasonably likely
to have a material adverse effect on the execution, delivery or
enforceability of this Agreement;
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this
Agreement or the consummation of the transactions contemplated by this
Agreement except for consents, approvals, authorizations and orders which
have been obtained;
(vi) [Reserved];
(vii) The collection and servicing practices used by the Servicer,
with respect to each Mortgage Note and Mortgage have been in all material
respects legal in the mortgage servicing business. With respect to escrow
deposits and payments that the Servicer collects, all such payments are in
the possession of, or under the control of, the Servicer, and there exist
no deficiencies in connection therewith for which customary arrangements
for repayment thereof have not been made. No escrow deposits or other
charges or payments due under the Mortgage Note have been capitalized
under any Mortgage or the related Mortgage Note;
(viii) The Servicer is an approved seller/servicer of residential
mortgage loans for Fannie Mae and Freddie Mac. The Servicer is in good
standing to service mortgage loans for Fannie Mae and Freddie Mac and no
event has occurred which would make the Servicer unable to comply with
eligibility requirements or which would require notification to either
Fannie Mae or Freddie Mac;
(ix) No statement, report or Officer's Certificate furnished in
writing by the Servicer pursuant to the Agreement contains any statement
that is inaccurate or misleading in any material respect or omits to state
a material fact required to be stated therein or necessary to make the
information and statements therein not misleading; and
(x) No fraud or misrepresentation of a material fact with respect to
the servicing of a Mortgage Loan has taken place on the part of the
Servicer.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.03 shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Seller, the
Trustee and the Certificateholders. Upon discovery by the Seller, the Trustee
or the Servicer of a breach of any of the foregoing representations, warranties
and covenants that materially and adversely affects the interests of the Seller
or the Trustee, the party discovering such breach shall give prompt written
notice to the other parties.
Section 2.04. Representations and Warranties of the Originator and Seller.
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The Seller hereby assigns to the Trustee for the benefit of
Certificateholders its interest in respect of the representations and
warranties made by the Originator in each of the Mortgage Loan Purchase
Agreements or the exhibits thereto, and the rights of the Seller to any
remedies provided thereunder for any breach of such representations and
warranties. Insofar as each of the Mortgage Loan Purchase Agreements relates to
such representations and warranties and such remedies, such right, title and
interest may be enforced by the Trustee on behalf of the Certificateholders.
Upon the discovery by the Originator, the Servicer or the Trustee of a breach
of any of the representations and warranties made in each of the Mortgage Loan
Purchase Agreements in respect of any Mortgage Loan which materially and
adversely affects the interests of the Certificateholders in such Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties. The Trustee or the Servicer, as the case may be, shall promptly
notify the Originator of such breach and request that the Originator shall,
within 60 days from the date that the Originator was notified or otherwise
obtained knowledge of such breach, cure such breach in all material respects;
if such breach cannot be cured within such 60 day period, the Originator shall,
within 90 days from the date the Originator was notified or otherwise obtained
knowledge of such breach, purchase such Mortgage Loan from the Trust Fund at
the Purchase Price and in the manner set forth in Section 2.02; provided that
if such breach would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such cure or
repurchase must occur within 90 days from the date such breach was discovered;
and provided further, that in the event that a breach of any of the
representations and warranties made with respect to the Mortgage Loans in
either of the Mortgage Loan Purchase Agreements occurs which materially and
adversely affects the value of the Mortgage Loans after the date that Bear
Stearns Mortgage Capital Corporation acquired the Mortgage Loans and on or
prior to the date the Mortgage Loans are assigned to the Trustee, the Seller
shall cause Bear Stearns Mortgage Capital Corporation to cure any such breach,
or to repurchase the affected Mortgage Loan at the Purchase Price. However, in
the case of a breach under each of the Mortgage Loan Purchase Agreements,
subject to the approval of the Seller, the Originator shall have the option to
substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan
if such substitution occurs within two (2) years following the Closing Date,
except that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such
substitution must occur within 90 days from the date the breach was discovered
if such 90 day period expires before two (2) years following the Closing Date.
In the event that the Originator elects to substitute a Qualified Substitute
Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this Section,
the Originator shall deliver to the Trustee, for the benefit of the parties
hereto and the Certificateholders with respect to such Qualified Substitute
Mortgage Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment
in recordable form, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed as required by Section 2.01. No
substitution will be made in any calendar month after the Determination Date
for such month. Scheduled Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall not be part of the
Trust Fund and will be retained by the Servicer and remitted by the Servicer to
the Originator on the next succeeding Distribution Date. For the month of
substitution, distributions to Certificateholders will include the Scheduled
Monthly Payment due on a Deleted Mortgage Loan for such month and thereafter
the Originator shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan. The Servicer shall amend or cause to be amended the
Mortgage Loan Schedule for the benefit of the Certificateholders to reflect the
removal of such Deleted Mortgage Loan and the substitution of the Qualified
Substitute Mortgage Loan or Loans and the Servicer shall deliver the amended
Mortgage Loan Schedule to the Trustee. Upon such substitution, the Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, the Originator shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute
Mortgage Loan contained in each Mortgage Loan Purchase Agreement as of the date
of substitution, and the Seller shall be deemed to have made with respect to
any Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in this Section.
In connection with the substitution of one or more Qualified Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Qualified Substitute Mortgage Loans as of the date of substitution is less
than the aggregate Stated Principal Balance of all such Deleted Mortgage Loans
(in each case after application of the principal portion of the Scheduled
Monthly Payments due in the month of substitution that are to be distributed to
Certificateholders in the month of substitution). The Seller shall cause the
Originator to provide the Servicer on the day of substitution for immediate
deposit into the Custodial Account the amount of such shortfall, without any
reimbursement therefor. The Seller shall cause the Originator to give notice in
writing to the Trustee of such event, which notice shall be accompanied by an
Officer's Certificate as to the calculation of such shortfall and by an Opinion
of Counsel to the effect that such substitution will not cause (a) any federal
tax to be imposed on any REMIC, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code or
(b) any portion of any REMIC to fail to qualify as a REMIC at any time that any
Certificate is outstanding. The costs of any substitution as described above,
including any related assignments, opinions or other documentation in
connection therewith shall be borne by the Originator.
Except as expressly set forth herein, the Trustee is under no obligation
to discover any breach of the above mentioned representations and warranties.
It is understood and agreed that the obligation of the Originator to cure such
breach, purchase or to substitute for such Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to Certificateholders or the Trustee on behalf
of Certificateholders.
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust
Fund.
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The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery of the Mortgage Files to it, subject to any exceptions noted
pursuant to Section 2.02, together with the assignment to it of all other
assets included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Seller, executed by an officer of the Seller, has
executed and caused to be authenticated and delivered to, or upon the order of,
the Seller the Certificates in authorized denominations which evidence
ownership of the Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01. Servicer to Service Mortgage Loans.
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For and on behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with the terms of this
Agreement and shall follow such practices and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general mortgage
servicing activities. In connection with such servicing and administration, the
Servicer shall have full power and authority, acting alone and/or through
subservicers as provided in Section 3.02 hereof, to do or cause to be done any
and all things that it may deem necessary or desirable in connection with such
servicing and administration, including but not limited to, the power and
authority, subject to the terms hereof (i) to execute and deliver, on behalf of
the Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Servicer shall not take any action that is
inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or the rights and interests of the
Seller, the Trustee and the Certificateholders under this Agreement. The
Servicer shall represent and protect the interests of the Trust Fund in the
same manner as it protects its own interests in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan, and
shall not make or permit any modification, waiver or amendment of any Mortgage
Loan which would cause any REMIC to fail to qualify as a REMIC or result in the
imposition of any tax under Section 860F(a) or Section 860G(d) of the Code.
Without limiting the generality of the foregoing, the Servicer, in its own name
or in the name of the Seller and the Trustee, is hereby authorized and
empowered by the Seller and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of
the Trustee, the Seller, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Servicer shall prepare and deliver to the Seller and/or
the Trustee such documents requiring execution and delivery by either or both
of them as are necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans to the extent that the Servicer is not permitted
to execute and deliver such documents pursuant to the preceding sentence. Upon
receipt of such documents, the Seller and/or the Trustee shall execute such
documents and deliver them to the Servicer.
In accordance with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the payment of taxes and assessments on the related Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the related Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.06. The costs incurred by the Servicer, if
any, in effecting the timely payments of taxes and assessments on related
Mortgaged Properties and related insurance premiums shall not, for the purpose
of calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balances of the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
Section 3.02. Subservicing; Enforcement of the Obligations of
Subservicers.
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(a) The Servicer may arrange for the subservicing of any Mortgage Loan by
a subservicer pursuant to a subservicing agreement; provided, however, that
such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder. Unless the
context otherwise requires, references in this Agreement to actions taken or to
be taken by the Servicer in servicing the Mortgage Loans include actions taken
or to be taken by a subservicer on behalf of the Servicer. Notwithstanding the
provisions of any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
subservicer or reference to actions taken through a subservicer or otherwise,
the Servicer shall remain obligated and liable to the Seller, the Trustee and
the Certificateholders for the servicing and administration of the Mortgage
Loans in accordance with the provisions of this Agreement without diminution of
such obligation or liability by virtue of such subservicing agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. All actions of each
subservicer performed pursuant to the related subservicing agreement shall be
performed as an agent of the Servicer with the same force and effect as if
performed directly by the Servicer.
(b) For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Mortgage
Loans that are received by a related subservicer regardless of whether such
payments are remitted by the subservicer to the Servicer.
Section 3.03. Collection of Certain Mortgage Loan Payments.
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The Servicer shall follow such practices and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general mortgage
servicing activities to collect all payments called for under the terms and
provisions of the related Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Insurance Policy. Consistent with the foregoing, the Servicer may in its
discretion (i) waive any late payment charge or any prepayment charge or
penalty interest in connection with the prepayment of a related Mortgage Loan
and (ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 180 days; provided, however, that the Servicer cannot extend
the maturity of any such Mortgage Loan past the date on which the final payment
is due on the latest maturing Mortgage Loan as of the Cut-off Date. In the
event of any such arrangement, the Servicer shall make Monthly Advances on the
related Mortgage Loan in accordance with the provisions of Section 4.03 during
the scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements. The
Servicer shall not be required to institute or join in litigation with respect
to collection of any payment (whether under a Mortgage, Mortgage Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the provision
of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law.
Section 3.04. Establishment of Custodial Accounts.
-----------------------------------
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts
held in trust, entitled "GMAC Mortgage Corporation Custodial Account in trust
for the benefit of the Holders of SAMI 1999-J1." Each Custodial Account shall
be an Eligible Account. The Custodial Account shall be maintained as a
segregated account, separate and apart from trust funds created for mortgage
pass-through certificates of other series, and the other accounts of the
Servicer.
Section 3.05. Deposits in the Custodial Account.
---------------------------------
Within two Business Days of receipt, except as otherwise specifically
provided herein, the Servicer shall deposit or cause to be deposited the
following payments and collections remitted by subservicers or received by it
in respect of the Mortgage Loans subsequent to the Cut-off Date (other than in
respect of principal and interest due on such Mortgage Loans on or before the
Cut-off Date) and the following amounts required to be deposited hereunder:
(i) all payments on account of principal on the related Mortgage
Loans, including Principal Prepayments;
(ii) all payments on account of interest on the related Mortgage
Loans, net of the related Servicing Fee;
(iii) all Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds and REO Disposition Proceeds, other than proceeds to be applied
to the restoration or repair of the related Mortgaged Property or released
to the Mortgagor in accordance with each Servicer's normal servicing
procedures;
(iv) any amount required to be deposited by such Servicer pursuant to
Section 3.07 in connection with any losses on Permitted Investments;
(v) any amounts required to be deposited by such Servicer pursuant to
Section 3.10(b), 3.10(d), and in respect of net monthly rental income from
REO Property pursuant to Section 3.12 hereof;
(vi) [Reserved];
(vii) with respect to each Full Principal Prepayment or Partial
Principal Prepayment received after the Cut-off Date, any Prepayment
Interest Shortfalls, if applicable (but not in excess of the Servicer's
aggregate Servicing Fee received with respect to the related Due Period);
(viii) all Monthly Advances made by such Servicer pursuant to Section
4.03; and
(ix) any other amounts required to be deposited hereunder.
In addition, with respect to any Mortgage Loan that is subject to a
buydown agreement, on each Due Date for such Mortgage Loan, in addition to the
monthly payment remitted by the Mortgagor, the Servicer shall cause funds to be
deposited into the Custodial Account in an amount required to cause an amount
of interest to be paid with respect to such Mortgage Loan equal to the amount
of interest that has accrued on such Mortgage Loan from the preceding Due Date
at the Mortgage Rate net of the related Servicing Fee on such date.
The foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment penalties, late payment
charges or assumption fees, if collected, need not be remitted by the Servicer.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time withdraw or direct the institution maintaining the
Custodial Account to withdraw such amount from the Custodial Account, any
provision herein to the contrary notwithstanding. Such withdrawal or direction
may be accomplished by delivering written notice thereof to the Trustee or such
other institution maintaining such Custodial Account which describes the
amounts deposited in error in such Custodial Account. The Servicer shall
maintain adequate records with respect to all deposits made pursuant to this
Section. All funds deposited in the Custodial Account shall be held in trust
for the Certificateholders until withdrawn in accordance with Section 3.06.
Section 3.06. Permitted Withdrawals From the Custodial Account.
------------------------------------------------
The Servicer may from time to time make withdrawals from the Custodial
Account for the following purposes:
(i) to pay to itself (to the extent not previously retained by it)
the servicing compensation to which it is entitled pursuant to Section
3.15, and to pay to itself, as additional servicing compensation, (A)
earnings on or investment income with respect to funds in or credited to
the Custodial Account and (B) any Excess Liquidation Proceeds;
(ii) to reimburse itself for unreimbursed Monthly Advances made by
it, such right of reimbursement pursuant to this subclause (ii) being
limited to amounts received on the related Mortgage Loan(s) in respect of
which any such Monthly Advance was made;
(iii) to reimburse itself for any Nonrecoverable Advance previously
made by it;
(iv) to reimburse itself for (a) unreimbursed Servicing Advances,
such right to reimbursement pursuant to this clause (a) with respect to
any Mortgage Loan being limited to amounts received on such Mortgage
Loan(s) which represent late recoveries of the payments for which such
advances were made pursuant to Section 3.01 or Section 3.09 and (b) for
unpaid Servicing Fees as provided in Section 3.12 hereof;
(v) to pay to the purchaser, with respect to each related Mortgage
Loan or property acquired in respect thereof that has been purchased
pursuant to Section 2.02, 2.04 or 3.12, all amounts received thereon after
the date of such purchase;
(vi) to reimburse itself or the Seller for expenses incurred by any
of them and reimbursable pursuant to Section 6.03 hereof;
(vii) to withdraw any amount deposited in such Custodial Account and
not required to be deposited therein;
(viii) on or prior to the Remittance Date, to withdraw an amount
equal to the portion of the related Available Distribution Amount on
deposit therein and the Trustee Fee with respect to the Mortgage Loans for
such Distribution Date and remit such amount to the Trustee for deposit in
the Certificate Account; and
(ix) to clear and terminate such Custodial Account upon termination
of this Agreement pursuant to Section 9.01 hereof.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the related Custodial Account pursuant to such subclauses (i), (ii), (iv) and
(v). Prior to making any withdrawal from a Custodial Account pursuant to
subclause (iii), the Servicer shall deliver to the Trustee an Officer's
Certificate of a Servicing Officer indicating the amount of any previous
Monthly Advance determined by the Servicer to be a Nonrecoverable Advance and
identifying the related Mortgage Loans(s), and their respective portions of
such Nonrecoverable Advance.
Section 3.07. Investment of Funds in the Custodial Account.
--------------------------------------------
Each institution at which a Custodial Account is maintained shall invest
the funds therein as directed in writing by the Servicer in Permitted
Investments, which shall mature not later than the second Business Day next
preceding the related Remittance Date (except that if such Permitted Investment
is an obligation of the institution that maintains such account, then such
Permitted Investment shall mature not later than the Business Day next
preceding such Remittance Date) and shall not be sold or disposed of prior to
its maturity. All such Permitted Investments shall be made in the name of the
Trustee, for the benefit of the Certificateholders. All income and gain net of
any losses realized from any such investment of funds on deposit in a Custodial
Account shall be for the benefit of the Servicer as servicing compensation and
shall be remitted to such entity monthly as provided herein. The amount of any
realized losses in a Custodial Account incurred in respect of any such
investments shall promptly be deposited by the Servicer in the such Custodial
Account. The Trustee in its fiduciary capacity shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in a Custodial Account and made in accordance with this section.
Section 3.08. Transfer of Accounts.
--------------------
The Servicer may transfer the Custodial Account(s) or Escrow Account(s) to
a different depository institution from time to time so long as each new
account is an Eligible Account. The Servicer shall notify the Trustee of any
such transfer within fifteen (15) Business Days of transfer.
Section 3.09. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
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(a) To the extent required by the related Mortgage Note and not violative
of current law, the Servicer shall establish and maintain one or more accounts
held in trust, entitled "GMAC Mortgage Corporation Escrow Account in trust for
the benefit of the Holders of SAMI 1999-J1" (each, an "Escrow Account") and
deposit and retain therein all collections from the related Mortgagors (or
advances by the Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the related
Mortgagors. Each Escrow Account shall be an Eligible Account. The Servicer or
applicable subservicer shall be entitled to retain any interest paid on funds
in an Escrow Account by the depository institution other than interest on
escrowed funds required by law or the terms of the related Mortgage or Mortgage
Note to be paid to the Mortgagor. Nothing herein shall require the Servicer to
compel a Mortgagor to establish an Escrow Account in violation of applicable
law.
(b) Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to
reimburse the Servicer out of related collections for any payments made
pursuant to Sections 3.01 hereof (with respect to taxes and assessments and
insurance premiums) and 3.10 hereof (with respect to hazard insurance), to
refund to any Mortgagors any sums determined to be overages, to pay interest to
the Servicer, or to the Mortgagors to the extent required by law or the terms
of the related Mortgage or Mortgage Note, on balances in the Escrow Account or
to clear and terminate the Escrow Account(s) at the termination of this
Agreement in accordance with Section 9.01 hereof. The Escrow Accounts shall not
be a part of the Trust Fund.
(c) The Servicer shall advance any payments referred to in Section 3.09(a)
that are not timely paid by the Mortgagors on the date when the tax, premium or
other cost for which such payment is intended is due, but the Servicer shall be
required so to advance only to the extent that such advances, in the good faith
judgment of the Servicer, will be recoverable by the Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.
Section 3.10. Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies.
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(a) The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount which is equal to the lesser of
(i) the maximum insurable value of the improvements securing such Mortgage Loan
or (ii) the greater of (a) the outstanding principal balance of the Mortgage
Loan, and (b) the percentage such that the proceeds thereof shall be sufficient
to prevent the Mortgagor and/or the Mortgagee from becoming a co-insurer. If
the Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as being a special flood hazard area that
has federally-mandated flood insurance requirements, the Servicer will cause to
be maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least
of (i) the outstanding principal balance of the Mortgage Loan, (ii) the maximum
insurable value of the improvements securing such Mortgage Loan or (iii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. The Servicer shall also maintain on the REO
Property, fire and hazard insurance with extended coverage in an amount which
is at least equal to the maximum insurable value of the improvements which are
a part of such property, liability insurance and, to the extent required and
available under the Flood Disaster Protection Act of 1973, as amended, flood
insurance in an amount as provided above. Any amounts collected by the Servicer
under any such policies other than amounts to be deposited in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property or
REO Property, or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures, shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Section 3.05. It is understood and agreed
that no other additional insurance need be required by the Servicer or the
Mortgagor or maintained on property acquired in respect of the Mortgage Loans,
other than pursuant to the Fannie Mae Guide or such applicable state or federal
laws and regulations as shall at any time be in force and as shall require such
additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and its successors and/or
assigns and shall provide for at least thirty days prior written notice of any
cancellation, reduction in the amount or material change in coverage to the
Servicer. The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent, provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies currently reflect a General Policy Rating in
Best's Key Rating Guide currently acceptable to Fannie Mae and are licensed to
do business in the state wherein the property subject to the policy is located.
(b) In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the related Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section, and there shall have been a
loss that would have been covered by such policy, deposit in the Custodial
Account the amount not otherwise payable under the blanket policy because of
such deductible clause. In connection with its activities as Servicer of the
Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Seller, and the Trustee for the benefit of the Certificateholders, claims under
any such blanket policy.
(c) The Servicer will maintain in full force and effect Primary Insurance
Policies issued by a Qualified Insurer with respect to each Mortgage Loan for
which such coverage is herein required. Such coverage will be maintained until
the ratio of the current outstanding principal balance of the related Mortgage
Loan to the appraised value of the related Mortgaged Property, based on the
most recent appraisal of the Mortgaged Property performed by a qualified
appraiser, such appraisal to be included in the related servicing file, is
reduced to 80.00% or less. The Servicer will not cancel or refuse to renew any
Primary Insurance Policy that is required to be kept in force under this
Agreement unless a replacement Primary Insurance Policy for such canceled or
nonrenewed policy is obtained from and maintained with a Qualified Insurer. The
Servicer shall not take any action which would result in noncoverage under any
applicable Primary Insurance Policy of any loss which, but for the actions of
the Servicer would have been covered thereunder. In connection with any
assumption or substitution agreement entered into or to be entered into
pursuant to Section 3.11, the Servicer shall promptly notify the insurer under
the related Primary Insurance Policy, if any, of such assumption or
substitution of liability in accordance with the terms of such policy and shall
take all actions which may be required by such insurer as a condition to the
continuation of coverage under the Primary Insurance Policy. If such Primary
Insurance Policy is terminated as a result of such assumption or substitution
of liability, the Servicer shall obtain a replacement Primary Insurance Policy
as provided above.
The Servicer agrees to effect the timely payment of the premiums on each
Primary Insurance Policy, and such costs not otherwise recoverable shall be
recoverable by the Servicer from the related Liquidation Proceeds.
(d) In connection with its activities as the Servicer of the Mortgage
Loans, the Servicer agrees to present on behalf of itself, the Trustee and
Certificateholders, claims to the insurer under any Primary Insurance Policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any Primary Insurance Policies respecting related
defaulted Mortgage Loans. Any amounts collected by the Servicer under any
Primary Insurance Policies shall be deposited in the Custodial Account.
Section 3.11. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
---------------------------------------------------------
(a) Except as otherwise provided in this Section, when any property
subject to a Mortgage has been conveyed by the Mortgagor, the Servicer shall to
the extent that it has knowledge of such conveyance, enforce any due-on-sale
clause contained in the related Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any required Primary Insurance Policy. Notwithstanding the foregoing, the
Servicer is not required to exercise such rights with respect to a Mortgage
Loan if the Person to whom the related Mortgaged Property has been conveyed or
is proposed to be conveyed satisfies the terms and conditions contained in the
Mortgage Note and Mortgage related thereto and the consent of the mortgagee
under such Mortgage Note or Mortgage is not otherwise so required under such
Mortgage Note or Mortgage as a condition to such transfer. In the event that
the Servicer is prohibited by law from enforcing any such due-on-sale clause,
or if coverage under any required Insurance Policy would be adversely affected,
or if nonenforcement is otherwise permitted hereunder, the Servicer is
authorized, subject to Section 3.11(b), to take or enter into an assumption and
modification agreement from or with the person to whom such property has been
or is about to be conveyed, pursuant to which such person becomes liable under
the Mortgage Note and, unless prohibited by applicable state law, the Mortgagor
remains liable thereon, provided that the Mortgage Loan shall continue to be
covered (if so covered before the Servicer enters such agreement) by the
applicable required Insurance Policies. The Servicer, subject to Section
3.11(b), is also authorized with the prior approval of the insurers under any
required Insurance Policies to enter into a substitution of liability agreement
with such Person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as Mortgagor and becomes liable under
the Mortgage Note. Notwithstanding the foregoing, the Servicer shall not be
deemed to be in default under this Section by reason of any transfer or
assumption which the Servicer reasonably believes it is restricted by law from
preventing, for any reason whatsoever.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a) hereof, in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage that requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Servicer shall
prepare and deliver or cause to be prepared and delivered to the Trustee for
signature and shall direct, in writing, the Trustee to execute the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
may be changed. In addition, the substitute Mortgagor and the Mortgaged
Property must be acceptable to the Servicer in accordance with its underwriting
standards as then in effect. Together with each such substitution, assumption
or other agreement or instrument delivered to the Trustee for execution by it,
the Servicer shall deliver an Officer's Certificate signed by a Servicing
Officer stating that the requirements of this subsection have been met in
connection therewith. The Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the
case of the original shall be added to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. Any fee
collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation.
Section 3.12. Realization Upon Defaulted Mortgage Loans.
-----------------------------------------
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee for the benefit of the Certificateholders, or
its nominee, on behalf of the Certificateholders. The Trustee's name shall be
placed on the title to such REO Property solely as the Trustee hereunder and
not in its individual capacity. The Servicer shall ensure that the title to
such REO Property references this Agreement and the Trustee's capacity
thereunder.
The Servicer shall use reasonable efforts to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the related
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and meet
the requirements of the insurer under any required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan after reimbursement
to itself of such expenses and (ii) that such expenses will be recoverable to
it through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account). The Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the liquidation proceeds with respect to the related Mortgaged
Property, as provided in the definition of Liquidation Proceeds. If the
Servicer has knowledge that a Mortgaged Property which the Servicer is
contemplating acquiring in foreclosure or by deed in lieu of foreclosure is
located within a one (1) mile radius of any site listed in the Expenditure Plan
for the Hazardous Substance Clean Up Bond Act of 1984 or other site with
environmental or hazardous waste risks known to the Servicer, the Servicer
will, prior to acquiring the Mortgaged Property, consider such risks and only
take action in accordance with its established environmental review procedures.
The Servicer shall, either itself or through an agent selected by the
Servicer, and in accordance with the Fannie Mae guidelines, manage, conserve,
protect and operate each 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. Each disposition of REO Property shall be carried out by
the Servicer at such price and upon such terms and conditions as the Servicer
deems to be in the best interest of the Certificateholders. Each Disposition of
REO Property shall be carried out by the Servicer at such price and upon such
terms and conditions as the Servicer deems to be in the best interest of the
Owner. The proceeds from the 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 Servicer shall reimburse itself for
any related Servicing Advances, or Monthly Advances made pursuant to Section
4.03. The Servicer shall cause each REO Property to be inspected promptly upon
the acquisition of title thereto and shall cause each REO Property to be
inspected at least monthly thereafter or more frequently as may be required by
the circumstances. The Servicer shall make or cause the inspector to make a
written report of each such inspection.
The Servicer shall prepare for and deliver to the Trustee a statement with
respect to each related REO Property that has been rented showing the aggregate
rental income received and all expenses incurred in connection with the
management and maintenance of such REO Property at such times as is necessary
to enable the Trustee to comply with the reporting requirements of the REMIC
Provisions. The net monthly rental income, if any, from such REO Property shall
be deposited in the Custodial Account no later than the close of business on
each Determination Date. The Servicer shall perform the tax reporting and
withholding required by Sections 1445 and 6050J of the Code with respect to
foreclosures and abandonments, the tax reporting required by Section 6050H of
the Code with respect to the receipt of mortgage interest from individuals and
any tax reporting required by Section 6050P of the Code with respect to the
cancellation of indebtedness by certain financial entities, by preparing such
tax and information returns as may be required, in the form required, and
delivering the same to the Trustee for filing.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
three (3) years after its acquisition by the Trust Fund unless the Trustee
shall have been supplied with an Opinion of Counsel to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of any REMIC hereunder as defined in section 860F of the Code or
cause any REMIC hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of
the Trust Fund in such a manner or pursuant to any terms that would (i) cause
such Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject any REMIC hereunder
to the imposition of any federal, state or local income taxes on the income
earned from such Mortgaged Property under Section 860G(c) of the Code or
otherwise, unless the Servicer has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
In the event of default on a Mortgage Loan one or more obligors of which
are not United States Persons, as that term is defined in Section 7701(a)(30)
of the Code, in connection with any foreclosure or acquisition of a deed in
lieu of foreclosure (together, "foreclosure") in respect of such Mortgage Loan,
the Servicer will cause compliance with the provisions of Treasury Regulation
Section 1.1445-2(d)(3) (or any successor thereto) necessary to assure that no
withholding tax obligation arises with respect to the proceeds of such
foreclosure except to the extent, if any, that proceeds of such foreclosure are
required to be remitted to the obligors on such Mortgage Loan.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any REO Properties, net of
reimbursement to the Servicer for expenses incurred (including any property or
other taxes) in connection with such management and net of applicable
unreimbursed Servicing Fees, Monthly Advances and Servicing Advances, shall be
applied to the payment of principal of and interest on the related defaulted
Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in this
Agreement, to be payments on account of principal and interest on the related
Mortgage Notes and shall be deposited into the Custodial Account. To the extent
the net income received during any calendar month is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
shall be considered to be a Partial Principal Prepayment of the related
Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Servicer for any related unreimbursed
Servicing Advances and Servicing Fees; second, to reimburse the Servicer for
any unreimbursed Monthly Advances; third, to reimburse the Custodial Account
for any Nonrecoverable Advances (or portions thereof) that were previously
withdrawn by the Servicer pursuant to Section 3.06(iii) that related to such
Mortgage Loan; fourth, to accrued and unpaid interest (to the extent no Monthly
Advance has been made for such amount or any such Monthly Advance has been
reimbursed) on the Mortgage Loan or related REO Property, at the Net Mortgage
Rate to the Due Date occurring in the month in which such amounts are required
to be distributed; and fifth, as a recovery of principal of the Mortgage Loan.
Section 3.13. Trustee to Cooperate; Release of Mortgage Files.
-----------------------------------------------
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
by a certification (which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Custodial Account pursuant to Section
3.09 have been or will be so deposited) of a Servicing Officer and shall
request delivery to it of the Mortgage File in the form of the Request for
Release attached hereto as Exhibit N, which shall be signed by an Authorized
Officer, or in a mutually agreeable electronic format which will, in lieu of a
signature on its face, originate from an Authorized Officer.
From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any Insurance
Policy relating to the Mortgage Loan, the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a Request for Release in the form
attached hereto as Exhibit N, which shall be signed by an Authorized Officer,
or in a mutually agreeable electronic format which will, in lieu of a signature
on its face, originate from an Authorized Officer, release the related Mortgage
File to the Servicer, and the Trustee shall execute such documents as the
Servicer shall prepare and request as being necessary to the prosecution of any
such proceedings.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
by delivering, or causing to be delivered a "Request for Release" substantially
in the form of Exhibit N. Upon receipt of such request, the Trustee shall
promptly release the related Mortgage File to the Servicer, and the Trustee
shall at the Servicer's direction execute and deliver to the Servicer the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage in each case
provided by the Servicer, together with the Mortgage Note with written evidence
of cancellation thereon. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the related
Mortgagor. From time to time and as shall be appropriate for the servicing or
foreclosure of any Mortgage Loan, including for such purpose, collection under
any policy of flood insurance, any fidelity bond or errors or omissions policy,
or for the purposes of effecting a partial release of any Mortgaged Property
from the lien of the Mortgage or the making of any corrections to the Mortgage
Note or the Mortgage or any of the other documents included in the Mortgage
File, the Trustee shall, upon delivery to the Trustee of a Request for Release
in the form of Exhibit N signed by a Servicing Officer, release the Mortgage
File to the Servicer. Subject to the further limitations set forth below, the
Servicer shall cause the Mortgage File or documents so released to be returned
to the Trustee when the need therefor by the Servicer no longer exists, unless
the Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Custodial Account, in which case the Servicer shall deliver to the Trustee a
Request for Release in the form of Exhibit N, signed by a Servicing Officer.
If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
shall deliver or cause to be delivered to the Trustee, for signature, as
appropriate, any court pleadings, requests for trustee's sale or other
documents necessary to effectuate such foreclosure or any legal action brought
to obtain judgment against the Mortgagor on the Mortgage Note or the Mortgage
or to obtain a deficiency judgment or to enforce any other remedies or rights
provided by the Mortgage Note or the Mortgage or otherwise available at law or
in equity.
Section 3.14. Documents, Records and Funds in Possession of the Servicer
to be Held for the Trustee.
-----------------------------------------------------------
Notwithstanding any other provisions of this Agreement, the Servicer shall
transmit to the Trustee as required by this Agreement all documents and
instruments in respect of a Mortgage Loan coming into the possession of the
Servicer from time to time and shall account fully to the Trustee for any funds
received by the Servicer or which otherwise are collected by the Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any related Mortgage
Loan. All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including but
not limited to, any funds on deposit in the Custodial Account(s), shall be held
by the Servicer for and on behalf of the Trustee and shall be and remain the
sole and exclusive property of the Trustee, subject to the applicable
provisions of this Agreement. The Servicer also agrees that it shall not
create, incur or subject any Mortgage File or any funds that are deposited in
the Custodial Account, Certificate Account or any related Escrow Account, or
any funds that otherwise are or may become due or payable to the Trustee for
the benefit of the Certificateholders, to any claim, lien, security interest,
judgment, levy, writ of attachment or other encumbrance, or assert by legal
action or otherwise any claim or right of setoff against any Mortgage File or
any funds collected on, or in connection with, a Mortgage Loan, except,
however, that the Servicer shall be entitled to set off against and deduct from
any such funds any amounts that are properly due and payable to the Servicer
under this Agreement.
Section 3.15. Servicing Compensation.
----------------------
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Custodial Account an amount equal to
the Servicing Fee for each Mortgage Loan, provided that the aggregate Servicing
Fee with respect to any Distribution Date shall be reduced by an amount equal
to the aggregate of the Prepayment Interest Shortfalls, if any, on the Mortgage
Loans with respect to such Distribution Date (but not below an amount equal to
the aggregate Servicing Fee for such Distribution Date before reduction thereof
in respect of such Prepayment Interest Shortfalls).
Additional servicing compensation in the form of prepayment penalties,
assumption fees, late payment charges, all income and gain net of any losses
realized from Permitted Investments on amounts on deposit in the Custodial
Account and all excess Liquidation Proceeds shall be retained by the Servicer
to the extent not required to be deposited in the Custodial Account pursuant to
Section 3.05 hereof. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
payment of any premiums for hazard insurance and any Primary Insurance Policy
and maintenance of the other forms of insurance coverage required by this
Agreement) and shall not be entitled to reimbursement therefor except as
specifically provided in this Agreement.
Section 3.16. Access to Certain Documentation.
-------------------------------
(a) The Servicer shall afford the Seller and the Trustee reasonable access
to all records and documentation regarding the Mortgage Loans and all accounts,
insurance information and other matters relating to this Agreement, such access
being afforded without charge, but only upon reasonable request and during
normal business hours at the office designated by the Servicer.
(b) Upon reasonable advance notice in writing, the Servicer will provide
to each Certificateholder which is a savings and loan association, bank or
insurance company certain reports and reasonable access to information and
documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing
such reports and access.
(c) The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of Subordinate Certificates and the
examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the related Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall
be afforded only upon reasonable and prior written request, during normal
business hours at the offices designated by the Servicer, and upon the payment
of a mutually agreed upon fee for time and effort. Nothing in this Section
shall limit the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the related Mortgagors and the
failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section.
Section 3.17. Annual Statement as to Compliance.
---------------------------------
The Servicer shall deliver to the Seller and the Trustee on or before 90
days after the end of the Servicer's fiscal year, commencing in its 2000 fiscal
year, an Officer's Certificate stating, as to the signer thereof, that (i) a
review of the activities of the Servicer during the preceding calendar year and
of the performance of the Servicer under this Agreement has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Servicer 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 except for such defaults as such
officer in his or her good faith judgment believes to be immaterial. The
Trustee shall forward a copy of each such statement to each Rating Agency.
Section 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
------------------------------------------------------------
On or before 90 days after the end of the Servicer's fiscal year,
commencing in its 2000 fiscal year, the Servicer at its expense shall cause a
firm of independent public accountants (who may also render other services to
the Servicer, the Seller or any affiliate thereof) which is a member of the
American Institute of Certified Public Accountants to furnish a statement to
the Trustee and the Seller to the effect that such firm has examined certain
documents and records relating to the Servicer's servicing of mortgage loans of
the same type as the Mortgage Loans pursuant to servicing agreements
substantially similar to this Agreement, which agreements may include this
Agreement, and that, on the basis of such an examination, conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Servicer's servicing has
been conducted in compliance with the agreements examined pursuant to this
Section, 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. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided such
statement is delivered by the Servicer to the Trustee.
Section 3.19. Errors and Omissions Insurance; Fidelity Bonds.
----------------------------------------------
The Servicer shall for so long as it acts as a servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as the
Servicer hereunder and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of Fannie Mae or Freddie Mac for
persons performing servicing for mortgage loans purchased by Fannie Mae or
Freddie Mac. In the event that any such policy or bond ceases to be in effect,
the Servicer shall obtain a comparable replacement policy or bond from an
insurer or issuer, meeting the requirements set forth above as of the date of
such replacement.
Section 3.20. [Reserved].
----------
Section 3.21. Additional Obligations of the Seller.
------------------------------------
The Seller agrees that on or prior to the tenth day after the Closing
Date, the Seller shall provide the Trustee and the Servicer with a written
notification, substantially in the form of Exhibit H attached hereto, relating
to each Class of Certificates, setting forth (i) in the case of each Class of
such Certificates, (a) if less than 10% of the aggregate Certificate Principal
Balance of such Class of Certificates has been sold as of such date, the value
calculated pursuant to clause (b)(iii) of Exhibit H hereto, or, (b) if 10% or
more of such Class of Certificates has been sold as of such date but no single
price is paid for at least 10% of the aggregate Certificate Principal Balance
of such Class of Certificates, then the weighted average price at which the
Certificates of such Class were sold and the aggregate percentage of
Certificates of such Class sold, (c) the first single price at which at least
10% of the aggregate Certificate Principal Balance of such class of
Certificates was sold, or (d) if any Certificates of each Class of Certificates
are retained by the Seller or an affiliate corporation, or are delivered to the
Seller, the fair market value of such Certificates as of the Closing Date, (ii)
the Prepayment Assumption used in pricing the Certificates, and (iii) such
other information as to matters of fact as the Trustee or the Servicer may
reasonably request to enable either of them to comply with its reporting
requirements with respect to each Class of such Certificates to the extent such
information can in the good faith judgment of the Seller be determined by it.
Section 3.22. Periodic Filings with the Securities and Exchange
Commission; Additional Information.
---------------------------------------------------------
The Seller shall prepare or cause to be prepared for filing with the
Commission any and all reports, statements and information respecting the Trust
Fund and/or the Certificates required to be filed with the Commission pursuant
to the Securities Exchange Act of 1934, as amended, and shall solicit any and
all proxies of the Certificateholders whenever such proxies are required to be
solicited, pursuant to the Securities Exchange Act of 1934, as amended. Fees
and expenses incurred by the Seller in connection with this Section shall not
be reimbursable from the Trust Fund.
The Servicer and the Trustee each agree promptly to furnish to the Seller,
from time to time upon request, such further information, reports and financial
statements within their respective control related to this Agreement, the
Certificates and the Mortgage Loans as is reasonable to prepare and file all
necessary reports with the Commission.
Section 3.23. Rights of the Seller and the Trustee in Respect of the
Servicer.
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The Seller may, but is not obligated to, enforce the obligations of the
Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Servicer hereunder and in
connection with any such defaulted obligation to exercise the related rights of
the Servicer hereunder; provided that the Servicer shall not be relieved of any
of its obligations hereunder by virtue of such performance by the Seller or its
designee. Neither the Trustee nor the Seller shall have any responsibility or
liability for any action or failure to act by the Servicer nor shall the
Trustee or the Seller be obligated to supervise the performance of the Servicer
or otherwise.
Section 3.24. Trustee to Act as Servicer.
--------------------------
(a) In the event that the Servicer shall for any reason no longer be a
servicer hereunder (including by reason of an Event of Default), the Trustee or
its successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.10 hereof or any acts
or omissions of the Servicer hereunder, (ii) obligated to make Monthly Advances
if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Mortgage Loans hereunder including,
but not limited to, repurchases or substitutions of Mortgage Loans pursuant to
Section 2.02 or 2.04 hereof or (iv) deemed to have made any representations and
warranties of the Servicer hereunder). Any such assumption shall be subject to
Section 7.02 hereof. If the Servicer shall for any reason no longer be a
servicer hereunder (including by reason of any Event of Default), the Trustee
or its successor shall succeed to any rights and obligations of the Servicer
under any subservicing agreement.
(b) The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement or substitute subservicing agreement and the
related Mortgage Loans then being serviced thereunder and an accounting of
amounts collected or held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the substitute subservicing agreement to
the assuming party.
Section 3.25. Certificate Account.
-------------------
The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit in the Certificate Account and retain therein the following:
(i) the aggregate amount remitted by the Servicer to the Trustee
pursuant to Section 3.06(viii);
(ii) any amount deposited by the Trustee pursuant to Section 3.26 in
connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required to be
deposited in the Certificate Account.
In addition, on each Remittance Date, the Servicer shall remit to the
Trustee for deposit in the Certificate Account from its own funds and without
any right of reimbursement therefor, a total amount equal to the Compensating
Interest for the related Distribution Date to the extent not in excess of the
Servicing Fee for such Distribution Date.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time direct the Trustee to withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
Such direction may be accomplished by delivering an Officer's Certificate to
the Trustee which describes the amounts deposited in error in the Certificate
Account. All funds deposited in the Certificate Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with
this Agreement or withdrawn in accordance with Section 3.08. In no event shall
the Trustee incur liability for withdrawals from the Certificate Account at the
direction of the Servicer.
Section 3.26. Permitted Withdrawals from the Certificate Account.
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The Trustee shall withdraw funds from the Certificate Account for
distributions to Certificateholders, in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to withhold pursuant to the last paragraph of Section 10.01(g)).
In addition, the Trustee may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related Distribution
Date;
(ii) to pay to itself as additional compensation earnings on or
investment income with respect to funds in the Certificate Account;
(iii) to withdraw and return to the Servicer any amount deposited in
the Certificate Account and not required to be deposited therein; and
(iv) to clear and terminate the Certificate Account upon termination
of the Agreement pursuant to Section 9.01 hereof.
Section 3.27. Investment of Funds in the Certificate Account.
----------------------------------------------
Each institution at which the Certificate Account is maintained shall
invest the funds therein as directed in writing by the Trustee in Permitted
Investments, which shall mature not later than the Business Day next preceding
the Distribution Date (except that if such Permitted Investment is an
obligation of the institution that maintains such fund or account, then such
Permitted Investment shall mature not later than such Distribution Date) and
shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. All income and gain net of any losses realized from any
such investment of funds on deposit in the Certificate Account shall be for the
benefit of the Trustee as trustee compensation and shall be remitted to such
entity monthly as provided herein. The amount of any realized losses in the
Certificate Account incurred in respect of any such investments shall promptly
be deposited by the Trustee into the Certificate Account.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account; Distributions.
----------------------------------
(a) The Servicer shall cause to be deposited on behalf of the Trustee in
the Certificate Account on or before 1:00 P.M. New York time on each Remittance
Date by wire transfer of immediately available funds an amount, without
duplication, equal to the sum of (i) any Monthly Advance for the immediately
succeeding Distribution Date, (ii) any amount required to be deposited in the
Certificate Account pursuant to Sections 3.06 or 3.25 and (iii) all other
amounts constituting the Available Distribution Amount for the immediately
succeeding Distribution Date.
With respect to any payment received by the Trustee after the Remittance
Date on which such payment was due, the Servicer shall pay to the Trust Fund
interest on any such late payment at an annual rate equal to the prime rate,
adjusted as of the date of each change, plus two 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 Servicer on the
date such late payment is made and shall cover the period commencing with the
day following such Remittance Date 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 related Remittance Date.
The payment by the Servicer of any such interest shall not be deemed an
extension of time for payment or a waiver of any Event of Default by the
Servicer.
(b) On each Distribution Date the Trustee shall distribute to each
Certificateholder of record as of the next preceding Record Date (other than as
provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Trustee at least five
(5) Business Days prior to the related Record Date and such Certificateholder
is the registered owner of Certificates the aggregate Initial Certificate
Principal Balance of which is not less than $2,500,000, or otherwise by check
mailed to such Certificateholder at the address of such Holder appearing in the
Certificate Register, such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the following amounts, in the following order of
priority, in each case to the extent of the remaining Available Distribution
Amount and in accordance with the information provided by the Servicer pursuant
to Section 4.02:
(i) to the Senior Certificateholders (other than the Class PO
Certificateholders), on a pro rata basis based on Accrued Certificate
Interest payable on such Certificates with respect to such Distribution
Date, Accrued Certificate Interest on such Classes of Certificates, for
such Distribution Date, plus any Accrued Certificate Interest thereon
remaining unpaid from any previous Distribution Date (the "Senior Interest
Distribution Amount");
(ii) (X) to the Class PO Certificateholders, the Class PO Principal
Distribution Amount; and
(Y) to the Senior Certificateholders (other than the Class PO
Certificateholders), in the priorities and amounts set forth in
Section 4.01(c) (other than clause fourth thereof) and Section
4.01(d), the sum of the following (applied to reduce the Certificate
Principal Balances of such Senior Certificates, as applicable):
(A) the Senior Percentage for such Distribution Date times the
sum of the following:
(1) the principal portion of each Scheduled Monthly Payment
due during the related Due Period on each Outstanding Mortgage
Loan (other than the related Discount Fraction of the principal
portion of such payment with respect to a Discount Mortgage
Loan), whether or not received on or prior to the related
Determination Date;
(2) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period pursuant to
Section 2.02, 2.04 or 3.11 and the amount of any shortfall
deposited in the Custodial Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to Section 2.04
during the related Prepayment Period (other than the related
Discount Fraction of such Stated Principal Balance or shortfall
with respect to a Discount Mortgage Loan); and
(3) the principal portion of all other unscheduled
collections (other than Full Principal Prepayments and Partial
Principal Prepayments and amounts received in connection with a
Cash Liquidation or REO Disposition of a Mortgage Loan described
in Section 4.01(b)(ii)(Y)(B), including without limitation
Insurance Proceeds, Liquidation Proceeds and REO Proceeds)
received during the related Prepayment Period to the extent
applied by the Servicer as recoveries of principal of the
related Mortgage Loan pursuant to Section 3.12 (other than the
related Discount Fraction of the principal portion of such
unscheduled collections with respect to a Discount Mortgage
Loan);
(B) with respect to each Mortgage Loan for which a Cash
Liquidation or a REO Disposition occurred during the related
Prepayment Period and did not result in any Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
Extraordinary Losses, an amount equal to the lesser of (a) the Senior
Percentage for such Distribution Date times the Stated Principal
Balance of such Mortgage Loan (other than the related Discount
Fraction of such Stated Principal Balance, with respect to a Discount
Mortgage Loan) and (b) the Senior Accelerated Distribution Percentage
for such Distribution Date times the related unscheduled collections
(including without limitation Insurance Proceeds, Liquidation
Proceeds and REO Proceeds) to the extent applied by the Servicer as
recoveries of principal of the related Mortgage Loan pursuant to
Section 3.12 (in each case other than the Discount Fraction of such
unscheduled collections, with respect to a Discount Mortgage Loan);
(C) the Senior Accelerated Distribution Percentage for such
Distribution Date times the aggregate of all Full Principal
Prepayments and Partial Principal Prepayments received in the related
Prepayment Period (other than the related Discount Fraction of such
Full Principal Prepayments and Partial Principal Prepayments with
respect to a Discount Mortgage Loan);
(D) if such Distribution Date is on or prior to the related
Accretion Termination Date, the Accrued Certificate Interest on the
Class A-10, Class A-13 and Class A-14 Certificates that would
otherwise be distributed to such Certificates on such Distribution
Date, to the extent added to the Certificate Principal Balance of
such Certificates on such Distribution Date in accordance with
Section 4.01(f), Section 4.01(g) and Section 4.01(h); and
(E) any amounts described in subsection (ii)(Y), clauses (A),
(B), (C) or (D) of this Section 4.01(b), as determined for any
previous Distribution Date, which remain unpaid after application of
amounts previously distributed pursuant to this clause (E) to the
extent that such amounts are not attributable to Realized Losses
which have been allocated to the Class B Certificates;
(iii) to the Holders of the Class B-1 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, plus any Accrued
Certificate Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(iv) to the Holders of the Class B-1 Certificates, an amount equal to
(x) the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date, minus (y) the amount of any Class
PO Collection Shortfalls for such Distribution Date or remaining unpaid
for all previous Distribution Dates, to the extent the amounts available
pursuant to clause (x) of Sections 4.01(b)(vi), (viii), (x), (xii), (xiii)
and (xiv) are insufficient therefor, applied in reduction of the
Certificate Principal Balance of the Class B-1 Certificates;
(v) to the Holders of the Class B-2 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, plus any Accrued
Certificate Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(vi) to the Holders of the Class B-2 Certificates, an amount equal to
(x) the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date, minus (y) the amount of any Class
PO Collection Shortfalls for such Distribution Date or remaining unpaid
for all previous Distribution Dates, to the extent the amounts available
pursuant to clause (x) of Sections 4.01(b)(viii), (x), (xii), (xiii) and
(xiv) are insufficient therefor, applied in reduction of the Certificate
Principal Balance of the Class B-2 Certificates;
(vii) to the Holders of the Class B-3 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, plus any Accrued
Certificate Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(viii) to the Holders of the Class B-3 Certificates, an amount equal
to (x) the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date minus (y) the amount of any Class
PO Collection Shortfalls for such Distribution Date or remaining unpaid
for all previous Distribution Dates, to the extent the amounts available
pursuant to clause (x) of Sections 4.01(b)(x), (xii), (xiii) and (xiv) are
insufficient therefor, applied in reduction of the Certificate Principal
Balance of the Class B-3 Certificates;
(ix) to the Holders of the Class B-4 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, plus any Accrued
Certificate Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(x) to the Holders of the Class B-4 Certificates, an amount equal to
(x) the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date minus (y) the amount of any Class
PO Collection Shortfalls for such Distribution Date or remaining unpaid
for all previous Distribution Dates, to the extent the amounts available
pursuant to clause (x) of Sections 4.01(b)(xii), (xiii) and (xiv) are
insufficient therefor, applied in reduction of the Certificate Principal
Balance of the Class B-4 Certificates;
(xi) to the Holders of the Class B-5 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, plus any Accrued
Certificate Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(xii) to the Holders of the Class B-5 Certificates, an amount equal
to (x) the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date minus (y) the amount of any Class
PO Collection Shortfalls for such Distribution Date or remaining unpaid
for all previous Distribution Dates, to the extent the amounts available
pursuant to clause (x) of Sections 4.01(b)(xiii) and (xiv) are
insufficient therefor, applied in reduction of the Certificate Principal
Balance of the Class B-5 Certificates;
(xiii) to the Holders of the Class B-6 Certificates, an amount equal
to (x) the Accrued Certificate Interest thereon for such Distribution
Date, plus any Accrued Certificate Interest thereon remaining unpaid from
any previous Distribution Date, except as provided below;
(xiv) to the Holders of the Class B-6 Certificates, an amount equal
to (x) the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date minus (y) the amount of any Class
PO Collection Shortfalls for such Distribution Date or remaining unpaid
for all previous Distribution Dates applied in reduction of the
Certificate Principal Balance of the Class B-6 Certificates;
(xv) to the Senior Certificateholders in the priority set forth in
Section 4.01(c), the portion, if any, of the Available Distribution Amount
remaining after the foregoing distributions, applied to reduce the
Certificate Principal Balances of such Senior Certificates, but in no
event more than the aggregate of the outstanding Certificate Principal
Balances of each such Senior Certificates, and thereafter, to each Class
of Class B Certificates then outstanding beginning with such Class with
the lowest numerical designation, any portion of the Available
Distribution Amount remaining after the Senior Certificates have been
retired, applied to reduce the Certificate Principal Balance of each such
Class of Class B Certificates, but in no event more than the outstanding
Certificate Principal Balance of each such Class of Class B Certificates;
and
(xvi) to the Class R Certificateholders, the balance, if any, of the
Available Distribution Amount.
(c) Distributions of principal on the Senior Certificates on each
Distribution Date occurring prior to the occurrence of the Credit Support
Depletion Date will be made as follows:
first, an amount equal to the Class A-10 Accrual Distribution Amount
shall be distributed to the Class A-6, Class A-7, Class A-8 and Class A-10
Certificates, with such amount to be allocated to such Certificates in the
following order of priority:
(A) first, concurrently, to the Class A-6, Class A-7 and Class
A-8 Certificates, pro rata, up to their respective Targeted Principal
Balances for such Distribution Date; and
(B) second, to the Class A-10 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
second, an amount equal to the Class A-13 Accrual Distribution Amount
shall be distributed to the Class A-6, Class A-7, Class A-8, Class A-10,
Class A11, Class A-12 and Class A-13 Certificates, with such amount to be
allocated to such Certificates in the following order of priority:
(A) first, concurrently, to the Class A-6, Class A-7 and Class
A-8 Certificates, pro rata, up to their respective Targeted Principal
Balances for such Distribution Date;
(B) second, to the Class A-10 Certificates, until the
Certificate Principal Balance thereof has been reduced to its
Targeted Principal Balance for such Distribution Date;
(C) third, concurrently, to the Class A-11 and Class A-12
Certificates, pro rata, up to their respective Targeted Principal
Balances for such Distribution Date; and
(D) fourth, to the Class A-13 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
third, an amount equal to the Class A-14 Accrual Distribution Amount
shall be distributed to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-6, Class A-7, Class A-8, Class A-10, Class A-11, Class A-12, Class
A-13 and Class A-14 Certificates, with such amount to be allocated to such
Certificates in the following order of priority:
(A) first, sequentially, pursuant to the priorities set forth in
step fifth below; and
(B) second, to the Class A-14 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
fourth, to the Class PO Certificates, until the Certificate Principal
Balance thereof is reduced to zero, an amount (the "Class PO Principal
Distribution Amount") equal to the aggregate of:
(A) the related Discount Fraction of the principal portion of
each Scheduled Monthly Payment on each Discount Mortgage Loan due
during the related Due Period, whether or not received on or prior to
the related Determination Date;
(B) the related Discount Fraction of the principal portion of
all unscheduled collections on each Discount Mortgage Loan received
during the preceding calendar month (other than amounts received in
connection with a Cash Liquidation or REO Disposition of a Discount
Mortgage Loan described in clause (C) below), including Full
Principal Prepayments, Partial Principal Prepayments and repurchases
of Discount Mortgage Loans (or, in the case of a substitution of a
Deleted Mortgage Loan, the Discount Fraction of the amount of any
shortfall deposited in the Custodial Account in connection with such
substitution);
(C) in connection with the Final Disposition of a Discount
Mortgage Loan that did not result in any Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
Extraordinary Losses, an amount equal to the lesser of (1) the
applicable Discount Fraction of the Stated Principal Balance of such
Discount Mortgage Loan immediately prior to such Distribution Date
and (2) the Discount Fraction of the aggregate amount of the
collections on such Discount Mortgage Loan to the extent applied as
recoveries of principal;
(D) any amounts allocable to principal for any previous
Distribution Date (calculated pursuant to clauses (A) through (C)
above) that remain undistributed; and
(E) the amount of any Class PO Collection Shortfalls for such
Distribution Date and the amount of any Class PO Collection
Shortfalls remaining unpaid for all previous Distribution Dates, but
only to the extent of the Eligible Funds for such Distribution Date;
fifth, the balance of the Senior Principal Distribution Amount
remaining after distributions, if any, described in clauses first through
fourth above shall be distributed as follows:
(A) first, to the Class R Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(B) second, concurrently, to the Class A-1 and Class A-4
Certificates, pro rata, up to their respective Planned Principal
Balances for such Distribution Date;
(C) third, sequentially, to the Class A-2 Certificates and to
the Class A-3 Certificates, up to their respective Planned Principal
Balances for such Distribution Date;
(D) fourth, concurrently, to the Class A-6, Class A-7 and Class
A-8 Certificates, pro rata, up to their respective Targeted Principal
Balances for such Distribution Date;
(E) fifth, to the Class A-10 Certificates, up to its Targeted
Principal Balance for such Distribution Date;
(F) sixth, concurrently, to the Class A-11 and Class A-12
Certificates, pro rata, up to their respective Targeted Principal
Balances for such Distribution Date;
(G) seventh, to the Class A-13 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(H) eighth, concurrently, to the Class A-11 and Class A-12
Certificates, pro rata, without regard to their Targeted Principal
Balances, until the Certificate Principal Balances thereof have been
reduced to zero;
(I) ninth, to the Class A-10 Certificates, without regard to its
Targeted Principal Balance, until the Certificate Principal Balance
thereof has been reduced to zero;
(J) tenth, concurrently, to the Class A-6, Class A-7 and Class
A-8 Certificates, pro rata, without regard to their Targeted
Principal Balances, until the Certificate Principal Balances thereof
have been reduced to zero;
(K) eleventh, concurrently, to the Class A-1 and Class A-4
Certificates, pro rata, without regard to their Planned Principal
Balances, until the Certificate Principal Balances thereof have been
reduced to zero;
(L) twelfth, sequentially, to the Class A-2 Certificates and to
the Class A-3 Certificates, without regard to their Planned Principal
Balances, until the Certificate Principal Balances thereof have been
reduced to zero; and
(M) thirteenth, to the Class A-14 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(d) On or after the occurrence of the Credit Support Depletion Date, all
priorities relating to distributions as described above in respect of principal
among the Senior Certificates (other than the Class PO Certificates) shall be
disregarded and an amount equal to the Discount Fraction of the principal
portion of scheduled or unscheduled payments received or advanced in respect of
Discount Mortgage Loans shall be distributed to the Class PO Certificates, and
the Senior Principal Distribution Amount shall be distributed to the Senior
Certificates (other than the Class PO Certificates) pro rata in accordance with
their respective outstanding Certificate Principal Balances and the Senior
Interest Distribution Amount, shall be distributed as interest pursuant to
Section 4.01(b)(i).
(e) After reduction of the Certificate Principal Balances of the Senior
Certificates (other than the Class PO Certificates) to zero but prior to the
Credit Support Depletion Date, the Senior Certificates (other than the Class PO
Certificates) will be entitled to no further distributions of principal thereon
and the Available Distribution Amount will be paid solely to the holders of the
Class PO Certificates and the Subordinate Certificates in each case as
described herein.
(f) On each Distribution Date prior to the Class A-10 Accretion
Termination Date, an amount equal to the Accrued Certificate Interest that
would otherwise be distributed on the Class A-10 Certificates shall be added to
the Certificate Principal Balance of such Certificates. On and after the Class
A-10 Accretion Termination Date, the entire amount of Accrued Certificate
Interest on the Class A-10 Certificates for such Distribution Date shall be
payable to the Holders of the Class A-10 Certificate to the extent not required
to reduce the Certificate Principal Balances of the Class A-6, Class A-7 and
Class A-8 Certificates to zero on such Class A-10 Accretion Termination Date.
(g) On each Distribution Date prior to the Class A-13 Accretion
Termination Date, an amount equal to the Accrued Certificate Interest that
would otherwise be distributed on the Class A-13 Certificates shall be added to
the Certificate Principal Balance of such Certificates. On and after the Class
A-13 Accretion Termination Date, the entire amount of Accrued Certificate
Interest on the Class A-13 Certificates for such Distribution Date shall be
payable to the Holders of the Class A-13 Certificate to the extent not required
to reduce the Certificate Principal Balances of the Class A-6, Class A-7, Class
A-8, Class A-10, Class A11, Class A-12 and Class A-13 Certificates to zero on
such Class A-13 Accretion Termination Date.
(h) On each Distribution Date prior to the Class A-14 Accretion
Termination Date, an amount equal to the Accrued Certificate Interest that
would otherwise be distributed on the Class A-14 Certificates shall be added to
the Certificate Principal Balance of such Certificates. On and after the Class
A-14 Accretion Termination Date, the entire amount of Accrued Certificate
Interest on the Class A-14 Certificates for such Distribution Date shall be
payable to the Holders of the Class A-14 Certificate to the extent not required
to reduce the Certificate Principal Balances of the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-6, Class A-7, Class A-8, Class A-10, Class A-11, Class
A-12, Class A-13 and Class A-14 Certificates to zero on such Class A-14
Accretion Termination Date.
(i) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of
its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the Seller
or the Servicer shall have any responsibility therefor except as otherwise
provided by this Agreement or applicable law.
(j) Except as otherwise provided in Section 9.01, if the Servicer
anticipates that a final distribution with respect to any Class of Certificates
will be made on the next Distribution Date, the Servicer shall, no later than
the Determination Date in the month of such final distribution, notify the
Trustee and the Trustee shall, no later than two (2) Business Days after
receipt of such notice, mail on such date to each Holder of such Class of
Certificates a notice to the effect that: (i) the Trustee anticipates that the
final distribution with respect to such Class of Certificates will be made on
such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified therein,
and (ii) no interest shall accrue on such Certificates from and after the end
of the prior calendar month.
(k) Any funds not distributed to any Holder or Holders of Certificates of
such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 4.01(k) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within six months after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall take reasonable steps as directed by the Seller, or appoint an agent to
take reasonable steps, to contact the remaining non-tendering
Certificateholders concerning surrender of their Certificates. The costs and
expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the Trust Fund.
If within nine months after the second notice any such Certificates shall not
have been surrendered for cancellation, the Class R Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject hereto.
No interest shall accrue or be payable to any Certificateholder on any amount
held in trust as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(k).
Section 4.02. Statements to Certificateholders.
--------------------------------
On each Distribution Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Certificate and to the Seller, the
Servicer and the Rating Agencies, a statement based on information provided by
the Servicer two Business Days prior to such Distribution Date in a mutually
agreeable format setting forth:
(i) (a) the amount of such distribution to the Certificateholders of
each Class applied to reduce the Certificate Principal Balance thereof,
and (b) the aggregate amount included therein representing Principal
Prepayments;
(ii) the amount of such distribution to Holders of each Class of
Certificates allocable to interest;
(iii) if the distribution to the Holders of any Class of Certificates
is less than the full amount that would be distributable to such Holders
if there were sufficient funds available therefor, the amount of the
shortfall;
(iv) the aggregate amount of Monthly Advances included in such
distribution as of the close of business on such Distribution Date and
outstanding thereafter;
(v) the number and aggregate Stated Principal Balance of the Mortgage
Loans at the close of business on such Distribution Date;
(vi) the aggregate Certificate Principal Balance of each Class of
Certificates, and each of the Senior Percentages and Class B Percentages,
after giving effect to the amounts distributed on such Distribution Date,
separately identifying any reduction thereof due to Realized Losses other
than pursuant to an actual distribution of principal;
(vii) the related Subordinate Principal Distribution Amount;
(viii) the number and aggregate Stated Principal Balance of Mortgage
Loans (a) delinquent 31 to 60 days, (b) delinquent 61 to 90 days, (c)
delinquent 91 days or more;
(ix) the number, aggregate principal balance and book value of any
REO Properties;
(x) the aggregate Accrued Certificate Interest remaining unpaid, if
any, for each Class of Certificates, after giving effect to the
distribution made on such Distribution Date;
(xi) the Special Hazard Amount, Fraud Loss Amount and Bankruptcy
Amount as of the close of business on such Distribution Date and a
description of any change in the calculation of such amounts;
(xii) the weighted average Pool Strip Rate for such Distribution Date
and the Pass-Through Rate on the Class X Certificates;
(xiii) the occurrence of the Credit Support Depletion Date;
(xiv) the Senior Accelerated Distribution Percentage applicable to
such distribution;
(xv) the Senior Percentage for such Distribution Date; and
(xvi) the aggregate amount of Realized Losses for such Distribution
Date.
In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts shall also be expressed as a dollar amount per Certificate
of any Class evidencing an Initial Certificate Principal Balance of $1,000.
The Trustee shall make such statement (and, at its option, any additional
files containing the same information in an alternative format) available each
month to Certificateholders and other parties hereto via the Trustee's internet
website and its fax-on demand service. Parties that are unable to use the above
distribution options shall be entitled to have a paper copy mailed to them upon
request via first class mail by calling the Trustee's customer service desk.
The Trustee shall have the right to change the way Distribution Date statements
are distributed in order to make such distribution more convenient and/or more
accessible to the above parties, and the Trustee shall provide timely and
adequate notification to all above parties regarding any such changes.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall prepare and forward, upon request, to each Person who at any
time during the calendar year was a Holder of a Senior or Subordinate
Certificate, a statement containing the information set forth in subclauses (i)
(iii) above, aggregated for such calendar year or applicable portion thereof
during which such person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code and regulations thereunder as from time to time are in
force.
On each Distribution Date the Trustee shall prepare and forward, to each
Holder of a Residual Certificate a copy of the reports forwarded to the other
Certificateholders on such Distribution Date.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall prepare and forward, upon request, to each Person who at any
time during the calendar year was a Holder of a Residual Certificate a
statement containing the information provided pursuant to the previous
paragraph aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time are in force.
The Trustee will make the Distribution Date statement (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Certificateholders and other parties to this Agreement
via the Trustee's internet website and its fax-on-demand servicer. The
Trustee's fax-on-demand service may be accessed by calling (301) 815-6610. The
Trustee's internet website shall initially be located at "www.ctslink.com."
Assistance in using the website or the fax-on-demand service can be obtained by
calling the Trustee's customer service desk at (301) 815-6600. Parties that are
unable to use the above distribution options are entitled to have a paper copy
mailed to them via first call mail by calling the customer service desk and
indicating such. The Trustee shall have the right to change the way
Distribution Date statements are distributed in order to make such distribution
more convenient and/or more accessible to the above parties and the Trustee
shall provide timely and adequate notification to all above parties regarding
any such changes.
Section 4.03. Remittance Reports; Monthly Advances by the Servicer;
Liquidation Reports.
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(a) No later than the seventeenth (17th) calendar day of each month, the
Servicer shall deliver to the Seller and the Trustee a report (the "Remittance
Report"), in a mutually agreed upon form of an electromagnetic tape or disk and
hard copy. The Remittance Report and any written information supplemental
thereto shall include such information with respect to the Mortgage Loans that
is required by the Trustee for purposes of making the calculations and
preparing the statement described in Sections 4.01 and 4.02, as set forth in
written specifications or guidelines issued by the Seller or the Trustee from
time to time.
(b) Not later than the close of business on the Business Day preceding
each Remittance Date, the Servicer shall either (i) deposit in the Custodial
Account from its own funds an amount equal to the Monthly Advances to be made
by the Servicer in respect of the related Distribution Date, which shall be in
an aggregate amount equal to the aggregate amount of Scheduled Monthly Payments
(with each interest portion thereof adjusted to the Net Mortgage Rate), less
the amount of any related reductions in the amount of interest collectable from
the Mortgagor pursuant to the Relief Act or similar legislation or regulations
then in effect, on the Outstanding Mortgage Loans as of the related Due Date,
which Scheduled Monthly Payments were delinquent as of the close of business as
of the related Determination Date; provided that no Monthly Advance shall be
made if it would be a Nonrecoverable Advance, (ii) withdraw from amounts on
deposit in the Custodial Account all or a portion of the Amount Held for Future
Distribution in discharge of any such Monthly Advance, or (iii) make advances
in the form of any combination of (i) and (ii) aggregating the amount of such
Monthly Advance. Any portion of the Amount Held for Future Distribution so used
shall be replaced by the Servicer by deposit in the Custodial Account on or
before the close of business on the Business Day preceding any future
Remittance Date to the extent that funds attributable to the Mortgage Loans
that are available in the Custodial Account on such date shall be less than
payments to Certificateholders required to be made on the following
Distribution Date. The determination by the Servicer that it has made a
Nonrecoverable Advance or that any proposed Monthly Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by a certificate of a
Servicing Officer delivered to the Seller and the Trustee with the Remittance
Report.
(c) In the event that the Servicer fails for any reason to make an Advance
required to be made pursuant to Section 4.03(b) on or before the Business Day
preceding the Remittance Date, the Trustee shall, on or before the related
Distribution Date, deposit into the Certificate Account an amount equal to the
excess of (i) Monthly Advances required to be made by the Servicer that would
have been deposited in the Certificate Account over (ii) the amount of any
Monthly 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 the Trustee has determined
that such Advance would not be a Nonrecoverable Advance. The Trustee shall be
entitled to be reimbursed from the Custodial Account for Advances made by it
pursuant to this paragraph as if it were the Servicer hereunder.
(d) The Servicer's obligation to make such Monthly Advances as to any
Mortgage Loan will continue through the final disposition or liquidation of the
Mortgaged Property, unless the Servicer deems such advance to be nonrecoverable
from Liquidation Proceeds, REO Proceeds or Insurance Proceeds with respect to
the applicable Mortgage Loan. In such latter event, the Servicer shall deliver
to the Trustee an Officer's Certificate to the effect that an officer of the
Servicer has reviewed the servicing file related to such Mortgage Loan and has
obtained a recent appraisal and has made the reasonable determination that any
additional Monthly Advances are nonrecoverable from Liquidation or Insurance
Proceeds with respect to the applicable Mortgage Loan.
(e) Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Trustee pursuant to a deed-in-lieu of foreclosure, the Servicer
shall submit to the Trustee a liquidation report with respect to such Mortgaged
Property in such form as the Servicer, the Seller and the Trustee shall agree.
The Servicer shall also provide reports on the status of REO Property
containing such information as the Seller and the Trustee may reasonably
require.
Section 4.04. Allocation of Realized Losses.
-----------------------------
Prior to each Distribution Date, the Servicer shall determine the total
amount of Realized Losses, if any, that resulted from any Cash Liquidation,
Debt Service Reduction, Deficient Valuation or REO Disposition that occurred
during the related Prepayment Period. The amount of each Realized Loss shall be
evidenced by an Officer's Certificate and shall be based solely upon
information provided by the Servicer. All Realized Losses, other than Excess
Special Hazard Losses, Extraordinary Losses, Excess Bankruptcy Losses or Excess
Fraud Losses, shall be allocated as follows: first, to the Class B-6
Certificates until the Certificate Principal Balance thereof has been reduced
to zero; second, to the Class B-5 Certificates until the Certificate Principal
Balance thereof has been reduced to zero; third, to the Class B-4 Certificates
until the Certificate Principal Balance thereof has been reduced to zero;
fourth, to the Class B-3 Certificates until the Certificate Principal Balance
thereof has been reduced to zero; fifth, to the Class B-2 Certificates until
the Certificate Principal Balance thereof has been reduced to zero; sixth, to
the Class B-1 Certificates until the Certificate Principal Balance thereof has
been reduced to zero; and, thereafter, if such Realized Losses are on a
Discount Mortgage Loan, to the Class PO Certificates, in an amount equal to the
Discount Fraction of the principal portion thereof, and the remainder of such
Realized Losses and the entire amount of such Realized Losses on Non-Discount
Mortgage Loans shall be allocated among all the Class A Certificates and Class
R Certificates, on a pro rata basis, as described below. Any Excess Special
Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses and Extraordinary
Losses on Non-Discount Mortgage Loans will be allocated among the Class A,
Class X, Class B and Class R Certificates, on a pro rata basis, as described
below. The principal portion of such losses on Discount Mortgage Loans will be
allocated to the Class PO Certificates in an amount equal to the related
Discount Fraction thereof, and the remainder of such losses on Discount
Mortgage Loans will be allocated among the Class A, Class X, Class B and Class
R Certificates.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a
pro rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such
Distribution Date in the case of the principal portion of a Realized Loss or
among the various Classes so specified based on the Accrued Certificate
Interest thereon payable on such Distribution Date (without regard to any
Compensating Interest for such Distribution Date) in the case of an interest
portion of a Realized Loss. Any allocation of the principal portion of Realized
Losses to the Class B Certificates then outstanding with the highest numerical
designation shall be made by operation of the definition of "Certificate
Principal Balance" and by operation of the provisions of Section 4.01.
Allocations of the interest portions of Realized Losses shall be made by
operation of the definition of "Accrued Certificate Interest" and by operation
of the provisions of Section 4.01. All Realized Losses and all other losses
allocated to a Class of Certificates hereunder will be allocated among the
Certificates of such Class in proportion to the Percentage Interests evidenced
thereby.
Section 4.05. Information Reports to Be Filed by the Servicer.
-----------------------------------------------
The Servicer shall file information reports with respect to the receipt of
mortgage interest received in a trade or business, foreclosures and
abandonments of any Mortgaged Property and the information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
Section 4.06. Compliance with Withholding Requirements.
----------------------------------------
Notwithstanding any other provision of this Agreement, the Trustee shall
comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount on the Mortgage
Loans, that the Trustee reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for such withholding. In
the event the Trustee withholds any amount from interest or original issue
discount payments or advances thereof to any Certificateholder pursuant to
federal withholding requirements, the Trustee shall, together with its monthly
report to such Certificateholders pursuant to Section 4.02 hereof, indicate
such amount withheld.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
----------------
The Certificates will be substantially in the respective forms annexed
hereto as Exhibits A-1, A-2, A-3 and B. The Certificates will be issuable in
registered form only. The Class A, Class PO and Class X Certificates will be
issued in minimum denominations of $1,000 and integral multiples of $1 in
excess thereof; the Class B-1, Class B-2 and Class B-3 Certificates will be
issued in minimum denominations of $25,000 and integral multiples of $1 in
excess thereof; and the Class B-4, Class B-5 and Class B-6 will be issued in
minimum denominations of $100,000 and integral multiples of $1 in excess
thereof. The Residual Certificates will be issued in certificated
fully-registered form in a single certificate of $100.
Upon original issuance, the Certificates shall, upon the written request
of the Seller executed by an officer of the Seller, be executed and delivered
by the Trustee, authenticated by the Trustee and delivered to or upon the order
of the Seller upon receipt by the Trustee of the documents specified in Section
2.01. The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee in its capacity as trustee hereunder by a Responsible
Officer. Certificates bearing the manual or facsimile signatures of individuals
who were at the time they signed the proper officers of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates issued on the Closing
Date shall be dated the Closing Date and any Certificates delivered thereafter
shall be dated the date of their authentication.
(b) The Book-Entry Certificates shall initially be issued as one or more
Certificates registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold
such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective Ownership
Interests in and to each of such Book-Entry Certificates through the book-entry
facilities of the Depository and, except as provided below, shall not be
entitled to Definitive Certificates in respect of such Ownership Interests. All
transfers by Certificate Owners of their respective Ownership Interests in the
Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall transfer the Ownership
Interests only in the Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
The Trustee, the Servicer and the Seller may for all purposes (including
the making of payments due on the respective Classes of Book-Entry
Certificates) deal with the Depository as the authorized representative of the
Certificate Owners with respect to the respective Classes of Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the respective
Classes of Book-Entry Certificates shall be limited to those established by law
and agreements between such Certificate Owners and the Depository Participants
and brokerage firms representing such Certificate Owners. Multiple requests and
directions from, and votes of, the Depository as Holder of any Class of
Book-Entry Certificates with respect to any particular matter shall not be
deemed inconsistent if they are made with respect to different Certificate
Owners. The Seller may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Depository of such record date.
If (i)(A) the Seller advises the Trustee in writing that the Depository is
no longer willing or able to properly discharge its responsibilities as
Depository and (B) the Seller is unable to locate a qualified successor or (ii)
the Seller at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Depository, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration of transfer, the Trustee shall, at the expense
of the Seller, issue the Definitive Certificates. Neither the Seller, the
Servicer nor the Trustee shall be liable for any actions taken by the
Depository or its nominee, including, without limitation, any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates the
Trustee and the Servicer shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
Section 5.02. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall maintain a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided.
(b) Except as provided in Section 5.02(c), no transfer, sale, pledge or
other disposition of a Private Certificate shall be made unless such transfer,
sale, pledge or other disposition is exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Act"), and any applicable state
securities laws or is made in accordance with said Act and laws. In the event
that a transfer of a Private Certificate is to be made under this Section
5.02(b), (i) the Trustee shall require an Opinion of Counsel addressed to the
Seller, the Servicer and the Trustee acceptable to and in form and substance
satisfactory to the Trustee that such transfer shall be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from
said Act and laws or is being made pursuant to said Act and laws, which Opinion
of Counsel shall not be an expense of the Trustee, the Seller or the Servicer,
provided that such Opinion of Counsel will not be required in connection with
the initial transfer of any such Private Certificate by the Seller or any
affiliate thereof, to a non-affiliate of the Seller and (ii) the Trustee shall
require the transferee to execute a representation letter, substantially in the
form of Exhibit F-1 hereto, and the Trustee shall require the transferor to
execute a representation letter, substantially in the form of Exhibit F-2
hereto, each acceptable to and in form and substance satisfactory to the
Trustee certifying to the Seller and the Trustee the facts surrounding such
transfer, which representation letters shall not be an expense of the Trustee,
the Seller or the Servicer; provided however that such representation letters
will not be required in connection with any transfer of any such Private
Certificate by the Seller to an affiliate of the Seller and the Trustee shall
be entitled to conclusively rely upon a representation (which, upon the request
of the Trustee, shall be a written representation) from the Seller of the
status of such transferee as an affiliate of the Seller. Any such
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Seller and the Servicer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such applicable federal and state laws.
(c) Notwithstanding the requirements of Section 5.02(b), transfers of
Private Certificates may be made in accordance with this Section 5.02(c) if the
prospective transferee of a Private Certificate provides the Trustee and the
Seller with an investment letter substantially in the form of Exhibit F-3
attached hereto, which investment letter shall not be an expense of the
Trustee, the Seller or the Servicer, and which investment letter states that,
among other things, such transferee is a "qualified institutional buyer" as
defined under Rule 144A. Such transfers shall be deemed to have complied with
the requirements of Section 5.02(b) hereof; provided, however, that no transfer
of any of the Private Certificates may be made pursuant to this Section 5.02(c)
by the Seller. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Seller and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such applicable federal and state laws.
(d) Subject to the provisions of subsection (ii), no Subordinate or
Residual Certificate may be acquired directly or indirectly by, or on behalf
of, an employee benefit plan or other retirement arrangement which is subject
to Title I of ERISA and/or Section 4975 of the Code, unless the proposed
transferee provides an opinion of counsel to the Trustee (upon which the
Trustee is authorized to rely) to the effect that the proposed transfer and/or
holding of such Certificate and the servicing, management and operation of the
Trust: (A) will not result in a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code which is not covered under an individual or
class prohibited transaction exemption including but not limited to Department
of Labor Prohibited Transaction Exemption ("PTE") 84-14 (Class Exemption for
Plan Asset Transactions Determined by Independent Qualified Professional Asset
Managers); PTE 91-38 (Class Exemption for Certain Transactions Involving Bank
Collective Investment Funds); PTE 90-1 (Class Exemption for Certain
Transactions Involving Insurance Company Pooled Separate Accounts); PTE 95-60
(Class Exemption for Certain Transactions Involving Insurance Company General
Accounts); PTE 96-23 (Class Exemption for Plan Asset Transactions Determined by
In-House Asset Managers); and Section 401(c) of ERISA and the regulations to be
promulgated thereunder (relating to insurance company general accounts) and (B)
will not give rise to any additional fiduciary duties under ERISA on the part
of either the Seller, the Servicer or the Trustee.
(i) In lieu of such opinion of counsel, any Person acquiring an
interest in a Subordinate Certificate may represent to the Trustee (or, in
the case of a Person acquiring an interest in a Book-Entry Certificate
which is a Subordinate Certificate, shall be deemed to have represented to
the Trustee) that it is either: (A) not acquiring an interest in such
Certificate directly or indirectly by, or on behalf of, an employee
benefit plan or other retirement arrangement which is subject to Title I
of ERISA and/or Section 4975 of the Code, or (B) providing a
representation or certification in the form of Exhibit F-6 attached hereto
to the Trustee to the effect that the transfer and/or holding of an
interest in such Certificate and the servicing, management and/or
operation of the Trust and its assets: (I) will not result in any
prohibited transaction which is not covered under an individual or class
prohibited transaction exemption, including, but not limited to, PTE
84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23 or Section 401(c) of
ERISA and the regulations to be promulgated thereunder and (II) will not
give rise to any additional fiduciary duties on the part of either the
Seller, the Servicer or the Trustee.
(e) (i) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably authorized the Trustee or its designee under clause
(iii)(A) below to deliver payments to a Person other than such Person and to
negotiate the terms of any mandatory sale under clause (iii)(B) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale. The rights of each Person acquiring any
Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall require
delivery to it, and shall not register the Transfer of any Residual
Certificate until its receipt of (I) an affidavit and agreement (a
"Transfer Affidavit and Agreement" in the form attached hereto as
Exhibit F-5) from the proposed Transferee, in form and substance
satisfactory to the Trustee representing and warranting, among other
things, that it is a Permitted Transferee, that it is not acquiring
its Ownership Interest in the Residual Certificate that is the
subject of the proposed Transfer as a nominee, trustee or agent for
any Person who is not a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Residual Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed
the provisions of this Section 5.02 and agrees to be bound by them,
and (II) a certificate, in the form attached hereto as Exhibit F-4,
from the Holder wishing to transfer the Residual Certificate, in form
and substance satisfactory to the Trustee representing and
warranting, among other things, that no purpose of the proposed
Transfer is to impede the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee assigned to this transaction has
actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (x) to require a Transfer Affidavit
and Agreement from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Residual Certificate and (y) not
to transfer its Ownership Interest unless it provides a certificate
to the Trustee in the form attached hereto as Exhibit F-4.
(E) Each Person holding or acquiring an Ownership Interest in a
Residual Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of Temporary
Treasury Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Residual Certificate, if it is
"a pass-through interest holder", or is holding an Ownership Interest
in a Residual Certificate on behalf of a "pass-through interest
holder."
(ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and
Agreement in the form attached hereto as Exhibit F-5, a certificate
of the Holder requesting such transfer in the form attached hereto as
Exhibit F-4 and all of such other documents as shall have been
reasonably required by the Trustee as a condition to such
registration. Transfers of the Residual Certificates other than to
Permitted Transferees are prohibited.
(iii) (A) If any Person other than a Permitted Transferee shall
become a Holder of a Residual Certificate, then the last preceding
Permitted Transferee shall be restored, to the extent permitted by law, to
all rights and obligations as Holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. If a transfer
of a Residual Certificate is disregarded pursuant to the provisions of
Treasury Regulations Section 1.860E-1 or Section 1.860G-3, then the last
preceding Permitted Transferee shall be restored, to the extent permitted
by law, to all rights and obligations as Holder thereof retroactive to the
date of registration of such Transfer of such Residual Certificate. The
Trustee shall be under no liability to any Person for any registration of
Transfer of a Residual Certificate that is in fact not permitted by this
Section 5.02 or for making any payments due on such Certificate to the
holder thereof or for taking any other action with respect to such holder
under the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this Section
5.02 and to the extent that the retroactive restoration of the rights
of the Holder of such Residual Certificate as described in clause
(iii)(A) above shall be invalid, illegal or unenforceable, then the
Trustee shall have the right, without notice to the holder or any
prior holder of such Residual Certificate, to sell such Residual
Certificate to a purchaser selected by the Trustee on such terms as
the Trustee may choose. Such purported Transferee shall promptly
endorse and deliver each Residual Certificate in accordance with the
instructions of the Trustee. Such purchaser may be the Trustee
itself. The proceeds of such sale, net of the commissions (which may
include commissions payable to the Trustee), expenses and taxes due,
if any, will be remitted by the Trustee to such purported Transferee.
The terms and conditions of any sale under this clause (iii)(B) shall
be determined in the sole discretion of the Trustee, and the Trustee
shall not be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal Revenue Service
and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (A) as a result of the transfer of an
ownership interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information regarding "excess
inclusions" of such Residual Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B) as a
result of any regulated investment company, real estate investment trust,
common trust fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a Residual
Certificate having as among its record holders at any time any Person who
is a Disqualified Organization. The Trustee may charge and shall be
entitled to reasonable compensation for providing such information as may
be required from those Persons which may have had a tax imposed upon them
as specified in clauses (A) and (B) of this paragraph for providing such
information.
(f) Subject to the preceding paragraphs, upon surrender for registration
of transfer of any Certificate at the office of the Trustee maintained for such
purpose, the Trustee shall execute and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class of a like aggregate Percentage Interest.
Every Certificate surrendered for transfer shall be accompanied by notification
of the account of the designated transferee or transferees for the purpose of
receiving distributions pursuant to Section 4.01 by wire transfer, if any such
transferee desires and is eligible for distribution by wire transfer.
(g) At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of the same Class of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at the office of the Trustee. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute, authenticate and deliver
the Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in the form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(h) No service charge shall be made to the Certificateholders for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(i) All Certificates surrendered for transfer and exchange shall be
cancelled and retained by the Trustee in accordance with the Trustee's standard
procedures.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If (i) any mutilated Certificate is surrendered to the Trustee and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by it to save it harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
---------------------
The Seller, the Servicer, the Trustee and any agent of any of them may
treat the person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
4.01 and for all other purposes whatsoever, and neither the Seller, the
Servicer, the Trustee nor any agent of any of them shall be affected by notice
to the contrary.
ARTICLE VI
THE SERVICER
Section 6.01. Liability of the Servicer.
-------------------------
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Servicer
herein.
Section 6.02. Merger, Consolidation or Conversion of the Servicer.
---------------------------------------------------
The Servicer will keep in full effect its existence, rights and franchises
as a corporation under the laws of the state of its incorporation except as
permitted herein, and will obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this
Agreement, the Certificates or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer whether or not related to loan servicing, shall be the successor of
the Servicer 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 which is a Fannie Mae or Freddie Mac approved
seller/servicer in good standing.
Section 6.03. Limitation on Liability of the Servicer and Others.
--------------------------------------------------
Neither the Servicer nor any of the officers, employees or agents of the
Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment
made in good faith; provided, however, that this provision shall not protect
the Servicer or any such person against any breach of warranties or
representations made herein, or failure to perform in any way its obligations
in compliance with any standard of care set forth in this Agreement; or any
liability which would otherwise be imposed by reason of negligence or any
breach of the terms and conditions of this Agreement. The Servicer and any
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Servicer and any director, or
officer, employee or agent of the Servicer shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certificates
(including reasonable legal fees and disbursements of counsel), other than (a)
any loss, liability or expense related to Servicer's servicing obligations with
respect to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement), or (b) any loss, liability or expense incurred by reason of
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. The Servicer 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 expenses or liability;
provided, however, that the Servicer may, in its sole discretion, undertake any
such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the Certificateholders hereunder. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund, and the Servicer shall be entitled to be reimbursed therefor from
the Custodial Account as provided in Section 3.06.
Section 6.04. Limitation on Resignation of the Servicer.
-----------------------------------------
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon a determination that its duties hereunder are no
longer permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel (at the
expense of the resigning Servicer) to such effect delivered to the Trustee. No
such resignation shall become effective until the Trustee or a successor
servicer shall have assumed the Servicer's responsibilities, duties,
liabilities and obligations hereunder.
Section 6.05. Sale and Assignment of Servicing.
--------------------------------
The Servicer may sell and assign its rights and delegate its duties and
obligations in their entirety as Servicer under this Agreement to an affiliate
of the Servicer to which all servicing of the Servicer is assigned so long as
such affiliate (a) shall be qualified to service mortgage loans for Fannie Mae
or Freddie Mac; (b) if it is intended that such affiliate be spun off to the
shareholders of the Servicer, shall have a net worth of not less than
$10,000,000; (c) shall be reasonably satisfactory to the Trustee (as evidenced
in writing signed by the Trustee); and (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such affiliate of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as servicer under this Agreement, from and after the effective
date of such agreement; (ii) each Rating Agency shall be given prior written
notice of the identity of the proposed successor to the Servicer and each
Rating Agency's rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded or withdrawn as a result
of such assignment, sale and delegation, as evidenced by a letter to such
effect delivered to the Trustee; and (iii) the Servicer assigning and selling
the servicing shall deliver to the Trustee an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions precedent to such action
under this Agreement have been completed and such action is permitted by and
complies with the terms of this Agreement. No such assignment or delegation
shall affect any liability of the Servicer arising prior to the effective date
thereof.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to deposit in the Certificate Account
or remit to the Trustee any payment (including Monthly Advances) required
to be made under the terms of this Agreement, which failure shall continue
unremedied for two (2) Business Days after the date upon which written
notice of such failure shall have been given to the Servicer by the
Trustee or the Seller, or to the Servicer and the Trustee by the Holders
of Certificates entitled to at least 25% of the Voting Rights; or
(ii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
on the part of the Servicer contained in the Certificates or in this
Agreement (including any breach of the Servicer's representations and
warranties pursuant to Section 2.03 which materially and adversely affects
the interests of the Certificateholders) which continues unremedied for a
period of 60 days after the date on which written notice of such failure
shall have been given to the Servicer by the Trustee or the Seller, or to
the Servicer and the Trustee by the Holders of Certificates entitled to at
least 25% of the Voting Rights; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law for the appointment
of a conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 consecutive
days; or
(iv) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, bankruptcy, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of
its property; or
(v) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
or otherwise voluntarily commence a case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vi) the Servicer attempts to assign its right to servicing
compensation hereunder or the Servicer attempts, without the consent of
the Trustee, to sell or otherwise dispose of all or substantially all of
its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any
portion thereof except as otherwise permitted herein; or
(vii) the Servicer ceases to be qualified to transact business in any
jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Servicer's
ability to perform its obligations hereunder;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Trustee may or, at the direction of Holders of
Certificates evidencing not less than 66 2/3% of the Voting Rights, the Trustee
shall by notice in writing to the Servicer (and to the Trustee if given by
Holders of Certificates), with a copy to the Rating Agencies, terminate all the
rights and obligations of the Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof without compensating the Servicer for
the same. On or after the receipt by the Servicer of such written notice, all
authority and power of the 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 7.02. Upon written request from the
Trustee, the Servicer shall prepare, execute and deliver, any and all documents
and other instruments, place in such successor's possession all servicing files
related to the Mortgage Loans, and 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, at the Servicer's sole expense. The
Servicer agrees to cooperate with the Trustee and such successor in effecting
the termination of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans or any REO Property. The Trustee shall not
be deemed to have breached any obligation hereunder as a result of a failure to
make or delay in making any distribution as and when required hereunder caused
by the failure of the Servicer to remit any amounts received on it or to
deliver any documents held by it with respect to the Mortgage Loans. For
purposes of this Section 7.01, the Trustee shall not be deemed to have
knowledge of an Event of Default unless a Responsible Officer of the Trustee
assigned to and working in the Trustee's corporate trust division has actual
knowledge thereof or unless notice of any event which is in fact such an Event
of Default is received by the Trustee and such notice references the
Certificates, the Trust Fund or this Agreement.
Section 7.02. Trustee to Act; Appointment of Successor.
----------------------------------------
On and after the time the Servicer receives a notice of termination, the
Trustee or its appointed agent shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject thereafter to all the
responsibilities, duties, liabilities and limitations on liabilities relating
thereto placed on the Servicer including the obligation to make Monthly
Advances which have been or will be required to be made (except for the
responsibilities, duties and liabilities contained in Section 2.03) by the
terms and provisions hereof; and provided further, that any failure to perform
such duties or responsibilities caused by the Servicer's failure to provide
information required by Section 4.02 or 4.03 shall not be considered a default
by the Trustee hereunder; and provided further, that the Trustee shall have no
obligation whatsoever with respect to any liability (other than advances deemed
recoverable and not previously made) incurred by the Servicer at or prior to
the time of receipt by the Servicer of the notice or of the Opinion of Counsel
referred to in Section 7.01. As compensation therefor, the Trustee shall be
entitled to the Servicing Fee and all funds relating to the Mortgage Loans
which the Servicer would have been entitled to charge to the Custodial Account
and the Certificate Account if the Servicer had continued to act hereunder. If
the Trustee has become the successor to the Servicer in accordance with Section
6.04 or this Section 7.02, then notwithstanding the above, if the Trustee shall
be unwilling to so act, or shall be unable to so act, the Trustee may appoint,
or petition a court of competent jurisdiction or appoint, any established
housing and home finance institution, which is also a Fannie Mae- or Freddie
Mac-approved mortgage servicing institution, having a net worth of not less
than $10,000,000 as the successor to the Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, the Trustee shall act in such capacity as herein above provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer hereunder. Each
of the Seller, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
The Trustee shall be entitled to be reimbursed by the Servicer for all
costs associated with the transfer of servicing, including any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be
required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Mortgage Loans
properly and effectively.
Any successor, including the Trustee, to the Servicer shall maintain in
force during its term as servicer hereunder policies and fidelity bonds to the
same extent as the Servicer is so required pursuant to Section 3.19.
If the Trustee shall succeed to any duties of the Servicer with respect to
the Mortgage Loans as provided herein, it shall do so in a separate capacity
and not in its capacity as Trustee and, accordingly, the provisions of Article
X shall be inapplicable to the Trustee in its duties as successor Servicer in
the servicing of the Mortgage Loans (although such provisions shall continue to
apply to the Trustee in its capacity as Trustee), the provisions of Article VI,
however, shall apply to the Trustee in its capacity as successor Servicer.
Section 7.03. Notification to Certificateholders.
----------------------------------
(a) Upon any such termination or appointment of a successor to the
Servicer, the Trustee shall give prompt notice thereof to Certificateholders,
the Seller and to the Rating Agencies.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
Section 7.04. List of Certificateholders.
--------------------------
Upon written request of three (3) or more Certificateholders of record,
for purposes of communicating with other Certificateholders with respect to
their rights under this Agreement, the Trustee will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders held by the Trustee.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee
-----------------
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement as duties of the Trustee. If an Event of Default has
occurred and has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and subject to Section
8.02(b) use the same degree of care and skill in their exercise, as a prudent
person would exercise under the circumstances in the conduct of his own
affairs, but only with respect to the defaulting Servicer.
(b) Upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments which are specifically required
to be furnished to the Trustee pursuant to any provision of this Agreement, the
Trustee 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 resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by the Servicer
hereunder.
(c) The Trustee shall make monthly distributions and the final
distribution to the Certificateholders as provided in Sections 4.01 and 9.01
herein.
(d) 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) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred,
the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(ii) The Trustee shall not be liable in its individual capacity for
an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the directions of the Holders of Certificates evidencing Voting
Interests aggregating not less than 25% of the Trust Fund, if such action
or non-action relates to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or other power conferred upon the Trustee, under this Agreement; and
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee's Corporate Trust Office shall have
actual knowledge thereof. In the absence of such notice, the Trustee may
conclusively assume there is no such default or Event of Default.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
(e) All funds received by the Trustee and required to be deposited in the
Certificate Account pursuant to this Agreement will be promptly so deposited by
the Trustee. The Trustee shall not be liable for interest or other compensation
on uninvested funds held under this Agreement.
(f) Except for those actions that the Trustee is required to take
hereunder, the Trustee shall have no obligation or liability to take any action
or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.
Section 8.02. Certain Matters Affecting The Trustee.
-------------------------------------
Except as otherwise provided in Section 8.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting in reliance on any resolution, Officer's
Certificate, certificate of a Servicing Officer, certificate of auditors
or any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) The Trustee may consult with counsel and any advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection with respect to 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 be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement, other than its obligation
to give notices pursuant to this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby. Nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default of which a Responsible Officer
of the Trustee's Corporate Trust Office has actual knowledge (which has
not been cured or waived), subject to Section 7.02(c), to exercise such of
the rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of his own affairs;
(iv) The Trustee shall not be liable in its individual capacity for
any action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
Holders of Certificates evidencing Voting Interests aggregating not less
than 25% of the Trust Fund and provided that 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, reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement. The Trustee may require
reasonable indemnity against such expense or liability as a condition to
taking any such action. The reasonable expense of every such examination
shall be paid by the Certificateholders requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or through Affiliates, agents
or attorneys; provided, however, that the Trustee may not appoint any
agent to perform its custodial functions with respect to the Mortgage
Files or paying agent functions under this Agreement without the express
written consent of the Servicer, which consent will not be unreasonably
withheld. The Trustee shall not be liable or responsible for the
misconduct or negligence of the Trustee's agents and attorneys or a
custodian or paying agent appointed hereunder by the Trustee with due care
and, when required, with the consent of the Servicer;
(vii) Should the Trustee deem the nature of any action required on
its part (other than a payment or transfer pursuant to Section 3.25) to be
unclear, the Trustee may require prior to such action that it be provided
by the Servicer with reasonable further instructions;
(viii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be accountable for other than its negligence or willful
misconduct in the performance of any such act;
(ix) The Trustee shall not be required to give any bond or surety
with respect to the execution of the trust created hereby or the powers
granted hereunder; and
(x) The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Mortgage Loan by BSMCC pursuant to this Agreement and/or
the Mortgage Loan Purchase Agreement or the eligibility of any Mortgage
Loan for purposes of this Agreement.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
-----------------------------------------------------
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Seller, and the Trustee shall have no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of the Certificates (other than the signature and
countersignature of the Trustee on the Certificates) or of any Mortgage Loan
except as expressly provided in Section 2.02. The Trustee's signature and
countersignature (or countersignature of its agent) on the Certificates shall
be solely in its capacity as Trustee and shall not constitute the Certificates
an obligation of the Trustee in any other capacity. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller with respect to the Mortgage Loans. The Trustee shall
not be responsible for the legality or validity of this Agreement or any
document or instrument relating to this Agreement, the validity of the
execution of this Agreement or of any supplement hereto or instrument of
further assurance, or the validity, priority, perfection or sufficiency of the
security for the Certificates issued hereunder or intended to be issued
hereunder. The Trustee shall at no time have any responsibility or liability
for or with respect to the legality, validity and enforceability of any
Mortgage or any Mortgage Loan, or the perfection and priority of any Mortgage
or the maintenance of any such perfection and priority, or for or with respect
to the sufficiency of the Trust Fund or its ability to generate the payments to
be distributed to Certificateholders, under this Agreement. The Trustee shall
have no responsibility for filing any financing or continuation statement in
any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
record this Agreement.
Section 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual capacity or in any capacity other than as
Trustee hereunder may become the owner or pledgee of any Certificates with the
same rights it would have if it were not Trustee, and may otherwise deal with
the parties hereto.
Section 8.05. Fees And Expenses.
-----------------
(a) The Trustee will be paid the Trustee's Fees each calendar month from
the Certificate Account, pursuant to Section 3.26. The Trust Fund will be
liable for the Trustee's expenses, including all reasonable out-of-pocket
expenses, disbursements and advances incurred or made by the Trustee in the
administration of the trusts hereunder as set forth in a fee letter sent by the
Trustee to the Seller (including the reasonable compensation, expenses and
disbursements of its counsel) except any such expense, disbursement or advance
as may arise from its negligence or willful misconduct or which is the
responsibility of the Certificateholders or the Servicer, and to the extent
that the funds in the Certificate Account are not sufficient to pay the
Trustee's Fees. Such compensation and reimbursement obligation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust.
(b) To the extent not otherwise indemnified against by the Servicer
hereunder, the Trust shall indemnify the Indemnified Persons for, and will hold
them harmless against, any loss, liability or expense incurred on their part,
arising out of, or in connection with, this Agreement and the Certificates,
including the costs and expenses (including reasonable legal fees and expenses)
of defending themselves against any such claim other than (i) any loss,
liability or expense related to such Indemnified Person's failure to perform
such Indemnified Person's duties in compliance with this Agreement (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and (ii) any loss, liability or expense incurred by reason of
such Indemnified Person's willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. This indemnity shall survive the resignation
or removal of the Trustee and the termination of this Agreement.
Section 8.06. Eligibility Requirements For Trustee.
------------------------------------
The Trustee and any successor Trustee shall during the entire duration of
this Agreement be a state bank or trust company or a national banking
association organized and doing business under the laws of such state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
a successor Trustee other than pursuant to Section 8.10, rated in one of the
two highest long-term debt categories of, or otherwise acceptable to, each of
the Rating Agencies. The Trustee shall not be an Affiliate of the Servicer,
unless the Trustee acts as successor Servicer hereunder. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital
and surplus) as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 8.06, the Trustee shall resign immediately in
the manner and with the effect specified in Section 8.08.
Section 8.07. Insurance.
---------
The Trustee, at its own expense, shall at all times maintain and keep in
full force and effect: (i) fidelity insurance, (ii) theft of documents
insurance and (iii) forgery insurance (which may be collectively satisfied by a
"Financial Institution Bond" and/or a "Bankers' Blanket Bond"). All such
insurance shall be in amounts, with standard coverage and subject to
deductibles, as are customary for insurance typically maintained by banks which
act as custodians for investor-owned mortgage pools. A certificate of an
officer of the Trustee as to the Trustee's compliance with this Section 8.07
shall be furnished to the Servicer or any Certificateholder upon reasonable
written request.
Section 8.08. Resignation and Removal of The Trustee.
--------------------------------------
(a) The Trustee may at any time resign and be discharged from the Trust
hereby created by giving written notice thereof to the Servicer, with a copy to
the Rating Agencies. Upon receiving such notice of resignation, the Servicer
shall promptly appoint a successor Trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to each of the
resigning Trustee and the successor Trustee. If no successor Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Servicer or if at any time 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, then
the Servicer shall be entitled to remove the Trustee and appoint a successor
Trustee by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the Trustee so removed and the successor Trustee.
(c) The Holders of Certificates evidencing Voting Interests aggregating
not less than 51% of the Trust Fund may at any time remove the Trustee and
appoint a successor Trustee by written instrument or instruments signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Servicer, the Trustee so removed and the
successor so appointed.
(d) No resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.08 shall
become effective except upon appointment of and acceptance of such appointment
by the successor Trustee as provided in Section 8.09.
Section 8.09. Successor Trustee.
-----------------
(a) Any successor Trustee appointed as provided in Section 8.08 shall
execute, acknowledge and deliver to the Servicer and to its predecessor Trustee
an instrument accepting such appointment hereunder. The resignation or removal
of the predecessor Trustee shall then 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 after payment of its outstanding fees and expenses
promptly deliver to the successor Trustee all assets and records of the Trust
held by it hereunder, and the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.
(b) No successor Trustee shall accept appointment as provided in this
Section 8.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.09, the successor Trustee shall mail notice of the succession
of such Trustee hereunder to all Certificateholders at their addresses as
shown in the Certificate Register and to the Rating Agencies. The Servicer
shall pay its Applicable Percentage of the cost of any mailing by the
successor Trustee.
Section 8.10. Merger or Consolidation of Trustee.
----------------------------------
Any state bank or trust company or national banking association into which
the Trustee may be merged or converted or with which it may be consolidated or
any state bank or trust company or national banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any state bank or trust company or national banking association succeeding
to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such state bank or
trust company or national banking association shall be eligible under the
provisions of Section 8.06. Such succession shall be valid without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 8.11. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or property constituting the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Servicer to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 8.11, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable.
(b) If the Servicer shall not have joined in such appointment within 15
days after the receipt by it of a written request so to do, or in case an Event
of Default with respect to the Servicer shall have occurred and be continuing,
the Trustee shall have the power to make such appointment without the Servicer.
(c) No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor Trustee under Section 8.06 hereunder
and no notice to Certificateholders of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 8.08 hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
(e) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or
attorney-in-fact, with full power and authority, to do any lawful act under or
with respect to this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
(g) No trustee under this Agreement shall be personally liable by reason
of any act or omission of another trustee under this Agreement. The Servicer
and the Trustee acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee, except that following the occurrence
of any Event of Default which has not been cured, the Trustee acting alone may
accept the resignation of or remove any separate trustee or co-trustee.
Section 8.12. Servicer Shall Provide Information As Reasonably Required.
---------------------------------------------------------
The Servicer shall furnish to the Trustee, during the term of this
Agreement, such periodic, special, or other reports or information (and in such
electronic format or other means acceptable to the Trustee) as may reasonably
be requested by the Trustee in order to fulfill its duties and obligations
under this Agreement.
Section 8.13. Federal Information Returns and Reports to
Certificateholders.
----------------------------------------------
(a) For Federal income tax purposes, the taxable year of each REMIC shall
be a calendar year and the Trustee shall maintain or cause the maintenance of
the books of each REMIC on the accrual method of accounting.
(b) The Trustee shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns or elections required
to be made by the Trustee hereunder with respect to any REMIC and the
Certificates containing such information and at the times and in the manner as
may be required by the Code or applicable Treasury regulations, and shall
furnish to each Holder of Certificates at any time during the calendar year for
which such returns or reports are made such statements or information at the
times and in the manner as may be required thereby. In connection with the
foregoing, the Trustee shall provide the name and address of the person who can
be contacted to obtain information required to be reported to the holders of
regular interests in each REMIC (the "REMIC Reporting Agent") as required by
IRS Form 8811. The Trustee shall make the elections to treat each REMIC as a
REMIC (which election shall apply to the taxable period ending December 31,
1999 and each calendar year thereafter) in such manner as the Code or
applicable Treasury regulations may prescribe. The Trustee shall sign all tax
information returns filed pursuant to this Section and any other returns as may
be required by the Code, and in doing so shall rely entirely upon, and shall
have no liability for information provided by, or calculations provided by, the
Seller or the Servicer. The Holder of the Residual Certificate is hereby
designated as the "Tax Matters Person" (within the meaning of Treas. Reg.
ss.ss.. 1.860F-4(d)) for each REMIC. The Trustee is hereby designated and
appointed as the agent of each such Tax Matters Person. Any Holder of a
Residual Certificate will by acceptance thereof appoint the Trustee as agent
and attorney-in-fact for the purpose of acting as Tax Matters Person for each
REMIC during such time as the Trustee does not own any such Residual
Certificate. In the event that the Code or applicable Treasury regulations
prohibit the Trustee from signing tax or information returns or other
statements, or the Trustee from acting as Tax Matters Person (as an agent or
otherwise), the Trustee shall take whatever action that in its sole good faith
judgment is necessary for the proper filing of such information returns or for
the provision of a tax matters person, including designation of the Holder of a
Residual Certificate to sign such returns or act as tax matters person. Each
Holder of a Residual Certificate shall be bound by this Section.
(c) The Trustee shall provide upon request such information (which shall
be provided upon reasonable compensation to the Trustee) as required in Section
860D(a)(6)(B) of the Code to the Internal Revenue Service, to any Person
purporting to transfer a Residual Certificate to a Person other than a
transferee permitted by Section 5.05(b), and to any regulated investment
company, real estate investment trust, common trust fund, partnership, trust,
estate, organization described in Section 1381 of the Code, or nominee holding
an interest in a pass-through entity described in Section 860E(e)(6) of the
Code, any record holder of which is not a transferee permitted by Section
5.02(e) (or which is deemed by statute to be an entity with a disqualified
member).
(d) The Trustee shall prepare and file or cause to be filed any state
income tax returns required under Applicable State Law with respect to each
REMIC or the Trust Fund.
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans or upon Purchase of Certificates.
-----------------------------------------------------------
(a) Subject to Section 9.02, the respective obligations and
responsibilities of the Seller, the Servicer and the Trustee created hereby
(other than the obligations of the Servicer to provide for and the Trustee to
make payments to Certificateholders as hereafter set forth) shall terminate
upon payment to the Certificateholders of all amounts held by or on behalf of
the Trustee and required to be paid to them hereunder following the earlier to
occur of (i) the repurchase by the Seller or its designee (or if the Seller or
its designee does not exercise such option, the Servicer or its designee) of
all Mortgage Loans and each REO Property in respect thereof remaining in the
Trust Fund at a price equal to the greater of (a) 100% of the unpaid principal
balance of each Mortgage Loan (other than one as to which a REO Property was
acquired) on the day of repurchase together with accrued interest on such
unpaid principal balance at the Net Mortgage Rate to the first day of the month
in which the proceeds of such repurchase are to be distributed, plus the
appraised value of any REO Property (but not more than the unpaid principal
balance of the related Mortgage Loan, together with accrued interest on that
balance at the Net Mortgage Rate to the first day of the month such repurchase
price is distributed), less the good faith estimate of the Servicer of
liquidation expenses to be incurred in connection with its disposal thereof,
such appraisal to be conducted by an appraiser mutually agreed upon by the
Servicer and the Trustee at the expense of the entity terminating the Trust
Fund, and (b) the aggregate fair market value of all of the assets of the Trust
Fund (as determined by the Servicer and the Trustee, as of the close of
business on the third Business Day next preceding the date upon which notice of
any such termination is furnished to Certificateholders pursuant to Section
9.01(b)), and (ii) the final payment or other liquidation (or any Monthly
Advance with respect thereto) of the last Mortgage Loan remaining in the Trust
Fund (or the disposition of all REO Property in respect thereof); provided,
however, that clauses (i) and (ii) of this paragraph will be paid only to the
extent that there is enough cash to make such payments; provided, further, that
in no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. In the case of any repurchase by the Servicer
pursuant to clause (i), the Servicer shall include in such repurchase price the
amount of any Monthly Advances that will be reimbursed to the Servicer pursuant
to Section 3.06(ii) and the Servicer shall exercise reasonable efforts to
cooperate fully with the Trustee in effecting such repurchase and the transfer
of the Mortgage Loans and related Mortgage Files and related records to the
Servicer.
The right of the Seller or its designee or the Servicer or its designee to
repurchase all Mortgage Loans pursuant to (i) above shall be conditioned upon
the aggregate Stated Principal Balance of such Mortgage Loans at the time of
any such repurchase aggregating an amount equal to or less than 10% in the case
of the Seller or its designee, or 5%, in the case of the Servicer or its
designee, of the aggregate Stated Principal Balance of the Mortgage Loans at
the Cut-off Date. The right of the Servicer or its designee to repurchase all
Mortgage Loans is subject to the Servicer or its designee receiving the consent
of the Seller. If such right is exercised, the Seller or the Servicer or their
respective designee upon such repurchase shall provide to the Trustee, notice
of such exercise prior to the Determination Date in the month preceding the
month of purchase and the certification required by Section 3.13.
(b) Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to the Certificateholders mailed (a) in the event such
notice is given in connection with the Seller or Servicer's election to
repurchase, not earlier than the 15th day and not later than the 25th day of
the month next preceding the month of such final distribution or (b) otherwise
during the month of such final distribution on or before the Determination Date
in such month, in each case specifying (i) the Distribution Date upon which
final payment of the Certificates will be made upon presentation and surrender
of Certificates at the office of the Trustee therein designated, (ii) the
amount of any such final payment, (iii) that no interest shall accrue in
respect of the Certificates from and after the Interest Accrual Period relating
to the final Distribution Date therefor and (iv) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Certificates at the office of the
Trustee therein specified. In the event such notice is given in connection with
the Seller, Servicer or their respective designee's election to repurchase, the
Seller, Servicer or their respective designee shall deliver to the Trustee for
deposit in the Certificate Account on the Business Day immediately preceding
the Distribution Date specified in such notice an amount equal to the
above-described repurchase price payable out of its own funds. Upon
certification to the Trustee by a Servicing Officer, following such final
deposit, the Trustee shall promptly release the Mortgage Files as directed by
the Seller or Servicer for the remaining Mortgage Loans, and the Trustee shall
execute all assignments, endorsements and other instruments required by the
Seller or Servicer as being necessary to effectuate such transfer. Immediately
following the deposit of funds in trust hereunder in respect of the
Certificates, the Trust Fund shall terminate.
Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall distribute to the Certificateholders to
each Certificateholder so presenting and surrendering its Certificates the
amount otherwise distributable on such Distribution Date in accordance with
Section 4.01 in respect of the Certificates so presented and surrendered.. Any
funds not distributed to any Holder or Holders of Certificates being retired on
such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust
and credited to the account of the appropriate non-tendering Holder or Holders.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned notice, the Trustee shall give a second notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within six months after the
second notice all of the Certificates shall not have been surrendered for
cancellation, the Trustee shall take reasonable steps as directed by the
Seller, or appoint an agent to take reasonable steps, to contact the remaining
Certificateholders concerning surrender of their Certificates. The costs and
expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in trust for such
Certificateholders. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Residual
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto.
Section 9.02. Additional Termination Requirements.
-----------------------------------
(a) In the event the Seller or the Servicer repurchases all the Mortgage
Loans and each REO Property as provided in Section 9.01, the Trust Fund shall
be terminated in accordance with the following additional requirements:
(i) The Seller or the Servicer shall specify the first day in the
90-day liquidation period in a statement attached to the final Tax Return
of each REMIC created hereunder pursuant to Treasury regulation Section
1.860F-1 and shall satisfy all requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder, as
evidenced by an Opinion of Counsel obtained at the expense of the Seller
or the Servicer;
(ii) During such 90-day liquidation period, and at or prior to the
time of making of the final payment on the Certificates, the Trustee shall
sell all of the assets of the Trust Fund to the Seller or the Servicer for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates all
cash on hand in the Trust Fund (other than cash retained to meet claims),
and the Trust Fund shall terminate at that time.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Servicer as its attorney-in-fact to adopt a plan of
complete liquidation for the Lower Tier REMIC and the Upper Tier REMIC at the
expense of the Trust Fund in accordance with the terms and conditions of this
Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
--------------------
(a) The Trustee shall make REMIC elections as set forth in the Preliminary
Statement under the Code and, if necessary, under applicable state law. Such
elections will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. The
regular interests and the residual interest in each REMIC shall be as
designated in the Preliminary Statement. The Trustee shall not permit the
creation of any "interests" in any of the Upper Tier REMIC or Lower Tier REMIC
(within the meaning of Section 860G of the Code) other than the interests
designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of each of
the Upper Tier REMIC and Lower Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(c) The Trustee shall be reimbursed for any and all expenses relating to
any tax audit of any REMIC created hereunder (including, but not limited to,
any professional fees or any administrative or judicial proceedings with
respect to any REMIC created hereunder that involve the Internal Revenue
Service or state tax authorities) including the expense of obtaining any
tax-related Opinion of Counsel, except as specified herein. The Trustee's right
of reimbursement shall not apply to expenses incurred as a result of the
Trustee's gross negligence in performing its duties pursuant to this Article X.
The Trustee, as agent for the tax matters person of each REMIC created
hereunder, shall (i) act on behalf of each REMIC created hereunder in relation
to any tax matter or controversy involving each REMIC created hereunder and
(ii) represent each REMIC in any administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority with respect
thereto. The holder of the largest Percentage Interest of the Residual
Certificate shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-I, as the tax matters person of each REMIC created hereunder. By
their acceptance thereof, the holder of the largest Percentage Interest of the
Residual Certificates hereby agrees to irrevocably appoint the Trustee or an
affiliate as its agent to perform all of the duties of the tax matters person
for each REMIC created hereunder.
(d) The Trustee shall prepare, sign and file all of the Tax Returns in
respect of each REMIC created hereunder. The expenses of preparing and filing
such returns shall be borne by the Trustee without any right of reimbursement
therefor.
(e) The Trustee shall perform on behalf of each REMIC created hereunder
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, as required by the Code, the REMIC Provisions or other
such compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of
any tax relating to the transfer of a Residual Certificate to any Person who is
not a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of each REMIC created hereunder. The Servicer shall
provide on a timely basis to the Trustee such information with respect to the
assets of each REMIC created hereunder, including, without limitation, the
Mortgage Loans, as is in its possession and reasonably required by the Trustee
to enable it to perform its obligations under this subsection. In addition, the
Seller shall provide or cause to be provided to the Trustee, within ten (10)
days after the Closing Date, all information or data that the Trustee
reasonably determines to be relevant for tax purposes as to the valuations and
issue prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause each REMIC created
hereunder to take such action as shall be necessary to create or maintain the
status thereof as a REMIC under the REMIC Provisions (and the Servicer shall
assist it, to the extent reasonably requested by it). The Trustee shall not
take any action, cause any REMIC created hereunder 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 any of the Upper Tier REMIC or Lower Tier REMIC as a REMIC or (ii)
result in the imposition of a tax upon any REMIC created hereunder (including
but not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless the Trustee has received an Opinion of Counsel, addressed to the Trustee
(at the expense of the party seeking to take such action but in no event at the
expense of the Trustee) to the effect that the contemplated action will not,
with respect to each REMIC created hereunder, endanger such status or result in
the imposition of such a tax, nor shall the Servicer take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee has
advised it in writing that it has received an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action. In
addition, prior to taking any action with respect to any REMIC or the assets of
any REMIC, or causing any REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, the Servicer 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 any REMIC created
hereunder, and the Servicer shall not take any such action or cause any REMIC
to take any such action as to which the Trustee has advised it in writing that
an Adverse REMIC Event could occur. The Trustee may consult with counsel to
make such written advice, and the cost of same shall be borne by the party
seeking to take the action not permitted by this Agreement, but in no event
shall such cost be an expense of the Trustee. At all times as may be required
by the Code, the Trustee will ensure that substantially all of the assets of
each REMIC created hereunder will consist of "qualified mortgages" as defined
in Section 860G(a)(3) of the Code and "permitted investments" as defined in
Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of
any REMIC created hereunder created hereunder as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of any REMIC created
hereunder as defined in Section 860G(c) of the Code, on any contributions to
any REMIC created hereunder after the Startup Day therefor pursuant to Section
860G(d) of the Code, or any other tax is imposed by the Code or any applicable
provisions of state or local tax laws, such tax shall be charged (i) to the
Trustee pursuant to Tax Indemnification provisions hereof, if such tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Article, (ii) to the Servicer pursuant to Section Tax Indemnification
Provisions hereof, if such tax arises out of or results from a breach by the
Servicer of any of its obligations under Article III or this Article X, or
otherwise, and (iii) if clauses (i) and (ii) do not apply, against amounts on
deposit in the Distribution Account and shall be paid by withdrawal therefrom.
(h) The Trustee and the Servicer shall, for federal income tax purposes,
maintain books and records with respect to each REMIC created hereunder on a
calendar year and on an accrual basis.
(i) Following the Startup Day, the Trustee shall not accept any
contributions of assets to any REMIC created hereunder other than in connection
with any Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.02 unless it shall have received an Opinion of Counsel to the effect
that the inclusion of such assets in any such REMIC will not cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject any REMIC created hereunder to any tax
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.
(j) Neither the Trustee nor the Servicer shall enter into any arrangement
by which any REMIC created hereunder will receive a fee or other compensation
for services nor permit any REMIC created hereunder to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in Section 860G(a)(5) of the Code.
Section 10.02. Prohibited Transactions and Activities.
--------------------------------------
None of the Seller, the Servicer or the Trustee shall sell, dispose of or
substitute for any of the Mortgage Loans (except in connection with (i) the
foreclosure of a Mortgage Loan, including but not limited to, the acquisition
or sale of a Mortgaged Property acquired by deed in lieu of foreclosure, (ii)
the bankruptcy of the Trust Fund (iii) the termination of the Trust Fund
pursuant to Article IX of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for the Trust Fund
(other than a REO Property acquired in respect of a defaulted Mortgage Loan),
nor sell or dispose of any investments in the Custodial Account for gain, nor
accept any contributions to the Trust Fund after the Closing Date (other than a
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.02 or
2.04), unless it has received an Opinion of Counsel, addressed to the Trustee
(at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of the
Trustee) that such sale, disposition, substitution, acquisition or contribution
will not (a) affect adversely the status of any REMIC created hereunder as a
REMIC or (b) cause any REMIC created hereunder to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions.
Section 10.03. Tax Indemnification.
-------------------
(a) The Trustee agrees to indemnify the Trust Fund, the Seller and the
Servicer for any taxes and costs including, without limitation, any reasonable
attorneys fees imposed on or incurred by the Trust Fund, the Seller or the
Servicer, as a result of a breach of the Trustee's covenants set forth in this
Article X.
(b) The Servicer agrees to indemnify the Trust Fund, the Seller and the
Trustee for any taxes and costs, including without limitation, any reasonable
attorneys fees imposed on or incurred by the Trust Fund, the Seller or the
Trustee, as a result of the breach of the Servicer's covenants set forth in
Article III or this Article X.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
---------
This Agreement may be amended from time to time by the Seller, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
(i) to cure any ambiguity, (ii) to correct or supplement any provisions herein
which may be defective or inconsistent with any other provisions herein or to
correct any error, (iii) to amend this Agreement in any respect subject to the
provisions in clauses (A) and (B) below, or (iv) if such amendment, as
evidenced by an Opinion of Counsel (provided by the Person requesting such
amendment) delivered to the Trustee, is reasonably necessary to comply with any
requirements imposed by the Code or any successor or amendatory statute or any
temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any proposed such action which, if made effective, would apply
retroactively to the Trust Fund at least from the effective date of such
amendment; provided that such action (except any amendment described in (iv)
above) shall not adversely affect in any material respect the interests of any
Certificateholder (other than Certificateholders who shall consent to such
amendment), as evidenced by (A) an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, and (B) a letter from each
Rating Agency, confirming that such amendment shall not cause it to lower its
rating on any of the Certificates.
This Agreement may also be amended from time to time by the Seller, the
Servicer and the Trustee and Holders of Certificates entitled to at least
66-2/3% of the Voting Rights 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 of Certificates;
provided, however, that no such amendment shall (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, (ii) adversely affect in any material respect the
interests of the Holders of any Class of Certificates in a manner other than as
described in (i), without the consent of the Holders of Certificates of such
Class evidencing at least 66-2/3% of the Voting Rights of such Class, or (iii)
reduce the aforesaid percentage of Certificates the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Certificates then outstanding. Notwithstanding any other provision of
this Agreement, for purposes of the giving or withholding of consents pursuant
to this Section 11.01, Certificates registered in the name of the Seller or the
Servicer or any affiliate thereof shall be entitled to Voting Rights with
respect to matters described in (i), (ii) and (iii) of this paragraph.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on the Trust Fund pursuant to the REMIC Provisions or cause any
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment or a written statement describing the
amendment to each Certificateholder, with a copy to the Rating Agencies.
It shall not be necessary for the consent of Certificateholders under this
Section 11.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Prior to executing any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel (provided by the Person
requesting such amendment) to the effect that such amendment is authorized or
permitted by this Agreement. The cost of an Opinion of Counsel delivered
pursuant to this Section 11.01 shall be an expense of the party requesting such
amendment, but in any case shall not be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.
Section 11.02. Recordation of Agreement; Counterparts.
--------------------------------------
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Certificateholders, but only upon direction of
the Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a notice of an Event of Default, or of a
default by the Seller or the Trustee in the performance of any obligation
hereunder, and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates entitled to at least 51% of the Voting Rights
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding. It is understood and intended, and 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 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 equal, ratable and common 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 11.04. Governing Law.
-------------
This Agreement and the Certificates 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 11.05. Notices.
-------
All demands, notices and direction hereunder shall be in writing and shall
be deemed effective upon receipt when delivered to (a) in the case of the
Seller, 245 Park Avenue, New York, New York, 10167, Attention: Vice
President-Servicing with a copy to Joseph T. Jurkowski, Esq. at the same
address, or such other address as may hereafter be furnished to the other
parties hereto in writing; (b) in the case of the Servicer, GMAC Mortgage
Corporation, 100 Witmer Road, Horshaw, Pennsylvania 19044, Attention:
President, or such other address as may hereafter be furnished to other parties
in writing); (c) in the case of the Trustee, at its Corporate Trust Office, or
such other address as may hereafter be furnished to the other parties hereto in
writing; or (d) in the case of the Rating Agencies, Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10007, Attention: Residential
Pass-Through Monitoring, or such other address as may hereafter be furnished to
the other parties hereto; and Duff & Phelps Credit Rating Co., 17 State Street,
New York, New York 10007, Attention: Residential Mortgage Department, or such
other address as may hereafter be furnished to the other parties hereto;. Any
notice required or permitted to be mailed to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice.
Section 11.06. 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, of the Certificates.
Section 11.07. Successors and Assigns; Third Party Beneficiary.
-----------------------------------------------
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Trustee and the
Certificateholders.
Section 11.08. Article and Section Headings.
----------------------------
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
Section 11.09. Notice to Rating Agencies.
-------------------------
The Trustee shall use its best efforts to promptly provide notice to each
Rating Agency referred to below with respect to each of the following of which
it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Servicer or the Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02 or 2.04;
5. The final payment to Certificateholders; and
6. Any change in the location of theccc Custodial Account or the
Certificate Account.
In addition, the Trustee and the Servicer shall promptly furnish to the
Rating Agency copies of the following:
1. Each report to Certificateholders described in Section 4.02; and
2. Each annual independent public accountants' servicing report
received as described in Section 3.18.
Any such notice pursuant to this Section 11.09 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to (i) in the
case of Moody's, Attention of Asset Backed Surveillance Department, (ii) in the
case of DCR or, in each case, such other address as either such Rating Agency
may designate in writing to the parties thereto.
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized all as of the day and year first above written.
STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.,
as Seller
By:_______________________________________
GMAC MORTGAGE CORPORATION,
as Servicer
By: _______________________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: _______________________________________
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of July, 1999 before me, a notary public in and for said
State, personally appeared _______________________, known to me to be the
_______________________ of STRUCTURED ASSET MORTGAGE INVESTMENTS INC., the
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________________
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of July, 1999 before me, a notary public in and for said
State, personally appeared _______________________, known to me to be the
_______________________ of GMAC MORTGAGE CORPORATION, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of July, 1999 before me, a notary public in and for said
State, personally appeared ___________________________, known to me to be the
___________________ of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, and also
known to me to be the person who executed the within instrument as a duly
authorized officer of said corporation on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________________
Notary Public
[Notarial Seal]
