SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
August 31, 1999
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under
the Trust Agreement, dated as of August 1, 1999, providing for
the issuance of Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1999-ALS3)
Structured Asset Securities Corporation
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-68513-08 74-2440850
- --------------------------- ------------- -------------------
State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
------------------------------- ----------
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (212) 526-5594
No Change
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
The Registrant registered issuances of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"),
by a Registration Statement on Form S-3 (Registration File No. 333-68513) (the
"Registration Statement"). Pursuant to the Registration Statement, the
Registrant issued $247,020,788.57 in aggregate principal amount of Class 1-CB,
Class 1-PO, Class 2-NC, Class 2-PO, Class B1, Class B2, Class B3 and Class R
Certificates of its Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 1999-ALS3 on August 30, 1999. This Current
Report on Form 8-K is being filed to satisfy an undertaking, contained in the
definitive Prospectus dated January 15, 1999, as supplemented by the Prospectus
Supplement dated August 27, 1999 (the "Prospectus Supplement"), to file a copy
of the Trust Agreement (as defined below) executed in connection with the
issuance of the Certificates, a form of which was filed as an exhibit to the
Registration Statement.
The Certificates were issued pursuant to a Trust Agreement (the "Trust
Agreement"), attached hereto as Exhibit 4.1, dated as of August 1, 1999, among
Structured Asset Securities Corporation, as depositor (the "Depositor"), Aurora
Loan Services Inc., as master servicer, and The Chase Manhattan Bank, as trustee
(the "Trustee"). The "Certificates" consist of the following classes: Class
1-CB, Class 1-PO, Class 2-NC, Class 2-PO, Class B1, Class B2, Class B3, Class
B4, Class B5, Class B6 and Class R. The Certificates evidence all the beneficial
ownership interest in a trust fund (the "Trust Fund") that consists primarily of
two pools of fixed rate, conventional, first lien, residential mortgage loans
(the "Mortgage Loans") with an aggregate outstanding principal balance of
$251,168,651.75 of August 1, 1999, together with certain other assets.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Trust Agreement.
<PAGE>
Item 7. Financial Statements; Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated August 27, 1999, between Structured Asset
Securities Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of August 1, 1999, among Structured
Asset Securities Corporation, as Depositor, Aurora Loan
Services Inc., as Master Servicer, and U.S. Bank National
Association, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of August
1, 1999, between Lehman Capital, A Division of Lehman Brothers
Holdings Inc., as Seller, and Structured Asset Securities
Corporation, as Purchaser.
99.2 Servicing Agreement, dated as of August 1, 1999, between Lehman
Capital, A Division of Lehman Brothers Holdings Inc., and
Aurora Loan Services Inc., as servicer.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Stanley Labanowski
---------------------------
Name: Stanley Labanowski
Title: Vice President
Dated: September 14, 1999
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description Page No.
- ---------- ----------- --------
1.1 Terms Agreement, dated August 27, 1999, between
Structured Asset Securities Corporation and Lehman
Brothers Inc.
4.1 Trust Agreement, dated as of August 1, 1999, among
Structured Asset Securities Corporation, as Depositor,
Aurora Loan Services Inc., as Master Servicer, and
The Chase Manhattan Bank, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as
of August 1, 1999, between Lehman Capital, A Division
of Lehman Brothers Holdings Inc., as Seller, and
Structured Asset Securities Corporation, as Purchaser.
99.2 Servicing Agreement, dated as of August 1, 1999,
between Lehman Capital, A Division of Lehman Brothers
Holdings Inc., and Aurora Loan Services Inc., as
servicer.
<PAGE>
Exhibit 1.1
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-ALS3
TERMS AGREEMENT
Dated: August 27, 1999
To: Structured Asset Securities Corporation, as Depositor under the
Trust Agreement dated as of August 1, 1999 (the "Trust Agreement").
Re: Underwriting Agreement Standard Terms dated as of April 16, 1996
(the "Standard Terms," and together with this Terms Agreement,
the "Agreement").
Series Designation: Series 1999-ALS3.
Terms of the Series 1999-ALS3 Certificates: Structured Asset Securities
Corporation, Series 1999-ALS3 Mortgage Pass-Through Certificates, Class1-CB,
Class I-PO, Class 2-NC, Class 2-PO, Class B1, Class B2, Class B3, Class B4,
Class B5, Class B6 and Class R (the "Certificates") will evidence, in the
aggregate, the entire beneficial ownership interest in a trust fund (the "Trust
Fund"). The primary assets of the Trust Fund consist of a two pools of fixed
rate, conventional, first lien, residential mortgage loans (the "Mortgage
Loans"). Only the Class 1-CB, Class 1-PO, Class 2-NC, Class 2-PO, Class B1,
Class B2, Class B3 and Class R Certificates (the "Offered Certificates") are
being sold pursuant to the terms hereof.
Registration Statement: File Number 333-68513.
Certificate Ratings: It is a condition of Closing that at the Closing Date: the
Class 1-CB and Class 2-NC Certificates be rated "AAA" by each of Duff & Phelps
Credit Rating Co. ("DCR"), Fitch IBCA, Inc. ("Fitch") and Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies, Inc. ("S&P," together
with DCR and Fitch the "Rating Agencies"); the Class 1-PO and Class 2-PO
Certificates be rated "AAA" by each of DCR and Fitch and "AAAr" by S&P; the
Class B1 Certificates be rated "AA" by DCR and Fitch; the Class B2 Certificates
be rated "A" by DCR; and the Class B3 Certificates be rated "BBB" by DCR.
Terms of Sale of Offered Certificates: The Depositor agrees to sell to Lehman
Brothers Inc. (the "Underwriter") and the Underwriter agrees to purchase from
the Depositor, the Offered Certificates in the principal amounts and prices set
forth on Schedule 1 annexed hereto. The purchase price for the Offered
Certificates shall be the Purchase Price Percentage set forth in Schedule 1 plus
accrued interest at the initial interest rate per annum from and including the
Cut-off Date up to, but not including, the Closing Date.
The Underwriter will offer the Offered Certificates to the public from time to
time in negotiated transactions or otherwise at varying prices to be determined
at the time of sale.
Cut-off Date: August 1, 1999.
Closing Date: 10:00 A.M., New York time, on or about August 30, 1999. On the
Closing Date, the Depositor will deliver the Offered Certificates to the
Underwriter against payment therefor for the account of the Underwriter.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Depositor and the Underwriter in accordance with its terms.
LEHMAN BROTHERS INC.
By: /s/ Stanley Labanowski
-------------------------
Name: Stanley Labanowski
Title: Vice President
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Joseph Kelly
----------------------
Name: Joseph Kelly
Title: Vice President
<PAGE>
Schedule 1
----------
Initial Certificate Certificate Purchase
Principal Interest Price
Class Amount(1) Rate Percentage
- ----- -------------------- ----------- ----------
Class 1-CB $83,692,000.00 7.25% 99.29%
Class 1-PO 347,058.37 0.00%(2) 70.00%
Class 2-NC 144,842,000.00 7.25% 99.00%
Class 2-PO 936,630.21 0.00%(2) 70.00%
Class B1 9,795,000.00 7.25% 95.73%
Class B2 4,520,000.00 7.25% 94.33%
Class B3 2,888,000.00 7.25% 86.07%
Class R 100.00 7.25% 100.00%
- ---------------
(1) Approximate.
(2) The Class 1-PO and Class 2-PO Certificates are principal-only
certificates and, accordingly, will not accrue interest.
Exhibit 4.1
EXECUTION
================================================================================
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
AURORA LOAN SERVICES INC., as Master Servicer,
and
U.S. BANK NATIONAL ASSOCIATION, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of August 1, 1999
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-ALS3
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.................................................2
Section 1.02. Calculations Respecting Mortgage Loans.....................29
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans ..........................................30
Section 2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund ............................33
Section 2.03. Representations and Warranties of the Depositor............34
Section 2.04. Discovery of Breach........................................36
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans.....36
Section 2.06. Grant Clause...............................................37
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates...........................................38
Section 3.02 Registration...............................................38
Section 3.03 Transfer and Exchange of Certificates......................39
Section 3.04 Cancellation of Certificates...............................41
Section 3.05 Replacement of Certificates................................42
Section 3.06 Persons Deemed Owners......................................42
Section 3.07 Temporary Certificates.....................................42
Section 3.08 Appointment of Paying Agent................................42
Section 3.09 Book-Entry Certificates....................................43
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01 Collection Account.........................................44
Section 4.02 Application of Funds in the Collection Account.............46
Section 4.03 Reports to Certificateholders..............................48
Section 4.04 Certificate Account........................................50
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01 Distributions Generally....................................51
Section 5.02 Distributions from the Certificate Account.................52
Section 5.03 Allocation of Realized Losses..............................57
Section 5.04 Advances by Master Servicer and Trustee....................58
Section 5.05 Compensating Interest Payments.............................59
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01 Duties of Trustee..........................................59
Section 6.02 Certain Matters Affecting the Trustee......................62
Section 6.03 Trustee Not Liable for Certificates........................63
Section 6.04 Trustee May Own Certificates...............................63
Section 6.05 Eligibility Requirements for Trustee.......................63
Section 6.06 Resignation and Removal of Trustee.........................64
Section 6.07 Successor Trustee..........................................64
Section 6.08 Merger or Consolidation of Trustee.........................65
Section 6.09 Appointment of Co-Trustee, Separate Trustee or Custodian...65
Section 6.10 Authenticating Agents......................................67
Section 6.11 Indemnification of Trustee.................................67
Section 6.12 Fees and Expenses of Trustee...............................68
Section 6.13 Collection of Monies.......................................68
Section 6.14 Events of Default; Trustee To Act; Appointment of
Successor ...............................................68
Section 6.15 Additional Remedies of Trustee Upon Event of Default.......72
Section 6.16 Waiver of Defaults.........................................72
Section 6.17 Notification to Holders....................................72
Section 6.18 Directions by Certificateholders and Duties of Trustee
During Event of Default .................................72
Section 6.19 Action Upon Certain Failures of the Master Servicer and
Upon Event of Default ...................................73
Section 6.20 Preparation of Tax Returns and Other Reports...............73
ARTICLE VII
PURCHASE AND TERMINATION OF THE TRUST FUND
Section 7.01 Termination of Trust Fund Upon Repurchase or Liquidation
of All Mortgage Loans....................................74
Section 7.02 Procedure Upon Termination of Trust Fund...................75
Section 7.03 Additional Trust Fund Termination Requirements.............75
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01 Limitation on Rights of Holders............................76
Section 8.02 Access to List of Holders..................................77
Section 8.03 Acts of Holders of Certificates............................77
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER
Section 9.01 Duties of the Master Servicer..............................78
Section 9.02 Master Servicer Fidelity Bond and Master Servicer Errors
and Omissions Insurance Policy ..........................78
Section 9.03 Master Servicer's Financial Statements and Related
Information .............................................79
Section 9.04 Power to Act; Procedures...................................79
Section 9.05 Servicing Agreement Between the Master Servicer and
Servicer; Enforcement of Servicer's Obligations..........81
Section 9.06 Collection of Taxes, Assessments and Similar Items.........81
Section 9.07 Termination of Servicing Agreements; Successor Servicers...82
Section 9.08 Master Servicer Liable for Enforcement.....................82
Section 9.09 No Contractual Relationship Between Servicers and
Trustee or Depositor ....................................83
Section 9.10 Assumption of Servicing Agreement by Trustee...............83
Section 9.11 "Due-on-Sale" Clauses; Assumption Agreements...............83
Section 9.12 Release of Mortgage Files..................................83
Section 9.13 Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee .........................84
Section 9.14 Representations and Warranties of the Master Servicer......86
Section 9.15 Closing Certificate and Opinion............................88
Section 9.16 Standard Hazard and Flood Insurance Policies...............88
Section 9.17 Presentment of Claims and Collection of Proceeds...........88
Section 9.18 Maintenance of the Primary Mortgage Insurance Policies.....88
Section 9.19 Trustee To Retain Possession of Certain Insurance Policies
and Documents ...........................................89
Section 9.20 Realization Upon Defaulted Mortgage Loans..................89
Section 9.21 Compensation to the Master Servicer........................89
Section 9.22 REO Property...............................................90
Section 9.23 [Omitted]..................................................91
Section 9.24 Reports to the Trustee.....................................91
Section 9.25 Annual Officer's Certificate as to Compliance..............91
Section 9.26 Annual Independent Accountants' Servicing Report...........92
Section 9.27 Merger or Consolidation....................................92
Section 9.28 Resignation of Master Servicer.............................92
Section 9.29 Assignment or Delegation of Duties by the Master Servicer..93
Section 9.30 Limitation on Liability of the Master Servicer and Others..93
Section 9.31 Indemnification; Third-Party Claims........................94
ARTICLE X
REMIC ADMINISTRATION
Section 10.01 REMIC Administration.......................................94
Section 10.02 Prohibited Transactions and Activities.....................96
Section 10.03 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status ............................................96
Section 10.04 REO Property...............................................96
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Binding Nature of Agreement; Assignment....................97
Section 11.02 Entire Agreement...........................................97
Section 11.03 Amendment..................................................97
Section 11.04 Voting Rights..............................................98
Section 11.05 Provision of Information...................................99
Section 11.06 Governing Law..............................................99
Section 11.07 Notices....................................................99
Section 11.08 Severability of Provisions.................................99
Section 11.09 Indulgences; No Waivers...................................100
Section 11.10 Headings Not To Affect Interpretation.....................100
Section 11.11 Benefits of Agreement.....................................100
Section 11.12 Special Notices to the Rating Agencies....................100
Section 11.13 Counterparts..............................................101
Section 11.14 Transfer of Servicing.....................................101
<PAGE>
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Initial Certification
Exhibit B-2 Form of Interim Certification
Exhibit B-3 Form of Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Servicing Agreement
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited
Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
Exhibit K Custodial Agreement
Schedule A Mortgage Loan Schedule
<PAGE>
This TRUST AGREEMENT, dated as of August 1, 1999 (the "Agreement"), is
by and among STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation, as
depositor (the "Depositor"), AURORA LOAN SERVICES INC., as master servicer (the
"Master Servicer"), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association with its main office in St. Paul, Minnesota, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller"), and at the Closing
Date is the owner of the Mortgage Loans and the other property being conveyed by
it to the Trustee for inclusion in the Trust Fund. On the Closing Date, the
Depositor will acquire the Certificates from the Trust Fund, as consideration
for its transfer to the Trust Fund of the Mortgage Loans and the other property
constituting the Trust Fund. The Depositor has duly authorized the execution and
delivery of this Agreement to provide for the conveyance to the Trustee of the
Mortgage Loans and the other property constituting the Trust Fund. All covenants
and agreements made by the Depositor, the Master Servicer and the Trustee herein
with respect to the Mortgage Loans and the other property constituting the Trust
Fund are for the benefit of the Holders from time to time of the Certificates.
The Depositor and the Master Servicer are entering into this Agreement, and the
Trustee is accepting the Trust Fund created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as a real estate mortgage investment
conduit (a "REMIC"). Each Certificate, other than the Class R Certificate,
represents ownership of a regular interest in the REMIC for purposes of the
REMIC Provisions. The Class R Certificate represents ownership of the sole class
of residual interest in the REMIC.
<PAGE>
The following table sets forth the Class designation, Interest Rate,
initial Class Principal Amount and minimum denomination for each Class of
Certificates comprising the interests in the Trust Fund created hereunder.
Class Initial Class
Designation Interest Rate Principal Amount Minimum Denominations
- ----------- ------------- ---------------- ---------------------
Class 1-CB 7.25% $ 83,692,000.00 $100,000
Class 1-PO 0.00(1) 347,058.00 100,000
Class 2-NC 7.25 144,842,000.00 100,000
Class 2-PO 0.00(1) 936,630.00 100,000
Class B1 7.25 9,795,000.00 100,000
Class B2 7.25 4,520,000.00 100,000
Class B3 7.25 2,888,000.00 100,000
Class B4 7.25 1,381,000.00 250,000
Class B5 7.25 1,004,000.00 250,000
Class B6 7.25 1,762,863.18 250,000
Class R 7.25 100.00 100
- ---------------------------
(1) The Class 1-PO and Class 2-PO Certificates are Principal Only
Certificates and, accordingly, will not accrue interest.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $251,168,651.75.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage servicing practices of prudent
mortgage servicing institutions that service or master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Trustee
or the Master Servicer or (y) as provided in the applicable Servicing Agreement,
to the extent applicable to the Servicer.
Accountant: A person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accretion Directed Certificate: None.
Accretion Termination Date: None.
Accrual Amount: As to any Class of Accrual Certificates and each
Distribution Date through the Credit Support Depletion Date, the sum of (x) any
amount of Accrued Certificate Interest allocable to such Class pursuant to
Section 5.02(a)(ii) on such Distribution Date and (y) any Interest Shortfall
allocable to such Class pursuant to Section 5.02(a)(iii) on such Distribution
Date. As to any Class of Accrual Certificates and each Distribution Date after
the Credit Support Depletion Date, zero.
Accrual Certificate: None.
Accrual Component: None.
Accrual Period: With respect to any Distribution Date and any Class of
Certificates (other than any Class of Principal Only Certificates), the
one-month period beginning immediately following the end of the preceding
Accrual Period (or from the Cut-off Date, in the case of the first Accrual
Period) and ending on the last day of the month preceding the month in which
such Distribution Date occurs.
Accrued Certificate Interest: As to any Class of Certificates (other
than any Principal Only Certificates) and any Distribution Date, the product of
the Interest Rate for such Class of Certificates and the Class Principal Amount
(or Class Notional Amount) of such Class of Certificates immediately preceding
such Distribution Date, as reduced by such Class's share of the interest portion
of (i) any Excess Losses for such Distribution Date and (ii) any Relief Act
Reduction, in each case allocable among the Senior Certificates of the related
Certificate Group pro rata based on the Accrued Certificate Interest otherwise
distributable thereto, and allocable to the Subordinate Certificates pro rata
based on interest accrued on their respective Apportioned Principal Balances.
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
Additional Collateral: None.
Adjustable Rate Mortgage Loan: None.
Advance: An advance of the aggregate of payments of principal and
interest (net of the Master Servicing Fee and the Servicing Fee) on one or more
Mortgage Loans that were due on the Due Date in the related Due Period and not
received as of the close of business on the related Determination Date, required
to be made by or on behalf of the Master Servicer and any Servicer (or by the
Trustee) pursuant to Section 5.04.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Master Servicing Compensation: As to any Distribution Date,
the sum of (x) the aggregate of the Master Servicing Fees payable to the Master
Servicer in respect of such Distribution Date and (y) all income and gain
realized from the investment of funds in the Collection Account during the
period from and including the Deposit Date in the calendar month immediately
preceding the month in which such Distribution Date occurs, to but excluding the
Deposit Date relating to such Distribution Date.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
Balances for all Mortgage Loans at any date of determination.
Aggregate Subordinate Percentage: The sum of the Class Principal
Amounts of the Subordinate Certificates divided by the sum of the Non-PO Pool
Balances for all Mortgage Pools.
Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
Apportioned Principal Balance: As to any Class of Subordinate
Certificates and any Distribution Date, the Class Principal Amount of such Class
multiplied by a fraction, the numerator of which is the applicable Group
Subordinate Amount and the denominator of which is the sum of the Group
Subordinate Amounts.
Appraised Value: With respect to any Mortgage Loan, the amount set
forth in an appraisal made in connection with the origination of such Mortgage
Loan as the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Available Distribution Amount: As to each Mortgage Pool and on any
Distribution Date, the sum of the following amounts:
(1) the total amount of all cash received by the Master Servicer
through the Remittance Date and deposited by the Master Servicer by the
Deposit Date for such Distribution Date on the Mortgage Loans of such
Mortgage Pool (including proceeds of any Insurance Policy and any other
credit support relating to such Mortgage Loans), plus all Advances made
by the Master Servicer or any Servicer (or the Trustee) for such
Distribution Date, any Compensating Interest Payment for such date and
Mortgage Pool and any amounts paid by any Servicer in respect of
Prepayment Interest Shortfalls in respect of the related Mortgage Loans
for such date, but not including:
(a) all amounts distributed pursuant to Section 5.02 on
prior Distribution Dates;
(b) all Scheduled Payments of principal and interest
collected but due on a date subsequent to the related Due Period;
(c) all Principal Prepayments received or identified by the
applicable Servicer after the applicable Prepayment Period
(together with any interest payments received with such
prepayments to the extent that they represent the payment of
interest accrued on the related Mortgage Loans for the period
subsequent to the applicable Prepayment Period);
(d) any other unscheduled collection, including Net
Liquidation Proceeds and Insurance Proceeds, received by the
Master Servicer after the applicable Prepayment Period; and
(e) all fees and amounts due or reimbursable to the Master
Servicer or any Servicer pursuant to the terms of this Agreement
or the applicable Servicing Agreement;
(f) any Prepayment Penalty Amounts;
(g) any Prepayment Interest Excess; and
(h) such portion of each payment in respect of interest
representing Retained Interest.
(2) any other payment made by any Servicer, the Seller, the
Depositor, or any other Person with respect to such Distribution Date
(including the Purchase Price with respect to any Mortgage Loan
repurchased by the Seller, the Depositor or any other Person).
Balloon Mortgage Loan: None.
Balloon Payment: Not applicable.
Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee, receiver
or liquidator, dissolution, or termination, as the case may be, of such Person
pursuant to the provisions of either the United States Bankruptcy Code of 1986,
as amended, or any other similar state laws.
Bankruptcy Coverage Termination Date: As to each Mortgage Pool, the
Distribution Date on which the related Bankruptcy Loss Limit has been reduced to
zero (or less than zero).
Bankruptcy Loss Limit: As of the Cut-off Date, $180,000, which amount
shall be reduced from time to time by the amount of Bankruptcy Losses allocated
to the Certificates.
Bankruptcy Losses: Any Realized Losses (as reported by the applicable
Servicer to the Master Servicer) arising from a proceeding under the United
States Bankruptcy Code or any other similar state law or other proceeding with
respect to the Mortgagor of or Mortgaged Property under a Mortgage Loan,
including, without limitation, any such loss arising from (a) the difference
between (i) the principal amount that would have been due under the original
scheduled payments of principal and interest due on the related Mortgage Loan
and (ii) the value established in the relevant court with respect to such
Mortgaged Property, including without limitation a Deficient Valuation, or (b) a
Debt Service Reduction.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
to the effect that any proposed transfer will not (i) cause the assets of the
Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the Depositor
or the Trustee.
Blanket Mortgage: Not applicable.
Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by a Clearing
Agency as described in Section 3.09; provided, that after the occurrence of a
condition whereupon book-entry registration and transfer are no longer permitted
and Definitive Certificates are to be issued to Certificate Owners, such
Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of the
Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: the Class 1-CB, Class 1-PO, Class 2-NC, Class 2-PO, Class B1,
Class B2 and Class B3 Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day
on which banking institutions in New York, New York or, if other than New York,
the city in which the Corporate Trust Office of the Trustee is located, or the
State of Colorado, or (iii) with respect to any Remittance Date or any Servicer
reporting date, the States specified in the definition of "Business Day" in the
applicable Servicing Agreement, are authorized or obligated by law or executive
order to be closed.
Certificate: Any one of the certificates signed and countersigned by
the Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in
accordance with the provisions of Section 4.04.
Certificate Group: The Group 1 Certificates or Group 2 Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate other
than a Notional Certificate, at the time of determination, the maximum specified
dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the initial principal amount set forth on
the face of such Certificate (plus, in the case of any Negative Amortization
Certificate, any Deferred Interest allocated thereto on previous Distribution
Dates, and plus, in the case of any Accrual Certificate, its Percentage Interest
of any related Accrual Amount for each previous Distribution Date), less the
amount of all principal distributions previously made with respect to such
Certificate, all Realized Losses allocated to such Certificate, and, in the case
of a Subordinate Certificate, any Subordinate Certificate Writedown Amount
allocated to such Certificate. For purposes of Article V hereof, unless
specifically provided to the contrary, Certificate Principal Amounts shall be
determined as of the close of business of the immediately preceding Distribution
Date, after giving effect to all distributions made on such date. Notional
Certificates are issued without Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
Class: All Certificates bearing the same class designation.
Class PO Deferred Amount: As to any Distribution Date on or prior to
the Credit Support Depletion Date and either of the Class 1-PO and Class 2-PO
Certificates, the aggregate of the applicable PO Percentage of the principal
portion of each Realized Loss on a Discount Mortgage Loan in the related
Mortgage Pool, other than, in each case, an Excess Loss, to be allocated to such
Class of Certificates on such Distribution Date or previously allocated to such
Class of Certificates and not yet paid to the Holders of such Class of
Certificates pursuant to Section 5.02(a)(v).
Class PO Certificate: Any Class 1-PO and Class 2-PO Certificate.
Class B Certificate: Any Class B1, Class B2, Class B3, Class B4, Class
B5 or Class B6 Certificate.
Class Notional Amount: Not applicable.
Class Principal Amount: With respect to each Class of Certificates
other than any Class of Notional Certificates, the aggregate of the Certificate
Principal Amounts of all Certificates of such Class at the date of
determination. With respect to each Class of Notional Certificates, zero.
Class Percentage: With respect to each Class of Subordinate
Certificates, for each Distribution Date, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such Distribution
Date by the aggregate Certificate Principal Amount of all Certificates
immediately prior to such date.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: August 30, 1999.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Account: A separate account established and maintained by
the Master Servicer pursuant to Section 4.01.
Compensating Interest Payment: With respect to each Mortgage Pool and
any Distribution Date, an amount equal to the excess of (x) the aggregate of any
Prepayment Interest Shortfalls with respect to such Mortgage Pool and such
Distribution Date over (y) the aggregate of any amounts required to be paid by
any Servicer in respect of such shortfalls but not paid; provided, that such
amount, to the extent payable by the Master Servicer, shall not exceed the
Aggregate Master Servicing Compensation that would be payable to the Master
Servicer in respect of such Mortgage Pool and such Distribution Date without
giving effect to any Compensating Interest Payment.
Component: None.
Component Certificate: None.
Component Interest Rate: None.
Component Principal Amount: Not applicable.
Conventional Loan: A Mortgage Loan that is not insured by the United
States Federal Housing Administration or guaranteed by the United States
Veterans Administration.
Converted Mortgage Loan: None.
Convertible Mortgage Loan: None.
Cooperative Corporation: Not applicable.
Cooperative Loan: Not applicable.
Cooperative Loan Documents: Not applicable.
Cooperative Property: Not applicable.
Cooperative Shares: Not applicable.
Cooperative Unit: Not applicable.
Corporate Trust Office: The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
Corresponding Class: Not applicable.
Corresponding Component: Not applicable.
Credit Score: With respect to any Mortgage Loan, a numerical assessment
of default risk with respect to the Mortgagor under such Mortgage Loan,
determined based on a methodology developed by Fair, Isaac & Co., Inc.
Credit Support Depletion Date: The Distribution Date on which, giving
effect to all distributions on such date, the aggregate Certificate Principal
Amount of the Subordinate Certificates is reduced to zero.
Credit Support Percentage: As to any Class of Subordinate Certificates
and any Distribution Date, the sum of the Class Percentages of all Classes of
Certificates that rank lower in priority than such Class.
Custodial Agreement: The custodial agreement attached as Exhibit K
hereto, and any custodial agreement subsequently executed by the Trustee
substantially in the form thereof.
Custodian: Each custodian appointed by the Trustee pursuant to a
Custodial Agreement, and any successor thereto.
Cut-off Date: August 1, 1999.
Cut-off Date Aggregate Principal Balance: With respect to the Mortgage
Loans in the Trust Fund on the Closing Date, the Aggregate Principal Balance for
all such Mortgage Loans as of the Cut-off Date.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
of the Scheduled Payment that the related Mortgagor is obligated to pay on any
Due Date as a result of any proceeding under Bankruptcy law or any similar
proceeding.
Deferred Interest: With respect to any Class of Negative Amortization
Certificates and any Distribution Date, the lesser of (x) the applicable
Interest Distribution Amount for such date (without giving effect to any
Deferred Interest) and (y) the aggregate Mortgage Loan Negative Amortization, if
any, for the related Due Period.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under such Mortgage Loan, which valuation
results from a proceeding under Bankruptcy law or any similar proceeding.
Definitive Certificate: A Certificate of any Class issued in
definitive, fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the
Trust Fund pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.
Deposit Date: With respect to each Distribution Date, the Business Day
immediately preceding such Distribution Date.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation having its principal place of business in New York, or its
successors in interest.
Determination Date: With respect to each Distribution Date, the 18th
day of the month in which such Distribution Date occurs, or, if such 18th day is
not a Business Day, the next succeeding Business Day.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate less
than 7.25% per annum.
Disqualified Organization: Either (i) the United States, (ii) any state
or political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative described
in section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code unless such organization is subject to the tax imposed by section 511
of the Code, (vii) any organization described in section 1381(a)(2)(C) of the
Code, (viii) any "electing large partnership" described in section 775 of the
Code, or (ix) any other entity designated as a Disqualified Organization by
relevant legislation amending the REMIC Provisions and in effect at or proposed
to be effective as of the time of the determination. In addition, a corporation
will not be treated as an instrumentality of the United States or of any state
or political subdivision thereof if all of its activities are subject to tax
and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.
Distribution Date: The 25th day of each month, or, if such 25th day is
not a Business Day, the next succeeding Business Day commencing in September
1999.
Due Date: With respect to any Mortgage Loan, the date on which a
Scheduled Payment is due under the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable to
the Rating Agencies or (ii) an account or accounts the deposits in which are
insured by the FDIC to the limits established by such corporation, provided that
any such deposits not so insured shall be maintained in an account at a
depository institution or trust company whose commercial paper or other short
term debt obligations (or, in the case of a depository institution or trust
company which is the principal subsidiary of a holding company, the commercial
paper or other short term debt or deposit obligations of such holding company or
depository institution, as the case may be) have been rated by each Rating
Agency in its highest short-term rating category, or (iii) a segregated trust
account or accounts (which shall be a "special deposit account") maintained with
the Trustee or any other federal or state chartered depository institution or
trust company, acting in its fiduciary capacity, in a manner acceptable to the
Trustee and the Rating Agencies. Eligible Accounts may bear interest.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of
America or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and
credit of the United States of America ("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates
of deposits of, or bankers' acceptances issued by, any depository
institution or trust company (including U.S. subsidiaries of foreign
depositories and the Trustee or any agent of the Trustee, acting in its
respective commercial capacity) incorporated or organized under the
laws of the United States of America or any state thereof and subject
to supervision and examination by federal or state banking authorities,
so long as at the time of investment or the contractual commitment
providing for such investment the commercial paper or other short-term
debt obligations of such depository institution or trust company (or,
in the case of a depository institution or trust company which is the
principal subsidiary of a holding company, the commercial paper or
other short-term debt or deposit obligations of such holding company or
deposit institution, as the case may be) have been rated by each Rating
Agency in its highest short-term rating category or one of its two
highest long-term rating categories;
(iii) repurchase agreements collateralized by Direct Obligations
or securities guaranteed by GNMA, FNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed
obligation rated by each Rating Agency in its highest short-term rating
category;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of
America or any state thereof which have a credit rating from each
Rating Agency, at the time of investment or the contractual commitment
providing for such investment, at least equal to one of the two highest
short-term credit ratings of each Rating Agency; provided, however,
that securities issued by any particular corporation will not be
Eligible Investments to the extent that investment therein will cause
the then outstanding principal amount of securities issued by such
corporation and held as part of the Trust Fund to exceed 20% of the sum
of the Aggregate Principal Balance and the aggregate principal amount
of all Eligible Investments in the Certificate Account; provided,
further, that such securities will not be Eligible Investments if they
are published as being under review with negative implications from
either Rating Agency;
(v) commercial paper (including both noninterest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance
thereof) rated by each Rating Agency in its highest short-term ratings;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of
the United States of America or its agencies or instrumentalities
(which obligations are backed by the full faith and credit of the
United States of America) held by a custodian in safekeeping on behalf
of the holders of such receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or
investment, (A) rated in the highest rating category by each Rating
Agency or (B) that would not adversely affect the then current rating
by either Rating Agency of any of the Certificates.
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
ERISA-Restricted Certificate: Any Subordinate Certificate.
Escrow Account: Any account established and maintained by the
applicable Servicer pursuant to the applicable Servicing Agreement.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 6.14(a).
Excess Loss: Any Bankruptcy Loss, or portion thereof, in excess of the
then-applicable Bankruptcy Loss Limit, any Fraud Loss, or portion thereof, in
excess of the then-applicable Fraud Loss Limit, and any Special Hazard Loss, or
portion thereof, in excess of the then-applicable Special Hazard Loss Limit.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Scheduled Distribution Date: September 25, 2029.
Financial Intermediary: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
Fitch: Fitch IBCA, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
Fraud Loss: Any Realized Loss on a Mortgage Loan sustained by reason of
a default arising from fraud, dishonesty or misrepresentation in connection with
the related Mortgage Loan, as reported by the applicable Servicer to the Master
Servicer.
Fraud Loss Limit: As of any Distribution Date after the Cut-off Date
(x) prior to the first anniversary of the Cut-off Date, $5,023,373, less the
aggregate of the Fraud Losses since the Cut-off Date, and (y) from the first to
the fourth anniversary of the Cut-off Date, an amount equal to (1) the lesser of
(a) the Fraud Loss Limit as of the most recent anniversary of the Cut-off Date
and (b) 2% (from the first to but excluding the second anniversary of the
Cut-off Date) or 1% (from and including the second, third and fourth anniversary
of the Cut-off Date) of the aggregate principal balance of all the Mortgage
Loans as of the most recent anniversary of the Cut-off Date less (2) the
aggregate of Fraud Losses since the most recent anniversary of the Cut-off Date.
On or after the fifth anniversary of the Cut-off Date, the Fraud Loss Limit
shall be zero.
GNMA: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.
Group 1: All of the Group 1 Certificates.
Group 1 Certificate: Any Class 1-CB or Class 1-PO Certificate.
Group 2: All of the Group 2 Certificates.
Group 2 Certificate: Any Class 2-NC, Class 2-PO or Class R
Certificate.
Group Subordinate Amount: As to any Mortgage Pool and any Distribution
Date, the excess of the Non-PO Pool Balance of such Mortgage Pool over the sum
of the aggregate of the Certificate Principal Amounts of the Non-PO Senior
Certificates of the related Certificate Group.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee, the Master
Servicer, any Servicer or any Affiliate thereof shall be deemed not to be
outstanding in determining whether the requisite percentage necessary to effect
any such consent has been obtained, except that, in determining whether the
Trustee shall be protected in relying upon any such consent, only Certificates
which a Responsible Officer of the Trustee knows to be so owned shall be
disregarded. The Trustee may request and conclusively rely on certifications by
the Depositor, the Master Servicer and any Servicer in determining whether any
Certificates are registered to an Affiliate of the Depositor, the Master
Servicer or such Servicer.
HUD: The United States Department of Housing and Urban Development, or
any successor thereto.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
Insurance Policy: Any Primary Mortgage Insurance Policy and any
standard hazard insurance policy, earthquake insurance policy or title insurance
policy relating to the Mortgage Loans or the Mortgaged Properties, to be in
effect as of the Closing Date or thereafter during the term of this Agreement.
Insurance Proceeds: Amounts paid by the insurer under any Insurance
Policy, other than amounts (i) to cover expenses incurred by or on behalf of the
Servicer in connection with procuring such proceeds, (ii) to be applied to
restoration or repair of the related Mortgaged Property or (iii) required to be
paid over to the Mortgagor pursuant to law or the related Mortgage Note.
Interest Distribution Amount: Not applicable.
Interest Rate: With respect to each Class of Certificates, the
applicable per annum rate set forth in the Preliminary Statement hereto.
Interest Shortfall: With respect to any Class of Certificates (other
than a Principal Only Certificate) and any Distribution Date, any Accrued
Certificate Interest not distributed (or added to principal) with respect to any
previous Distribution Date, other than any Net Prepayment Interest Shortfalls.
Intervening Assignments: The original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Maturity Date: August 25, 2029.
Lehman Capital: Lehman Capital, A Division of Lehman Brothers Holdings
Inc., or any successor in interest.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Master Servicer or the applicable Servicer has determined that all amounts that
it expects to recover on behalf of the Trust Fund from or on account of such
Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Master Servicer
or a Servicer in connection with the liquidation of any defaulted Mortgage Loan
and are not recoverable under the applicable Primary Mortgage Insurance Policy,
including, without limitation, foreclosure and rehabilitation expenses, legal
expenses and unreimbursed amounts expended pursuant to Sections 9.06, 9.16 or
9.22.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan, including any amounts remaining in the related Escrow
Account.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the ratio of
the principal balance of such Mortgage Loan at origination, or such other date
as is specified, to the Original Value thereof.
Maintenance: Not applicable.
Master Servicer: Aurora Loan Services Inc., or any successor in
interest, or if any successor master servicer shall be appointed as herein
provided, then such successor master servicer.
Master Servicing Fee: As to any Distribution Date and each Mortgage
Loan, an amount equal to the product of the Master Servicing Fee Rate and the
Scheduled Principal Balance of such Mortgage Loan as of the first day of the
related Due Period. The Master Servicing Fee for any Mortgage Loan shall be
payable in respect of any Distribution Date solely from the interest portion of
the Scheduled Payment or other payment or recovery with respect to such Mortgage
Loan.
Master Servicing Fee Rate: 0.02% per annum.
Material Defect: As defined in Section 2.02(c) hereof.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
Corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or an Assignment of Mortgage, has been or will be recorded in the name of MERS,
as agent for the holder from time to time of the Mortgage Note.
Moody's: Moody's Investors Service, Inc., or any successor in
interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering a
fee simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage File: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan required to be delivered to the Trustee
or a Custodian pursuant to this Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 or Section 2.05,
including without limitation, each Mortgage Loan listed on the Mortgage Loan
Schedule, as amended from time to time.
Mortgage Loan Sale Agreement: The agreement, dated as of August 1,
1999, for the sale of the Mortgage Loans by Lehman Capital to the Depositor.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A,
which shall identify each Mortgage Loan, as such schedule may be amended from
time to time pursuant to Section 2.02.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: Either of Pool 1 or Pool 2.
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan.
Mortgaged Property: The fee simple interest in real property, together
with improvements thereto including any exterior improvements to be completed
within 120 days of disbursement of the related Mortgage Loan proceeds securing
the indebtedness of the Mortgagor under the related Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization Certificate: None.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
the related Liquidation Proceeds net of unreimbursed expenses incurred in
connection with liquidation or foreclosure and unreimbursed Advances, Servicing
Advances, Servicing Fees and Retained Interest, if any, received and retained in
connection with the liquidation of such Mortgage Loan.
Net Mortgage Rate: With respect to any Mortgage Loan, the Mortgage Rate
thereof reduced by the sum of the applicable Servicing Fee Rate, the Master
Servicing Fee Rate, the Trustee Fee Rate and the Retained Interest Rate.
Net Prepayment Interest Shortfall: With respect to each Mortgage Pool
and any Distribution Date, the excess, if any, of any Prepayment Interest
Shortfalls with respect to the Mortgage Loans in such Mortgage Pool for such
date over the sum of any amounts paid by the Servicers with respect to such
shortfalls and any amount that is required to be paid by the Master Servicer in
respect of such shortfalls pursuant to this Agreement.
Non-PO Senior Certificate: Any Class 1-CB, Class 2-NC or Class R
Certificate.
Non-PO Percentage: As to any Discount Mortgage Loan in any Mortgage
Pool, the percentage equivalent of the fraction, the numerator of which is the
Net Mortgage Rate of such Discount Mortgage Loan and the denominator of which is
7.25%. As to any Premium Mortgage Loan in any Mortgage Pool, 100%.
Non-PO Pool Balance: As to each Mortgage Pool and any Distribution
Date, the sum of the applicable Non-PO Percentage of the Scheduled Principal
Balance of each Mortgage Loan included in such Mortgage Pool.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate
equal to or greater than 7.25% per annum.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Non-U.S. Person: Any individual, corporation, partnership or other
person other than a citizen or resident of the United States; a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, including for this purpose, the District of
Columbia; an estate that is subject to U.S. federal income tax regardless of the
source of its income; or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States trustees have authority to control all substantial decisions
of the trust.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Class Notional
Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: None.
Notional Component: None.
Notional Component Amount: None.
Offering Document: Either of the Prospectus or the private placement
memorandum dated August 27, 1999 relating to the Class B4, Class B5 and Class B6
Certificates.
Officer's Certificate: A certificate signed by the Chairman of the
Board, any Vice Chairman, the President, any Vice President or any Assistant
Vice President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
in form and substance to the Trustee, and who may be in-house or outside counsel
to the Depositor, the Master Servicer or a Servicer but which must be
Independent outside counsel with respect to any such opinion of counsel
concerning the transfer of any Residual Certificate or concerning certain
matters with respect to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the taxation, or the federal income tax status, of each
REMIC.
Original Credit Support Percentage: With respect to each Class of
Subordinate Certificates, the Credit Support Percentage for such Class of
Certificates on the Closing Date.
Original Group Subordinate Amount: As to any Mortgage Pool, the Group
Subordinate Amount for such Mortgage Pool on the Closing Date.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor at
the time the related Mortgage Loan was originated.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than a Notional Certificate, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal Amount
thereof divided by the initial Class Principal Amount of all Certificates of the
same Class. With respect to any Notional Certificate, the Percentage Interest
evidenced thereby shall be as specified on the face thereof.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Placement Agent: Lehman Brothers Inc.
Plan Asset Regulations: The Department of Labor regulations set forth
in 29 C.F.R. 2510.3-101.
PO Percentage: As to any Discount Mortgage Loan in any Mortgage Pool,
the percentage equivalent of a fraction, the numerator of which is 7.25% minus
the Net Mortgage Rate of such Discount Mortgage Loan and the denominator of
which is 7.25%. As to any Non-Discount Mortgage Loan in any Mortgage Pool,
0.000%.
PO Principal Distribution Amount: For any Distribution Date and for
each Certificate Group, the sum of the following amounts:
(i) the applicable PO Percentage of the principal portion of each
Scheduled Payment (without giving effect to any Debt Service Reduction
occurring prior to the Bankruptcy Coverage Termination Date) on each
Mortgage Loan in the related Mortgage Pool due during the related Due
Period;
(ii) the applicable PO Percentage of each of the following
amounts: (1) each Principal Prepayment collected on a Mortgage Loan in
the related Mortgage Pool during the applicable Prepayment Period, (2)
each other unscheduled collection, including Insurance Proceeds and Net
Liquidation Proceeds (other than with respect to any Mortgage Loan in
the related Mortgage Pool that was finally liquidated during the
applicable Prepayment Period) representing or allocable to recoveries
of principal of such Mortgage Loan in the related Mortgage Pool
received during the applicable Prepayment Period and (3) the principal
portion of all proceeds of the purchase of any Mortgage Loan in the
related Mortgage Pool (or, in the case of a permitted substitution,
amounts representing a principal adjustment) actually received by the
Trustee with respect to the applicable Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to
principal of any Mortgage Loan in the related Mortgage Pool that was
finally liquidated during the related Prepayment Period, the applicable
PO Percentage of the related net Liquidation Proceeds allocable to
principal; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Pool 1: The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool 1.
Pool 2: The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool 2.
Premium Mortgage Loan. Any Mortgage Loan with a Net Mortgage Rate
greater than 7.25% per annum.
Prepayment Interest Excess: With respect to any Principal Prepayment in
full received from the first day through the sixteenth day of any month, all
amounts paid in respect of interest on such Principal Prepayment.
Prepayment Interest Shortfall: With respect to any Distribution Date
and (x) any Principal Prepayment in part (other than any such prepayment
received on the first of the month) and (y) any Principal Prepayment in full
received on or after the seventeenth day of the month immediately preceding the
month of such Distribution Date, but on or before the last day of the month
immediately preceding the month of such Distribution Date, the difference
between (i) one full month's interest at the applicable Mortgage Rate (giving
effect to any applicable Relief Act Reduction), as reduced by the Master
Servicing Fee Rate, the applicable Servicing Fee Rate and the Retained Interest
Rate, on the outstanding principal balance of such Mortgage Loan immediately
prior to such prepayment and (ii) the amount of interest actually received with
respect to such Mortgage Loan in connection with such Principal Prepayment.
Prepayment Penalty Amounts: With respect to any Distribution Date, all
premiums or charges paid by the obligors under the Mortgage Notes due to
Principal Prepayments collected by the Servicers during the immediately
preceding Prepayment Period.
Prepayment Period: With respect to any Distribution Date and any
partial Principal Prepayment, the period from the second day of the month
immediately preceding the month of such Distribution Date to the first day of
the month of such Distribution Date. With respect to any Distribution Date and a
full Principal Prepayment, the period from the seventeenth day of the month
immediately preceding the month of such Distribution Date to the sixteenth day
of the month of such Distribution Date.
Primary Mortgage Insurance Policy: Mortgage guaranty insurance, if any,
on an individual Mortgage Loan, as evidenced by a policy or certificate.
Principal Amount Schedules: Not applicable.
Principal Only Certificate: Any Class 1-PO or Class 2-PO Certificate.
Principal Prepayment: Any Mortgagor payment of principal (other than a
Balloon Payment) or other recovery of principal on a Mortgage Loan that is
recognized as having been received or recovered in advance of its scheduled Due
Date and applied to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the Mortgage Note or the applicable Servicing
Agreement.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: Not applicable.
Prospectus: The prospectus supplement dated August 30, 1999, together
with the accompanying prospectus dated January 15, 1999, relating to the Class
1-CB, Class 2-NC, Class 1-PO, Class 2-PO, Class B1, Class B2, Class B3 and Class
R Certificates.
Purchase Price: With respect to the repurchase of a Mortgage Loan
pursuant to this Agreement, an amount equal to the sum of (a) 100% of the unpaid
principal balance of such Mortgage Loan and (b) accrued interest thereon at the
Mortgage Rate, from the date as to which interest was last paid to (but not
including) the Due Date immediately preceding the related Distribution Date. The
Master Servicer or the applicable Servicer (or the Trustee, if applicable) shall
be reimbursed from the Purchase Price for any Mortgage Loan or related REO
Property for any Advances made with respect to such Mortgage Loan that are
reimbursable to the Master Servicer or such Servicer under this Agreement or the
related Servicing Agreement, as well as any unreimbursed Servicing Advances and
accrued and unpaid Master Servicing Fees or Servicing Fees, as applicable.
Qualified GIC: A guaranteed investment contract or surety bond
providing for the investment of funds in the Collection Account or the
Certificate Account and insuring a minimum, fixed or floating rate of return on
investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other corporation
whose long-term debt is rated by each Rating Agency in one of its two
highest rating categories or, if such insurance company has no
long-term debt, whose claims paying ability is rated by each Rating
Agency in one of its two highest rating categories, and whose
short-term debt is rated by each Rating Agency in its highest rating
category;
(b) provide that the Trustee may exercise all of the rights under
such contract or surety bond without the necessity of taking any action
by any other Person;
(c) provide that if at any time the then current credit standing
of the obligor under such guaranteed investment contract is such that
continued investment pursuant to such contract of funds would result in
a downgrading of any rating of the Certificates, the Trustee shall
terminate such contract without penalty and be entitled to the return
of all funds previously invested thereunder, together with accrued
interest thereon at the interest rate provided under such contract to
the date of delivery of such funds to the Trustee;
(d) provide that the Trustee's interest therein shall be
transferable to any successor trustee hereunder: and
(e) provide that the funds reinvested thereunder and accrued
interest thereon be returnable to the Collection Account or the
Certificate Account, as the case may be, not later than the Business
Day prior to any Distribution Date.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the related Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability is
rated by each Rating Agency in its highest rating category or whose selection as
an insurer will not adversely affect the rating of the Certificates.
Qualifying Substitute Mortgage Loan: In the case of a Mortgage Loan
substituted for a Deleted Mortgage Loan, a Mortgage Loan that, on the date of
substitution, (i) has a Scheduled Principal Balance (together with that of any
other mortgage loan substituted for the same Deleted Mortgage Loan) as of the
Due Date in the month in which such substitution occurs not in excess of the
Scheduled Principal Balance of the related Deleted Mortgage Loan, provided,
however, that, to the extent that the Scheduled Principal Balance of such
Mortgage Loan is less than the Scheduled Principal Balance of the related
Deleted Mortgage Loan, then such differential in principal amount, together with
interest thereon at the applicable Mortgage Rate net of the Master Servicing Fee
and the applicable Servicing Fee from the date as to which interest was last
paid through the end of the Due Period in which such substitution occurs, shall
be paid by the party effecting such substitution to the Trustee for deposit into
the Certificate Account, and shall be treated as a Principal Prepayment
hereunder; (ii) has a Net Mortgage Rate not lower than the Net Mortgage Rate of
the related Deleted Mortgage Loan; (iii) has a remaining stated term to maturity
not longer than, and not more than one year shorter than, the remaining term to
stated maturity of the related Deleted Mortgage Loan; (iv) (A) has a
Loan-to-Value Ratio as of the date of such substitution of not greater than 80%,
provided, however, that if the related Deleted Mortgage Loan has a Loan-to-Value
Ratio of greater than 80%, then the Loan-to-Value Ratio of such substitute
Mortgage Loan may be greater than 80% but shall not be greater than the
Loan-to-Value Ratio of the related Deleted Mortgage Loan and (B) the addition of
such substitute Mortgage Loan does not increase the weighted average
Loan-to-Value Ratio of the related Mortgage Pool by more than 5%; (v) will
comply with all of the representations and warranties relating to Mortgage Loans
set forth herein, as of the date as of which such substitution occurs; (vi) is
not a Cooperative Loan unless the related Deleted Mortgage Loan was a
Cooperative Loan; (vii) if applicable, has the same index as and a margin not
less than that of the related Deleted Mortgage Loan; (viii) has not been
delinquent for a period of more than 30 days more than once in the twelve months
immediately preceding such date of substitution; (ix) is covered by a Primary
Mortgage Insurance Policy if the related Deleted Mortgage Loan is so covered,
and the Loan-to-Value Ratio of such Mortgage Loan is greater than 80%; and (x)
has a Credit Score not greater than 20 points lower than the Credit Score of the
related Deleted Mortgage Loan, provided, however, that if the Deleted Mortgage
Loan does not have a Credit Score, then such substitute Mortgage Loan shall have
a Credit Score equal to or greater than 700. In the event that either one
mortgage loan is substituted for more than one Deleted Mortgage Loan or more
than one mortgage loan is substituted for one or more Deleted Mortgage Loans,
then (a) the Scheduled Principal Balance referred to in clause (i) above shall
be determined such that the aggregate Scheduled Principal Balance of all such
substitute Mortgage Loans shall not exceed the aggregate Scheduled Principal
Balance of all Deleted Mortgage Loans and (b) each of (1) the rate referred to
in clause (ii) above, (2) the remaining term to stated maturity referred to in
clause (iii) above, (3) the Loan-to-Value Ratio referred to in clause (iv) above
and (4) the Credit Score referred to in clause (x) above shall be determined on
a weighted average basis, provided that the final scheduled maturity date of any
Qualifying Substitute Mortgage Loan shall not exceed the Final Scheduled
Distribution Date of any Class of Certificates. Whenever a Qualifying Substitute
Mortgage Loan is substituted for a Deleted Mortgage Loan pursuant to this
Agreement, the party effecting such substitution shall certify such
qualification in writing to the Trustee.
Rating Agency: Each of DCR, Fitch and S&P.
Realized Loss: (a) with respect to each Liquidated Mortgage Loan, an
amount equal to (i) the unpaid principal balance of such Mortgage Loan as of the
date of liquidation, plus (ii) interest at the applicable Net Mortgage Rate from
the date as to which interest was last paid up to the last day of the month of
such liquidation, minus (iii) Liquidation Proceeds received, net of amounts that
are reimbursable to the Master Servicer or any Servicer with respect to such
Mortgage Loan (other than Advances of principal and interest) including expenses
of liquidation, and (b) with respect to each Mortgage Loan that has become the
subject of a Deficient Valuation, the difference between the unpaid principal
balance of such Mortgage Loan immediately prior to such Deficient Valuation and
the unpaid principal balance of such Mortgage Loan as reduced by the Deficient
Valuation. In determining whether a Realized Loss is a Realized Loss of interest
or principal, Liquidation Proceeds shall be allocated, first, to payment of
expenses related to such Liquidated Mortgage Loan, then to accrued unpaid
interest and finally to reduce the principal balance of the Mortgage Loan.
Recognition Agreement: Not applicable.
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
in which such Distribution Date occurs.
Redemption Certificate: None.
Reference Banks: None.
Reimbursement Amount: As defined in Section 5.02.
Relief Act Reduction: With respect to any Mortgage Loan as to which
there has been a reduction in the amount of interest collectible thereon as a
result of application of the Solders' and Sailors' Civil Relief Act of 1940, as
amended, any amount by which interest collectible on such Mortgage Loan for the
Due Date in the related Due Period is less than interest accrued thereon for the
applicable one-month period at the Mortgage Rate without giving effect to such
reduction.
REMIC: The REMIC described in the Preliminary Statement hereto.
REMIC Provisions: The provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at sections 860A
through 86OG of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The day in each month on which each Servicer is
required to remit payments to the account maintained by the Master Servicer, as
specified in the related Servicing Agreement, which in the case of each Servicer
is the 18th day of each month (or if such 18th day is not a Business Day, the
immediately preceding Business Day).
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Reserve Interest Rate: Not applicable.
Residual Certificate: Any Class R Certificate.
Responsible Officer: When used with respect to the Trustee, any Vice
President, Assistant Vice President, the Secretary, any assistant secretary, the
Treasurer, or any assistant treasurer, working in its corporate trust department
and having direct responsibility for the administration of this Agreement.
Restricted Certificate: Any Class B4, Class B5 or Class B6
Certificate.
Retained Interest: Interest in respect of each Mortgage Loan retained
by the Retained Interest Holder at the Retained Interest Rate.
Retained Interest Holder: The Depositor or any successor in interest by
assignment or otherwise.
Retained Interest Rate: With respect to each Mortgage Loan, the excess
of the Mortgage Rate of such Mortgage Loan over the Trust Rate.
Rounding Account: Not applicable.
S&P: Standard & Poor's Rating Services, a division of the McGraw-Hill
Companies, Inc., or any successor in interest.
Scheduled Amount: Not applicable.
Scheduled Certificate: None.
Scheduled Component: None.
Scheduled Payment: Each scheduled payment of principal and interest (or
of interest only, if applicable) to be paid by the Mortgagor on a Mortgage Loan,
as reduced (except where otherwise specified herein) by the amount of any
related Debt Service Reduction (excluding all amounts of principal and interest
that were due on or before the Cut-off Date whenever received) and, in the case
of an REO Property, an amount equivalent to the Scheduled Payment that would
have been due on the related Mortgage Loan if such Mortgage Loan had remained in
existence. In the case of any bi-weekly payment Mortgage Loan, all payments due
on such Mortgage Loan during any Due Period shall be deemed collectively to
constitute the Scheduled Payment due on such Mortgage Loan in such Due Period.
Scheduled Principal Amount: As to any Distribution Date, an amount
equal to the amount described in clause (i)(b) of the definition of Senior
Principal Distribution Amount.
Scheduled Principal Balance: With respect to (i) any Mortgage Loan as
of any Distribution Date, the principal balance of such Mortgage Loan at the
close of business on the Cut-off Date, after giving effect to principal payments
due on or before the Cut-off Date, whether or not received, less an amount equal
to principal payments due after the Cut-off Date and on or before the Due Date
in the related Due Period, whether or not received from the Mortgagor or
advanced by any Servicer or the Master Servicer, and all amounts allocable to
unscheduled principal payments (including Principal Prepayments, Net Liquidation
Proceeds, Insurance Proceeds and condemnation proceeds, in each case to the
extent identified and applied prior to or during the applicable Prepayment
Period) and (ii) any REO Property as of any Distribution Date, the Scheduled
Principal Balance of the related Mortgage Loan on the Due Date immediately
preceding the date of acquisition of such REO Property by the Trustee (reduced
by any amount applied as a reduction of principal on the Mortgage Loan).
Security Agreement: Not applicable.
Seller: Lehman Capital, A Division of Lehman Brothers Holdings Inc., or
any successor in interest.
Senior Certificate: Any Class 1-CB, Class 1-PO, Class 2-NC, Class 2-PO
or Class R Certificate.
Senior Percentage: With respect to each Mortgage Pool and any
Distribution Date, the percentage equivalent of the fraction, the numerator of
which is the aggregate of the Certificate Principal Amounts of the Class 1-CB
Certificates, in the case of Pool 1 and the Class 2-NC and Class R Certificates,
in the case of Pool 2.
Senior Prepayment Percentage: With respect to each Mortgage Pool and
any Distribution Date occurring during the five years beginning on the first
Distribution Date, 100%. With respect to each Mortgage Pool and for any
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date, the related Senior Percentage plus the following percentage
of the related Subordinate Percentage for such Distribution Date: for any
Distribution Date in the first year thereafter, 70%; for any Distribution Date
in the second year thereafter, 60%; for any Distribution Date in the third year
thereafter, 40%; for any Distribution Date in the fourth year thereafter, 20%;
and for any subsequent Distribution Date, 0%; provided, however, that if on any
of the foregoing Distribution Dates the Senior Percentage for any Mortgage Pool
exceeds the initial Senior Percentage for such Mortgage Pool, the Senior
Prepayment Percentage for each Mortgage Pool on such Distribution Date will once
again equal 100% for such Distribution Date.
Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage for any Mortgage Pool below the level in effect for the most recent
prior period set forth in the paragraph above shall be effective on any
Distribution Date if, as of the first Distribution Date as to which any such
decrease applies, (i) the average outstanding principal balance on such
Distribution Date and for the preceding five Distribution Dates of all Mortgage
Loans that were delinquent 60 days or more (including for this purpose any
Mortgage Loans in foreclosure and the Scheduled Payments that would have been
due on Mortgage Loans with respect to which the related Mortgaged Property has
been acquired by the Trust Fund if the related Mortgage Loan had remained in
existence) is greater than or equal to 50% of the applicable Group Subordinate
Amount immediately prior to such Distribution Date or (ii) cumulative Realized
Losses with respect to the Mortgage Loans in any Mortgage Pool exceed (a) with
respect to the Distribution Date on the fifth anniversary of the first
Distribution Date, 30% of the related Original Group Subordinate Amount, (b)
with respect to the Distribution Date on the sixth anniversary of the first
Distribution Date, 35% of the related Original Group Subordinate Amount, (c)
with respect to the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the related Original Group Subordinate Amount, (d)
with respect to the Distribution Date on the eighth anniversary of the first
Distribution Date, 45% of the related Original Group Subordinate Amount, and (e)
with respect to the Distribution Date on the ninth anniversary of the first
Distribution Date or thereafter, 50% of the related Original Group Subordinate
Amount.
Senior Principal Distribution Amount: For each Certificate Group and
any Distribution Date, the sum of the following amounts:
(i) the product of (a) the related Senior Percentage for such
date and (b) the principal portion (multiplied by the applicable Non-PO
Percentage) of each Scheduled Payment (without giving effect to any
Debt Service Reduction occurring prior to the Bankruptcy Coverage
Termination Date), on each Mortgage Loan in the related Mortgage Pool
due during the related Due Period;
(ii) the product of (a) the related Senior Prepayment Percentage
for such date and (b) each of the following amounts (multiplied by the
applicable Non-PO Percentage): (1) each Principal Prepayment on the
Mortgage Loans in the related Mortgage Pool collected during the
related Prepayment Period, (2) each other unscheduled collection,
including Insurance Proceeds and Net Liquidation Proceeds (other than
with respect to any Mortgage Loan in the related Mortgage Pool that was
finally liquidated during the related Prepayment Period) representing
or allocable to recoveries of principal received during the related
Prepayment Period, and (3) the principal portion of all proceeds of the
purchase of any Mortgage Loan in the related Mortgage Pool (or, in the
case of a permitted substitution, amounts representing a principal
adjustment) actually received by the Trustee during the related
Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to
principal of any Mortgage Loan in the related Mortgage Pool that was
finally liquidated during the related Prepayment Period, the lesser of
(a) the related net Liquidation Proceeds allocable to principal
(multiplied by the applicable Non-PO Percentage) and (b) the product of
the related Senior Prepayment Percentage for such date and the
Scheduled Principal Balance (multiplied by the applicable Non-PO
Percentage) of such related Mortgage Loan at the time of liquidation;
and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Servicer: Aurora Loan Services Inc. or any successor in interest.
Servicing Advances: Expenditures incurred by the Servicer in connection
with the liquidation or foreclosure of a Mortgage Loan which are eligible for
reimbursement under the Servicing Agreement.
Servicing Agreement: The Servicing Agreement between the Master
Servicer, the Servicer and the Seller, dated as of August 1, 1999, attached
hereto as Exhibit E and any other servicing agreement entered into between a
successor servicer, the Master Servicer and the Trustee pursuant to the terms
hereof, attached hereto as an exhibit.
Servicing Fee: The Servicing Fee specified in the Servicing Agreement
(which shall include any Prepayment Interest Excess).
Servicing Fee Rate: With respect to any Servicer, as specified in the
Servicing Agreement.
Servicing Officer: Any officer of the Master Servicer involved in or
responsible for the administration and servicing or master servicing of the
Mortgage Loans whose name appears on a list of servicing officers furnished by
the Master Servicer to the Trustee, as such list may from time to time be
amended.
Special Hazard Loss: With respect to the Mortgage Loans, (x) any
Realized Loss arising out of any direct physical loss or damage to a Mortgaged
Property which is caused by or results from any cause, exclusive of any loss
covered by a hazard policy or a flood insurance policy required to be maintained
in respect of such Mortgaged Property and any loss caused by or resulting from
(i) normal wear and tear, (ii) conversion or other dishonest act on the part of
the Trustee, the Master Servicer, any Servicer or any of their agents or
employees, or (iii) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues, or (y) any
Realized Loss arising from or related to the presence or suspected presence of
hazardous wastes, or hazardous substances on a Mortgaged Property unless such
loss is covered by a hazard policy or flood insurance policy required to be
maintained in respect of such Mortgaged Property, in any case, as reported by
the applicable Servicer to the Master Servicer.
Special Hazard Loss Limit: As of the Cut-off Date, $7,130,186, which
amount shall be reduced from time to time to an amount equal on any Distribution
Date to the lesser of (a) the greatest of (i) 1% of the aggregate of the
Scheduled Principal Balances of the Mortgage Loans; (ii) twice the Scheduled
Principal Balance of the Mortgage Loan having the highest Scheduled Principal
Balance, and (iii) the aggregate Scheduled Principal Balances of the Mortgage
Loans secured by Mortgaged Properties located in the single California postal
zip code area having the highest aggregate Scheduled Principal Balance of
Mortgage Loans of any such postal zip code area and (b) the Special Hazard Loss
Limit as of the Closing Date less the amount, if any, of Special Hazard Losses
incurred with respect to Mortgage Loans since the Closing Date.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Subordinate Certificate: Any Class B Certificate.
Subordinate Certificate Writedown Amount: As to any Distribution Date,
the amount by which (i) the sum of the Class Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
application of Realized Losses in reduction of the Certificate Principal Amounts
of the Certificates on such Distribution Date) exceeds (ii) the aggregate
Scheduled Principal Balance of the Mortgage Loans at the close of the related
Due Period.
Subordinate Class Percentage: With respect to any Distribution Date and
any Class of Subordinate Certificates, the percentage obtained by dividing the
Class Principal Amount of such Class immediately prior to such Distribution Date
by the aggregate Certificate Principal Amount of all Subordinate Certificates
immediately prior to such date.
Subordinate Percentage: With respect to each Mortgage Pool and any
Distribution Date, the difference between 100% and the related Senior Percentage
for such Distribution Date.
Subordinate Prepayment Percentage: With respect to each Mortgage Pool
and any Distribution Date, the difference between 100% and the related Senior
Prepayment Percentage for such Distribution Date.
Subordinate Principal Distribution Amount: For each Certificate Group
and any Distribution Date, the sum of the following:
(i) the product of (a) the related Subordinate Percentage for
such date and (b) the principal portion (multiplied by the applicable
Non-PO Percentage) of each Scheduled Payment (without giving effect to
any Debt Service Reduction occurring prior to the applicable Bankruptcy
Coverage Termination Date) on each Mortgage Loan in the related
Mortgage Pool due during the related Due Period;
(ii) the product of (a) the related Subordinate Prepayment
Percentage for such date and (b) each of the following amounts
(multiplied by the applicable Non-PO Percentage): (1) each Principal
Prepayment on the Mortgage Loans in the related Mortgage Pool collected
during the related Prepayment Period, (2) each other unscheduled
collection, including Insurance Proceeds and Net Liquidation Proceeds
(other than with respect to any Mortgage Loan in the related Mortgage
Pool that was finally liquidated during the related Prepayment Period)
representing or allocable to recoveries of principal received during
the related Prepayment Period, and (3) the principal portion of all
proceeds of the purchase of any Mortgage Loan in the related Mortgage
Pool (or, in the case of a permitted substitution, amounts representing
a principal adjustment) actually received by the Trustee during the
related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to
principal of any Mortgage Loan in the related Mortgage Pool that was
finally liquidated during the related Prepayment Period, the related
net Liquidation Proceeds allocable to principal (multiplied by the
applicable Non-PO Percentage) less any related amount paid pursuant to
subsection (iii) of the definition of Senior Principal Distribution
Amount for the related Certificate Group; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid;
TAC Amount: Not applicable.
TAC Certificate: None.
TAC Component: None.
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions.
Termination Price: As defined in Section 7.01 hereof.
Title Insurance Policy: A title insurance policy maintained with
respect to a Mortgage Loan.
Transfer Agreement: As defined in the Mortgage Loan Sale Agreement.
Transferor: Each seller of Mortgage Loans to Lehman Capital pursuant to
a Transfer Agreement.
Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of the Mortgage Loans (other than any Retained Interest), the
assignment of the Depositor's rights under the Mortgage Loan Sale Agreement
(other than any Retained Interest), such amounts as shall from time to time be
held in the Collection Account, the Certificate Account, any Escrow Account, the
Insurance Policies, any REO Property and the other items referred to in, and
conveyed to the Trustee under, Section 2.01(a).
Trustee: U.S. Bank National Association, not in its individual capacity
but solely as Trustee, or any successor in interest, or if any successor trustee
or any co-trustee shall be appointed as herein provided, then such successor
trustee and such co-trustee, as the case may be.
Trustee Fee: As to any Distribution Date, an amount equal to the
product of the Trustee Fee Rate and the aggregate Scheduled Principal Balance of
the related Mortgage Loans as of the first day of the related Due Period. The
Trustee Fee shall be calculated separately, by Mortgage Pool.
Trustee Fee Rate: 0.00725% per annum.
Trust Rate: With respect to each Mortgage Loan, the sum of (i) 7.25%,
(ii) the Servicing Fee Rate, (iii) the Master Servicing Fee Rate and (iv) the
Trustee Fee Rate.
Undercollateralization Distribution: As defined in Section
5.02(e)(ii).
Undercollateralized Group: With respect to any Distribution Date, the
Non-PO Senior Certificates of any Certificate Group as to which the aggregate
Certificate Principal Amount thereof after giving effect to distributions
pursuant to Sections 5.02(a) and (b) on such date is greater than the Non-PO
Pool Balance of the related Mortgage Pool for such Distribution Date.
Unscheduled Principal Amount: As to any Distribution Date, the sum of
the amounts described in clauses (ii)(b) and (iii) (without regard to the
reference in clause (iii) to the "Senior Prepayment Percentage") of the
definition of Senior Principal Distribution Amount.
Voting Interests: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
Voting Interests shall be allocated among the Classes of Certificates (and among
the Certificates of each such Class) in proportion to their Class Principal
Amounts (or Certificate Principal Amounts).
Section 1.02. Calculations Respecting Mortgage Loans. Calculations
required to be made pursuant to this Agreement with respect to any Mortgage Loan
in the Trust Fund shall be made based upon current information as to the terms
of the Mortgage Loans and reports of payments received from the Mortgagor on
such Mortgage Loans and payments to be made to the Trustee as supplied to the
Trustee by the Master Servicer. The Trustee shall not be required to recompute,
verify or recalculate the information supplied to it by the Master Servicer.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans. (a) Concurrently with the execution and delivery of this
Agreement, the Depositor does hereby transfer, assign, set over, deposit with
and otherwise convey to the Trustee, without recourse, subject to Sections 2.02,
2.04, 2.05 and 2.06, in trust, all the right, title and interest of the
Depositor in and to the Mortgage Loans. Such conveyance includes, without
limitation, the right to all distributions of principal and interest received on
or with respect to the Mortgage Loans on and after the Cut-off Date other than
(i) any amounts representing Retained Interest and (ii) payments of principal
and interest due on or before such date, and all such payments due after such
date but received prior to such date and intended by the related Mortgagors to
be applied after such date, together with all of the Depositor's right, title
and interest in and to the Collection Account and all amounts from time to time
credited to and the proceeds of the Collection Account, the Certificate Account
and all amounts from time to time credited to and the proceeds of the
Certificate Account, any Escrow Account established pursuant to Section 9.06
hereof and all amounts from time to time credited to and the proceeds of any
such Escrow Account, any REO Property and the proceeds thereof, the Depositor's
rights under any Insurance Policies related to the Mortgage Loans, and the
Depositor's security interest in any collateral pledged to secure the Mortgage
Loans, including the Mortgaged Properties and any Additional Collateral, and any
proceeds of the foregoing, to have and to hold, in trust; and the Trustee
declares that, subject to the review provided for in Section 2.02, it has
received and shall hold the Trust Fund, as trustee, in trust, for the benefit
and use of the Holders of the Certificates and for the purposes and subject to
the terms and conditions set forth in this Agreement, and, concurrently with
such receipt, has caused to be executed, authenticated and delivered to or upon
the order of the Depositor, in exchange for the Trust Fund, Certificates in the
authorized denominations evidencing the entire ownership of the Trust Fund.
Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby assign to the Trustee all of its rights and interest under
the Mortgage Loan Sale Agreement (other than any right to receive Retained
Interest), including all rights of the Seller under the Servicing Agreement to
the extent assigned under the Mortgage Loan Sale Agreement, and delegates its
obligations thereunder. The Trustee hereby accepts such assignment and
delegation, and shall be entitled to exercise all rights of the Depositor under
the Mortgage Loan Sale Agreement as if, for such purpose, it were the Depositor.
The foregoing sale, transfer, assignment, set-over, deposit and conveyance does
not and is not intended to result in creation or assumption by the Trustee of
any obligation of the Depositor, the Seller, or any other Person in connection
with the Mortgage Loans or any other agreement or instrument relating thereto
except as specifically set forth herein.
(b) In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, or cause to be delivered to and deposited
with, the Trustee, and/or any custodian acting on the Trustee's behalf, if
applicable, the following documents or instruments with respect to each Mortgage
Loan (each a "Mortgage File") so transferred and assigned:
(i) with respect to each Mortgage Loan, the original Mortgage
Note endorsed without recourse in proper form to the order of the
Trustee, or in blank (in each case, with all necessary intervening
endorsements as applicable);
(ii) the original of any guarantee executed in connection with
the Mortgage Note, assigned to the Trustee;
(iii) with respect to each Mortgage Loan, the original recorded
Mortgage with evidence of recording indicated thereon. If, in
connection with any Mortgage Loan, the Depositor cannot deliver the
Mortgage with evidence of recording thereon on or prior to the Closing
Date because of a delay caused by the public recording office where
such Mortgage has been delivered for recordation or because such
Mortgage has been lost, the Depositor shall deliver or cause to be
delivered to the Trustee (or its custodian), in the case of a delay due
to recording, a true copy of such Mortgage, pending delivery of the
original thereof, together with an Officer's Certificate of the
Depositor certifying that the copy of such Mortgage delivered to the
Trustee (or its custodian) is a true copy and that the original of such
Mortgage has been forwarded to the public recording office, or, in the
case of a Mortgage that has been lost, a copy thereof (certified as
provided for under the laws of the appropriate jurisdiction) and a
written Opinion of Counsel acceptable to the Trustee and the Depositor
that an original recorded Mortgage is not required to enforce the
Trustee's interest in the Mortgage Loan;
(iv) The original of each assumption, modification or
substitution agreement, if any, relating to the Mortgage Loans, or, as
to any assumption, modification or substitution agreement which cannot
be delivered on or prior to the Closing Date because of a delay caused
by the public recording office where such assumption, modification or
substitution agreement has been delivered for recordation, a photocopy
of such assumption, modification or substitution agreement, pending
delivery of the original thereof, together with an Officer's
Certificate of the Depositor certifying that the copy of such
assumption, modification or substitution agreement delivered to the
Trustee (or its custodian) is a true copy and that the original of such
agreement has been forwarded to the public recording office;
(v) with respect to each Non-MERS Mortgage Loan, the original
Assignment of Mortgage for each Mortgage Loan;
(vi) If applicable, such original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument (each, an
"Intervening Assignment"), as may be necessary to show a complete chain
of assignment from the originator, or, in the case of an Intervening
Assignment that has been lost, a written Opinion of Counsel acceptable
to the Trustee that such original Intervening Assignment is not
required to enforce the Trustee's interest in the Mortgage Loans;
(vii) the original Primary Mortgage Insurance Policy or
certificate, if private mortgage guaranty insurance is required;
(viii) with respect to each Mortgage, the original mortgagee
title insurance policy or attorney's opinion of title and abstract of
title; and
(ix) the original of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage or as to any
security agreement, chattel mortgage or their equivalent that cannot be
delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such document has been delivered for
recordation, a photocopy of such document, pending delivery of the
original thereof, together with an Officer's Certificate of the
Depositor certifying that the copy of such security agreement, chattel
mortgage or their equivalent delivered to the Trustee (or its
custodian) is a true copy and that the original of such document has
been forwarded to the public recording office;
The parties hereto acknowledge and agree that the form of endorsement
attached hereto as Exhibit B-4 is intended to effect the transfer to the
Trustee, for the benefit of the Certificateholders, of the Mortgage Notes and
the Mortgages.
(c) (i) Assignments of Mortgage with respect to each Non-MERS Mortgage
Loan shall be recorded; provided, however, that such Assignments need not be
recorded if, in the Opinion of Counsel (which must be Independent counsel)
acceptable to the Trustee and the Rating Agencies, recording in such states is
not required to protect the Trustee's interest in the related Non-MERS Mortgage
Loans. Subject to the preceding sentence, as soon as practicable after the
Closing Date (but in no event more than 3 months thereafter except to the extent
delays are caused by the applicable recording office), the Trustee, at the
expense of the Depositor and with the cooperation of the Servicer, shall cause
to be properly recorded by the Servicer in each public recording office where
the related Mortgages are recorded each Assignment of Mortgage referred to in
subsection (b)(v) above with respect to a Non-MERS Mortgage Loan.
(ii) With respect to each MERS Mortgage Loan, the Trustee, at the
expense of the Depositor and at the direction and with the cooperation of the
Servicer, shall cause to be taken such actions as are necessary to cause the
Trustee to be clearly identified as the owner of each such Mortgage Loan on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS.
(d) In instances where a Title Insurance Policy is required to be
delivered to the Trustee, or to the applicable Custodian on behalf of the
Trustee, under clause (b)(viii) above and is not so delivered, the Depositor
will provide a copy of such Title Insurance Policy to the Trustee, or to the
applicable Custodian on behalf of the Trustee, as promptly as practicable after
the execution and delivery hereof, but in any case within 180 days of the
Closing Date.
(e) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, herewith delivers to the Trustee, or to the
applicable Custodian on behalf of the Trustee, an Officer's Certificate which
shall include a statement to the effect that all amounts received in connection
with such prepayment that are required to be deposited in the applicable
Collection Account pursuant to Section 4.01 have been so deposited. All original
documents that are not delivered to the Trustee shall be held by the Master
Servicer or the applicable Servicer in trust for the benefit of the Trustee and
the Certificateholders.
Section 2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund. (a) The Trustee, by execution and delivery hereof,
acknowledges receipt of the Mortgage Files pertaining to the Mortgage Loans
listed on the Mortgage Loan Schedule, subject to review thereof by the Trustee,
or by the applicable Custodian on behalf of the Trustee, under this Section
2.02. The Trustee, or the applicable Custodian on behalf of the Trustee, will
execute and deliver to the Depositor and the Master Servicer on the Closing Date
an Initial Certification in the form annexed hereto as Exhibit B-1 (or in the
form annexed to the applicable Custodial Agreement as Exhibit B-1, as
applicable).
(b) Within 45 days after the Closing Date, the applicable Custodian
will, on behalf of the Trustee and for the benefit of Holders of the
Certificates, review each Mortgage File to ascertain that all required documents
set forth in Section 2.01 have been received and appear on their face to contain
the requisite signatures by or on behalf of the respective parties thereto, and
shall deliver to the Depositor and the Master Servicer an Interim Certification
in the form annexed hereto as Exhibit B-2 (or in the form annexed to the
applicable Custodial Agreement as Exhibit B-2, as applicable) to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan prepaid in full or any Mortgage Loan specifically identified
in such certification as not covered by such certification), (i) all of the
applicable documents specified in Section 2.01(b) are in its possession and (ii)
such documents have been reviewed by it and appear to relate to such Mortgage
Loan. The Trustee, or the applicable Custodian on behalf of the Trustee, shall
make sure that the documents are executed and endorsed, but shall be under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that the same are valid,
binding, legally effective, properly endorsed, genuine, enforceable or
appropriate for the represented purpose or that they have actually been recorded
or are in recordable form or that they are other than what they purport to be on
their face. Neither the Trustee nor any Custodian shall have any responsibility
for verifying the genuineness or the legal effectiveness of or authority for any
signatures of or on behalf of any party or endorser.
(c) If in the course of the review described in paragraph (b) above the
Trustee or the applicable Custodian discovers any document or documents
constituting a part of a Mortgage File that is missing, does not appear regular
on its face (i.e., is mutilated, damaged, defaced, torn or otherwise physically
altered) or appears to be unrelated to the Mortgage Loans identified in the
Mortgage Loan Schedule (each, a "Material Defect"), the Trustee, or the
applicable Custodian on behalf of the Trustee, shall promptly identify the
Mortgage Loan to which such Material Defect relates in the Interim Certificate
delivered to the Depositor or the Master Servicer (and to the Trustee). Within
90 days of its receipt of such notice, the Depositor shall be required to cure
such Material Defect (and, in such event, the Depositor shall provide the
Trustee with an Officer's Certificate confirming that such cure has been
effected). If the Depositor does not so cure such Material Defect, it shall, if
a loss has been incurred with respect to such Mortgage Loan that would, if such
Mortgage Loan were not purchased from the Trust Fund, constitute a Realized
Loss, and such loss is attributable to the failure of the Depositor to cure such
Material Defect, repurchase the related Mortgage Loan from the Trust Fund at the
Purchase Price. A loss shall be deemed to be attributable to the failure of the
Depositor to cure a Material Defect if, as determined by the Depositor, upon
mutual agreement acting in good faith, absent such Material Defect, such loss
would not have been incurred. Within the two year period following the Closing
Date, the Depositor may, in lieu of repurchasing a Mortgage Loan pursuant to
this Section 2.02, substitute for such Mortgage Loan a Qualifying Substitute
Mortgage Loan subject to the provisions of Section 2.05. The failure of the
Trustee or the applicable Custodian to give the notice contemplated herein
within 45 days after the Closing Date shall not affect or relieve the Depositor
of its obligation to repurchase any Mortgage Loan pursuant to this Section 2.02
or any other Section of this Agreement requiring the repurchase of Mortgage
Loans from the Trust Fund.
(d) Within 180 days following the Closing Date, the Trustee, or the
applicable Custodian, shall deliver to the Depositor and the Master Servicer a
Final Certification substantially in the form annexed hereto as Exhibit B-3 (or
in the form annexed to the applicable Custodial Agreement as Exhibit B-3, as
applicable) evidencing the completeness of the Mortgage Files in its possession
or control, with any exceptions noted thereto.
(e) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.
(f) Each of the parties hereto acknowledges that the Custodian shall
perform the applicable review of the Mortgage Loans and respective
certifications thereof as provided in this Section 2.02.
Section 2.03. Representations and Warranties of the Depositor. (a) The
Depositor hereby represents and warrants to the Trustee, for the benefit of
Certificateholders, and to the Master Servicer, as of the Closing Date or such
other date as is specified, that:
(i) the Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and has full corporate power and authority to own its
property, to carry on its business as presently conducted, to enter
into and perform its obligations under this Agreement, and to create
the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Depositor; neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on the Depositor or its properties or the
certificate of incorporation or bylaws of the Depositor;
(iii) the execution, delivery and performance by the Depositor of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency,
except such as has been obtained, given, effected or taken prior to the
date hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by
the Trustee and the Master Servicer, constitutes a valid and binding
obligation of the Depositor enforceable against it in accordance with
its terms except as such enforceability may be subject to (A)
applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally and (B)
general principles of equity regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened or likely to be asserted against
or affecting the Depositor, before or by any court, administrative
agency, arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to any
other matter which in the judgment of the Depositor will be determined
adversely to the Depositor and will if determined adversely to the
Depositor materially and adversely affect it or its business, assets,
operations or condition, financial or otherwise, or adversely affect
its ability to perform its obligations under this Agreement;
(vi) immediately prior to the transfer and assignment of the
Mortgage Loans to the Trustee, the Depositor was the sole owner of
record and holder of each Mortgage Loan, and the Depositor had good and
marketable title thereto, and had full right to transfer and sell each
Mortgage Loan to the Trustee free and clear, subject only to (1) liens
of current real property taxes and assessments not yet due and payable
and, if the related Mortgaged Property is a condominium unit, any lien
for common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage acceptable to
mortgage lending institutions in the area in which the related
Mortgaged Property is located and specifically referred to in the
lender's Title Insurance Policy or attorney's opinion of title and
abstract of title delivered to the originator of such Mortgage Loan,
and (3) such other matters to which like properties are commonly
subject which do not, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by
the Mortgage, of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest, and had full right and
authority, subject to no interest or participation of, or agreement
with, any other party, to sell and assign each Mortgage Loan pursuant
to this Agreement.
(b) The representations and warranties of each Transferor with respect
to the related Mortgage Loans in the applicable Transfer Agreement, which have
been assigned to the Trustee hereunder, were made as of the date specified in
the applicable Transfer Agreement (or underlying agreement, if such Transfer
Agreement is in the form of an assignment of a prior agreement). To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes a
breach of both (i) a representation or warranty of the applicable Transferor
under the applicable Transfer Agreement and (ii) a representation or warranty of
Lehman Capital under the Mortgage Loan Sale Agreement, the only right or remedy
of the Trustee or of any Certificateholder shall be the Trustee's right to
enforce the obligations of the applicable Transferor under any applicable
representation or warranty made by it. The Trustee acknowledges that the
representations and warranties of Lehman Capital in Section 1.04(b) of the
Mortgage Loan Sale Agreement are applicable only to facts or conditions that
arise or events that occur subsequent to the date as of which the
representations and warranties with respect to the related Mortgage Loans in the
Transfer Agreements were made, and which do not constitute a breach of any
representation or warranty made by the applicable Transferor in the applicable
Transfer Agreement. The Trustee acknowledges that Lehman Capital shall have no
obligation or liability with respect to any breach of a representation or
warranty made by it with respect to the Mortgage Loans if the fact, condition or
event constituting such breach also constitutes a breach of a representation or
warranty made by the applicable Transferor in the applicable Transfer Agreement,
without regard to whether such Transferor fulfills its contractual obligations
in respect of such representation or warranty. The Trustee further acknowledges
that the Depositor shall have no obligation or liability with respect to any
breach of any representation or warranty with respect to the Mortgage Loans
(except as set forth in Section 2.03(a)(vi)) under any circumstances.
Section 2.04. Discovery of Breach. It is understood and agreed that the
representations and warranties (i) set forth in Section 2.03, (ii) of Lehman
Capital set forth in the Mortgage Loan Sale Agreement and assigned to the
Trustee by the Depositor hereunder and (iii) of each Transferor, assigned by
Lehman Capital to the Depositor pursuant to the Mortgage Loan Sale Agreement and
assigned to the Trustee by the Depositor hereunder shall each survive delivery
of the Mortgage Files and the Assignment of Mortgage of each Mortgage Loan to
the Trustee and shall continue throughout the term of this Agreement. Upon
discovery by either the Depositor, the Master Servicer or the Trustee of a
breach of any of such representations and warranties that adversely and
materially affects the value of the related Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties. Within 90
days of the discovery of a breach of any representation or warranty given to the
Trustee by the Depositor or given by Lehman Capital and assigned to the Trustee,
the Depositor or Lehman Capital, as applicable, shall either (a) cure such
breach in all material respects, (b) repurchase such Mortgage Loan or any
property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a
Qualifying Substitute Mortgage Loan for the affected Mortgage Loan. In the event
of discovery of a breach of any representation and warranty of any Transferor
assigned to the Trustee, the Trustee may enforce its rights under the applicable
Transfer Agreement for the benefit of Certificateholders.
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans.
(a) With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Agreement, by Lehman Capital pursuant to the Mortgage Loan Sale Agreement
or by any Transferor pursuant to the applicable Transfer Agreement, the
principal portion of the funds received by the Trustee in respect of such
repurchase of a Mortgage Loan will be considered a Principal Prepayment and
shall be deposited in the Collection Account. The Trustee, upon receipt of the
full amount of the Purchase Price for a Deleted Mortgage Loan, or upon receipt
of the Mortgage File for a Qualifying Substitute Mortgage Loan substituted for a
Deleted Mortgage Loan (and any applicable Substitution Amount), shall release or
cause to be released and reassign to the Depositor, Lehman Capital or the
applicable Transferor, as applicable, the related Mortgage File for the Deleted
Mortgage Loan and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty, as shall
be necessary to vest in such party or its designee or assignee title to any
Deleted Mortgage Loan released pursuant hereto, free and clear of all security
interests, liens and other encumbrances created by this Agreement, which
instruments shall be prepared by the Trustee (or its custodian), and the Trustee
shall have no further responsibility with respect to the Mortgage File relating
to such Deleted Mortgage Loan.
(b) With respect to each Qualifying Substitute Mortgage Loan to be
delivered to the Trustee (or its custodian) pursuant to the terms of this
Article II in exchange for a Deleted Mortgage Loan: (i) the Depositor, the
applicable Transferor or Lehman Capital, as applicable, must deliver to the
Trustee (or its custodian) the Mortgage File for the Qualifying Substitute
Mortgage Loan containing the documents set forth in Section 2.01(b) along with a
written certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01(a); and (ii) the
Depositor will be deemed to have made, with respect to such Qualified Substitute
Mortgage Loan, each of the representations and warranties made by it with
respect to the related Deleted Mortgage Loan. As soon as practicable after the
delivery of any Qualifying Substitute Mortgage Loan hereunder, the Trustee, at
the expense of the Depositor and at the direction and with the cooperation of
the Servicer, shall (i) with respect to a Qualifying Substitute Mortgage Loan
that is a Non-MERS Mortgage Loan, cause the Assignment of Mortgage to be
recorded by the Servicer if required pursuant to Section 2.01(c)(i), or (ii)
with respect to a Qualifying Substitute Mortgage Loan that is a MERS Mortgage
Loan, cause to be taken such actions as are necessary to cause the Trustee to be
clearly identified as the owner of each such Mortgage Loan on the records of
MERS if required pursuant to Section 2.01(c)(ii).
(c) Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Qualifying Substitute Mortgage
Loan for a Deleted Mortgage Loan shall be made unless the Trustee has received
an Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of the REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in the REMIC, or (B) cause
the REMIC to engage in a "prohibited transaction" or prohibited contribution
pursuant to the REMIC Provisions.
Section 2.06. Grant Clause. It is intended that the conveyance of the
Depositor's right, title and interest in and to property constituting the Trust
Fund pursuant to this Agreement shall constitute, and shall be construed as, a
sale of such property and not a grant of a security interest to secure a loan.
However, if such conveyance is deemed to be in respect of a loan, it is intended
that: (1) the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement; (2) the Depositor hereby grants to the
Trustee for the benefit of the Holders of the Certificates a first priority
security interest in all of the Depositor's right, title and interest in, to and
under, whether now owned or hereafter acquired, the Trust Fund and all proceeds
of any and all property constituting the Trust Fund to secure payment of the
Certificates; and (3) this Agreement shall constitute a security agreement under
applicable law. If such conveyance is deemed to be in respect of a loan and the
Trust created by this Agreement terminates prior to the satisfaction of the
claims of any Person holding any Certificate, the security interest created
hereby shall continue in full force and effect and the Trustee shall be deemed
to be the collateral agent for the benefit of such Person, and all proceeds
shall be distributed as herein provided.
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates. (a) The Certificates shall be issuable
in registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount or Notional Principal
Amount, as applicable, or in the Percentage Interests, specified herein. Each
Class of Book-Entry Certificates shall be issued in the minimum denominations in
Certificate Principal Amount specified in the Preliminary Statement hereto and
in integral multiples of $1 in excess thereof. Each Class of Non-Book Entry
Certificates other than the Residual Certificate shall be issued in definitive,
fully registered form in the minimum denominations in Certificate Principal
Amount specified in the Preliminary Statement hereto and in integral multiples
of $1 in excess thereof. The Residual Certificate shall be issued as a single
Certificate and maintained in definitive, fully registered form in a minimum
denomination equal to 100% of the Percentage Interest of such Class. The
Certificates may be issued in the form of typewritten certificates. One
Certificate of each Class of Certificates other than any Class of Residual
Certificates may be issued in any denomination in excess of the minimum
denomination.
(b) The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee upon the order of the Depositor
upon receipt by the Trustee of the Mortgage Files described in Section 2.01. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein, executed by an
authorized officer of the Trustee or the Authenticating Agent, if any, by manual
signature, and such certification upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. At any time and from time to time after the execution
and delivery of this Agreement, the Depositor may deliver Certificates executed
by the Depositor to the Trustee or the Authenticating Agent for authentication
and the Trustee or the Authenticating Agent shall authenticate and deliver such
Certificates as in this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and hereby
accepts its appointment as, Certificate Registrar in respect of the Certificates
and shall maintain books for the registration and for the transfer of
Certificates (the "Certificate Register"). The Trustee may appoint a bank or
trust company to act as Certificate Registrar. A registration book shall be
maintained for the Certificates collectively. The Certificate Registrar may
resign or be discharged or removed and a new successor may be appointed in
accordance with the procedures and requirements set forth in Sections 6.06 and
6.07 hereof with respect to the resignation, discharge or removal of the Trustee
and the appointment of a successor Trustee. The Certificate Registrar may
appoint, by a written instrument delivered to the Holders and the Master
Servicer, any bank or trust company to act as co-registrar under such conditions
as the Certificate Registrar may prescribe; provided, however, that the
Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates. (a) A Certificate
(other than Book-Entry Certificates which shall be subject to Section 3.09
hereof) may be transferred by the Holder thereof only upon presentation and
surrender of such Certificate at the office of the Certificate Registrar duly
endorsed or accompanied by an assignment duly executed by such Holder or his
duly authorized attorney in such form as shall be satisfactory to the
Certificate Registrar. Upon the transfer of any Certificate in accordance with
the preceding sentence, the Trustee shall execute, and the Trustee or any
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any registration of transfer of Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number
of new Certificates of the same Class, in authorized denominations, representing
in the aggregate the same Certificate Principal Amount as the Certificate
surrendered, upon surrender of the Certificate to be exchanged at the office of
the Certificate Registrar duly endorsed or accompanied by a written instrument
of transfer duly executed by such Holder or his duly authorized attorney in such
form as is satisfactory to the Certificate Registrar. Certificates delivered
upon any such exchange will evidence the same obligations, and will be entitled
to the same rights and privileges, as the Certificates surrendered. No service
charge shall be made to a Certificateholder for any exchange of Certificates,
but the Certificate Registrar may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
exchange of Certificates. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, and the Trustee or the Authenticating Agent
shall authenticate, date and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the
Depositor or the Placement Agent, an affiliate (as defined in Rule
144(a)(1) under the 1933 Act) of the Depositor or the Placement Agent
or (y) being made to a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act of 1933, as amended (the "Act") by a
transferor who has provided the Trustee with a certificate in the form
of Exhibit F hereto; and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made to an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the
Act by a transferor who furnishes to the Trustee a letter of the
transferee substantially in the form of Exhibit G hereto.
(d) (i) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Trustee has
received (A) a certificate substantially in the form of Exhibit H hereto from
such transferee or (B) an Opinion of Counsel satisfactory to the Trustee and the
Depositor to the effect that the purchase and holding of such a Certificate will
not constitute or result in the assets of the Trust Fund being deemed to be
"plan assets" subject to the prohibited transactions provisions of ERISA or
Section 4975 of the Code and will not subject the Trustee or the Depositor to
any obligation in addition to those undertaken in the Agreement; provided,
however, that the Trustee will not require such certificate or opinion in the
event that, as a result of a change of law or otherwise, counsel satisfactory to
the Trustee has rendered an opinion to the effect that the purchase and holding
of an ERISA-Restricted Certificate by a Plan or a Person that is purchasing or
holding such a Certificate with the assets of a Plan will not constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code. The
preparation and delivery of the certificate and opinions referred to above shall
not be an expense of the Trust Fund, the Trustee or the Depositor.
Notwithstanding the foregoing, no opinion or certificate shall be required for
the initial issuance of the ERISA-Restricted Certificates.
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of Certificate.
(f) Notwithstanding anything to the contrary contained herein, no
Residual Certificate may be owned, pledged or transferred, directly or
indirectly, by or to (i) a Disqualified Organization or (ii) an individual,
corporation or partnership or other person unless such person is (A) not a
Non-U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate in
connection with the conduct of a trade or business within the United States and
has furnished the transferor and the Trustee with an effective Internal Revenue
Service Form 4224 or successor form at the time and in the manner required by
the Code (any such person who is not covered by clause (A) or (B) above is
referred to herein as a "Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale
or other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit D-1 representing and warranting, among other things, that such
transferee is neither a Disqualified Organization, an agent or nominee acting on
behalf of a Disqualified Organization, nor a Non-permitted Foreign Holder (any
such transferee, a "Permitted Transferee"), and the proposed transferor shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit D-2. In addition, the Trustee may (but shall have no obligation to)
require, prior to and as a condition of any such transfer, the delivery by the
proposed transferee of an Opinion of Counsel, addressed to the Depositor and the
Trustee satisfactory in form and substance to the Depositor, that such proposed
transferee or, if the proposed transferee is an agent or nominee, the proposed
beneficial owner, is not a Disqualified Organization, agent or nominee thereof,
or Non-permitted Foreign Holder. Notwithstanding the registration in the
Certificate Register of any transfer, sale, or other disposition of a Residual
Certificate to a Disqualified Organization, an agent or nominee thereof, or
Non-permitted Foreign Holder, such registration shall be deemed to be of no
legal force or effect whatsoever and such Disqualified Organization, agent or
nominee thereof, or Non-permitted Foreign Holder shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. The Trustee shall not be
under any liability to any person for any registration or transfer of a Residual
Certificate to a Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder or for the maturity of any payments due on such
Residual Certificate to the Holder thereof or for taking any other action with
respect to such Holder under the provisions of the Agreement, so long as the
transfer was effected in accordance with this Section 3.03(f), unless the
Trustee shall have actual knowledge at the time of such transfer or the time of
such payment or other action that the transferee is a Disqualified Organization,
agent or nominee thereof, or Non-permitted Foreign Holder. The Trustee shall be
entitled to recover from any Holder of a Residual Certificate that was a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder at the time it became a Holder or any subsequent time it became a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, all payments made on such Residual Certificate at and after either such
times (and all costs and expenses, including but not limited to attorneys' fees,
incurred in connection therewith). Any payment (not including any such costs and
expenses) so recovered by the Trustee shall be paid and delivered to the last
preceding Holder of such Residual Certificate.
If any purported transferee shall become a registered Holder of a
Residual Certificate in violation of the provisions of this Section 3.03(f),
then upon receipt of written notice to the Trustee that the registration of
transfer of such Residual Certificate was not in fact permitted by this Section
3.03(f), the last preceding Permitted Transferee shall be restored to all rights
as Holder thereof retroactive to the date of such registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to any Person
for any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 3.03(f), for making any payment due on such
Certificate to the registered Holder thereof or for taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered upon receipt of the affidavit described in the preceding
paragraph of this Section 3.03(f).
(g) Each Holder of a Residual Certificate, by such Holder's acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this section.
Section 3.04. Cancellation of Certificates. Any Certificate surrendered
for registration of transfer or exchange shall be cancelled and retained in
accordance with normal retention policies with respect to cancelled certificates
maintained by the Trustee or the Certificate Registrar.
Section 3.05. Replacement of Certificates. If (i) any Certificate is
mutilated and is surrendered to the Trustee or any Authenticating Agent or (ii)
the Trustee or any Authenticating Agent receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and there is delivered to the
Trustee or the Authenticating Agent such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Depositor and any Authenticating Agent that such destroyed, lost or
stolen Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Certificate Principal
Amount. Upon the issuance of any new Certificate under this Section 3.05, the
Trustee and Authenticating Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
or the Authenticating Agent) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of
Section 3.09 with respect to Book-Entry Certificates, the Depositor, the Master
Servicer, the Trustee, the Certificate Registrar and any agent of any of them
may treat the Person in whose name any Certificate is registered upon the books
of the Certificate Registrar as the owner of such Certificate for the purpose of
receiving distributions pursuant to Sections 5.01 and 5.02 and for all other
purposes whatsoever, and neither the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar nor any agent of any of them shall be
affected by notice to the contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in exchange
therefor a like aggregate Certificate Principal Amount of definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Certificates of the same Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a
Paying Agent (which may be the Trustee) for the purpose of making distributions
to Certificateholders hereunder. The Trustee shall cause such Paying Agent to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in an Eligible Account in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
Certificates, upon original issuance, shall be issued in the form of one or more
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):
(i) the provisions of this Section 3.09 shall be in full force
and effect;
(ii) the Depositor, the Master Servicer, the Paying Agent, the
Registrar and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Book-Entry
Certificates) as the authorized representatives of the Certificate
Owners and the Clearing Agency shall be responsible for crediting the
amount of such distributions to the accounts of such Persons entitled
thereto, in accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09
conflict with any other provisions of this Agreement, the provisions of
this Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Certificate Owners and the Clearing Agency and/or the Clearing
Agency Participants. Unless and until Definitive Certificates are
issued pursuant to Section 3.09(c), the initial Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal of and interest on the
Book-Entry Certificates to such Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Principal Amount of a Class
of Book-Entry Certificates identified as such to the Trustee by an Officer's
Certificate from the Clearing Agency advise the Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of a Class of Book-Entry Certificates, the Trustee
shall notify or cause the Certificate Registrar to notify the Clearing Agency to
effect notification to all Certificate Owners, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Trustee of the Book-Entry Certificates by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration, the Trustee
shall issue the Definitive Certificates. Neither the Transferor nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the extent
applicable, with respect to such Definitive Certificates and the Trustee shall
recognize the holders of the Definitive Certificates as Certificateholders
hereunder.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Collection Account. (a) On the Closing Date, the Master
Servicer shall open and shall thereafter maintain an account held in trust (the
"Collection Account"), entitled "Aurora Loan Services Inc., as Master Servicer,
in trust for the benefit of the Holders of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-ALS3." The
Collection Account shall relate solely to the Certificates issued by the Trust
Fund hereunder, and funds in such Collection Account shall not be commingled
with any other monies.
(b) The Collection Account shall be an Eligible Account. If an existing
Collection Account ceases to be an Eligible Account, the Master Servicer shall
establish a new Collection Account that is an Eligible Account within 30 days
and transfer all funds on deposit in such existing Collection Account into such
new Collection Account.
(c) The Master Servicer shall give to the Trustee prior written notice
of the name and address of the depository institution at which the Collection
Account is maintained and the account number of such Collection Account. On each
Deposit Date, the entire amount on deposit in the Collection Account (subject to
permitted withdrawals set forth in Section 4.02), excluding such amounts not
included in the Available Distribution Amount for such Distribution Date
pursuant to clauses (a) through (h) of paragraph (1) of the definition thereof,
shall be remitted to the Trustee for deposit into the Certificate Account by
wire transfer in immediately available funds. The Master Servicer, at its
option, may choose to make daily remittances from the Collection Account to the
Trustee for deposit into the Certificate Account.
(d) The Master Servicer shall deposit or cause to be deposited into the
Collection Account, no later than the Business Day following the Closing Date,
any amounts representing Scheduled Payments on the Mortgage Loans due after the
Cut-off Date and received by the Master Servicer on or before the Closing Date.
Thereafter, the Master Servicer shall deposit or cause to be deposited in the
Collection Account on the applicable Remittance Date the following amounts
received or payments made by it (other than in respect of principal of and
interest on the Mortgage Loans due on or before the Cut-Off Date):
(i) all payments on account of principal, including Principal
Prepayments and late collections, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
(other than payments due prior to the Cut-off Date), net of the
Servicing Fee and Master Servicing Fee with respect to each such
Mortgage Loan, but only to the extent of the amount permitted to be
withdrawn or withheld from the Collection Account in accordance with
Sections 5.04 and 9.21; provided that, if the Servicer is also the
Retained Interest Holder with respect to any Mortgage Loans, payments
on account of interest on the Mortgage Loans as to which such Servicer
is the Retained Interest Holder may also be made net of the Retained
Interest with respect to each such Mortgage Loan.
(iii) any unscheduled payment or other recovery with respect to a
Mortgage Loan not otherwise specified in this paragraph (d), including
all Net Liquidation Proceeds with respect to the Mortgage Loans and REO
Property, and all amounts received in connection with the operation of
any REO Property, net of any unpaid Servicing Fees and Master Servicing
Fees with respect to such Mortgage Loans (but only to the extent of the
amount permitted to be withdrawn or withheld from the Collection
Account in accordance with Sections 5.04 and 9.21);
(iv) all Insurance Proceeds;
(v) all Advances made by the Master Servicer or any Servicer
pursuant to Section 5.04 or the applicable Servicing Agreement; and
(vi) all proceeds of any Mortgage Loan purchased by any Person.
(e) Funds in the Collection Account may be invested in Eligible
Investments (selected by and at the written direction of the Master Servicer)
which shall mature not later than the earlier of (a) the Deposit Date (except
that if such Eligible Investment is an obligation of the Trustee or the Paying
Agent, if other than the Trustee, and such Collection Account is maintained with
the Trustee or the Paying Agent, if other than the Trustee, then such Eligible
Investment shall mature not later than such applicable Distribution Date) or (b)
the day on which the funds in such Collection Account are required to be
remitted to the Trustee for deposit into the Certificate Account, and any such
Eligible Investment shall not be sold or disposed of prior to its maturity. All
such Eligible Investments shall be made in the name of the Trustee (in its
capacity as such) or its nominee. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time, subject to Section 5.05, and shall
not be part of the Trust Fund. The amount of any losses incurred in respect of
any such investments shall be deposited in such Collection Account by the Master
Servicer out of its own funds, without any right of reimbursement therefor,
immediately as realized. The foregoing requirements for deposit in the
Collection Account are exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments of interest on funds in the
Collection Account and payments in the nature of late payment charges or
assumption fees need not be deposited by the Master Servicer in the Collection
Account and may be retained by the Master Servicer or the applicable Servicer as
additional servicing compensation. If the Master Servicer deposits in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from such Collection Account. In the event the
Master Servicer does not provide written direction to the Trustee pursuant to
this Section, all funds on deposit in the Collection Account shall remain
uninvested.
Section 4.02. Application of Funds in the Collection Account. The
Master Servicer may, from time to time, make, or cause to be made, withdrawals
from the Collection Account for the following purposes:
(i) to reimburse itself or any Servicer for Advances made by it
or by such Servicer pursuant to Section 5.04 or the Servicing
Agreement; the Master Servicer's right to reimburse itself pursuant to
this subclause (i) is limited to amounts received on or in respect of
particular Mortgage Loans (including, for this purpose, Liquidation
Proceeds and amounts representing Insurance Proceeds with respect to
the property subject to the related Mortgage) which represent late
recoveries (net of the applicable Servicing Fee and the Master
Servicing Fee) of payments of principal or interest respecting which
any such Advance was made, it being understood, in the case of any such
reimbursement, that the Master Servicer's or Servicer's right thereto
shall be prior to the rights of the Certificateholders;
(ii) to reimburse itself or the Servicer for any Servicing
Advances made by it or by such Servicer that it determines in good
faith will not be recoverable from amounts representing late recoveries
of payments of principal or interest respecting the particular Mortgage
Loan as to which such Servicing Advance was made or from Liquidation
Proceeds or Insurance Proceeds with respect to such Mortgage Loan, it
being understood, in the case of any such reimbursement, that such
Master Servicer's or Servicer's right thereto shall be prior to the
rights of the Certificateholders;
(iii) to reimburse itself or the Servicer from Liquidation
Proceeds for Liquidation Expenses and for amounts expended by it
pursuant to Sections 9.20 and 9.22(a) or the Servicing Agreement in
good faith in connection with the restoration of damaged property and,
to the extent that Liquidation Proceeds after such reimbursement exceed
the unpaid principal balance of the related Mortgage Loan, together
with accrued and unpaid interest thereon at the applicable Mortgage
Rate less the applicable Servicing Fee and the Master Servicing Fee for
such Mortgage Loan to the Due Date next succeeding the date of its
receipt of such Liquidation Proceeds, to pay to itself out of such
excess the amount of any unpaid assumption fees, late payment charges
or other Mortgagor charges on the related Mortgage Loan and to retain
any excess remaining thereafter as additional servicing compensation,
it being understood, in the case of any such reimbursement or payment,
that such Master Servicer's or Servicer's right thereto shall be prior
to the rights of the Certificateholders;
(iv) in the event it has elected not to pay itself the Master
Servicing Fee out of any Mortgagor payment on account of interest or
other recovery with respect to a particular Mortgage Loan prior to the
deposit of such Mortgagor payment or recovery in the Collection
Account, to pay to itself the Master Servicing Fee for each
Distribution Date and any unpaid Master Servicing Fees for prior
Distribution Dates, as reduced pursuant to Section 5.05, from any
Mortgagor payment as to interest or such other recovery with respect to
that Mortgage Loan, as is permitted by this Agreement;
(v) to reimburse itself or the Servicer for expenses incurred by
and recoverable by or reimbursable to it or such Servicer pursuant to
Section 9.04, 9.06, 9.16 or 9.22(a) or pursuant to the applicable
Servicing Agreement, and to reimburse itself for any expenses
reimbursable to it pursuant to Section 10.01(c);
(vi) to pay to the applicable Person, with respect to each
Mortgage Loan or REO Property acquired in respect thereof that has been
repurchased by such Person pursuant to this Agreement, all amounts
received thereon and not distributed on the date on which the related
repurchase was effected;
(vii) subject to Section 5.04, to pay to itself income earned on
the investment of funds deposited in the Collection Account;
(viii) to make payments to the Trustee for deposit into the
Certificate Account in the amounts and in the manner provided for in
Section 4.04;
(ix) to make distributions of the Retained Interest to the
Retained Interest Holder on each Distribution Date (other than any
Retained Interest not deposited into the Collection Account in
accordance with Section 4.01(d)(ii));
(x) to make payment to itself and others pursuant to any
provision of this Agreement;
(xi) to withdraw funds deposited in error in the Collection
Account;
(xii) to clear and terminate any Collection Account pursuant to
Section 7.02;
(xiii) to reimburse a successor Master Servicer (solely in its
capacity as successor Master Servicer), for any fee or advance
occasioned by a termination of the Master Servicer, and the assumption
of such duties by the Trustee or a successor Master Servicer appointed
by the Trustee pursuant to Section 6.14, in each case to the extent not
reimbursed by the terminated Master Servicer, it being understood, in
the case of any such reimbursement or payment, that the right of the
Master Servicer or the Trustee thereto shall be prior to the rights of
the Certificateholders; and
(xiv) to reimburse the Servicer for such amounts as are due
thereto under the applicable Servicing Agreement and have not been
retained by or paid to such Servicer to the extent provided in such
Servicing Agreement.
Each Servicer shall be entitled to retain as additional servicing
compensation any Prepayment Penalty Amounts or Prepayment Interest Excess.
In connection with withdrawals pursuant to subclauses (i), (iii), (iv)
and (vi) above, the Master Servicer's or Servicer's entitlement thereto is
limited to collections or other recoveries on the related Mortgage Loan. The
Master Servicer shall therefore keep and maintain a separate accounting for each
Mortgage Loan it master services for the purpose of justifying any withdrawal
from the Collection Account it maintains pursuant to such subclause (i), (iii),
(iv) and (vi).
Section 4.03. Reports to Certificateholders. (a) On each Distribution
Date, the Trustee shall deliver or cause to be delivered by first class mail to
each Certificateholder a written report setting forth the following information,
by Mortgage Pool and Certificate Group (on the basis of Mortgage Loan level
information obtained from the Servicer):
(i) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates
allocable to principal on the Mortgage Loans, including Liquidation
Proceeds and Insurance Proceeds, stating separately the amount
attributable to scheduled principal payments and unscheduled payments
in the nature of principal in each Mortgage Pool;
(ii) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates (other
than any Class of Principal Only Certificates) allocable to interest,
including any Accrual Amount added to the Class Principal Amount of any
Class of Accrual Certificates;
(iii) the amount, if any, of any distribution to the Holders of a
Residual Certificate;
(iv) (A) the aggregate amount of any Advances required to be made
by or on behalf of the Master Servicer or the Servicer (or the Trustee)
with respect to such Distribution Date, (B) the aggregate amount of
such Advances actually made, and (C) the amount, if any, by which (A)
above exceeds (B) above;
(v) the Aggregate Principal Balance of the Mortgage Loans and the
Non-PO Pool Balance of each Mortgage Pool as of the close of business
on the last day of the related Due Period, after giving effect to
payments allocated to principal reported under clause (i) above;
(vi) the Class Principal Amount (or Class Notional Amount) of
each Class of Certificates, to the extent applicable, as of such
Distribution Date after giving effect to payments allocated to
principal reported under clause (i) above (and to the addition of any
Accrual Amount in the case of any Class of Accrual Certificates),
separately identifying any reduction of any of the foregoing
Certificate Principal Amounts due to Realized Losses:
(vii) any Realized Losses realized with respect to the Mortgage
Loans (x) in the applicable Prepayment Period and (y) in the aggregate
since the Cut-off Date, stating separately the amount of Special Hazard
Losses, Fraud Losses and Bankruptcy Losses and the aggregate amount of
such Realized Losses, and the remaining Special Hazard Loss Amount,
Fraud Loss Amount and Bankruptcy Loss Amount;
(viii) the amount of the Master Servicing Fees, Servicing Fees
and Trustee Fee paid during the Due Period to which such distribution
relates;
(ix) the number and aggregate Scheduled Principal Balance of
Mortgage Loans, as reported to the Trustee by the Master Servicer, (a)
remaining outstanding (b) delinquent one month, (c) delinquent two
months, (d) delinquent three or more months, and (e) as to which
foreclosure proceedings have been commenced as of the close of business
on the last Business Day of the calendar month immediately preceding
the month in which such Distribution Date occurs;
(x) the deemed principal balance of each REO Property as of the
close of business on the last Business Day of the calendar month
immediately preceding the month in which such Distribution Date occurs;
(xi) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the principal balance of
such Mortgage Loan and the number of such Mortgage Loans as of the
close of business on the Distribution Date in such preceding month;
(xii) with respect to substitution of Mortgage Loans in the
preceding calendar month, the Scheduled Principal Balance of each
Deleted Mortgage Loan, and of each Qualifying Substitute Mortgage Loan;
(xiii) the aggregate outstanding Interest Shortfalls and Net
Prepayment Interest Shortfalls, if any, for each Class of Certificates,
after giving effect to the distribution made on such Distribution Date;
(xiv) if applicable, the amount of any shortfall (i.e., the
difference between the aggregate amounts of principal and interest
which Certificateholders would have received if there were sufficient
available amounts in the Certificate Account and the amounts actually
distributed); and
(xv) any other "loan-level" information for any Mortgage Loans
that are delinquent three or more months and any REO Property held by
the Trust that is reported by the Master Servicer to the Trustee.
In the case of information furnished pursuant to subclauses (i), (ii)
and (viii) above, the amounts shall be expressed as a dollar amount per $1,000
of original principal amount of Certificates.
The foregoing information and reports shall be prepared and determined
by the Trustee based solely on Mortgage Loan data provided to the Trustee by the
Master Servicer no later than four Business Days prior to the Distribution Date.
In preparing or furnishing the Mortgage Loan data to the Trustee, the Master
Servicer shall be entitled to rely conclusively on the accuracy of the
information or data regarding the Mortgage Loans and the related REO Property
that has been provided to the Master Servicer by the Servicer, and the Master
Servicer shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.
On each Distribution Date, the Trustee shall also deliver or cause to
be delivered by first class mail to the Depositor a copy of the above-described
written report, to the following address: Mortgage Finance Group, Lehman
Brothers Inc., Three World Financial Center, 200 Vesey Street, New York, New
York, 10285, Attention:
Joseph J. Kelly, or to such other address as the Depositor may designate.
(b) Upon the reasonable advance written request of any
Certificateholder that is a savings and loan, bank or insurance company, which
request, if received by the Trustee, will be promptly forwarded to the Master
Servicer, the Master Servicer shall provide, or cause to be provided, (or, to
the extent that such information or documentation is not required to be provided
by a Servicer under the Servicing Agreement, shall use reasonable efforts to
obtain such information and documentation from such Servicer, and provide) to
such Certificateholder such reports and access to information and documentation
regarding the Mortgage Loans as such Certificateholder may reasonably deem
necessary to comply with applicable regulations of the Office of Thrift
Supervision or its successor or other regulatory authorities with respect to
investment in the Certificates; provided, however, that the Master Servicer
shall be entitled to be reimbursed by such Certificateholder for such Master
Servicer's actual expenses incurred in providing such reports and access.
(c) Within 90 days, or such shorter period as may be required by
statute or regulation, after the end of each calendar year, the Trustee shall
send to each Person who at any time during the calendar year was a
Certificateholder of record, and make available to Certificate Owners
(identified as such by the Clearing Agency) in accordance with applicable
regulations, a report summarizing the items provided to Certificateholders
pursuant to Section 4.03(a) on an annual basis as may be required to enable such
Holders to prepare their federal income tax returns. Such information shall
include the amount of original issue discount accrued on each Class of
Certificates and information regarding the expenses of the Trust Fund. The
Master Servicer shall provide the Trustee with such information as is necessary
for the Trustee to prepare such reports.
Section 4.04. Certificate Account. (a) The Trustee shall establish and
maintain in its name, as trustee, a special deposit trust account (the
"Certificate Account"), to be held in trust for the benefit of the
Certificateholders until disbursed pursuant to the terms of this Agreement. The
Certificate Account shall be an Eligible Account. If the existing Certificate
Account ceases to be an Eligible Account, the Trustee shall establish a new
Certificate Account that is an Eligible Account within 20 Business Days and
transfer all funds on deposit in such existing Certificate Account into such new
Certificate Account. The Certificate Account shall relate solely to the
Certificates issued hereunder and funds in the Certificate Account shall be held
separate and apart from and shall not be commingled with any other monies
including, without limitation, other monies of the Trustee held under this
Agreement.
(b) The Trustee shall cause to be deposited into the Certificate
Account on the day on which, or, if such day is not a Business Day, the Business
Day immediately following the day on which, any monies are remitted by the
Master Servicer to the Trustee, all such amounts. The Trustee shall make
withdrawals from the Certificate Account only for the following purposes:
(i) to withdraw amounts deposited in the Certificate Account in
error;
(ii) to pay itself any investment income earned with respect to
funds in the Certificate Account invested in Eligible Investments as
set forth in subsection (c) below, and to make payments to itself and
others pursuant to any provision of this Agreement;
(iii) to make payments of the Master Servicing Fee (to the extent
not already withheld or withdrawn from the Collection Account by the
Master Servicer) to the Master Servicer;
(iv) to make distributions to the Certificateholders pursuant to
Article V; and
(v) to clear and terminate the Certificate Account pursuant to
Section 7.02.
(c) The Trustee may invest, or cause to be invested, funds held in the
Certificate Account, which funds, if invested, shall be invested in Eligible
Investments (which may be obligations of the Trustee). All such investments must
mature no later than the next Distribution Date, and shall not be sold or
disposed of prior to their maturity. All such Eligible Investments will be made
in the name of the Trustee (in its capacity as such) or its nominee. All income
and gain realized from any such investment shall be compensation for the Trustee
and shall be subject to its withdrawal on order from time to time. The amount of
any losses incurred in respect of any such investments shall be paid by the
Trustee for deposit in the Certificate Account out of its own funds, without any
right of reimbursement therefor, immediately as realized. Funds held in the
Certificate Account that are not invested shall be held in cash.
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
respecting the final distribution on the Certificates, on each Distribution Date
the Trustee or the Paying Agent shall make distributions in accordance with this
Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date to any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of the
Class 1-PO or Class 2-PO Certificates, a Percentage Interest of 100%, by wire
transfer in immediately available funds to an account specified in the request
and at the expense of such Certificateholder; provided, however, that the final
distribution in respect of any Certificate shall be made only upon presentation
and surrender of such Certificate at the Corporate Trust Office. Wire transfers
will be made at the expense of the Holder requesting such wire transfer by
deducting a wire transfer fee from the related distribution. Notwithstanding
such final payment of principal of any of the Certificates, the Residual
Certificate will remain outstanding until the termination of the REMIC and the
payment in full of all other amounts due with respect to the Residual
Certificate and at such time such final payment in retirement of the Residual
Certificate will be made only upon presentation and surrender of such
Certificate at the Corporate Trust Office of the Trustee. If any payment
required to be made on the Certificates is to be made on a day that is not a
Business Day, then such payment will be made on the next succeeding Business
Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Certificate Principal Amounts.
Section 5.02. Distributions from the Certificate Account. (a) On each
Distribution Date, the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Available Distribution Amount
with respect to each Mortgage Pool, and shall distribute such amount to itself
(in the case of clause (i)) and to the Holders of record of each Class of
Certificates in the following order of priority:
(i) from the Available Distribution Amount for each Mortgage
Pool, to the Trustee, the Trustee Fee allocable to such Mortgage Pool
for such Distribution Date;
(ii) from the Available Distribution Amount for each Mortgage
Pool, to each Class of Senior Certificates in the related Certificate
Group (other than any Class of Principal Only Certificates), the
Accrued Certificate Interest thereon for such Distribution Date, as
reduced by such Class's allocable share of any Net Prepayment Interest
Shortfalls for the related Mortgage Pool for such Distribution Date;
provided, however, that any shortfall in available amounts for each
Mortgage Pool shall be allocated between the Classes of the related
Certificate Group in proportion to the amount of Accrued Certificate
Interest (as so reduced) that would otherwise be distributable thereon;
(iii) from the Available Distribution Amount for each Mortgage
Pool, to each Class of Senior Certificates in the related Certificate
Group (other than any Class of Principal Only Certificates), any
related Interest Shortfall for such Distribution Date; provided,
however, that any shortfall in available amounts for each Mortgage Pool
shall be allocated between the Classes of the related Certificate Group
in proportion to the Interest Shortfall for each such Class on such
Distribution Date;
(iv) from the remaining Available Distribution Amount for each
Mortgage Pool, to the Senior Certificates of the related Certificate
Group, as follows:
(A) to the Class 1-CB and Class 1-PO Certificates, from the
Available Distribution Amount for Pool 1 for such Distribution
Date, in reduction of their respective Class Principal Amounts,
concurrently, as follows:
(1) to the Class 1-CB Certificates, the Senior
Principal Distribution Amount for Pool 1 for such
Distribution Date, until the Class Principal Amount thereof
has been reduced to zero; and
(2) to the Class 1-PO Certificates, the PO Distribution
Amount for Pool 1 for such Distribution Date, until the
Class Principal Amount thereof has been reduced to zero;
(B) to the Class 2-NC, Class 2-PO and Class R Certificates,
from the Available Distribution Amount for Pool 2 for such
Distribution Date, in reduction of their respective Class
Principal Amounts, concurrently, as follows:
(1) sequentially, to the Class R and Class 2-NC
Certificates, in that order, the Senior Principal
Distribution Amount for Pool 2 for such Distribution Date,
until the Class Principal Amount of each such Class has been
reduced to zero; and
(2) to the Class 2-PO Certificates, the PO Principal
Distribution Amount for Pool 2 for such Distribution Date,
until the Class Principal Amount thereof has been reduced to
zero;
(v) to the Class 1-PO and Class 2-PO Certificates, to the extent
of the remaining Available Distribution Amount for each Mortgage Pool,
the Class PO Deferred Amount for such Class and Distribution Date,
until the Class Principal Amount thereof has been reduced to zero;
provided, however, that (A) distributions pursuant to this priority
shall not exceed the aggregate Subordinate Principal Distribution
Amount for both Mortgage Pools for such date; (B) such amounts will not
reduce the Class Principal Amounts of such Classes; and (C) in the
event the aggregate Subordinate Principal Distribution Amount for both
Mortgage Pools is insufficient to fully pay the Class PO Deferred
Amount for the Class 1-PO and Class 2-PO Certificates, such amount
shall be distributed pro rata to such Classes on the basis of their
respective Class PO Deferred Amounts; and
(vi) from the remaining Available Distribution Amount for both
Mortgage Pools, subject to the prior distribution of amounts pursuant
to Section 5.02(e) in the case of clauses (C), (F), (I), (L), (O) and
(R) below, to the Subordinated Certificates, as follows:
(A) to the Class B1 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(B) to the Class B1 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(C) to the Class B1 Certificates, in reduction of the Class
Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c),
until the Certificate Principal Balance thereof has been reduced
to zero;
(D) to the Class B2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(E) to the Class B2 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(F) to the Class B2 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Class Principal Amount thereof has been
reduced to zero;
(G) to the Class B3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(H) to the Class B3 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(I) to the Class B3 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Class Principal Amount thereof has been
reduced to zero;
(J) to the Class B4 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(K) to the Class B4 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(L) to the Class B4 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Certificate Principal Balance thereof has been
reduced to zero;
(M) to the Class B5 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(N) to the Class B5 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(O) to the Class B5 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Class Principal Balance thereof has been
reduced to zero;
(P) to the Class B6 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(Q) to the Class B6 Certificates, any Interest Shortfall for
such Class on such Distribution Date; and
(R) to the Class B6 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Certificate Principal Balance thereof has been
reduced to zero.
(b) Net Prepayment Interest Shortfalls for each Mortgage Pool shall be
allocated among the Certificates of the related Certificate Group (other than
any related Principal Only Certificates) pro rata based on (i) in the case of
the Non-PO Senior Certificates, the Accrued Certificate Interest otherwise
distributable thereon, and (ii) in the case of the Subordinate Certificates,
interest accrued on the related Apportioned Principal Balances.
(c) (i) If on any Distribution Date the Credit Support Percentage for
the Class B1 Certificates is less than the Original Credit Support Percentage
for such Class, then, notwithstanding anything to the contrary in Section
5.02(a), no distribution of amounts described in clauses (ii) and (iii) of the
definition of Subordinate Principal Distribution Amount will be made in respect
of the Class B2, Class B3, Class B4, Class B5 or Class B6 Certificates on such
Distribution Date. (ii) If on any Distribution Date the Credit Support
Percentage for the Class B2 Certificates is less than the Original Credit
Support Percentage for such Class, then, notwithstanding anything to the
contrary in Section 5.02(a), no distribution of amounts described in clauses
(ii) and (iii) of the definition of Subordinate Principal Distribution Amount
will be made in respect of the Class B3, Class B4, Class B5 or Class B6
Certificates on such Distribution Date. (iii) If on any Distribution Date the
Credit Support Percentage for the Class B3 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B4, Class B5 or Class
B6 Certificates on such Distribution Date. (iv) If on any Distribution Date the
Credit Support Percentage for the Class B4 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B5 or Class B6
Certificates on such Distribution Date. (v) If on any Distribution Date the
Credit Support Percentage for the Class B5 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B6 Certificates on such
Distribution Date.
Any amount not distributed in respect of any Class on any Distribution
Date pursuant to the immediately preceding paragraph will be allocated among the
remaining Subordinate Classes in proportion to their respective Certificate
Principal Amounts.
(d) On each Distribution Date, the Trustee shall distribute to the
Holder of the Class R Certificate any amounts remaining in the Trust Fund for
such Distribution Date after application of all amounts described in paragraph
(a) of this Section 5.02. Any distributions pursuant to this paragraph (d) shall
not reduce the Class Principal Amount of the Class R Certificate.
(e) (i) On each Distribution Date prior to the Credit Support Depletion
Date but on or after the date on which the aggregate Certificate Principal
Amount of the Non-PO Senior Certificates of any Certificate Group has been
reduced to zero, amounts otherwise distributable as principal on each Class of
Subordinate Certificates pursuant to Section 5.02(a)(vi), in reverse order of
priority, in respect of such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the Mortgage Pool relating to such
retired Certificates, shall be distributed as principal to the Non-PO Senior
Certificates remaining outstanding, until the Class Principal Amounts thereof
have been reduced to zero, provided that on such Distribution Date (a) the
Aggregate Subordinate Percentage for such Distribution Date is less than 200% of
the Aggregate Subordinate Percentage as of the Cut-off Date or (b) the average
outstanding principal balance of the Mortgage Loans in any Mortgage Pool that
are delinquent 60 days or more over the last six months as a percentage of the
related Group Subordinate Amount is greater than or equal to 50%.
(ii)(A) On any Distribution Date on which any Certificate Group
constitutes an Undercollateralized Group, all amounts otherwise
distributable as principal on the Subordinate Certificates, in reverse
order of priority (other than amounts necessary to pay Class PO
Deferred Amounts or unpaid Interest Shortfalls) (or, following the
Credit Support Depletion Date, such other amounts described in the
immediately following sentence), will be distributed as principal to
the Non-PO Senior Certificates of such Undercollateralized Group, until
the aggregate Certificate Principal Amount of such Non-PO Senior
Certificates equals the Non-PO Pool Balance of the related Mortgage
Pool (such distribution, an "Undercollateralization Distribution"). In
the event that any Certificate Group constitutes an Undercollateralized
Group on any Distribution Date following the Credit Support Depletion
Date, Undercollateralization Distributions will be made from any
Available Distribution Amount for the Mortgage Pool not related to an
Undercollateralized Group remaining after all required amounts have
been distributed to the Non-PO Senior Certificates of such other
Certificate Group. In addition, the amount of any unpaid Interest
Shortfalls with respect to an Undercollateralized Group on any
Distribution Date (including any Interest Shortfalls for such
Distribution Date) will be distributed to the Non-PO Senior
Certificates of such Undercollateralized Group prior to the payment of
any Undercollateralization Distributions from amounts otherwise
distributable as principal on the Subordinate Certificates, in reverse
order of priority (or, following the Credit Support Depletion Date, as
provided in the preceding sentence).
Section 5.03. Allocation of Realized Losses. (a) On any Distribution
Date, (x) the applicable PO Percentage of the principal portion of each Realized
Loss (other than any Excess Loss) in respect of a Mortgage Loan in each Mortgage
Pool will be allocated to the related Class of Principal Only Certificates until
the Class Principal Amount thereof has been reduced to zero; and (y) the
applicable Non-PO Percentage of the principal portion of each Realized Loss
(other than any Excess Loss) in respect of a Mortgage Loan shall be allocated in
the following order of priority:
first, to the Class B6 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
second, to the Class B5 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
third, to the Class B4 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fourth, to the Class B3 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fifth, to the Class B2 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
sixth, to the Class B1 Certificates, until the Class Principal
Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates of either
Certificate Group, pro rata, in accordance with their Class Principal
Amounts; provided, that any such loss allocated to any Class of Accrual
Certificates shall be allocated (subject to Section 5.03(c)) on the
basis of the lesser of (x) the Class Principal Amount thereof
immediately prior to the applicable Distribution Date and (y) the Class
Certificate Principal thereof on the Closing Date (as reduced by any
Realized Losses previously allocated thereto).
(b) With respect to any Distribution Date, the applicable Non-PO
Percentage of the principal portion of any Excess Loss in respect of a Mortgage
Loan shall be allocated, pro rata, to the Subordinate Certificates (regardless
which Mortgage Pool experienced the loss) and the Group 1 Certificates and the
Group 2 Certificates (irrespective of whether the Realized Loss was realized by
Pool 1 or Pool 2) and on the basis of the Apportioned Principal Balances of the
Classes of Subordinate Certificates and Class Principal Amounts of the Senior
Certificates; provided, that any such loss allocated to any Class of Accrual
Certificates (and any Accrual Component) shall be allocated (subject to Section
5.03(c)) on the basis of the lesser of (x) the Class Principal Amount thereof
immediately prior to the applicable Distribution Date and (y) the Class
Principal Amount thereof on the Closing Date (as reduced by any Realized Losses
previously allocated thereto). The applicable PO Percentage of the principal
portion of an Excess Loss in a Mortgage Pool will be applied to the related
Class of Principal Only Certificates until the Class Principal Amount thereof
has been reduced to zero.
(c) Any Realized Losses allocated to a Class of Certificates pursuant
to Section 5.03(a) or (b) shall be allocated among the Certificates of such
Class in proportion to their respective Certificate Principal Amounts. Any
allocation of Realized Losses pursuant to this paragraph (c) shall be
accomplished by reducing the Certificate Principal Amount of the related
Certificates on the related Distribution Date in accordance with Section
5.03(d).
(d) Realized Losses allocated in accordance with this Section 5.03
shall be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion thereof,
after giving effect to distributions made on such Distribution Date, except that
the aggregate amount of Realized Losses to be allocated to the Principal Only
Certificates on such Distribution Date will be taken into account in determining
distributions in respect of any related Class PO Deferred Amount for such date.
(e) On each Distribution Date, the Subordinate Certificate Writedown
Amount for such date shall effect a corresponding reduction in the Certificate
Principal Amount of the lowest ranking Class of outstanding Subordinate
Certificates, which reduction shall occur on such Distribution Date after giving
effect to distributions made on such Distribution Date.
(f) In the event that there is a recovery of an amount in respect of
principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates, each outstanding Class to
which any portion of such Realized Loss had previously been allocated shall be
entitled to receive, on the Distribution Date in the month following the month
in which such recovery is received, its pro rata share (based on the Class
Principal Amount thereof) of such recovery, up to the amount of the portion of
such Realized Loss previously allocated to such Class. In the event that the
total amount of such recovery exceeds the amount of Realized Loss allocated to
the outstanding Classes in accordance with the preceding provisions, each
outstanding Class of Certificates shall be entitled to receive its pro rata
share of the amount of such excess, up to the amount of any unrecovered Realized
Loss previously allocated to such Class. Any such recovery allocated to a Class
of Certificates shall not further reduce the Certificate Principal Amount of
such Certificate. Any such amounts not otherwise allocated to any Class of
Certificates, pursuant to this subsection shall be treated as Principal
Prepayments for purposes of this Agreement.
Section 5.04. Advances by Master Servicer and Trustee. (a) Advances
shall be made in respect of each Deposit Date as provided herein. If, on any
Determination Date, the Master Servicer determines that any Scheduled Payments
due during the related Due Period (other than Balloon Payments) have not been
received, the Master Servicer shall, or cause the applicable Servicer to,
advance such amount, less an amount, if any, to be set forth in an Officer's
Certificate to be delivered to the Trustee on such Determination Date, which if
advanced the Master Servicer or the applicable Servicer has determined would not
be recoverable from amounts received with respect to such Mortgage Loan,
including late payments, Liquidation Proceeds, Insurance Proceeds or otherwise.
If the Master Servicer determines that an Advance is required, it shall on the
Deposit Date immediately following such Determination Date either (i) remit to
the Trustee from its own funds (or funds advanced by the Servicer) for deposit
in the Certificate Account immediately available funds in an amount equal to
such Advance, (ii) cause to be made an appropriate entry in the records of the
Collection Account that funds in such account being held for future distribution
or withdrawal have been, as permitted by this Section 5.04, used by the Master
Servicer to make such Advance, and remit such immediately available funds to the
Trustee for deposit in the Certificate Account or (iii) make Advances in the
form of any combination of clauses (i) and (ii) aggregating the amount of such
Advance. Any funds being held in the Collection Account for future distribution
to Certificateholders and so used shall be replaced by the Master Servicer from
its own funds by remittance to the Trustee for deposit in the Certificate
Account on or before any future Deposit Date to the extent that funds in the
Certificate Account on such Deposit Date shall be less than payments to
Certificateholders required to be made on the related Distribution Date. The
Master Servicer and the Servicer shall be entitled to be reimbursed from the
Collection Account for all Advances made by it as provided in Section 4.02.
(b) In the event that the Master Servicer fails for any reason to make
an Advance required to be made pursuant to Section 5.04 on or before the Deposit
Date, the Trustee, as successor Master Servicer pursuant to Section 6.14, shall,
on or before the related Distribution Date, deposit in the Certificate Account
an amount equal to the excess of (a) Advances required to be made by the Master
Servicer or the Servicer that would have been deposited in such Certificate
Account over (b) the amount of any Advance made by the Master Servicer or the
Servicer with respect to such Distribution Date; provided, however, that the
Trustee shall be required to make such Advance only if it is not prohibited by
law from doing so and it has determined that such Advance would be recoverable
from amounts to be received with respect to such Mortgage Loan, including late
payments, Liquidation Proceeds, Insurance Proceeds, or otherwise. The Trustee
shall be entitled to be reimbursed from the Certificate Account for Advances
made by it pursuant to this Section 5.04 as if it were the Master Servicer.
Section 5.05. Compensating Interest Payments. The amount of the
Aggregate Master Servicing Compensation payable to the Master Servicer in
respect of any Distribution Date shall be reduced by the amount of any
Compensating Interest Payment for such Distribution Date, but only to the extent
such Compensating Interest Payment is not actually made by the Servicer on the
applicable Remittance Date. Such amount shall not be treated as an Advance and
shall not be reimbursable to the Master Servicer.
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee. (a) The Trustee, except during the
continuance of an Event of Default (of which a Responsible Officer of the
Trustee shall have actual knowledge), undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. Any permissive
right of the Trustee provided for in this Agreement shall not be construed as a
duty of the Trustee. If an Event of Default (of which a Responsible Officer of
the Trustee shall have actual knowledge) has occurred and has not otherwise been
cured or waived, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement and use the same degree of care and skill in their
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Master Servicer, to the Trustee pursuant to this Agreement, and
shall not be required to recalculate or verify any numerical information
furnished to the Trustee pursuant to this Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful misconduct.
No provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct; provided, however, that:
(i) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the consent or direction of Holders of Certificates
as provided in Section 6.19 hereof;
(ii) For all purposes under this Agreement, the Trustee shall not
be deemed to have notice of any Event of Default (other than resulting
from a failure by the Master Servicer (i) to remit funds (or to make
Advances) or (ii) to furnish information to the Trustee when required
to do so) unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in
fact such a default is received by the Trustee at the Corporate Trust
Office, and such notice references the Holders of the Certificates and
this Agreement;
(iii) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it, and 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 Master 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 Master Servicer in accordance with the terms of this Agreement; and
(iv) The Trustee shall not be responsible for any act or omission
of the Master Servicer. In particular, the Trustee shall not be liable
for any servicing errors or interruptions resulting from any failure of
the Master Servicer or the Servicer to maintain computer and other
information systems that are year 2000 compliant.
(d) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided, however,
that the Trustee shall use its best efforts to remit to the Master Servicer upon
receipt any such complaint, claim, demand, notice or other document (i) which is
delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.
(e) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement.
(f) Subject to Section 4.04, the Trustee shall not be held liable by
reason of any insufficiency in any account (including without limitation the
Collection Amount) held by or on behalf of the Trustee resulting from any
investment loss on any Eligible Investment included therein (except to the
extent that the Trustee is the obligor and has defaulted thereon).
(g) Except as otherwise provided herein, the Trustee shall have no duty
(A) to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any re-recording, re-filing or
re-depositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Fund other than from funds available in the
Collection Account or the Certificate Account, or (D) to confirm or verify the
contents of any reports or certificates of the Master Servicer delivered to the
Trustee pursuant to this Agreement believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties.
(h) The Trustee shall not be liable in its individual capacity for an
error of judgment made in good faith by a Responsible Officer or other officers
of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(i) Notwithstanding anything in this Agreement to the contrary, the
Trustee shall not be liable for special, indirect or consequential losses or
damages of any kind whatsoever (including, but not limited to, lost profits),
even if the Trustee has been advised of the likelihood of such loss or damage
and regardless of the form of action.
Section 6.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 6.01:
(i) The Trustee may request, and may rely and shall be protected
in acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors, opinion of counsel or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Trustee may consult with counsel and any advice of its
counsel or Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by
it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(iii) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and reasonably believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(iv) Unless an Event of Default shall have occurred and be
continuing, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document (provided the same
appears regular on its face), unless requested in writing to do so by
Holders of at least a majority in Class Principal Amount of each Class
of Certificates; provided, however, that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee
may require reasonable indemnity against such expense or liability or
payment of such estimated expenses as a condition to proceeding. The
reasonable expense thereof shall be paid by the Holders requesting such
investigation;
(v) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through
agents, custodians, or attorneys, which agents, custodians or attorneys
shall have any and all of the rights, powers, duties and obligations of
the Trustee conferred on them by such appointment provided that the
Trustee shall continue to be responsible for its duties and obligations
hereunder to the extent provided herein, and provided further that the
Trustee shall not be responsible for any misconduct or negligence on
the part of any such agent or attorney appointed with due care by the
Trustee;
(vi) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto, in
each case 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;
(v) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act; and
(vii) The Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Fund created hereby or
the powers granted hereunder.
Section 6.03. Trustee Not Liable for Certificates. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates)
or of any Mortgage Loan, or related document save that the Trustee represents
that, assuming due execution and delivery by the other parties hereto, this
Agreement has been duly authorized, executed and delivered by it and constitutes
its valid and binding obligation, enforceable against it in accordance with its
terms except that such enforceability may be subject to (A) applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally, and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding in equity
or at law. The Trustee shall not be accountable for the use or application by
the Depositor of funds paid to the Depositor in consideration of the assignment
of the Mortgage Loans to the Trust Fund by the Depositor or for the use or
application of any funds deposited into the Collection Account, the Certificate
Account, any Escrow Account or any other fund or account maintained with respect
to the Certificates. The Trustee shall not be responsible for the legality or
validity of this Agreement or the validity, priority, perfection or sufficiency
of the security for the Certificates issued or intended to be issued hereunder.
Except as otherwise provided herein, 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 6.04. Trustee May Own Certificates. The Trustee and any
Affiliate or agent of the Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates and may transact banking and trust
with the other parties hereto with the same rights it would have if it were not
Trustee or such agent.
Section 6.05. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (i) an institution insured by the FDIC and (ii)
a corporation or national banking association, organized and doing business
under the laws of any State or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation or national banking
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section, the combined capital and surplus of such
corporation or national banking association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with provisions of this Section, the Trustee shall resign immediately
in the manner and with the effect specified in Section 6.06.
Section 6.06. Resignation and Removal of Trustee. (a) The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor and the Master Servicer. Upon receiving
such notice of resignation, the Depositor will promptly appoint a successor
trustee by written instrument, one copy of which instrument shall be delivered
to the resigning Trustee, one copy to the successor trustee and one copy to the
Master Servicer. If no successor trustee shall have been so appointed and shall
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.05 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, (iii) a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee is located, or (iv) the continued
use of the Trustee would result in a downgrading of the rating by the Rating
Agencies of any Class of Certificates with a rating, then the Depositor shall
remove the Trustee and appoint a successor trustee by written instrument, one
copy of which instrument shall be delivered to the Trustee so removed, one copy
to the successor trustee and one copy to the Master Servicer.
(c) The Holders of more than 50% of the Class Principal Amount of each
Class of Certificates may at any time upon 30 days' written notice to the
Trustee and to the Depositor remove the Trustee by such written instrument,
signed by such Holders or their attorney-in-fact duly authorized, one copy of
which instrument shall be delivered to the Depositor, one copy to the Trustee so
removed and one copy to the Master Servicer; the Depositor shall thereupon use
its best efforts to appoint a mutually acceptable successor trustee in
accordance with this Section.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 6.07.
Section 6.07. Successor Trustee. (a) Any successor trustee appointed as
provided in Section 6.06 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to the successor trustee all Mortgage Files and documents and
statements related to each Mortgage Files held by it hereunder, and shall duly
assign, transfer, deliver and pay over to the successor trustee the entire Trust
Fund, together with all necessary instruments of transfer and assignment or
other documents properly executed necessary to effect such transfer and such of
the record or copies thereof maintained by the predecessor trustee in the
administration hereof as may be requested by the successor trustee and shall
thereupon be discharged from all duties and responsibilities under this
Agreement. In addition, the Master Servicer and the predecessor trustee shall
execute and deliver such other instruments and do such other things as may
reasonably be required to more fully and certainly vest and confirm in the
successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to the Rating Agencies. The expenses of such
mailing shall be borne by the Master Servicer.
Section 6.08. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Persons succeeding to the business of the Trustee,
shall be the successor to the Trustee hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, provided that such Person shall
be eligible under the provisions of Section 6.05.
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.
(a) Notwithstanding any other provisions hereof, at any time, the Trustee, the
Depositor or the Certificateholders evidencing more than 50% of the Class
Principal Amount of each Class of Certificates shall each have the power from
time to time to appoint one or more Persons to act either as co-trustees jointly
with the Trustee, or as separate trustees, or as custodians, for the purpose of
holding title to, foreclosing or otherwise taking action with respect to any
Mortgage Loan outside the state where the Trustee has its principal place of
business where such separate trustee or co-trustee is necessary or advisable (or
the Trustee has been advised by the Master Servicer that such separate trustee
or co-trustee is necessary or advisable) under the laws of any state in which a
property securing a Mortgage Loan is located or for the purpose of otherwise
conforming to any legal requirement, restriction or condition in any state in
which a property securing a Mortgage Loan is located or in any state in which
any portion of the Trust Fund is located. The separate Trustees, co-trustees, or
custodians so appointed shall be trustees or custodians for the benefit of all
the Certificateholders and shall have such powers, rights and remedies as shall
be specified in the instrument of appointment; provided, however, that no such
appointment shall, or shall be deemed to, constitute the appointee an agent of
the Trustee. The obligation of the Trustee to make Advances pursuant to Section
5.04 and 6.14 hereof shall not be affected or assigned by the appointment of a
co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall
be exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee,
co-trustee, or custodian jointly, except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be
performed the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations, including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction, shall be exercised and
performed by such separate trustee, co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally
liable by reason of any act or omission of any other trustee or
custodian hereunder; and
(iv) the Trustee or the Certificateholders evidencing more than
50% of the Aggregate Voting Interests of the Certificates may at any
time accept the resignation of or remove any separate trustee,
co-trustee or custodian, so appointed by it or them, if such
resignation or removal does not violate the other terms of this
Agreement.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee, co-trustee or custodian may, at any time,
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. The Trustee shall not
be responsible for any action or inaction of any separate trustee, co-trustee or
custodian. If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the
extent necessary to fulfill the Trustee's obligations hereunder.
(g) The Trustee shall pay the reasonable compensation of the
co-trustees to the extent, and in accordance with the standards, specified in
Section 6.12 hereof (which compensation shall not reduce any compensation
payable to the Trustee under such Section).
Section 6.10. Authenticating Agents. (a) The Trustee may appoint one or
more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. Any Authenticating Agent shall be
entitled to reasonable compensation for its services and, if paid by the
Trustee, it shall be a reimbursable expense pursuant to Section 6.12.
Section 6.11. Indemnification of Trustee. The Trustee and its
directors, officers, employees and agents shall be entitled to indemnification
from the Trust Fund for any loss, liability or expense incurred in connection
with any legal proceeding and incurred without negligence or willful misconduct
on their part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder, including the costs and expenses
of defending themselves against any claim in connection with the exercise or
performance of any of their powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall have given
the Depositor, the Master Servicer and the Holders written notice
thereof promptly after the Trustee shall have knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Depositor in preparing such
defense; and
(iii) notwithstanding anything to the contrary in this Section
6.11, the Trust Fund shall not be liable for settlement of any such
claim by the Trustee entered into without the prior consent of the
Depositor, which consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to any loss, liability or expense under
any environmental law.
Section 6.12. Fees and Expenses of Trustee. The Trustee shall be
entitled to the Trustee Fee (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust), to the extent
provided herein, and in addition, the Trustee shall be entitled to receive, and
is authorized to pay to itself the amount of income or gain earned from the
investment of funds in the Certificate Account.
Section 6.13. Collection of Monies. Except as otherwise expressly
provided in this Agreement, the Trustee may demand payment or delivery of, and
shall receive and collect, all money and other property payable to or receivable
by the Trustee pursuant to this Agreement. The Trustee shall hold all such money
and property received by it as part of the Trust Fund and shall distribute it as
provided in this Agreement. If the Trustee shall not have timely received
amounts to be remitted with respect to the Mortgage Loans from the Master
Servicer, the Trustee shall request the Master Servicer to make such
distribution as promptly as practicable or legally permitted. If the Trustee
shall subsequently receive any such amount, it may withdraw such request.
Section 6.14. Events of Default; Trustee To Act; Appointment of
Successor. (a) The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(i) Any failure by the Master Servicer to furnish the Trustee the
Mortgage Loan data sufficient to prepare the reports described in
Section 4.03(a) which continues unremedied for a period of one Business
Day after the date upon which written notice of such failure shall have
been given to such Master Servicer by the Trustee or to such Master
Servicer and the Trustee by the Holders of not less than 25% of the
Class Principal Amount of each Class of Certificates affected thereby;
or
(ii) Any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of such Master Servicer contained in this
Agreement which continues unremedied for a period of 30 days (or 15
days, in the case of a failure to maintain any Insurance Policy
required to be maintained pursuant to this Agreement) after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to such Master Servicer by the Trustee,
or to such Master Servicer and the Trustee by the Holders of not less
than 25% of the Class Principal Amount of each Class of Certificates
affected thereby; or
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days or
any Rating Agency reduces or withdraws or threatens to reduce or
withdraw the rating of the Certificates because of the financial
condition or loan servicing capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities, voluntary liquidation
or similar proceedings of or relating to such Master Servicer or of or
relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of
all or substantially all of its assets, or consolidate with or merge
into another entity or shall permit another entity to consolidate or
merge into it, such that the resulting entity does not meet the
criteria for a successor servicer as specified in Section 9.27 hereof;
or
(vii) If a representation or warranty set forth in Section 9.14
hereof shall prove to be incorrect as of the time made in any respect
that materially and adversely affects the interests of the
Certificateholders, and the circumstance or condition in respect of
which such representation or warranty was incorrect shall not have been
eliminated or cured within 60 days after the date on which written
notice of such incorrect representation or warranty shall have been
given to the Master Servicer by the Trustee, or to the Master Servicer
and the Trustee by the Holders of not less than 25% of the Aggregate
Certificate Principal Amount of each Class of Certificates; or
(viii) A sale or pledge of the any of the rights of the Master
Servicer hereunder or an assignment of this Agreement by the Master
Servicer or a delegation of the rights or duties of the Master Servicer
hereunder shall have occurred in any manner not otherwise permitted
hereunder and without the prior written consent of the Trustee and
Certificateholders holding more than 50% of the Class Principal Amount
of each Class of Certificates;
(ix) Any Servicer at any time is not either an FNMA- or FHLMC-
approved Seller/Servicer, and the Master Servicer has not terminated
the rights and obligations of such Servicer under the applicable
Servicing Agreement and replaced such Servicer with an FNMA- or
FHLMC-approved servicer within 30 days of the absence of such approval;
or
(x) Any failure of the Master Servicer to remit to the Trustee
any payment required to be made to the Trustee for the benefit of
Certificateholders under the terms of this Agreement, including any
Advance, on any Deposit Date.
If an Event of Default described in clauses (i) through (ix) of this
Section 6.14 shall occur, then, in each and every case, subject to applicable
law, so long as any such Event of Default shall not have been remedied within
any period of time prescribed by this Section 6.14, the Trustee, by notice in
writing to the Master Servicer may, and shall, if so directed by
Certificateholders evidencing more than 50% of the Class Principal Amount of
each Class of Certificates, terminate all of the rights and obligations of the
Master Servicer hereunder and in and to the Mortgage Loans and the proceeds
thereof. If an Event of Default described in clause (x) of this Section 6.14
shall occur, then, in each and every case, subject to applicable law, the
Trustee, by notice in writing to the Master Servicer, shall promptly terminate
all of the rights and obligations of the Master Servicer hereunder and in and to
the Mortgage Loans and the proceeds thereof. On or after the receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer, and only in its capacity as Master Servicer under this Agreement,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee pursuant to and under the terms of this Agreement; and the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the defaulting Master Servicer as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents or otherwise. The defaulting Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the defaulting Master Servicer's responsibilities and rights hereunder as Master
Servicer including, without limitation, notifying Mortgagors of the assignment
of the master servicing function and providing the Trustee or its designee all
documents and records in electronic or other form reasonably requested by it to
enable the Trustee or its designee to assume the defaulting Master Servicer's
functions hereunder and the transfer to the Trustee for administration by it of
all amounts which shall at the time be or should have been deposited by the
defaulting Master Servicer in the Collection Account maintained by such
defaulting Master Servicer and any other account or fund maintained with respect
to the Certificates or thereafter received with respect to the Mortgage Loans.
The Master Servicer being terminated shall bear all costs of a master servicing
transfer, including but not limited to those of the Trustee reasonably allocable
to specific employees and overhead, legal fees and expenses, accounting and
financial consulting fees and expenses, and costs of amending the Agreement, if
necessary.
Notwithstanding the termination of its activities as Master Servicer,
each terminated Master Servicer shall continue to be entitled to reimbursement
to the extent provided in Section 4.02(i), (ii), (iii), (iv), (v), (vi), (vii),
(ix) and (xi) to the extent such reimbursement relates to the period prior to
such Master Servicer's termination.
If any Event of Default shall occur, the Trustee shall promptly notify
the Rating Agencies of the nature and extent of such Event of Default. The
Trustee shall immediately give written notice to the Master Servicer upon such
Master Servicer's failure to remit funds on the Deposit Date.
(b) On and after the time the Master Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee receives
the resignation of the Master Servicer evidenced by an Opinion of Counsel
pursuant to Section 9.29, the Trustee, unless another master servicer shall have
been appointed, shall be the successor in all respects to the Master Servicer in
its capacity as such under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject to
all the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Master Servicer hereunder, including the obligation to
make Advances; provided, however, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by this Agreement shall not be considered a default by the Trustee
hereunder. In addition, the Trustee shall have no responsibility for any act or
omission of the Master Servicer prior to the issuance of any notice of
termination and shall have no liability relating to the representations and
warranties of the Master Servicer set forth in Section 9.14. In the Trustee's
capacity as such successor, the Trustee shall have the same limitations on
liability herein granted to the Master Servicer. As compensation therefor, the
Trustee shall be entitled to receive all compensation payable to the Master
Servicer under this Agreement, including the Master Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be
unwilling to continue to so act, or shall, if it is unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
housing and home finance institution servicer, master servicer, servicing or
mortgage servicing institution having a net worth of not less than $15,000,000
and meeting such other standards for a successor master servicer as are set
forth in this Agreement, as the successor to such Master Servicer in the
assumption of all of the responsibilities, duties or liabilities of a master
servicer, like the Master Servicer. Any entity designated by the Trustee as a
successor master servicer may be an Affiliate of the Trustee; provided, however,
that, unless such Affiliate meets the net worth requirements and other standards
set forth herein for a successor master servicer, the Trustee, in its individual
capacity shall agree, at the time of such designation, to be and remain liable
to the Trust Fund for such Affiliate's actions and omissions in performing its
duties hereunder. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted to the
Master Servicer hereunder. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate any
such succession and may make other arrangements with respect to the servicing to
be conducted hereunder which are not inconsistent herewith. The Master Servicer
shall cooperate with the Trustee and any successor master servicer in effecting
the termination of the Master Servicer's responsibilities and rights hereunder
including, without limitation, notifying Mortgagors of the assignment of the
master servicing functions and providing the Trustee and successor master
servicer, as applicable, all documents and records in electronic or other form
reasonably requested by it to enable it to assume the Master Servicer's
functions hereunder and the transfer to the Trustee or such successor master
servicer, as applicable, all amounts which shall at the time be or should have
been deposited by the Master Servicer in the Collection Account and any other
account or fund maintained with respect to the Certificates or thereafter be
received with respect to the Mortgage Loans. Neither the Trustee nor any other
successor master servicer shall be deemed to be in default hereunder by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (i) the failure of the Master Servicer to deliver,
or any delay in delivering, cash, documents or records to it, (ii) the failure
of the Master Servicer to cooperate as required by this Agreement, (iii) the
failure of the Master Servicer to deliver the Mortgage Loan data to the Trustee
as required by this Agreement or (iv) restrictions imposed by any regulatory
authority having jurisdiction over the Master Servicer.
Section 6.15. Additional Remedies of Trustee Upon Event of Default.
During the continuance of any Event of Default, so long as such Event of Default
shall not have been remedied, the Trustee, in addition to the rights specified
in Section 6.14, shall have the right, in its own name and as trustee of an
express trust, to take all actions now or hereafter existing at law, in equity
or by statute to enforce its rights and remedies and to protect the interests,
and enforce the rights and remedies, of the Certificateholders (including the
institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
Section 6.16. Waiver of Defaults. 35% or more of the Aggregate Voting
Interests of Certificateholders may waive any default or Event of Default by the
Master Servicer in the performance of its obligations hereunder, except that a
default in the making of any required deposit to the Certificate Account that
would result in a failure of the Trustee to make any required payment of
principal of or interest on the Certificates may only be waived with the consent
of 100% of the affected Certificateholders. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
Section 6.17. Notification to Holders. Upon termination of the Master
Servicer or appointment of a successor to the Master Servicer, in each case as
provided herein, the Trustee shall promptly mail notice thereof by first class
mail to the Certificateholders at their respective addresses appearing on the
Certificate Register. The Trustee shall also, within 45 days after the
occurrence of any Event of Default known to the Trustee, give written notice
thereof to Certificateholders, unless such Event of Default shall have been
cured or waived prior to the issuance of such notice and within such 45-day
period.
Section 6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default. Subject to the provisions of Section 8.01 hereof,
during the continuance of any Event of Default, Holders of Certificates
evidencing not less than 25% of the Class Principal Amount of each Class of
Certificates may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement; provided, however, that the
Trustee shall be under no obligation to pursue any such remedy, or to exercise
any of the trusts or powers vested in it by this Agreement (including, without
limitation, (i) the conducting or defending of any administrative action or
litigation hereunder or in relation hereto and (ii) the terminating of the
Master Servicer or any successor master servicer from its rights and duties as
master servicer hereunder) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which may be incurred therein or thereby; and, provided further,
that, subject to the provisions of Section 8.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, in accordance with
an Opinion of Counsel, determines that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith determines that the action
or proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
Section 6.19. Action Upon Certain Failures of the Master Servicer and
Upon Event of Default. In the event that the Trustee shall have actual knowledge
of any action or inaction of the Master Servicer that would become an Event of
Default upon the Master Servicer's failure to remedy the same after notice, the
Trustee shall give notice thereof to the Master Servicer. For all purposes of
this Agreement, in the absence of actual knowledge by a Responsible Officer of
the Trustee, the Trustee shall not be deemed to have knowledge of any failure of
the Master Servicer or any other Event of Default unless notified in writing by
the Depositor, the Master Servicer or a Certificateholder.
Section 6.20. Preparation of Tax Returns and Other Reports. (a) The
Trustee shall prepare or cause to be prepared on behalf of the Trust Fund, based
upon information calculated in accordance with this Agreement pursuant to
instructions given by the Depositor, and the Trustee shall file, federal tax
returns and appropriate state income tax returns and such other returns as may
be required by applicable law relating to the Trust Fund, and the Trustee shall
forward copies to the Depositor of all such returns and Form 1099 information
and such other information within the control of the Trustee as the Depositor
may reasonably request in writing, and shall forward to each Certificateholder
such forms and furnish such information within the control of the Trustee as are
required by the Code and the REMIC Provisions to be furnished to them, and will
prepare and file annual reports required by applicable state authorities, will
file copies of this Agreement with the appropriate state authorities as may be
required by applicable law, and will prepare and disseminate to
Certificateholders Form 1099 (or otherwise furnish information within the
control of the Trustee) to the extent required by applicable law. The Master
Servicer will indemnify the Trustee for any liability of or assessment against
the Trustee resulting from any error in any of such tax or information returns
directly resulting from errors in the information provided by such Master
Servicer (other than information that is derived solely from information
provided by a Servicer).
(b) The Trustee shall prepare and file with the Internal Revenue
Service ("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4.
The Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned, shall promptly forward a copy of such notice to the Master
Servicer and the Depositor.
(c) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K and thereafter the Trustee will prepare or cause to
be prepared Form 10-Ks and Form 10-Qs (if necessary), or monthly current reports
on Form 8-K, on behalf of the Trust Fund, as may be required by applicable law,
for filing with the Securities and Exchange Commission (the "SEC"), and the
Trustee will sign each such report on behalf of the Trust. The Trustee will
forward a copy of each such report to the Depositor promptly after such report
has been filed with the SEC. The Trustee agrees to use its best efforts to seek
to terminate such filing obligation after the period during which such filings
are required under the Securities Exchange Act of 1934. Promptly after filing a
Form 15 or other applicable form with the SEC in connection with such
termination, the Trustee shall deliver to the Depositor a copy of such form
together with copies of confirmations of receipt by the SEC of each report filed
therewith on behalf of the Trust Fund.
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation
of All Mortgage Loans. (a) The respective obligations and responsibilities of
the Trustee and the Master Servicer created hereby (other than the obligation of
the Trustee to make payments to Certificateholders as set forth in Section 7.02,
the obligation of the Master Servicer to make a final remittance to the Trustee
for deposit into the Certificate Account pursuant to Section 4.01 and the
obligations of the Master Servicer to the Trustee pursuant to Sections 9.10 and
9.14), shall terminate on the earlier of (i) the final payment or other
liquidation of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the sale of the property held by the
Trust Fund in accordance with Section 7.01(b); provided, however, that in no
event shall the Trust Fund created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James's, living on the date hereof, and (ii) the Latest Possible Maturity Date.
Any termination of the Trust Fund shall be carried out in such a manner so that
the termination of each REMIC included therein shall qualify as a "qualified
liquidation" under the REMIC Provisions.
(b) On any Distribution Date occurring after the date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than 10% of
the Cut-off Date Aggregate Principal Balance, the Depositor may, upon written
direction to the Trustee, cause (i) the Trustee to sell (or arrange for the sale
of) the assets of the Trust Fund and (ii) the Trust Fund to adopt a plan of
complete liquidation pursuant to Section 7.03(a)(i) hereof to sell all of its
property. The property of the Trust Fund shall be sold at a price (the
"Termination Price") equal to: (i) 100% of the unpaid principal balance of each
Mortgage Loan on the day of such purchase plus interest accrued thereon at the
applicable Mortgage Rate with respect to any Mortgage Loan to the Due Date in
the Due Period immediately preceding the related Distribution Date to the date
of such repurchase and (ii) the fair market value of any REO Property and any
other property held by any REMIC, such fair market value to be determined by an
appraiser or appraisers appointed by the Master Servicer with the consent of the
Trustee.
Section 7.02. Procedure Upon Termination of Trust Fund. (a) Notice of
any termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
(x) no later than five Business Days after the Trustee has received notice from
the Depositor of its intent to exercise its right to cause the termination of
the Trust Fund pursuant to Section 7.01(b) or (y) upon the final payment or
other liquidation of the last Mortgage Loan or REO Property in the Trust Fund.
Such notice shall specify (A) the Distribution Date upon which final
distribution on the Certificates of all amounts required to be distributed to
Certificateholders pursuant to Section 5.02 will be made upon presentation and
surrender of the Certificates at the Corporate Trust Office, and (B) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distribution being made only upon presentation and surrender of the Certificates
at the office or agency of the Trustee therein specified. The Trustee shall give
such notice to the Master Servicer and the Certificate Registrar at the time
such notice is given to Holders of the Certificates. Upon any such termination,
the duties of the Certificate Registrar with respect to the Certificates shall
terminate and the Trustee shall terminate, or request the Master Servicer to
terminate, the Collection Account it maintains, the Certificate Account and any
other account or fund maintained with respect to the Certificates, subject to
the Trustee's obligation hereunder to hold all amounts payable to
Certificateholders in trust without interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to contact
the remaining Certificateholders concerning surrender of such Certificates, and
the cost thereof shall be paid out of the amounts distributable to such Holders.
If within two years after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall, subject to applicable state law
relating to escheatment, hold all amounts distributable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held by the
Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
final distribution thereon in accordance with this Section.
(c) Any reasonable expenses incurred by the Trustee in connection with
any termination or liquidation of the Trust Fund shall be paid from proceeds
received from the liquidation of the Trust Fund.
Section 7.03. Additional Trust Fund Termination Requirements. (a) The
Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee seeks (at the request of the Master Servicer),
and subsequently receives, an Opinion of Counsel (at the expense of the Master
Servicer), addressed to the Trustee to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 7.03 will not (i) result in
the imposition of taxes on the REMIC under the REMIC Provisions or (ii) cause
the REMIC established hereunder to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates, the Trustee (upon (x) the sale of the
property of the Trust Fund by the Trustee pursuant to Section 7.01(b)
or (y) notification by the Depositor that it intends to exercise its
option to cause the termination of the Trust Fund) shall adopt a plan
of complete liquidation of the Trust Fund on behalf of each REMIC,
meeting the requirements of a qualified liquidation under the REMIC
Provisions;
(ii) The sale of the assets of the Trust Fund pursuant to Section
7.02 shall be a sale for cash and shall occur at or after the time of
adoption of such a plan of complete liquidation and prior to the time
of making of the final payment on the Certificates;
(iii) On the date specified for final payment of the
Certificates, the Trustee shall make final distributions of principal
and interest on the Certificates in accordance with Section 5.02 and
distribute or credit, or cause to be distributed or credited, to the
Holder of the Residual Certificate all cash on hand after such final
payment (other than cash retained to meet claims), and the Trust Fund
(and the REMIC) shall terminate at that time; and
(iv) In no event may the final payment on the Certificates or the
final distribution or credit to the Holder of the Residual Certificate
be made after the 89th day from the date on which the plan of complete
liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof
hereby (i) authorizes the Trustee to take such action as may be necessary to
adopt a plan of complete liquidation of the REMIC and (ii) agrees to take such
other action as may be necessary to adopt a plan of complete liquidation of the
REMIC, which authorization shall be binding upon all successor Residual
Certificateholders.
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or this Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or take any action or proceeding
in any court for a partition or winding up of this Trust Fund, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them. Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the Master Servicer or the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association, nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Principal Amount of Certificates of each Class shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the cost, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for sixty days after its receipt
of such notice, request and offer of indemnity, shall have neglected or refused
to institute any such action, suit or proceeding and no direction inconsistent
with such written request has been given such Trustee during such sixty-day
period by such Certificateholders; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 8.02. Access to List of Holders. (a) If the Trustee is not
acting as Certificate Registrar, the Certificate Registrar will furnish or cause
to be furnished to the Trustee, within fifteen days after receipt by the
Certificate Registrar of a request by the Trustee in writing, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter
referred to as "Applicants") apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Certificates and
is accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants reasonable access during the normal
business hours of the Trustee to the most recent list of Certificateholders held
by the Trustee or shall, as an alternative, send, at the Applicants' expense,
the written communication proffered by the Applicants to all Certificateholders
at their addresses as they appear in the Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing
Agency, by receiving and holding a Certificate, agrees with the Depositor, the
Master Servicer, the Certificate Registrar and the Trustee that neither the
Depositor, the Master Servicer, the Certificate Registrar nor the Trustee shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Certificateholders hereunder, regardless of the
source from which such information was derived.
Section 8.03. Acts of Holders of Certificates. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Holders or Certificate Owner, if the
Holder is a Clearing Agency, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where expressly required herein, to the Master
Servicer. Such instrument or instruments (as the action embodies therein and
evidenced thereby) are herein sometimes referred to as an "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agents shall be sufficient for
any purpose of this Agreement and conclusive in favor of the Trustee and Master
Servicer, if made in the manner provided in this Section. Each of the Trustee
and Master Servicer shall promptly notify the other of receipt of any such
instrument by it, and shall promptly forward a copy of such instrument to the
other.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments or deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the individual
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates
shall be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee, the Master Servicer, nor the
Depositor shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Trustee or
the Master Servicer in reliance thereon, whether or not notation of such action
is made upon such Certificate.
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01. Duties of the Master Servicer. The Certificateholders, by
their purchase and acceptance of the Certificates, appoint Aurora Loan Services
Inc., as Master Servicer. For and on behalf of the Depositor, the Trustee and
the Certificateholders, the Master Servicer shall master service the Mortgage
Loans in accordance with the provisions of this Agreement and the provisions of
the Servicing Agreement.
Section 9.02. Master Servicer Fidelity Bond and Master Servicer Errors
and Omissions Insurance Policy. (a) The Master Servicer, at its expense, shall
maintain in effect a Fidelity Bond and an Errors and Omissions Insurance Policy,
affording coverage with respect to all directors, officers, employees and other
Persons acting on such Master Servicer's behalf, and covering errors and
omissions in the performance of the Master Servicer's obligations hereunder. The
Errors and Omissions Insurance Policy and the Fidelity Bond shall be in such
form and amount that would meet the requirements of FNMA or FHLMC if it were the
purchaser of the Mortgage Loans. The Master Servicer shall (i) require the
Servicer to maintain an Errors and Omissions Insurance Policy and a Fidelity
Bond in accordance with the provisions of the Servicing Agreement, (ii) cause
the Servicer to provide to the Master Servicer certificates evidencing that such
policy and bond is in effect and to furnish to the Master Servicer any notice of
cancellation, non-renewal or modification of the policy or bond received by it,
as and to the extent provided in the Servicing Agreement, and (iii) furnish
copies of the certificates and notices referred to in clause (ii) to the Trustee
upon its request. The Fidelity Bond and Errors and Omissions Insurance Policy
may be obtained and maintained in blanket form.
(b) The Master Servicer shall promptly report to the Trustee any
material changes that may occur in the Master Servicer Fidelity Bond or the
Master Servicer Errors and Omissions Insurance Policy and shall furnish to the
Trustee, on request, certificates evidencing that such bond and insurance policy
are in full force and effect. The Master Servicer shall promptly report to the
Trustee all cases of embezzlement or fraud, if such events involve funds
relating to the Mortgage Loans. The total losses, regardless of whether claims
are filed with the applicable insurer or surety, shall be disclosed in such
reports together with the amount of such losses covered by insurance. If a bond
or insurance claim report is filed with any of such bonding companies or
insurers, the Master Servicer shall promptly furnish a copy of such report to
the Trustee. Any amounts relating to the Mortgage Loans collected by the Master
Servicer under any such bond or policy shall be promptly remitted by the Master
Servicer to the Trustee for deposit into the Certificate Account. Any amounts
relating to the Mortgage Loans collected by the Servicer under any such bond or
policy shall be remitted to the Master Servicer to the extent provided in the
applicable Servicing Agreement.
Section 9.03. Master Servicer's Financial Statements and Related
Information. For each year this Agreement is in effect, the Master Servicer
shall submit to the Trustee, each Rating Agency and the Depositor a copy of its
annual unaudited financial statements on or prior to May 31 of each year. Such
financial statements shall include a balance sheet, income statement, statement
of retained earnings, statement of additional paid-in capital, statement of
changes in financial position and all related notes and schedules and shall be
in comparative form, certified by a nationally recognized firm of Independent
Accountants to the effect that such statements were examined and prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding year.
Section 9.04. Power to Act; Procedures. (a) The Master Servicer shall
master service the Mortgage Loans and shall have full power and authority,
subject to the REMIC Provisions and the provisions of Article X hereof, and the
Servicer shall have full power and authority (to the extent provided in the
Servicing Agreement) to do any and all things that it may deem necessary or
desirable in connection with the servicing and administration of the Mortgage
Loans, including but not limited to the power and authority (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, (iii) to collect any Insurance Proceeds and Liquidation Proceeds, and
(iv) to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Mortgage Loan, in each case, in accordance with
the provisions of this Agreement and the Servicing Agreement, as applicable;
provided that the Master Servicer shall not take, or knowingly permit the
Servicer to 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 Depositor, the Trustee and the
Certificateholders under this Agreement. The Master 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 Servicer
to make any modification, waiver or amendment of any term of any Mortgage Loan
that would cause the Trust Fund 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 Master Servicer in its own
name or in the name of the Servicer, and the Servicer, to the extent such
authority is delegated to the Servicer by the Master Servicer under the
Servicing Agreement, is hereby authorized and empowered by the Trustee when the
Master Servicer or the Servicer, as the case may be, believes it appropriate in
its best judgment and in accordance with Accepted Servicing Practices and the
Servicing Agreement, to execute and deliver, on behalf of itself and the
Certificateholders, the Trustee 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. The Trustee shall furnish the Master
Servicer, upon request, with any powers of attorney empowering the Master
Servicer or the Servicer to execute and deliver instruments of satisfaction or
cancellation, or of partial or full release or discharge, and to foreclose upon
or otherwise liquidate Mortgaged Property, and to appeal, prosecute or defend in
any court action relating to the Mortgage Loans or the Mortgaged Property, in
accordance with the applicable Servicing Agreement and this Agreement, and the
Trustee shall execute and deliver such other documents, as the Master Servicer
may request, necessary or appropriate to enable the Master Servicer to master
service and administer the Mortgage Loans and carry out its duties hereunder, in
each case in accordance with Accepted Servicing Practices (and the Trustee shall
have no liability for misuse of any such powers of attorney by the Master
Servicer or the Servicer). If the Master Servicer or the Trustee has been
advised that it is likely that the laws of the state in which action is to be
taken prohibit such action if taken in the name of the Trustee or that the
Trustee would be adversely affected under the "doing business" or tax laws of
such state if such action is taken in its name, then upon request of the
Trustee, the Master Servicer shall join with the Trustee in the appointment of a
co-trustee pursuant to Section 6.09 hereof. In the performance of its duties
hereunder, the Master Servicer shall be an independent contractor and shall not,
except in those instances where it is taking action in the name of the Trustee,
be deemed to be the agent of the Trustee.
(b) In master servicing and administering the Mortgage Loans, the
Master Servicer shall employ procedures, and shall cause the Servicer to employ
procedures (including, but not limited to, collection procedures), consistent
with the Servicing Agreement. Consistent with the foregoing, the Master Servicer
may, and may permit the Servicer to, in its discretion (i) waive any late
payment charge or any prepayment charge or penalty interest in connection with
the prepayment of a Mortgage Loan and (ii) extend the due dates for payments due
on a Mortgage Note for a period not greater than 120 days; provided, however,
that the maturity of any Mortgage Loan shall not be extended 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 extension described in clause (ii) above, the
Master Servicer shall make or cause to be made Advances on the related Mortgage
Loan in accordance with the provisions of Section 5.04 on the basis of the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such extension. Notwithstanding anything to the contrary in this
Agreement, the Master Servicer shall not, unless default by the related
Mortgagor is, in the reasonable judgment of the Master Servicer, imminent,
permit any modification, waiver or amendment of any material term of any
Mortgage Loan (including but not limited to the interest rate, the principal
balance, the amortization schedule, or any other term affecting the amount or
timing of payments on the Mortgage Loan or the collateral therefor) unless the
Master Servicer shall have provided or caused to be provided to the Trustee an
Opinion of Counsel in writing to the effect that such modification, waiver or
amendment would not be treated as giving rise to a new debt instrument for
federal income tax purposes and would not adversely affect the status of the
REMIC.
Section 9.05. Servicing Agreement Between the Master Servicer and
Servicer; Enforcement of Servicer's Obligations. (a) The Servicing Agreement
requires the Servicer to service the Mortgage Loans in accordance with the
provisions thereof. References in this Agreement to actions taken or to be taken
by the Master Servicer include actions taken or to be taken by the Servicer on
behalf of the Master Servicer. Any fees and other amounts payable to the
Servicer shall be deducted from amounts remitted to the Master Servicer by the
Servicer and shall not be an obligation of the Trust.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under the
Servicing Agreement, and shall, in the event that the Servicer fails to perform
its obligations in accordance with the Servicing Agreement, terminate the rights
and obligations of the Servicer thereunder and either act as servicer of the
related Mortgage Loans or enter into a Servicing Agreement with a successor
Servicer. Such enforcement, including, without limitation, the legal prosecution
of claims, termination of the Servicing Agreement and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor initially only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed, and then, to the extent that such amounts are
insufficient to reimburse the Master Servicer for the costs of such enforcement,
(iii) from the Collection Account.
Section 9.06. Collection of Taxes, Assessments and Similar Items. (a)
To the extent provided in the Servicing Agreement, the Master Servicer shall
cause the Servicer to establish and maintain one or more custodial accounts at a
depository institution (which may be a depository institution with which the
Master Servicer or the Servicer establishes accounts in the ordinary course of
its servicing activities), the accounts of which are insured to the maximum
extent permitted by the FDIC (each, an "Escrow Account") and shall deposit
therein any collections of amounts received with respect to amounts due for
taxes, assessments, water rates, Standard Hazard Insurance Policy premiums or
any comparable items for the account of the Mortgagors. Withdrawals from any
Escrow Account may be made (to the extent amounts have been escrowed for such
purpose) only in accordance with the Servicing Agreement. The Servicer shall be
entitled to all investment income not required to be paid to Mortgagors on any
Escrow Account maintained by the Servicer. The Master Servicer shall make (or
cause to be made) to the extent provided in the Servicing Agreement advances to
the extent necessary in order to effect timely payment of taxes, water rates,
assessments, Standard Hazard Insurance Policy premiums or comparable items in
connection with the related Mortgage Loan (to the extent that the Mortgagor is
required, but fails, to pay such items), provided that it has determined that
the funds so advanced are recoverable from escrow payments, reimbursement
pursuant to Section 4.02(v) or otherwise.
(b) Costs incurred by the Master Servicer or by the Servicer in
effecting the timely payment of taxes and assessments on the properties subject
to the Mortgage Loans may be added to the amount owing under the related
Mortgage Note where the terms of the Mortgage Note so permit; provided, however,
that the addition of any such cost shall not be taken into account for purposes
of calculating the distributions to be made to Certificateholders. Such costs,
to the extent that they are unanticipated, extraordinary costs, and not ordinary
or routine costs shall be recoverable by the Master Servicer pursuant to Section
4.02(v).
Section 9.07. Termination of Servicing Agreements; Successor Servicers.
(a) The Master Servicer shall be entitled to terminate the rights and
obligations of the Servicer under the Servicing Agreement in accordance with the
terms and conditions of such Servicing Agreement and without any limitation by
virtue of this Agreement; provided, however, that in the event of termination of
the Servicing Agreement by the Master Servicer or the Servicer, the Master
Servicer shall either act as Servicer of the related Mortgage Loans, or enter
into a Servicing Agreement with a successor Servicer.
(b) If the Master Servicer acts as Servicer, it will not assume
liability for the representations and warranties of the Servicer, if any, that
it replaces. The Master Servicer shall use reasonable efforts to have the
successor Servicer assume liability for the representations and warranties made
by the terminated Servicer in respect of the related Mortgage Loans, and in the
event of any such assumption by the successor Servicer, the Trustee or the
Master Servicer, as applicable, may, in the exercise of its business judgment,
release the terminated Servicer from liability for such representations and
warranties.
Section 9.08. Master Servicer Liable for Enforcement. Notwithstanding
the Servicing Agreement, the Master Servicer shall remain obligated and liable
to the Trustee and the Certificateholders in accordance with the provisions of
this Agreement, to the extent of its obligations hereunder, without diminution
of such obligation or liability by virtue of such Servicing Agreement or
arrangement. The Master Servicer shall use commercially reasonable efforts to
ensure that the Mortgage Loans are serviced in accordance with the provisions of
this Agreement and shall use commercially reasonable efforts to enforce the
provisions of the Servicing Agreement for the benefit of the Certificateholders.
The Master Servicer shall be entitled to enter into any agreement with the
Servicer for indemnification of the Master Servicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification. Except
as expressly set forth herein, the Master Servicer shall have no liability for
the acts or omissions of the Servicer in the performance by such Servicer of its
obligations under the Servicing Agreement.
Section 9.09. No Contractual Relationship Between Servicers and Trustee
or Depositor. Any Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Servicer in
its capacity as such and not as an originator shall be deemed to be between such
Servicer, the Seller and the Master Servicer, and the Trustee and the Depositor
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to such Servicer except as set
forth in Section 9.10 hereof.
Section 9.10. Assumption of Servicing Agreement by Trustee. (a) In the
event the Master Servicer shall for any reason no longer be the Master Servicer
(including by reason of any Event of Default under this Agreement), the Trustee
shall thereupon assume all of the rights and obligations of such Master Servicer
hereunder and under the Servicing Agreement entered into with respect to the
Mortgage Loans. The Trustee, its designee or any successor master servicer
appointed by the Trustee shall be deemed to have assumed all of the Master
Servicer's interest herein and therein to the same extent as if such Servicing
Agreement had been assigned to the assuming party, except that the Master
Servicer shall not thereby be relieved of any liability or obligations of the
Master Servicer under such Servicing Agreement accruing prior to its replacement
as Master Servicer, and shall be liable to the Trustee, and hereby agrees to
indemnify and hold harmless the Trustee from and against all costs, damages,
expenses and liabilities (including reasonable attorneys' fees) incurred by the
Trustee as a result of such liability or obligations of the Master Servicer and
in connection with the Trustee's assumption (but not its performance, except to
the extent that costs or liability of the Trustee are created or increased as a
result of negligent or wrongful acts or omissions of the Master Servicer prior
to its replacement as Master Servicer) of the Master Servicer's obligations,
duties or responsibilities thereunder; provided that the Master Servicer shall
not indemnify or hold harmless the Trustee against negligent or wrongful acts or
omissions of the Trustee.
(b) The Master Servicer that has been terminated shall, upon
request of the Trustee but at the expense of such Master Servicer, deliver to
the assuming party all documents and records relating to the Servicing Agreement
and the related Mortgage Loans and an accounting of amounts collected and held
by it and otherwise use its best efforts to effect the orderly and efficient
transfer of each Servicing Agreement to the assuming party.
Section 9.11. "Due-on-Sale" Clauses; Assumption Agreements. To the
extent provided in the Servicing Agreement, to the extent Mortgage Loans contain
enforceable due-on-sale clauses, the Master Servicer shall cause the Servicer to
enforce such clauses in accordance with the Servicing Agreement. If applicable
law prohibits the enforcement of a due-on-sale clause or such clause is
otherwise not enforced in accordance with the Servicing Agreement, and, as a
consequence, a Mortgage Loan is assumed, the original Mortgagor may be released
from liability in accordance with the Servicing Agreement.
Section 9.12. Release of Mortgage Files. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by the Master Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Master Servicer will, or will cause the Servicer to, promptly notify the
Trustee (or the applicable Custodian) by a certification (which certification
shall include a statement to the effect that all amounts received in connection
with such payment that are required to be deposited in the Collection Account
maintained by the Master Servicer pursuant to Section 4.01 have been or will be
so deposited) of a Servicing Officer and shall request the Trustee or the
applicable Custodian, to deliver to the Servicer the related Mortgage File. Upon
receipt of such certification and request, the Trustee or the applicable
Custodian (with the consent, and at the direction of the Trustee), shall
promptly release the related Mortgage File to the Servicer and the Trustee shall
have no further responsibility with regard to such Mortgage File. Upon any such
payment in full, the Master Servicer is authorized, and the Servicer, to the
extent such authority is delegated to such Servicer by the Master Servicer under
the Servicing Agreement, is authorized, to give, as agent for the Trustee, as
the mortgagee under the Mortgage that secured the Mortgage Loan, an instrument
of satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Collection Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with Accepted Servicing
Practices and the Servicing Agreement, the Trustee shall execute such documents
as shall be prepared and furnished to the Trustee by the Master Servicer, or by
the Servicer (in form reasonably acceptable to the Trustee) and as are necessary
to the prosecution of any such proceedings. The Trustee or the Custodian, shall,
upon request of the Master Servicer, or of the Servicer, and delivery to the
Trustee or the applicable Custodian, of a trust receipt signed by a Servicing
Officer substantially in the form of Exhibit C, release the related Mortgage
File held in its possession or control to the Master Servicer (or the applicable
Servicer). Such trust receipt shall obligate the Master Servicer or Servicer to
return the Mortgage File to the Trustee or Custodian, as applicable, when the
need therefor by the Master Servicer or Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that herein above specified, the trust receipt
shall be released by the Trustee or the Custodian, as applicable, to the Master
Servicer (or the Servicer).
Section 9.13. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee. (a) The Master Servicer shall transmit, or
cause the Servicer to transmit, to the Trustee such documents and instruments
coming into the possession of the Master Servicer or such Servicer from time to
time as are required by the terms hereof to be delivered to the Trustee. Any
funds received by the Master Servicer or by the Servicer in respect of any
Mortgage Loan or which otherwise are collected by the Master Servicer or by the
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan shall be held for the benefit of the Trustee and the
Certificateholders subject to the Master Servicer's right to retain or withdraw
from the Collection Account the Master Servicing Fee and other amounts provided
in this Agreement, and to the right of the Servicer to retain its Servicing Fee
as provided in the Servicing Agreement. The Master Servicer shall, and shall (to
the extent provided in the Servicing Agreement) cause the Servicer to, provide
access to information and documentation regarding the Mortgage Loans to the
Trustee, its agents and accountants at any time upon reasonable request and
during normal business hours, and to Certificateholders that are savings and
loan associations, banks or insurance companies, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of such Office
and Corporation or examiners of any other federal or state banking or insurance
regulatory authority if so required by applicable regulations of the Office of
Thrift Supervision or other regulatory authority, such access to be afforded
without charge but only upon reasonable request in writing and during normal
business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, or the Servicer, in respect of any Mortgage
Loans, whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the Master
Servicer, or by the Servicer, for and on behalf of the Trustee and the
Certificateholders and shall be and remain the sole and exclusive property of
the Trustee; provided, however, that the Master Servicer and the Servicer shall
be entitled to setoff against, and deduct from, any such funds any amounts that
are properly due and payable to the Master Servicer or such Servicer under this
Agreement or the Servicing Agreement.
(c) The Master Servicer hereby acknowledges that concurrently with the
execution of this Agreement, the Trustee shall own or, to the extent that a
court of competent jurisdiction shall deem the conveyance of the Mortgage Loans
from the Seller to the Depositor not to constitute a sale, the Trustee shall
have a security interest in the Mortgage Loans and in all Mortgage Files
representing such Mortgage Loans and in all funds now or hereafter held by, or
under the control of, the Servicer or the Master Servicer that are collected by
the Servicer or the Master Servicer in connection with the Mortgage Loans,
whether as scheduled installments of principal and interest or as full or
partial prepayments of principal or interest or as Liquidation Proceeds or
Insurance Proceeds or otherwise, and in all proceeds of the foregoing and
proceeds of proceeds (but excluding any fee or other amounts to which the
Servicer is entitled under the Servicing Agreement, or the Master Servicer or
the Depositor is entitled to hereunder); and the Master Servicer agrees that so
long as the Mortgage Loans are assigned to and held by the Trustee, all
documents or instruments constituting part of the Mortgage Files, and such funds
relating to the Mortgage Loans which come into the possession or custody of, or
which are subject to the control of, the Master Servicer or the Servicer shall
be held by the Master Servicer or such Servicer for and on behalf of the Trustee
as the Trustee's agent and bailee for purposes of perfecting the Trustee's
security interest therein as provided by the applicable Uniform Commercial Code
or other laws.
(d) The Master Servicer agrees that it shall not, and shall
not authorize the Servicer to, create, incur or subject any Mortgage Loans, or
any funds that are deposited in any custodial account, Escrow Account or the
Collection Account, or any funds that otherwise are or may become due or payable
to the Trustee, to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance, nor assert by legal action or otherwise any
claim or right of setoff against any Mortgage Loan or any funds collected on, or
in connection with, a Mortgage Loan.
Section 9.14. Representations and Warranties of the Master Servicer.
(a) The Master Servicer hereby represents and warrants to the Depositor and the
Trustee, for the benefit of the Certificateholders, as of the Closing Date that:
(i) it is validly existing and in good standing under the
jurisdiction of its formation, and as Master Servicer has full power
and authority to transact any and all business contemplated by this
Agreement and to execute, deliver and comply with its obligations under
the terms of this Agreement, the execution, delivery and performance of
which have been duly authorized by all necessary corporate action on
the part of the Master Servicer;
(ii) the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws,
(B) violate any law or regulation or any administrative decree or order
to which it is subject or (C) constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or
other instrument to which the Master Servicer is a party or by which it
is bound or to which any of its assets are subject, which violation,
default or breach would materially and adversely affect the Master
Servicer's ability to perform its obligations under this Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights in general, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(iv) the Master Servicer is not in default with respect to any
order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency to the extent that any such
default would materially and adversely affect its performance
hereunder;
(v) the Master Servicer is not a party to or bound by any
agreement or instrument or subject to any charter provision, bylaw or
any other corporate restriction or any judgment, order, writ,
injunction, decree, law or regulation that may materially and adversely
affect its ability as Master Servicer to perform its obligations under
this Agreement or that requires the consent of any third person to the
execution of this Agreement or the performance by the Master Servicer
of its obligations under this Agreement;
(vi) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
would prohibit its entering into this Agreement or performing its
obligations under this Agreement;
(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is an FNMA- and FHLMC-approved seller/servicer;
(viii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Master Servicer of or compliance by the Master
Servicer with this Agreement or the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders (if any) as have been obtained;
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master
Servicer; and
(x) the Master Servicer has obtained an Errors and Omissions
Insurance Policy and a Fidelity Bond in accordance with Section 9.02,
each of which is in full force and effect, and each of which provides
at least such coverage as is required hereunder.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 9.14 shall survive the execution and delivery of this
Agreement. The Master Servicer shall indemnify the Depositor and the Trustee and
hold them harmless against any loss, damages, penalties, fines, forfeitures,
legal fees and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Master Servicer's representations and warranties
contained in Section 9.14(a). Notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not be liable for special, indirect or
consequential losses or damages of any kind whatsoever (including, but not
limited to, lost profits). It is understood and agreed that the enforcement of
the obligation of the Master Servicer set forth in this Section to indemnify the
Depositor and the Trustee as provided in this Section constitutes the sole
remedy (other than as set forth in Section 6.14) of the Depositor and the
Trustee, respecting a breach of the foregoing representations and warranties.
Such indemnification shall survive any termination of the Master Servicer as
Master Servicer hereunder, and any termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising
out of the breach of any representations and warranties made in this Section
shall accrue upon discovery of such breach by either the Depositor, the Master
Servicer or the Trustee or notice thereof by any one of such parties to the
other parties.
(c) It is understood and agreed that the representations and warranties
of the Depositor set forth in Sections 2.03(a) through (f) shall survive the
execution and delivery of this Agreement. The Depositor shall indemnify the
Master Servicer and hold it harmless against any loss, damages, penalties,
fines, forfeitures, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Depositor's representations
and warranties contained in Sections 2.03(a) through (f) hereof. It is
understood and agreed that the enforcement of the obligation of the Depositor
set forth in this Section to indemnify the Master Servicer as provided in this
Section constitutes the sole remedy of the Master Servicer respecting a breach
by the Depositor of the representations and warranties in Sections 2.03(a)
through (f) hereof.
Any cause of action against the Depositor relating to or arising out of
the breach of the representations and warranties made in Sections 2.03(a)
through (f) hereof shall accrue upon discovery of such breach by either the
Depositor or the Master Servicer or notice thereof by any one of such parties to
the other parties.
Section 9.15. Closing Certificate and Opinion. On or before the Closing
Date, the Master Servicer shall cause to be delivered to the Depositor and
Lehman Brothers Inc. an Opinion of Counsel, dated the Closing Date, in form and
substance reasonably satisfactory to the Depositor and Lehman Brothers Inc., as
to the due authorization, execution and delivery of this Agreement by the Master
Servicer and the enforceability thereof.
Section 9.16. Standard Hazard and Flood Insurance Policies. For each
Mortgage Loan, the Master Servicer shall maintain, or cause to be maintained by
the Servicer, standard fire and casualty insurance and, where applicable, flood
insurance, all in accordance with the provisions of this Agreement and the
Servicing Agreement, as applicable. It is understood and agreed that such
insurance shall be with insurers meeting the eligibility requirements set forth
in the Servicing Agreement and that no earthquake or other additional insurance
is to be required of any Mortgagor or to be maintained on property acquired in
respect of a defaulted loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.
Pursuant to Section 4.01, any amounts collected by the Master Servicer,
or by the Servicer, under any insurance policies maintained pursuant to this
Section 9.16 (other than amounts to be applied to the restoration or repair of
the property subject to the related Mortgage or released to the Mortgagor in
accordance with the Servicing Agreement) shall be deposited into the Collection
Account, subject to withdrawal pursuant to Section 4.02. Any cost incurred by
the Master Servicer or the Servicer in maintaining any such insurance if the
Mortgagor defaults in its obligation to do so shall be added to the amount owing
under the Mortgage Loan where the terms of the Mortgage Loan so permit;
provided, however, that the addition of any such cost shall not be taken into
account for purposes of calculating the distributions to be made to
Certificateholders and shall be recoverable by the Master Servicer or such
Servicer pursuant to Section 4.02(v).
Section 9.17. Presentment of Claims and Collection of Proceeds. The
Master Servicer shall, or shall cause the Servicer (to the extent provided in
the Servicing Agreement) to, prepare and present on behalf of the Trustee and
the Certificateholders all claims under the Insurance Policies with respect to
the Mortgage Loans, and take such actions (including the negotiation,
settlement, compromise or enforcement of the insured's claim) as shall be
necessary to realize recovery under such policies. Any proceeds disbursed to the
Master Servicer (or disbursed to the Servicer and remitted to the Master
Servicer) in respect of such policies or bonds shall be promptly deposited in
the Collection Account upon receipt, except that any amounts realized that are
to be applied to the repair or restoration of the related Mortgaged Property as
a condition requisite to the presentation of claims on the related Mortgage Loan
to the insurer under any applicable Insurance Policy need not be so deposited
(or remitted).
Section 9.18. Maintenance of the Primary Mortgage Insurance Policies.
(a) The Master Servicer shall not take, or permit the Servicer (consistent with
the Servicing Agreement) to take, any action that would result in non-coverage
under any applicable Primary Mortgage Insurance Policy of any loss which, but
for the actions of such Master Servicer or Servicer, would have been covered
thereunder. The Master Servicer shall use its best reasonable efforts to keep in
force and effect, or to cause the Servicer to keep in force and effect (to the
extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance), primary mortgage insurance applicable to each Mortgage Loan in
accordance with the provisions of this Agreement and the Servicing Agreement, as
applicable. The Master Servicer shall not, and shall not permit the Servicer to,
cancel or refuse to renew any such Primary Mortgage Insurance Policy that is in
effect at the date of the initial issuance of the Certificates and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement and the Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause the Servicer to
present, on behalf of the Trustee and the Certificateholders, claims to the
insurer under any Primary Mortgage Insurance Policies and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policies respecting defaulted Mortgage Loans.
Pursuant to Section 4.01, any amounts collected by the Master Servicer or the
Servicer under any Primary Mortgage Insurance Policies shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 4.02.
Section 9.19. Trustee To Retain Possession of Certain Insurance
Policies and Documents. The Trustee (or its custodian, if any, as directed by
the Trustee), shall retain possession and custody of the originals of the
Primary Mortgage Insurance Policies or certificate of insurance if applicable
and any certificates of renewal as to the foregoing as may be issued from time
to time as contemplated by this Agreement. Until all amounts distributable in
respect of the Certificates have been distributed in full and the Master
Servicer otherwise has fulfilled its obligations under this Agreement, the
Trustee (or its custodian, if any, as directed by the Trustee) shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Trustee (or its custodian, if any, as
directed by the Trustee), upon the execution or receipt thereof the originals of
the Primary Mortgage Insurance Policies and any certificates of renewal thereof,
and such other documents or instruments that constitute portions of the Mortgage
File that come into the possession of the Master Servicer from time to time.
Section 9.20. Realization Upon Defaulted Mortgage Loans. The Master
Servicer shall use its reasonable best efforts to, or to cause the Servicer to,
foreclose upon, repossess or otherwise comparably convert the ownership of
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments, all in accordance with the Servicing
Agreement.
Section 9.21. Compensation to the Master Servicer. The Master Servicer
shall (i) be entitled, at its election, either (a) to pay itself the Master
Servicing Fee, as reduced pursuant to Section 5.05, in respect of the Mortgage
Loans out of any Mortgagor payment on account of interest prior to the deposit
of such payment in the Collection Account it maintains or (b) to withdraw from
the Collection Account, subject to Section 5.05, the Master Servicing Fee to the
extent permitted by Section 4.02(iv). The Master Servicer shall also be
entitled, at its election, either (a) to pay itself the Master Servicing Fee in
respect of each delinquent Mortgage Loan master serviced by it out of
Liquidation Proceeds in respect of such Mortgage Loan or other recoveries with
respect thereto to the extent permitted in Section 4.02 or (b) to withdraw from
the Collection Account it maintains the Master Servicing Fee in respect of each
Liquidated Mortgage Loan to the extent of such Liquidation Proceeds or other
recoveries, to the extent permitted by Section 4.02. Servicing compensation in
the form of assumption fees, if any, late payment charges, as collected, if any,
or otherwise (including any Prepayment Penalty Amount) shall be retained by the
Master Servicer (or the Servicer) and shall not be deposited in the Collection
Account. If the Master Servicer does not retain or withdraw the Master Servicing
Fee from the Collection Account as provided herein, the Master Servicer shall be
entitled to direct the Trustee to pay the Master Servicing Fee to such Master
Servicer by withdrawal from the Certificate Account to the extent that payments
have been received with respect to the applicable Mortgage Loan. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its activities hereunder and shall not be entitled to reimbursement therefor
except as provided in this Agreement. Pursuant to Section 4.01(e), all income
and gain realized from any investment of funds in the Collection Account shall
be for the benefit of the Master Servicer as additional compensation. The
provisions of this Section 9.21 are subject to the provisions of Section
6.14(b).
Section 9.22. REO Property. (a) In the event the Trust Fund acquires
ownership of any REO Property in respect of any Mortgage Loan, the deed or
certificate of sale shall be issued to the Trustee, or to its nominee, on behalf
of the Certificateholders. The Master Servicer shall use its reasonable best
efforts to sell, or, to the extent provided in the Servicing Agreement, cause
the Servicer to sell, any REO Property as expeditiously as possible and in
accordance with the provisions of this Agreement and the Servicing Agreement, as
applicable, but in all events within the time period, and subject to the
conditions set forth in Article X hereof. Pursuant to its efforts to sell such
REO Property, the Master Servicer shall protect and conserve, or cause the
Servicer to protect and conserve, such REO Property in the manner and to such
extent required by the Servicing Agreement, subject to Article X hereof.
(b) The Master Servicer shall deposit or cause to be deposited all
funds collected and received by it, or recovered from any Servicer, in
connection with the operation of any REO Property in the Collection Account.
(c) The Master Servicer and the Servicer, upon the final disposition of
any REO Property, shall be entitled to reimbursement for any related
unreimbursed Advances as well as any unpaid Master Servicing Fees or Servicing
Fees from Liquidation Proceeds received in connection with the final disposition
of such REO Property; provided, that any such unreimbursed Advances as well as
any unpaid Master Servicing Fees or Servicing Fees may be reimbursed or paid, as
the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.
(d) The Liquidation Proceeds from the final disposition of the REO
Property, net of any payment to the Master Servicer and the Servicer as provided
above, shall be deposited in the Collection Account on or prior to the
Determination Date in the month following receipt thereof (and the Master
Servicer shall provide prompt written notice to the Trustee upon such deposit)
and be remitted by wire transfer in immediately available funds to the Trustee
for deposit into the Certificate Account on the next succeeding Deposit Date.
Section 9.23. [Omitted]
Section 9.24. Reports to the Trustee. (a) Not later than 30 days after
each Distribution Date, the Master Servicer shall forward to the Trustee a
statement, deemed to have been certified by a Servicing Officer, setting forth
the status of the Collection Account maintained by the Master Servicer as of the
close of business on the related Distribution Date, indicating that all
distributions required by this Agreement to be made by the Master Servicer have
been made (or if any required distribution has not been made by the Master
Servicer, specifying the nature and status thereof) and showing, for the period
covered by such statement, the aggregate of deposits into and withdrawals from
the Collection Account maintained by the Master Servicer. Copies of such
statement shall be provided by the Master Servicer to the Depositor, Attention:
Contract Finance, and, upon request, any Certificateholders (or by the Trustee
at the Master Servicer's expense if the Master Servicer shall fail to provide
such copies (unless (i) the Master Servicer shall have failed to provide the
Trustee with such statement or (ii) the Trustee shall be unaware of the Master
Servicer's failure to provide such statement)).
(b) Not later than two Business Days following each Distribution Date,
the Master Servicer shall deliver to the Person designated by the Depositor, in
a format consistent with other electronic loan level reporting supplied by the
Master Servicer in connection with similar transactions, "loan level"
information with respect to the Mortgage Loans as of the related Determination
Date, to the extent that such information has been provided to the Master
Servicer by the Servicer or by the Depositor.
Section 9.25. Annual Officer's Certificate as to Compliance. (a) The
Master Servicer shall deliver to the Trustee and the Rating Agencies on or
before May 31 of each year, commencing on May 31, 2000, an Officer's
Certificate, certifying that with respect to the period ending on the
immediately preceding December 31; (i) such Servicing Officer has reviewed the
activities of such Master Servicer during the preceding calendar year or portion
thereof and its performance under this Agreement; (ii) to the best of such
Servicing Officer's knowledge, based on such review, such Master Servicer has
performed and fulfilled its duties, responsibilities and obligations under this
Agreement in all material respects throughout such year, or, if there has been a
default in the fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof, (iii) nothing has come to the attention of such Servicing
Officer to lead such Servicing Officer to believe that any Servicer has failed
to perform any of its duties, responsibilities and obligations under the
Servicing Agreement in all material respects throughout such year, or, if there
has been a material default in the performance or fulfillment of any such
duties, responsibilities or obligations, specifying each such default known to
such Servicing Officer and the nature and status thereof, and (iv) the Master
Servicer has received from the Servicer such Servicer's annual certificate of
compliance and a copy of such Servicer's annual audit report, in each case to
the extent required under the Servicing Agreement, or, if any such certificate
or report has not been received by the Master Servicer, the Master Servicer is
using its best reasonable efforts to obtain such certificate or report.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).
Section 9.26. Annual Independent Accountants' Servicing Report. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Depositor on or
before May 31 of each year, commencing on May 31, 2000, to the effect that, with
respect to the most recently ended fiscal year, such firm has examined certain
records and documents relating to the Master Servicer's performance of its
servicing obligations under this Agreement and pooling and servicing and trust
agreements in material respects similar to this Agreement and to each other and
that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for FHLMC or the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that the
Master Servicer's activities have been conducted in compliance with this
Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by FHLMC requires it to
report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If
such report discloses exceptions that are material, the Master Servicer shall
advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.
Section 9.27. Merger or Consolidation. Any Person into which the Master
Servicer may be merged or consolidated, or any Person resulting from any merger,
conversion, other change in form or consolidation to which the Master Servicer
shall be a party, or any Person succeeding to the business of the Master
Servicer, shall be the successor to the Master 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 resulting Person to the Master Servicer shall be
a Person that shall be qualified and approved to service mortgage loans for FNMA
or FHLMC and shall have a net worth of not less than $15,000,000.
Section 9.28. Resignation of Master Servicer. Except as otherwise
provided in Sections 9.27 and 9.29 hereof, the Master Servicer shall not resign
from the obligations and duties hereby imposed on it unless it or the Trustee
determines that the Master Servicer's duties hereunder are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it and cannot be cured. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel that shall be Independent to such effect
delivered to the Trustee. No such resignation shall become effective until the
Trustee shall have assumed, or a successor master servicer shall have been
appointed by the Trustee and until such successor shall have assumed, the Master
Servicer's responsibilities and obligations under this Agreement. Notice of such
resignation shall be given promptly by the Master Servicer to the Depositor.
Section 9.29. Assignment or Delegation of Duties by the Master
Servicer. Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder; provided, however, that the Master
Servicer shall have the right without the prior written consent of the Trustee,
the Depositor or the Rating Agencies to delegate or assign to or subcontract
with or authorize or appoint an Affiliate of the Master Servicer to perform and
carry out any duties, covenants or obligations to be performed and carried out
by the Master Servicer hereunder. In no case, however, shall any such
delegation, subcontracting or assignment to an Affiliate of the Master Servicer
relieve the Master Servicer of any liability hereunder. Notice of such permitted
assignment shall be given promptly by the Master Servicer to the Depositor and
the Trustee. If, pursuant to any provision hereof, the duties of the Master
Servicer are transferred to a successor master servicer, the entire amount of
the Master Servicing Fees and other compensation payable to the Master Servicer
pursuant hereto, including amounts payable to or permitted to be retained or
withdrawn by the Master Servicer pursuant to Section 9.21 hereof, shall
thereafter be payable to such successor master servicer.
Section 9.30. Limitation on Liability of the Master Servicer and
Others. Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Trustee or the Certificateholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the Master
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its obligations
and duties under this Agreement. The Master Servicer and any director, officer,
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Master Servicer shall be under no obligation
to appear in, prosecute or defend any legal action that is not incidental to its
duties to master service the Mortgage Loans in accordance with this Agreement
and that in its opinion may involve it in any expenses or liability; provided,
however, that the Master Servicer may in its sole discretion undertake any such
action that it may deem necessary or desirable in respect to this Agreement and
the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund and the Master Servicer shall be entitled to be
reimbursed therefor out of the Collection Account it maintains as provided by
Section 4.02.
The Master Servicer shall not be liable for any acts or omissions of
any Servicer. In particular, the Master Servicer shall not be liable for any
servicing errors or interruptions resulting from any failure of any Servicer to
maintain computer and other information systems that are year-2000 compliant.
Section 9.31. Indemnification; Third-Party Claims. The Master Servicer
agrees to indemnify the Depositor and the Trustee, and hold them harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, liability, fees and expenses
that the Depositor and the Trustee may sustain as a result of the failure of the
Master Servicer to perform its duties and master service the Mortgage Loans in
compliance with the terms of this Agreement. The Depositor and the Trustee shall
immediately notify the Master Servicer if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans entitling the Depositor or the
Trustee to indemnification hereunder, whereupon the Master Servicer shall assume
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or them in respect of such claim.
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration. (a) As set forth in the
Preliminary Statement hereto, the Trustee shall elect REMIC status in accordance
with the REMIC Provisions. The Trustee shall make such elections on Forms 1066
or other appropriate federal tax or information return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued.
(b) The Closing Date is hereby designated as the "Startup Day" of the
REMIC within the meaning of section 86OG(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not
including taxes) of the REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to the REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder (including its
duties as tax return preparer). The Trustee shall be entitled to reimbursement
of expenses to the extent provided in clause (i) above from the Certificate
Account.
(d) The Trustee shall prepare, sign and file, all of the REMIC's
federal and state tax and information returns as the REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Trustee. The Trustee shall be entitled to reimbursement of expenses from
the Certificate Account.
(e) The Trustee or its designee shall perform on behalf of the REMIC
all reporting and other tax compliance duties that are the responsibility of the
REMIC under the Code, the REMIC Provisions, or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee shall provide (i) to the Treasury or other governmental
authority such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any disqualified person or
organization and (ii) to the Certificateholders such information or reports as
are required by the Code or REMIC Provisions.
(f) The Trustee, the Master Servicer and the Holders of Certificates
shall take any action or cause the REMIC to take any action necessary to create
or maintain the status of the REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Master Servicer nor the Holder of any Residual Certificate
shall take any action, cause the REMIC to take any action or fail to take (or
fail to cause to be taken) any action that, under the REMIC Provisions, if taken
or not taken, as the case may be, could (i) endanger the status of the REMIC as
a REMIC or (ii) result in the imposition of a tax upon the REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Master Servicer have received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such status or result in the imposition of such a tax.
In addition, prior to taking any action with respect to the REMIC or the assets
therein, or causing the REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Master Servicer, or their
respective designees, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur with respect to the REMIC, and no such
Person shall take any such action or cause the REMIC to take any such action as
to which the Trustee or the Master Servicer has advised it in writing that an
Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and
all taxes imposed on the REMIC by federal or state governmental authorities. To
the extent that such Trust taxes are not paid by a Residual Certificateholder,
the Trustee shall pay any remaining REMIC taxes out of current or future amounts
otherwise distributable to the Holder of the Residual Certificate in the REMIC
or, if no such amounts are available, out of other amounts held in the
Collection Account, and shall reduce amounts otherwise payable to holders of
regular interests in such REMIC, as the case may be.
(h) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to the REMIC on a calendar year and on an accrual
basis.
(i) No additional contributions of assets shall be made to the REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which the REMIC will receive a fee or other compensation for
services.
(k) Upon the request of any Rating Agency, the Trustee shall deliver to
such Rating Agency an Officer's Certificate stating the Trustee's compliance
with the provisions of this Section 10.01.
Section 10.02. Prohibited Transactions and Activities. Neither the
Depositor, the Master Servicer nor the Trustee shall sell, dispose of, or
substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of the REMIC pursuant to Article VII of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a repurchase
of Mortgage Loans pursuant to Article II of this Agreement, nor acquire any
assets for the REMIC, nor sell or dispose of any investments in the Certificate
Account for gain, nor accept any contributions to the REMIC after the Closing
Date, unless it has received an Opinion of Counsel (at the expense of the party
causing such sale, disposition, or substitution) that such disposition,
acquisition, substitution, or acceptance will not (a) affect adversely the
status of the REMIC as a REMIC or of the Certificates other than the Residual
Certificates as the regular interests therein, (b) affect the distribution of
interest or principal on the Certificates, (c) result in the encumbrance of the
assets transferred or assigned to the Trust Fund (except pursuant to the
provisions of this Agreement) or (d) cause the REMIC to be subject to a tax on
prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
Section 10.03. Indemnification with Respect to Certain Taxes and Loss
of REMIC Status. (a) In the event that the REMIC fails to qualify as a REMIC,
loses its status as a REMIC, or incurs federal, state or local taxes as a result
of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the Holder of the
Residual Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Trustee shall not be liable for any such Losses attributable to the action or
inaction of the Master Servicer, the Depositor, or the Holder of such Residual
Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual Certificate on which the
Trustee has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of such Residual Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Trustee have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than arising out of a negligent performance by the Trustee of its duties
and obligations set forth herein, and (3) for any special or consequential
damages to Certificateholders (in addition to payment of principal and interest
on the Certificates).
Section 10.04. REO Property. (a) Notwithstanding any other provision of
this Agreement, the Master Servicer, acting on behalf of the Trustee hereunder,
shall not, and shall, to the extent provided in the Servicing Agreement, not
permit the Servicer to, rent, lease, or otherwise earn income on behalf of any
REMIC with respect to any REO Property which might cause such REO Property to
fail to qualify as "foreclosure" property within the meaning of section
860G(a)(8) of the Code or result in the receipt by any REMIC of any "income from
non-permitted assets" within the meaning of section 860F(a)(2) of the Code or
any "net income from foreclosure property" which is subject to tax under the
REMIC Provisions unless the Master Servicer has advised, or has caused the
Servicer to advise, the Trustee in writing to the effect that, under the REMIC
Provisions, such action would not adversely affect the status of the REMIC as a
REMIC and any income generated for such REMIC by the REO Property would not
result in the imposition of a tax upon such REMIC.
(b) The Master Servicer shall make, or shall cause the Servicer to
make, reasonable efforts to sell any REO Property for its fair market value. In
any event, however, the Master Servicer shall, or shall cause the Servicer to,
dispose of any REO Property within three years from the end of the calendar year
of its acquisition by the Trust Fund unless the Trustee has received a grant of
extension from the Internal Revenue Service to the effect that, under the REMIC
Provisions and any relevant proposed legislation and under applicable state law,
the REMIC may hold REO Property for a longer period without adversely affecting
the REMIC status of such REMIC or causing the imposition of a Federal or state
tax upon such REMIC. If the Trustee has received such an extension, then the
Trustee, or the Master Servicer, acting on its behalf hereunder, shall, or shall
cause the Servicer to, continue to attempt to sell the REO Property for its fair
market value for such period longer than three years as such extension permits
(the "Extended Period"). If the Trustee has not received such an extension and
the Trustee, or the Master Servicer acting on behalf of the Trustee hereunder,
or the Servicer is unable to sell the REO Property within 33 months after its
acquisition by the Trust Fund or if the Trustee has received such an extension,
and the Trustee, or the Master Servicer acting on behalf of the Trustee
hereunder, is unable to sell the REO Property within the period ending three
months before the close of the Extended Period, the Master Servicer shall, or
shall cause the Servicer to, before the end of the three year period or the
Extended Period, as applicable, (i) purchase such REO Property at a price equal
to the REO Property's fair market value or (ii) auction the REO Property to the
highest bidder (which may be the Master Servicer) in an auction reasonably
designed to produce a fair price prior to the expiration of the three-year
period or the Extended Period, as the case may be.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 11.03. Amendment. (a) This Agreement may be amended from time
to time by the Depositor, the Master Servicer and the Trustee, without notice to
or the consent of any of the Holders, (i) to cure any ambiguity, (ii) to cause
the provisions herein to conform to or be consistent with or in furtherance of
the statements made with respect to the Certificates, the Trust Fund or this
Agreement in any Offering Document; or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein, (iii) to make
any other provisions with respect to matters or questions arising under this
Agreement or (iv) to add, delete, or amend any provisions to the extent
necessary or desirable to comply with any requirements imposed by the Code and
the REMIC Provisions. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel, adversely affect the
status of the REMIC created pursuant to this Agreement, nor shall such amendment
effected pursuant to clause (iii) of such sentence adversely affect in any
material respect the interests of any Holder. Prior to entering into any
amendment without the consent of Holders pursuant to this paragraph, the Trustee
may require an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this paragraph.
Any such amendment shall be deemed not to adversely affect in any material
respect any Holder, if the Trustee receives written confirmation from each
Rating Agency that such amendment will not cause such Rating Agency to reduce
the then current rating assigned to the Certificates (and any Opinion of Counsel
requested by the Trustee in connection with any such amendment may rely
expressly on such confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of not less than 66-2/3% of the Class Principal Amount (or Percentage Interest)
of each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall be made unless the Trustee
receives an Opinion of Counsel, at the expense of the party requesting the
change, that such change will not adversely affect the status of the REMIC as a
REMIC or cause a tax to be imposed on such REMIC; and provided further, that no
such amendment may (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate, without the consent of the Holder of such Certificate or (ii)
reduce the aforesaid percentages of Class Principal Amount (or Percentage
Interest) of Certificates of each Class, the Holders of which are required to
consent to any such amendment without the consent of the Holders of 100% of the
Class Principal Amount of each Class of Certificates affected thereby. For
purposes of this paragraph, references to "Holder" or "Holders" shall be deemed
to include, in the case of any Class of Book-Entry Certificates, the related
Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Holder, the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing
Agreement, the Trustee shall not consent to any amendment of any Servicing
Agreement except pursuant to the standards provided in this Section with respect
to amendment of this Agreement.
Section 11.04. Voting Rights. Except to the extent that the consent of
all affected Certificateholders is required pursuant to this Agreement, with
respect to any provision of this Agreement requiring the consent of
Certificateholders representing specified percentages of aggregate outstanding
Certificate Principal Amount, Certificates owned by the Depositor, the Master
Servicer, the Trustee or any Servicer or Affiliates thereof are not to be
counted so long as such Certificates are owned by the Depositor, the Master
Servicer, the Trustee or any Servicer or Affiliates thereof.
Section 11.05. Provision of Information. (a) For so long as any of the
Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such Certificateholder,
upon the request of such Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Act. Any
reasonable, out-of-pocket expenses incurred by the Trustee in providing such
information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or documents
requested, (i) a copy (excluding exhibits) of any report on Form 8-K or Form
10-K filed with the Securities and Exchange Commission pursuant to Section
6.20(c) and (ii) a copy of any other document incorporated by reference in the
Prospectus. Any reasonable out-of-pocket expenses incurred by the Trustee in
providing copies of such documents shall be reimbursed by the Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to be
delivered by first class mail to the Depositor, Attention: Contract Finance, a
copy of the report delivered to Certificateholders pursuant to Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
received by (a) in the case of the Depositor, Structured Asset Securities
Corporation, 200 Vesey Street, 12th Floor, New York, New York 10285, Attention:
Mark Zusy, (b) in the case of the Trustee, U.S. Bank National Association, 180
East Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance, and
(c) in the case of the Master Servicer, Aurora Loan Services Inc., 2530 South
Parker Road, Suite 601, Aurora, Colorado 80014; Attention: Master Servicing, or
as to each party such other address as may hereafter be furnished by such party
to the other parties in writing. Any notice required or permitted to be mailed
to a Holder shall be given by first class mail, postage prepaid, at the address
of such Holder as shown in the Certificate Register. Any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Holder receives such notice.
Section 11.08. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.09. Indulgences; No Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. Nothing in this Agreement or in
the Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of the
Certificates, any benefit or any legal or equitable right, power, remedy or
claim under this Agreement, except to the extent specified in Section 11.14.
Section 11.12. Special Notices to the Rating Agencies. (a) The
Depositor shall give prompt notice to the Rating Agencies of the occurrence of
any of the following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
(ii) any Assignment by the Master Servicer of its rights
hereunder or delegation of its duties hereunder;
(iii) the occurrence of any Event of Default described in Section
6.14;
(iv) any notice of termination given to the Master Servicer
pursuant to Section 6.14 and any resignation of the Master Servicer
hereunder;
(v) the appointment of any successor to any Master Servicer
pursuant to Section 6.14; and
(vi) the making of a final payment pursuant to Section 7.02.
(b) All notices to the Rating Agencies provided for this Section shall
be in writing and sent by first class mail, telecopy or overnight courier, as
follows:
If to DCR, to:
Duff & Phelps Credit Rating Co.
17 State Street
12th Floor
New York, New York 10004
Attention: RMBS Monitoring
MBS/SASCO 1999-ALS3
If to Fitch, to:
Fitch IBCA, Inc.
1201 East 7th Street
Powell, Wyoming 82435
Attention: Residential Mortgage Surveillance
If to S&P, to:
Standard & Poor's Rating Services
25 Broadway, 12th Floor
New York, New York 10004
Attention: Residential Mortgages
(c) The Trustee shall deliver to the Rating Agencies reports prepared
pursuant to Section 4.03.
Section 11.13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
Section 11.14. Transfer of Servicing. The Seller agrees that it shall
provide written notice to the Trustee and the Master Servicer thirty days prior
to any transfer or assignment by the Seller of its rights under the Servicing
Agreement or of the servicing thereunder or delegation of its rights or duties
thereunder or any portion thereof to any Person other than the initial Servicer
under the Servicing Agreement. In addition, the ability of the Seller to
transfer or assign its rights and delegate its duties under the Servicing
Agreement or to transfer the servicing thereunder to a successor servicer shall
be subject to the following conditions:
(i) Such successor servicer must be qualified to service loans
for FNMA or FHLMC;
(ii) Such successor servicer must satisfy the seller/servicer
eligibility standards in the Servicing Agreement, exclusive of any
experience in mortgage loan origination, and must be reasonably
acceptable to the Master Servicer, whose approval shall not be
unreasonably withheld;
(iii) Such successor servicer must execute and deliver to the
Trustee and the Master Servicer an agreement, in form and substance
reasonably satisfactory to the Trustee and the Master Servicer, that
contains an assumption by such successor servicer of the due and
punctual performance and observance of each covenant and condition to
be performed and observed by the Servicer under the Servicing
Agreement;
(iv) There must be delivered to the Trustee a letter from each
Rating Agency to the effect that such transfer of servicing will not
result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates;
(v) The Seller shall, at its cost and expense, take such steps,
or cause the terminated Servicer to take such steps, as may be
necessary or appropriate to effectuate and evidence the transfer of the
servicing of the Mortgage Loans to such successor servicer, including,
but not limited to, the following: (A) to the extent required by the
terms of the Mortgage Loans and by applicable federal and state laws
and regulations, the Seller shall cause the prior Servicer to timely
mail to each obligor under a Mortgage Loan any required notices or
disclosures describing the transfer of servicing of the Mortgage Loans
to the successor servicer; (B) prior to the effective date of such
transfer of servicing, the Seller shall cause the prior Servicer to
transmit to any related insurer notification of such transfer of
servicing; (C) on or prior to the effective date of such transfer of
servicing, the Seller shall cause the prior Servicer to deliver to the
successor servicer all Mortgage Loan Documents and any related records
or materials; (D) on or prior to the effective date of such transfer of
servicing, the Seller shall cause the prior Servicer to transfer to the
successor servicer, or, if such transfer occurs after a Remittance Date
but before the next succeeding Deposit Date, to the Master Servicer,
all funds held by the Servicer in respect of the Mortgage Loans; (E) on
or prior to the effective date of such transfer of servicing, the
Seller shall cause the prior Servicer to, after the effective date of
the transfer of servicing to the successor servicer, continue to
forward to such successor servicer, within one Business Day of receipt,
the amount of any payments or other recoveries received by the prior
Servicer, and to notify the successor servicer of the source and proper
application of each such payment or recovery; and (F) the Seller shall
cause the prior Servicer to, after the effective date of transfer of
servicing to the successor servicer, continue to cooperate with the
successor servicer to facilitate such transfer in such manner and to
such extent as the successor servicer may reasonably request.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Trustee and the Master Servicer
have caused their names to be signed hereto by their respective officers
hereunto duly authorized as of the day and year first above written.
STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor
By: /s/ Stanley Labanowski
-------------------------
Name: Stanley Labanowski
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ P.J. Crowley
-------------------------
Name: P.J. Crowley
Title: Vice President
AURORA LOAN SERVICES INC.,
as Master Servicer
By: /s/ Rick W. Skogg
-------------------------
Name: Rick W. Skogg
Title: President
Solely for purposes of Section 11.14,
accepted and agreed to by:
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Joseph Kelly
----------------------
Name: Joseph Kelly
Title: Vice President
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATES
<PAGE>
EXHIBIT B-1
FORM OF INITIAL CERTIFICATION
________________
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of August 1, 1999
among Structured Asset Securities Corporation, as Depositor,
U.S. Bank National Association, as Trustee, and Aurora Loan Services
Inc., as Master Servicer, with respect to Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-ALS3
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Trust Agreement, subject to
review of the contents thereof, the undersigned, as Custodian on behalf of the
Trustee, hereby certifies that it (or its custodian) has received the documents
listed in Section 2.01(b) of the Trust Agreement for each Mortgage File
pertaining to each Mortgage Loan listed on Schedule A, to the Trust Agreement,
subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Trust
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Trust Agreement and the Trust Agreement sections cross-referenced
therein.
[Custodian], on behalf of
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:____________________________
Name:
Title:
<PAGE>
EXHIBIT B-2
-----------
FORM OF INTERIM CERTIFICATION
____________________
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of August 1, 1999
among Structured Asset Securities Corporation, as Depositor,
U.S. Bank National Association, as Trustee, and Aurora Loan Services
Inc., as Master Servicer, with respect to Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-ALS3
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the
undersigned, as Custodian on behalf of the Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on Schedule I hereto) it (or its custodian) has
received the applicable documents listed in Section 2.01(b) of the Trust
Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed on
Schedule I hereto, it has reviewed the documents identified above and has
determined that each such document appears regular on its face and appears to
relate to the Mortgage Loan identified in such document.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is qualified
in all respects by the terms of said Trust Agreement including, but not limited
to, Section 2.02(b).
[Custodian], on behalf of
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT B-3
-----------
FORM OF FINAL CERTIFICATION
__________________
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of August 1, 1999
among Structured Asset Securities Corporation, as Depositor,
U.S. Bank National Association, as Trustee, and Aurora Loan Services
Inc., as Master Servicer, with respect to Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-ALS3
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Trust Agreement, the
undersigned, as Custodian on behalf of the Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on Schedule I hereto) it (or its custodian) has
received the applicable documents listed in Section 2.01(b) of the Trust
Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed on
Schedule I hereto, it has reviewed the documents listed above and has determined
that each such document appears to be complete and, based on an examination of
such documents, the information set forth in the Mortgage Loan Schedule is
correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is qualified
in all respects by the terms of said Trust Agreement.
[Custodian], on behalf of
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:____________________________
Name:
Title:
<PAGE>
EXHIBIT B-4
-----------
FORM OF ENDORSEMENT
Pay to the order of U.S. Bank National Association, as trustee (the
"Trustee") under the Trust Agreement dated as of August 1, 1999, among
Structured Asset Securities Corporation, as Depositor, the Trustee and the
Master Servicer relating to Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 1999-ALS3, without recourse.
________________________________
[current signatory on note]
By:_____________________________
Name:
Title:
<PAGE>
EXHIBIT C
---------
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
__________________
Date
[Addressed to Trustee
or, if applicable, custodian]
In connection with the administration of the mortgages held by you as
Trustee under a certain Trust Agreement dated as of August 1, 1999 among
Structured Asset Securities Corporation, as Depositor, Aurora Loan Services
Inc., as Master Servicer, and you, as Trustee (the "Trust Agreement"), the
undersigned Master Servicer hereby requests a release of the Mortgage File held
by you as Trustee with respect to the following described Mortgage Loan for the
reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
Reason for requesting file:
1. Mortgage Loan paid in full. (The Master Servicer hereby certifies
that all amounts received in connection with the loan have been or will be
credited to the Collection Account or the Certificate Account (whichever is
applicable) pursuant to the Trust Agreement.)
2. The Mortgage Loan is being foreclosed.
3. Mortgage Loan substituted. (The Master Servicer hereby certifies
that a Qualifying Substitute Mortgage Loan has been assigned and delivered to
you along with the related Mortgage File pursuant to the Trust Agreement.)
4. Mortgage Loan repurchased. (The Master Servicer hereby certifies
that the Purchase Price has been credited to the Collection Account or the
Certificate Account (whichever is applicable) pursuant to the Trust
Agreement.)
5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Trust Agreement and
will be returned to you within ten (10) days of our receipt of the Mortgage
File, except if the Mortgage Loan has been paid in full, or repurchased or
substituted for a Qualifying Substitute Mortgage Loan (in which case the
Mortgage File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the Mortgage File will be returned when
no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them
in the Trust Agreement.
_________________________________
[Name of Master Servicer]
By:______________________________
Name:
Title: Servicing Officer
<PAGE>
EXHIBIT D-1
-----------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes
and says:
1. That he [she] is [title of officer] ________________________ of
[name of Purchaser] _________________________________________ (the "Purchaser"),
a _______________________ [description of type of entity] duly organized and
existing under the laws of the [State of __________] [United States], on behalf
of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is
______________.
3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a "disqualified organization" as of
__________________ [date of transfer], and that the Purchaser is not acquiring a
Residual Certificate (as defined in the Agreement) for the account of, or as
agent (including a broker, nominee, or other middleman) for, any person or
entity from which it has not received an affidavit substantially in the form of
this affidavit. For these purposes, a "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (other than an instrumentality if all of its activities are
subject to tax and a majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas as described in Code
Section 1381(a)(2)(C), any "electing large partnership" within the meaning of
Section 775 of the Code, or any organization (other than a farmers' cooperative
described in Code Section 521) that is exempt from federal income tax unless
such organization is subject to the tax on unrelated business income imposed by
Code Section 511.
4. That the Purchaser is not, and on __________________ [date of
transfer] will not be, and is not and on such date will not be investing the
assets of, an employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan subject to Code Section
4975 or a person or entity that is using the assets of any employee benefit plan
or other plan to acquire a Residual Certificate.
5. That the Purchaser hereby acknowledges that under the terms of the
Trust Agreement (the "Agreement") among Structured Asset Securities Corporation,
U.S. Bank National Association, as Trustee and Aurora Loan Services Inc., as
Master Servicer, dated as of August 1, 1999, no transfer of a Residual
Certificate shall be permitted to be made to any person unless the Trustee has
received a certificate from such transferee to the effect that such transferee
is not an employee benefit plan subject to ERISA or a plan subject to Section
4975 of the Code and is not using the assets of any employee benefit plan or
other plan to acquire a Residual Certificate.
6. That the Purchaser does not hold REMIC residual securities as
nominee to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating organizations (such
entity, a "Book-Entry Nominee").
7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to such Residual Certificate.
8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge that the
requirements set forth in paragraph 3, paragraph 6 or paragraph 10 hereof are
not satisfied or that the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without obtaining from
the prospective Purchaser an affidavit substantially in this form and providing
to the Trustee a written statement substantially in the form of Exhibit G to the
Agreement.
9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any cash flows
generated by the interest and that it intends to pay taxes associated with
holding such Residual Certificate as they become due.
10. That the Purchaser (i) is a U.S. Person or (ii) is a Non-U.S.
Person that holds a Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Trustee with an effective Internal Revenue Service Form 4224 or successor
form at the time and in the manner required by the Code. "Non-U.S. Person" means
an individual, corporation, partnership or other person other than a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any state
thereof, including for this purpose, the District of Columbia, or an estate that
is subject to U.S. federal income tax regardless of the source of its income, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
trustees have authority to control all substantial decisions of the trust.
11. That the Purchaser agrees to such amendments of the Trust Agreement
as may be required to further effectuate the restrictions on transfer of any
Residual Certificate to such a "disqualified organization," an agent thereof, a
Book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.
12. That the Purchaser consents to the designation of the Trustee as
its agent to act as "tax matters person" of the Trust Fund pursuant to the Trust
Agreement.
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[title of officer] this _____ day of __________, 19__.
_________________________________
[name of Purchaser]
By:______________________________
Name:
Title:
Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________, 19__.
NOTARY PUBLIC
______________________________
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
<PAGE>
EXHIBIT D-2
-----------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
__________________
Date
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
---------------------------------------
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
_________________________________
Name:
Title:
<PAGE>
EXHIBIT E
---------
SERVICING AGREEMENT
<PAGE>
EXHIBIT F
---------
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 1999-ALS3
---------------------------------------
Reference is hereby made to the Trust Agreement dated as of August 1,
1999 (the "Trust Agreement") among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master Servicer and U.S. Bank National
Association, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Trust Agreement.
This letter relates to $_________ initial Certificate Balance of Class
___ Certificates which are held in the form of Definitive Certificates
registered in the name of _____________________ (the "Transferor"). The
Transferor has requested a transfer of such Definitive Certificates for
Definitive Certificates of such Class registered in the name of [insert name of
transferee].
In connection with such request, and in respect of such Certificates,
the Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Trust Agreement
and the Certificates and (ii) Rule 144A under the Securities Act to a purchaser
that the Transferor reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A purchasing for its own account or for the
account of a "qualified institutional buyer", which purchaser is aware that the
sale to it is being made in reliance upon Rule 144A, in a transaction meeting
the requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Placement Agent and the Depositor.
________________________________
[Name of Transferor]
By:_____________________________
Name:
Title:
Dated: __________________, ________
<PAGE>
EXHIBIT G
---------
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
_________________
Date
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Mortgage Pass-Through Certificates, Series 1999-ALS3 (the "Privately
Offered Certificates") of Structured Asset Securities Corporation (the
"Depositor"), we confirm that:
(1) We understand that the Privately Offered Certificates have not been,
and will not be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be sold except as permitted
in the following sentence. We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we
should sell any Privately Offered Certificates within three years of
the later of the date of original issuance of the Privately Offered
Certificates or the last day on which such Privately Offered
Certificates are owned by the Depositor or any affiliate of the
Depositor (which includes the Placement Agent) we will do so only (A)
to the Depositor, (B) to "qualified institutional buyers" (within the
meaning of Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act ("QIBs"), (C) pursuant to an exemption
from registration in accordance with Rule 904 of Regulation S under the
Securities Act, (D) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act, or (E) to an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act
that is not a QIB (an "Institutional Accredited Investor") which, prior
to such transfer, delivers to the Trustee under the Trust Agreement
dated as of August 1, 1999 among the Depositor, Aurora Loan Services
Inc., as Master Servicer and U.S. Bank National Association, as Trustee
(the "Trustee"), a signed letter in the form of this letter; and we
further agree, in the capacities stated above, to provide to any person
purchasing any of the Privately Offered Certificates from us a notice
advising such purchaser that resales of the Privately Offered
Certificates are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited Investor,
we will be required to furnish to the Trustee and the Depositor a
certification from such transferee in the form hereof to confirm that
the proposed sale is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act. We further understand that the Privately Offered
Certificates purchased by us will bear a legend to the foregoing
effect.
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Privately Offered Certificates, and we and any account for which we are
acting are each able to bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or
for one or more accounts (each of which is an Institutional Accredited
Investor) as to each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that
in accordance with ERISA, the Code and the Exemption, no Plan as to
which the Purchaser, the Depositor, any Servicer or Master Servicer or
the Trustee is a party in interest or disqualified person, and no
person acting on behalf of such a Plan may acquire such Certificate
unless the acquisition would constitute an exempt transaction under a
statutory exemption or any of the administrative exemptions issued by
the U.S. Department of Labor.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Trust Agreement.
<PAGE>
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
________________________________
[Purchaser]
By______________________________
Name:
Title:
<PAGE>
EXHIBIT H
---------
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"), a
[corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or (2)
if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account" (as
such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion") satisfactory
to the Trustee and the Depositor, and upon which the Trustee and the Depositor
shall be entitled to rely, to the effect that the purchase or holding of such
Certificate by the Investor will not result in the assets of the Trust Fund
being deemed to be plan assets and subject to the prohibited transaction
provisions of ERISA or the Code and will not subject the Trustee or the
Depositor to any obligation in addition to those undertaken by such entities in
the Trust Agreement, which opinion of counsel shall not be an expense of the
Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master Servicer, and U.S. Bank National
Association, as Trustee, dated as of August 1, 1999, no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person unless
the Depositor and Trustee have received a certificate from such transferee in
the form hereof.
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________, 199 .
________________________________
[Investor]
By:_____________________________
Name:
Title:
ATTEST:
________________________________
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named _________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the _________________ of the Investor, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this _____ day of ___________ 199__.
________________________________
NOTARY PUBLIC
My commission expires the
____ day of __________, 19__.
<PAGE>
EXHIBIT I
---------
MONTHLY REMITTANCE ADVICE
<PAGE>
EXHIBIT J
---------
MONTHLY ELECTRONIC DATA TRANSMISSION
<PAGE>
EXHIBIT K
---------
CUSTODIAL AGREEMENT
<PAGE>
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
<PAGE>
Exhibit 99.1
EXECUTION
================================================================================
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.,
SELLER
and
STRUCTURED ASSET SECURITIES CORPORATION,
PURCHASER
MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT
Dated as of August 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
1.01. Sale of Mortgage Loans...............................................1
1.02. Delivery of Documents................................................2
1.03. Review of Documentation..............................................2
1.04. Representations and Warranties of Lehman Capital.....................2
1.05. Grant Clause.........................................................6
1.06 Assignment by Depositor..............................................6
ARTICLE II
MISCELLANEOUS PROVISIONS
2.01. Binding Nature of Agreement; Assignment..............................7
2.02. Entire Agreement.....................................................7
2.03. Amendment 7
2.04. Governing Law........................................................8
2.05. Severability of Provisions...........................................8
2.06. Indulgences; No Waivers..............................................8
2.07. Headings Not to Affect Interpretation................................8
2.08. Benefits of Agreement................................................8
2.09. Counterparts.........................................................8
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
<PAGE>
This MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT is executed by and
between Lehman Capital, A Division of Lehman Brothers Holdings Inc. ("Lehman
Capital"), and Structured Asset Securities Corporation (the "Depositor"), dated
as of the 1st day of August, 1999.
All capitalized terms not defined herein shall have the same meanings
assigned to such terms in that certain Trust Agreement (the "Trust Agreement"),
dated as of August 1, 1999, among the Depositor, Aurora Loan Services Inc., as
Master Servicer, and U.S. Bank National Association, as Trustee (the "Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the following specified mortgage loan transfer
agreements (each a "Transfer Agreement", and together the "Transfer
Agreements"), Lehman Capital has purchased from certain transferors (each a
"Transferor", and together the "Transferors"), certain mortgage loans identified
on the Mortgage Loan Schedule attached hereto as Exhibit A:
1. Mortgage Loan Purchase and Warranties Agreement, dated as of
November 30, 1998, between Lehman Capital and Headlands Mortgage
Company; and
2. Loan Purchase Agreement (Servicing Released), dated March 23,
1998, between Lehman Capital and Aurora Loan Services Inc.
WHEREAS, each Transfer Agreement permits the purchaser to assign its
rights and interests in such agreement and to delegate its obligations
thereunder;
WHEREAS, Lehman Capital desires to sell, without recourse, all of its
right, title and interest in the Mortgage Loans to the Depositor, to assign all
of its rights and interest under each Transfer Agreement, and to delegate all of
its obligations thereunder, to the Depositor; and
WHEREAS, Lehman Capital and the Depositor acknowledge and agree that
the Depositor will assign all of its rights and delegate all of its obligations
hereunder to the Trustee, and that each reference herein to the Depositor is
intended, unless otherwise specified, to mean the Depositor or the Trustee, as
assignee, whichever is the owner of the Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Lehman Capital and the Depositor agree as
follows:
ARTICLE I.
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans. Concurrently with the execution
and delivery of this Agreement, Lehman Capital does hereby transfer, assign, set
over, deposit with and otherwise convey to the Depositor, without recourse,
subject to Sections 1.03 and 1.04, all the right, title and interest of Lehman
Capital in and to the Mortgage Loans identified on Schedule A hereto, having an
aggregate principal balance as of the Cut-off Date of $251,168,651.75. Such
conveyance includes, without limitation, the right to all distributions of
principal and interest received on or with respect to the Mortgage Loans on or
after August 1, 1999 (other than payments of principal and interest due on or
before such date), and all such payments due after such date but received prior
to such date and intended by the related Mortgagors to be applied after such
date, together with all of Lehman Capital's right, title and interest in and to
each related account and all amounts from time to time credited to and the
proceeds of such account, any REO Property and the proceeds thereof, Lehman
Capital's rights under any Insurance Policies related to the Mortgage Loans, and
Lehman Capital's security interest in any collateral pledged to secure the
Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral.
Concurrently with the execution and delivery of this Agreement, Lehman
Capital hereby assigns to the Depositor all of its rights and interest under
each Transfer Agreement, and delegates to the Depositor all of its obligations
thereunder. Concurrently with the execution hereof, the Depositor tenders the
purchase price of $251,168,651.75. The Depositor hereby accepts such assignment
and delegation, and shall be entitled to exercise all such rights of Lehman
Capital under each Transfer Agreement, as if the Depositor had been a party to
each Transfer Agreement.
Section 1.02. Delivery of Documents. (a) In connection with such
transfer and assignment of the Mortgage Loans hereunder, Lehman Capital does
hereby deliver, or cause to be delivered, to the Depositor (or its designee) the
documents or instruments with respect to each Mortgage Loan (each a "Mortgage
File") so transferred and assigned, as specified in the applicable Transfer
Agreement.
(b) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the related Mortgage Files, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Servicer for such purpose have been
so deposited.
Section 1.03. Review of Documentation. The Depositor, by execution and
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by LaSalle National Bank, as custodian for the Depositor. The Custodian is
required to review, within 45 days following the Closing Date, each applicable
Mortgage File. If in the course of such review the Custodian identifies any
Material Defect, Lehman Capital shall be obligated to cure such defect or to
repurchase the related Mortgage Loan from the Depositor (or, at the direction of
and on behalf of the Depositor, from the Trust Fund), or to substitute a
Qualifying Substitute Mortgage Loan therefor, in each case to the same extent
and in the same manner as the Depositor is obligated to the Trustee and the
Trust Fund under Section 2.02(c) of the Trust Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. (a)
Lehman Capital hereby represents and warrants to the Depositor that as of the
date hereof that:
(i) Lehman Capital is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and has full corporate power and authority to own its
property, to carry on its business as presently conducted, and to enter
into and perform its obligations under this Agreement;
(ii) the execution and delivery by Lehman Capital of this
Agreement have been duly authorized by all necessary corporate action
on the part of Lehman Capital; neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on Lehman Capital or its properties or the
certificate of incorporation or bylaws of Lehman Capital;
(iii) the execution, delivery and performance by Lehman Capital
of this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency,
except such as has been obtained, given, effected or taken prior to the
date hereof;
(iv) this Agreement has been duly executed and delivered by
Lehman Capital and, assuming due authorization, execution and delivery
by the Depositor, constitutes a valid and binding obligation of Lehman
Capital enforceable against it in accordance with its terms except as
such enforceability may be subject to (A) applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of the
rights of creditors generally and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding in
equity or at law; and
(v) there are no actions, suits or proceedings pending or, to the
knowledge of Lehman Capital, threatened or likely to be asserted
against or affecting Lehman Capital, before or by any court,
administrative agency, arbitrator or governmental body (A) with respect
to any of the transactions contemplated by this Agreement or (B) with
respect to any other matter which in the judgment of Lehman Capital
will be determined adversely to Lehman Capital and will if determined
adversely to Lehman Capital materially and adversely affect it or its
business, assets, operations or condition, financial or otherwise, or
adversely affect its ability to perform its obligations under this
Agreement.
(b) The representations and warranties of each Transferor with respect
to the Mortgage Loans in the applicable Transfer Agreement were made as of the
date of such Transfer Agreement. To the extent that any fact, condition or event
with respect to a Mortgage Loan constitutes a breach of both (i) a
representation or warranty of a Transferor under the applicable Transfer
Agreement and (ii) a representation or warranty of Lehman Capital under this
Agreement, the only right or remedy of the Depositor shall be the right to
enforce the obligations of such Transferor under any applicable representation
or warranty made by it. The Depositor acknowledges and agrees that the
representations and warranties of Lehman Capital in this Section 1.04(b) are
applicable only to facts, conditions or events that do not constitute a breach
of any representation or warranty made by the related Transferor in the
applicable Transfer Agreement. Lehman Capital shall have no obligation or
liability with respect to any breach of a representation or warranty made by it
with respect to the Mortgage Loans if the fact, condition or event constituting
such breach also constitutes a breach of a representation or warranty made by
the related Transferor in such Transfer Agreement, without regard to whether the
related Transferor fulfills its contractual obligations in respect of such
representation or warranty. Subject to the foregoing, Lehman Capital represents
and warrants upon delivery of the Mortgage Loans to the Depositor hereunder, as
to each, that:
(i) The information set forth with respect to the Mortgage Loans
on the Mortgage Loan Schedule provides an accurate listing of the
Mortgage Loans, and the information with respect to each Mortgage Loan
on the Mortgage Loan Schedule is true and correct in all material
respects at the date or dates respecting which such information is
given;
(ii) There are no defaults in complying with the terms of any
Mortgage, and Lehman Capital has no notice as to any taxes,
governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously
became due and owing but which have not been paid;
(iii) Except in the case of Cooperative Loans, each Mortgage
requires all buildings or other improvements on the related Mortgaged
Property to be insured by a generally acceptable insurer against loss
by fire, hazards of extended coverage and such other hazards as are
customary in the area where the related Mortgaged Property is located
pursuant to insurance policies conforming to the requirements of the
guidelines of FNMA or FHLMC. If upon origination of the Mortgage Loan,
the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) a
flood insurance policy meeting the requirements of the current
guidelines of the Federal Flood Insurance Administration is in effect
which policy conforms to the requirements of the current guidelines of
the Federal Flood Insurance Administration. Each Mortgage obligates the
related Mortgagor thereunder to maintain the hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state law
or regulation, each Mortgagor has been given an opportunity to choose
the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy
is the valid and binding obligation of the insurer, is in full force
and effect, and will be in full force and effect and inure to the
benefit of the Depositor upon the consummation of the transactions
contemplated by this Agreement.
(iv) Each Mortgage has not been satisfied, cancelled,
subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or recision;
(v) Each Mortgage evidences a valid, subsisting, enforceable and
perfected first lien on the related Mortgaged Property (including all
improvements on the Mortgaged Property). The lien of the Mortgage is
subject only to: (1) liens of current real property taxes and
assessments not yet due and payable and, if the related Mortgaged
Property is a condominium unit, any lien for common charges permitted
by statute, (2) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording of such Mortgage acceptable to mortgage lending institutions
in the area in which the related Mortgaged Property is located and
specifically referred to in the lender's Title Insurance Policy or
attorney's opinion of title and abstract of title delivered to the
originator of such Mortgage Loan, and (3) such other matters to which
like properties are commonly subject which do not, individually or in
the aggregate, materially interfere with the benefits of the security
intended to be provided by the Mortgage. Any security agreement,
chattel mortgage or equivalent document related to, and delivered to
the Trustee in connection with, a Mortgage Loan establishes a valid,
subsisting and enforceable first lien on the property described therein
and the Depositor has full right to sell and assign the same to the
Trustee;
(vi) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Depositor, Lehman Capital was the sole owner of
record and holder of each Mortgage Loan, and Lehman Capital had good
and marketable title thereto, and has full right to transfer and sell
each Mortgage Loan to the Depositor free and clear, except as described
in paragraph (v) above, of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and has
full right and authority, subject to no interest or participation of,
or agreement with, any other party, to sell and assign each Mortgage
Loan pursuant to this Agreement;
(vii) Each Mortgage Loan other than any Cooperative Loan is
covered by either (i) an attorney's opinion of title and abstract of
title the form and substance of which is generally acceptable to
mortgage lending institutions originating mortgage loans in the
locality where the related Mortgaged Property is located or (ii) an
ALTA mortgagee Title Insurance Policy or other generally acceptable
form of policy of insurance, issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located,
insuring the originator of the Mortgage Loan, and its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan (subject only to the exceptions
described in paragraph (v) above). If the Mortgaged Property is a
condominium unit located in a state in which a title insurer will
generally issue an endorsement, then the related Title Insurance Policy
contains an endorsement insuring the validity of the creation of the
condominium form of ownership with respect to the project in which such
unit is located. With respect to any Title Insurance Policy, the
originator is the sole insured of such mortgagee Title Insurance
Policy, such mortgagee Title Insurance Policy is in full force and
effect and will inure to the benefit of the Depositor upon the
consummation of the transactions contemplated by this Agreement, no
claims have been made under such mortgagee Title Insurance Policy and
no prior holder of the related Mortgage, including Lehman Capital, has
done, by act or omission, anything that would impair the coverage of
such mortgagee Title Insurance Policy;
(viii) To the best of Lehman Capital's knowledge, no foreclosure
action is being threatened or commenced with respect to any Mortgage
Loan. There is no proceeding pending for the total or partial
condemnation of any Mortgaged Property (or, in the case of a
Cooperative Loan, the related cooperative unit) and each such property
is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty, so as to have a material adverse
effect on the value of the related Mortgaged Property as security for
the related Mortgage Loan or the use for which the premises were
intended;
(ix) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting
the related Mortgaged Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage;
(x) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or similar institution which is supervised and examined by a
Federal or State authority, or by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to sections 203 and 211 of
the National Housing Act; and
(xi) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G of the Code and Treas. Reg. ss.1.860G-2.
It is understood and agreed that the representations and warranties set
forth herein survive delivery of the Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Depositor. Upon discovery by either Lehman
Capital or the Depositor of a breach of any of the foregoing representations and
warranties that adversely and materially affects the value of the related
Mortgage Loan, and that does not also constitute a breach of a representation or
warranty of the related Transferor in the applicable Transfer Agreement, the
party discovering such breach shall give prompt written notice to the other
party. Within 60 days of the discovery of any such breach, Lehman Capital shall
either (a) cure such breach in all material respects, (b) repurchase such
Mortgage Loan or any property acquired in respect thereof from the Depositor at
the applicable Purchase Price or (c) within the two year period following the
Closing Date, substitute a Qualifying Substitute Mortgage Loan for the affected
Mortgage Loan.
Section 1.05. Grant Clause. It is intended that the conveyance of
Lehman Capital's right, title and interest in and to Mortgage Loans and other
property conveyed pursuant to this Agreement shall constitute, and shall be
construed as, a sale of such property and not a grant of a security interest to
secure a loan. However, if such conveyance is deemed to be in respect of a loan,
it is intended that: (1) the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement; (2) Lehman Capital hereby
grants to the Depositor a first priority security interest in all of Lehman
Capital's right, title and interest in, to and under, whether now owned or
hereafter acquired, such Mortgage Loans and other property; and (3) this
Agreement shall constitute a security agreement under applicable law.
Section 1.06. Assignment by Depositor. The Depositor shall have the
right, upon notice to but without the consent of Lehman Capital, to assign, in
whole or in part, its interest under this Agreement with respect to the Mortgage
Loans to the Trustee, and the Trustee then shall succeed to all rights of the
Depositor under this Agreement. All references to the Depositor in this
Agreement shall be deemed to include its assignee or designee, specifically
including the Trustee.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 2.03. Amendment. This Agreement may be amended from time to
time by Lehman Capital and the Depositor, without notice to or the consent of
any of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund, the Trust Agreement or
this Agreement in any Offering Document; or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement or (iv) to add, delete, or amend any provisions to the
extent necessary or desirable to comply with any requirements imposed by the
Code and the REMIC Provisions. No such amendment effected pursuant to clause
(iii) of the preceding sentence shall adversely affect in any material respect
the interests of any Holder. Any such amendment shall be deemed not to adversely
affect in any material respect any Holder, if the Trustee receives written
confirmation from each Rating Agency that such amendment will not cause such
Rating Agency to reduce the then current rating assigned to the Certificates
(and any Opinion of Counsel requested by the Trustee in connection with any such
amendment may rely expressly on such confirmation as the basis therefor).
(a) This Agreement may also be amended from time to time by Lehman
Capital and the Depositor with the consent of the Holders of not less than
66-2/3% of the Class Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without, the consent of the Holder
of such Certificate or (ii) reduce the aforesaid percentages of Class
Certificate Principal Amount (or Percentage Interest) of Certificates of each
Class, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Class Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby.
For purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of any Class of Book-Entry Certificates, the
related Certificate Owners.
(b) It shall not be necessary for the consent of Holders under this
Section 2.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Section 2.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 2.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 2.06. Indulgences; No Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
Section 2.07. Headings Not to Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 2.08. Benefits of Agreement. Nothing in this Agreement, express
or implied, shall give to any Person, other than the parties to this Agreement
and their successors hereunder, any benefit or any legal or equitable right,
power, remedy or claim under this Agreement.
Section 2.09. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, Lehman Capital and the Depositor have caused their
names to be signed hereto by their respective duly authorized officers as of the
date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Joseph J. Kelly
-------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Stanley Labanowski
-------------------------
Name: Stanley Labanowski
Title: Vice President
<PAGE>
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
<PAGE>
Exhibit 99.2
Execution
================================================================================
AURORA LOAN SERVICES INC.,
as Servicer
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.,
as Seller
and
AURORA LOAN SERVICES INC.,
as Master Servicer
-----------------------------
STRUCTURED ASSET SECURITIES CORPORATION
Mortgage Pass-Through Certificates, Series 1999-ALS3
SERVICING AGREEMENT
Dated as of August 1, 1999
-----------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01 Contract for Servicing; Possession of Servicing Files........12
Section 2.02 Books and Records............................................12
ARTICLE III.
SERVICING OF THE MORTGAGE LOANS
Section 3.01 Servicer to Service..........................................13
Section 3.02 Collection of Mortgage Loan Payments.........................15
Section 3.03 Establishment of and Deposits to Custodial Account...........15
Section 3.04 Permitted Withdrawals From Custodial Account.................16
Section 3.05 Establishment of and Deposits to Escrow Account..............17
Section 3.06 Permitted Withdrawals From Escrow Account....................18
Section 3.07 Maintenance of FHA Mortgage Insurance and VA Guaranty........18
Section 3.08 Fidelity Bond and Errors and Omissions Insurance.............19
Section 3.09 Notification of Adjustments..................................19
Section 3.10 Completion and Recordation of Assignments of Mortgage
and FHA and VA Change Notices .............................19
Section 3.11 Protection of Accounts.......................................20
Section 3.12 Title, Management and Disposition of REO Property............20
Section 3.13 Real Estate Owned Reports....................................22
Section 3.14 MERS.........................................................22
Section 3.15 [Reserved]...................................................23
ARTICLE IV.
PAYMENTS TO MASTER SERVICER
Section 4.01 Remittances..................................................23
Section 4.02 Statements to Master Servicer................................24
Section 4.03 Monthly Advances by Servicer.................................24
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation.......................................25
Section 5.02 Annual Audit Report..........................................25
Section 5.03 Annual Officer's Certificate.................................26
ARTICLE VI.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Section 6.01 Representations, Warranties and Agreements of the Servicer...26
Section 6.02 Remedies for Breach of Representations and Warranties of
the Servicer ..............................................27
Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims ....................................................28
ARTICLE VII.
THE SERVICER
Section 7.01 Merger or Consolidation of the Servicer......................29
Section 7.02 Limitation on Liability of the Servicer and Others...........29
Section 7.03 Limitation on Resignation and Assignment by the Servicer.....30
ARTICLE VIII.
TERMINATION
Section 8.01 Termination for Cause........................................30
Section 8.02 Termination Without Cause....................................32
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Successor to the Servicer....................................32
Section 9.02 Costs........................................................34
Section 9.03 Notices......................................................35
Section 9.04 Severability Clause..........................................36
Section 9.05 No Personal Solicitation.....................................36
Section 9.06 Counterparts.................................................36
Section 9.07 Place of Delivery and Governing Law..........................37
Section 9.08 Further Agreements...........................................37
Section 9.09 Intention of the Parties.....................................37
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement....37
Section 9.11 Assignment by Lehman Capital.................................37
Section 9.12 [Reserved]...................................................37
Section 9.13 Waivers......................................................37
Section 9.14 Exhibits.....................................................38
Section 9.15 General Interpretive Principles..............................38
Section 9.16 Reproduction of Documents....................................38
EXHIBITS & SCHEDULES
EXHIBIT A Mortgage Loan Schedule
EXHIBIT B Custodial Account Letter Agreement
EXHIBIT C Escrow Account Letter Agreement
SCHEDULE 1 Servicer Recordation Fees
<PAGE>
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st
day of August, 1999, by and between LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC., a Delaware corporation (the "Seller" or "Lehman
Capital"), AURORA LOAN SERVICES INC., a Delaware corporation ("the Servicer"),
and AURORA LOAN SERVICES INC., as Master Servicer under the Trust Agreement (as
defined herein) recites and provides as follows:
RECITALS
WHEREAS, the Seller has conveyed certain Mortgage Loans identified on
Schedule I hereto (the "Mortgage Loans") on a servicing-retained basis to
Structured Asset Securities Corporation (the "Depositor"), which in turn has
conveyed the Mortgage Loans to U.S. Bank National Association, as trustee (the
"Trustee") under a trust agreement dated as of August 1, 1999 (the "Trust
Agreement"), among the Trustee, Aurora Loan Services Inc., as master servicer
(together with any successor Master Servicer appointed pursuant to the
provisions of the Trust Agreement, the "Master Servicer"), and the Depositor.
WHEREAS, Lehman Capital desires that the Servicer service the Mortgage
Loans pursuant to this Agreement, and the Servicer has agreed to do so, subject
to the right of the Seller and of the Master Servicer to terminate the rights
and obligations of the Servicer hereunder at any time and to the other
conditions set forth herein.
WHEREAS, Lehman Capital and the Servicer agree that the provisions of
the Flow Servicing Agreement dated as of September 1, 1997, between Lehman
Capital and the Servicer shall not apply to the Mortgage Loans for so long as
such Mortgage Loans remain subject to the provisions of the Trust Agreement;
WHEREAS, the Master Servicer shall be obligated under the Trust
Agreement, among other things, to supervise the servicing of the Mortgage Loans
on behalf of the Trustee, and shall have the right, under certain circumstances,
to terminate the rights and obligations of the Servicer under this Servicing
Agreement.
WHEREAS, Lehman Capital and the Servicer intend that the Master
Servicer, pursuant to Section 9.12, is an intended third party beneficiary of
this Agreement.
WHEREAS, Lehman Capital and the Servicer acknowledge and agree that
Lehman Capital will assign all of its rights and delegate all of its obligations
hereunder (excluding Lehman Capital's rights and obligations as owner of the
servicing rights relating to the Mortgage Loans) to the Trustee, and that each
reference herein to either Lehman Capital or the Seller is intended, unless
otherwise specified, to mean the Seller or the Trustee, as assignee, whichever
is the owner of the Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Seller and the Servicer hereby
agree as follows:
ARTICLE I.
DEFINITIONS
The following terms are defined as follows (except as otherwise agreed
in writing by the parties):
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions that
service mortgage loans of the same type as such Mortgage Loans in the
jurisdiction where the related Mortgaged Property is located.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: A Mortgage Loan serviced pursuant to
this Agreement under which the Mortgage Interest Rate is adjusted from time to
time in accordance with the terms and provisions of the Mortgage Note.
Agreement: This Servicing Agreement and all amendments hereof and
supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans, other
than Servicing Fees, including but not limited to late charges, fees received
with respect to checks or bank drafts returned by the related bank for
non-sufficient funds, Prepayment Penalty Amounts, assumption fees, optional
insurance administrative fees and all other incidental fees and charges.
Appraised Value: The value set forth in an appraisal made in connection
with the origination or the refinance of the related Mortgage Loan as the value
of the Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the transfer of the Mortgage to the party indicated therein, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law.
Best Efforts: Efforts determined to be reasonably diligent by the
Seller or Servicer, as the case may be, in its sole discretion. Such efforts do
not require the Seller or Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Seller or Servicer, as the case may be, to advance or expend fees or
sums of money in addition to those specifically set forth in this Agreement.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions in the States of New
York, Florida and Minnesota are authorized or obligated by law or executive
order to be closed.
Certificates: Any or all of the Certificates issued pursuant to the
Trust Agreement.
Closing Date: August 30, 1999.
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate Mortgage Loan that is neither FHA insured nor VA
guaranteed.
Costs: For any Person, any claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses of such Person.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 3.03.
Custodial Agreement: The custodial agreement relating to custody of all
of the Mortgage Loans, among the Custodian, the Trustee, and the Depositor,
dated as of August 1, 1999.
Custodian: LaSalle National Bank, as Custodian pursuant to the
Custodial Agreement, and any successor thereto.
Cut-off Date: August 1, 1999.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Determination Date: With respect to each Distribution Date, the 18th
day of the month in which such Distribution Date occurs, or, if such 18th day is
not a Business Day, the next succeeding Business Day.
Depositor: Structured Asset Securities Corporation, or any successor in
interest.
Due Date: The day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace. With respect to the Mortgage
Loans for which payment from the Mortgagor is due on a day other than the first
day of the month, such Mortgage Loans will be treated as if the Monthly Payment
is due on the first day of the immediately succeeding month.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month immediately preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the obligations and securities
listed below which investment provides for a date of maturity not later than the
Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America
("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates
of deposits of, or bankers' acceptances issued by, any depository institution or
trust company (including U.S. subsidiaries of foreign depositories and the
Trustee or any agent of the Trustee, acting in its respective commercial
capacity) incorporated or organized under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal or state banking authorities, so long as at the time of investment or
the contractual commitment providing for such investment the commercial paper or
other short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company which is
the principal subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in its
highest short-term rating category or one of its two highest long-term rating
categories;
(iii) repurchase agreements collateralized by Direct Obligations
or securities guaranteed by GNMA, FNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer
or bank has an uninsured, unsecured and unguaranteed obligation rated by each
Rating Agency in its highest short-term rating category;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any state thereof which have a credit rating from each Rating Agency, at the
time of investment or the contractual commitment providing for such investment,
at least equal to one of the two highest long-term credit rating categories of
each Rating Agency; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that investment
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust Fund to exceed 20% of the sum of
the Aggregate Loan Balance and the aggregate principal amount of all Eligible
Investments in the Certificate Account; provided, further, that such securities
will not be Eligible Investments if they are published as being under review
with negative implications from either Rating Agency;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof) rated
by each Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America) held by a
custodian in safekeeping on behalf of the holders of such receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or investment, (A)
rated in the highest rating category by each Rating Agency or (B) that would not
adversely affect the then current rating by either Rating Agency of any of the
Certificates. Such investments in this subsection (viii) may include money
market mutual funds or common trust funds, including any fund for which U.S.
Bank National Association (the "Bank"), the Trustee, the Master Servicer or an
affiliate thereof serves as an investment advisor, administrator, shareholder
servicing agent, and/or custodian or subcustodian, notwithstanding that (x) the
Bank or an affiliate thereof charges and collects fees and expenses from such
funds for services rendered, (y) the Bank or an affiliate thereof charges and
collects fees and expenses for services rendered pursuant to this Agreement, and
(z) services performed for such funds and pursuant to this Agreement may
converge at any time. The Trustee specifically authorizes the Bank or an
affiliate thereof to charge and collect from the Trustee such fees as are
collected from all investors in such funds for services rendered to such funds
(but not to exceed investment earnings thereon);
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer in accordance with the FNMA Guides.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 3.05.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any event set forth in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: The Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.
FHA Approved Mortgagee: A corporation or institution approved as a
mortgagee by FHA under the Act and applicable HUD regulations, and eligible to
own and service mortgage loans such as the FHA Loans.
FHA Insurance Contract: The contractual obligation of FHA respecting
the insurance of a Mortgage Loan.
FHA Loan: A residential Mortgage Loan that, as of the Cut-off Date (or,
in the case of a Qualifying Substitute Mortgage Loan, as of the date of such
substitution), is the subject of an FHA Insurance Contract as evidenced by a
mortgage insurance contract.
FHA Mortgage Insurance: Mortgage insurance authorized under the Act and
provided by the FHA.
FHA Regulations: Regulations promulgated by HUD under the National
Housing Act, codified in 24 Code of Federal Regulations, and other HUD issuances
relating to FHA Loans, including the related handbooks, circulars, notices and
mortgagee letters.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer in
accordance with the FNMA Guides.
Fixed Rate Mortgage Loan: Any individual Mortgage Loan serviced
pursuant to this Agreement as to which the Mortgage Interest Rate set forth in
the Mortgage Note is fixed for the term of such Mortgage Loan.
Fitch: Fitch IBCA, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
FNMA Guides: The FNMA Selling Guide and the FNMA Servicing Guide and
all amendments or additions thereto.
GNMA: The Government National Mortgage Association, or any successor
thereto.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and GNMA.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property
including FHA insurance proceeds and/or VA guaranty proceeds.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related REO Property, if the Mortgaged Property is acquired in satisfaction of
the Mortgage Loan.
Master Servicer: Aurora Loan Services Inc., or any successor in
interest, or if any successor master servicer shall be appointed as provided in
the Trust Agreement, then such successor master servicer.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Eligible Mortgage Loan: Any Mortgage Loan that has been designated
by the Servicer as recordable in the name of MERS.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or an Assignment of Mortgage, has been or will be recorded in the name of MERS,
as agent for the holder from time to time of the Mortgage Note.
Monthly Advance: With respect to each Remittance Date and each Mortgage
Loan, an amount equal to the Monthly Payment (with the interest portion of such
Monthly Payment adjusted to the Mortgage Loan Remittance Rate) that was due on
the Mortgage Loan, and that (i) was delinquent at the close of business on the
first day of the month in which such Remittance Date occurs and (ii) was not the
subject of a previous Monthly Advance, but only to the extent that such amount
is expected, in the reasonable judgment of the Servicer, to be recoverable from
collections or other recoveries in respect of such Mortgage Loan. To the extent
that the Servicer determines that any such amount is not recoverable from
collections or other recoveries in respect of such Mortgage Loan, such
determination shall be evidenced by a certificate of a Servicing Officer
delivered to the Master Servicer setting forth such determination and the
procedures and considerations of the Servicer forming the basis of such
determination, which shall include a copy of any broker's price opinion and any
other information or reports obtained by the Servicer which may support such
determinations.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: Moody's Investors Service, or any successor in interest.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first or second lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in the FNMA Guides.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note.
Mortgage Loan: An individual Mortgage Loan that is the subject of this
Agreement, each Mortgage Loan subject to this Agreement being identified on the
Mortgage Loan Schedule, which Mortgage Loan includes without limitation the
Mortgage Loan documents, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds, and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Master Servicer, which shall be equal to
the Mortgage Interest Rate minus the applicable Servicing Fee.
Mortgage Loan Schedule: A schedule of the Mortgage Loans setting forth
information with respect to such Mortgage Loans (including any MERS
identification number (if available) with respect to each MERS Mortgage Loan or
MERS Eligible Mortgage Loan), attached hereto as Exhibit A.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Sale Proceeds: The proceeds from the sale of REO Property, net of
all expenses incurred by the Servicer in connection with such sale, including,
without limitation, legal fees and expenses, referral fees, brokerage
commissions, conveyance taxes and any other related expense.
Non-MERS Eligible Mortgage Loan: Any Mortgage Loan other than a MERS
Eligible Mortgage Loan.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Seller, but which must be
independent outside counsel with respect to any such opinion of counsel
concerning (i) the non-recordation of Mortgage Loans pursuant to Section 2.02
hereof and (ii) federal income tax matters.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Excess: With respect to any Principal Prepayment in
full received from the first day through the sixteenth day of any month, all
amounts paid in respect of interest on such Principal Prepayment.
Prepayment Interest Shortfall Amount: With respect to any Remittance
Date and (x) any Principal Prepayment in part (other than any such prepayment
received on the first of the month) and (y) any Principal Prepayment in full
received on or after the seventeenth day of the month immediately preceding the
month of such Remittance Date, but on or before the last day of the month
immediately preceding the month of such Remittance Date, the difference between
(i) one full month's interest at the applicable Mortgage Loan Remittance Rate
(giving effect to any applicable Relief Act Reduction) on the outstanding
principal balance of such Mortgage Loan immediately prior to such prepayment and
(ii) the amount of interest actually received with respect to such Mortgage Loan
in connection with such Principal Prepayment.
Prepayment Penalty Amount: With respect to any Remittance Date, all
premiums or charges paid by the obligors under the Mortgage Notes due to
Principal Prepayments collected by the Servicers during the immediately
preceding Prepayment Period.
Prepayment Period: With respect to any Remittance Date and any partial
Principal Prepayment, the period from the second day of the month immediately
preceding the month of such Remittance Date to the first day of the month of
such Remittance Date. With respect to any Remittance Date and a full Principal
Prepayment, the period from the seventeenth day of the month immediately
preceding the month of such Remittance Date to the sixteenth day of the month of
such Remittance Date.
Prime Rate: The prime rate published from time to time, as published as
the average rate in The Wall Street Journal Northeast Edition.
Principal Prepayment: Any Mortgagor payment of principal (other than a
Balloon Payment) or other recovery of principal on a Mortgage Loan that is
recognized as having been received or recovered in advance of its scheduled Due
Date and applied to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the Mortgage Note.
Qualified Depository: Any of (i) a depository the accounts of which are
insured by the FDIC and the debt obligations of which are rated AA (or its
equivalent) or better by each Rating Agency; (ii) the corporate trust department
of any bank the debt obligations of which are rated at least A-1 or its
equivalent by each Rating Agency; or (iii) the Servicer, unless the Master
Servicer is notified by any Rating Agency that the designation of the Servicer
as a Qualified Depository will result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Certificates.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA, FHLMC and GNMA.
Rating Agency: Each of S&P, Fitch and DCR.
Relief Act Reduction: With respect to any Mortgage Loan as to which
there has been a reduction in the amount of the interest collectible thereon as
a result of the application of the Soldiers' and Sailors' Civil Relief act of
1940, as amended, any amount by which interest collectible on such Mortgage Loan
for the Due Date in the related Due Period is less than the interest accrued
thereon for the applicable one-month period at the Mortgage Interest Rate
without giving effect to such reduction.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.12.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Trustee through foreclosure or by deed in lieu of foreclosure, pursuant
to Section 3.12.
Retained Interest: The meaning set forth in the Trust Agreement.
Retained Interest Holder: The meaning set forth in the Trust
Agreement.
Retained Interest Rate: The meaning set forth in the Trust Agreement.
S&P: Standard & Poor's Rating Services, a division of the McGraw-Hill
Companies, Inc., or any successor in interest.
Seller: Lehman Capital, A Division of Lehman Brothers Holdings Inc., or
its successors in interest and assigns.
Servicer: Aurora Loan Services Inc. or its successor in interest or
assigns or any successor to the Servicer under this Agreement as herein
provided.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rents and other charges which are or may become a lien upon the
Mortgaged Property, and PMI Policy premiums and fire and hazard insurance
coverage, (e) any losses sustained by the Servicer with respect to the
liquidation of the Mortgaged Property and (f) compliance with the obligations
pursuant to the provisions of the FNMA Guides.
Servicing Fee: An amount equal to the sum of (a) one-twelfth the
product of (i) a rate per annum equal to 0.25% and (ii) the outstanding
principal balance of such Mortgage Loan and (b) any Prepayment Interest Excess
Amounts. The obligation of the Trustee to pay the Servicing Fee is limited to,
and the Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds to the extent
permitted by Section 3.02 of this Agreement) of such Monthly Payment collected
by the Servicer, or as otherwise provided under this Agreement.
Servicing File: The items pertaining to a particular Mortgage Loan
including, but not limited to, the computer files, data disks, books, records,
data tapes, notes, and all additional documents generated as a result of or
utilized in originating and/or servicing each Mortgage Loan, which are held in
trust for the Trustee by the Servicer.
Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Master Servicer or Seller upon request, as such list may from time to time be
amended.
Trust Agreement: The Trust Agreement dated as of August 1, 1999, among
the Trustee, the Master Servicer and the Depositor.
Trust Fund: The trust fund established by the Trust Agreement, the
assets of which consist of the Mortgage Loans and any related assets.
Trustee: U.S. Bank National Association, or any successor in interest,
or if any successor trustee or co-trustee shall be appointed as provided in the
Trust Agreement, then such successor trustee or such co-trustee, as the case may
be.
VA: The Veterans Administration, an agency of the United States of
America, or any successor thereto including the Administrator of Veterans
Affairs.
VA Approved Lender: Those lenders which are approved by the VA to act
as a lender in connection with the origination of VA Loans.
VA Loan: A Mortgage Loan that, as of the Cut-off Date (or, in the case
of a Qualifying Substitute Mortgage Loan, as of the date of such substitution),
is the subject of a VA Loan Guaranty Agreement as evidenced by a Loan Guaranty
Certificate, or a Mortgage Loan which is a vendee loan sold by the VA.
VA Loan Guaranty Agreement: The obligation of the United States to pay
a specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen's Readjustment Act, as
amended.
VA Loan Guaranty Certificate: The certificate evidencing a VA Loan
Guaranty Agreement.
VA Regulations: Regulations promulgated by the Veteran's Administration
pursuant to the Servicemen's Readjustment Act, as amended, codified in 38 Code
of Federal Regulations, and other VA issuances relating to VA Loans, including
related Handbooks, Circulars and Notices.
Any capitalized terms used and not defined in this Agreement shall have
the meanings ascribed to such terms in the Trust Agreement.
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01 Contract for Servicing; Possession of Servicing Files.
The Seller, by execution and delivery of this Agreement, does hereby
contract with the Servicer, subject to the terms of this Agreement, for the
servicing of the Mortgage Loans. On or before the Closing Date, the Seller shall
cause to be delivered the Servicing Files with respect to the Mortgage Loans
listed on the Mortgage Loan Schedule to the Servicer. Each Servicing File
delivered to a Servicer shall be held in trust by such Servicer for the benefit
of the Trustee, provided, however, that the Servicer shall have no liability for
any Servicing Files (or portions thereof) not delivered by the Seller. The
Servicer's possession of any portion of the Mortgage Loan documents shall be at
the will of the Trustee for the sole purpose of facilitating servicing of the
related Mortgage Loan pursuant to this Agreement, and such retention and
possession by the Servicer shall be in a custodial capacity only. The ownership
of each Mortgage Note, Mortgage, and the contents of the Servicing File shall be
vested in the Trustee and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or which come into the
possession of the Servicer shall immediately vest in the Trustee and shall be
retained and maintained, in trust, by the Servicer at the will of the Trustee in
such custodial capacity only. The portion of each Servicing File retained by the
Servicer pursuant to this Agreement shall be segregated from the other books and
records of the Servicer and shall be appropriately marked to clearly reflect the
ownership of the related Mortgage Loan by the Trustee. The Servicer shall
release from its custody the contents of any Servicing File retained by it only
in accordance with this Agreement.
Section 2.02 Books and Records.
(a) Subject to Section 3.01(a) hereof, as soon as practicable after the
Closing Date or the date on which a Qualifying Substitute Mortgage Loan is
delivered pursuant to Section 2.05 of the Trust Agreement, as applicable (but in
no event more than 90 days thereafter except to the extent delays are caused by
the applicable recording office), the Servicer, at the expense of the Depositor,
shall cause the Mortgage or Assignment of Mortgage, as applicable, with respect
to each MERS Eligible Mortgage Loan, to be properly recorded in the name of MERS
in the public recording office in the applicable jurisdiction, or shall
ascertain that such have previously been so recorded.
(b) Subject to Section 3.01(a) hereof, an Assignment of Mortgage in
favor of the Trustee shall be recorded as to each Non-MERS Mortgage Loan unless
instructions to the contrary are delivered to the Servicer, in writing, by the
Trustee. Subject to the preceding sentence, as soon as practicable after the
Closing Date (but in no event more than 90 days thereafter except to the extent
delays are caused by the applicable recording office), the Servicer, at the
expense of the Depositor, shall cause to be properly recorded in each public
recording office where such Non-MERS Eligible Mortgage Loans are recorded each
Assignment of Mortgage.
(c) Additionally, the Servicer shall prepare and execute, at the
direction of the Trustee, any note endorsements relating to any of the Non-MERS
Mortgage Loans.
(d) All rights arising out of the Mortgage Loans shall be vested in the
Trustee, subject to the Servicer's right to service and administer the Mortgage
Loans hereunder in accordance with the terms of this Agreement. All funds
received on or in connection with a Mortgage Loan, other than the Servicing Fee
and other compensation to which the Servicer is entitled as set forth herein,
including but not limited to in Section 5.01 below, shall be received and held
by the Servicer in trust for the benefit of the Trustee pursuant to the terms of
this Agreement.
ARTICLE III.
SERVICING OF THE MORTGAGE LOANS
Section 3.01 Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the Mortgage Loans from and after the Closing Date and shall have
full power and authority, acting alone, to do any and all things in connection
with such servicing and administration which the Servicer may deem necessary or
desirable, consistent with the terms of this Agreement and with Accepted
Servicing Practices, including taking all actions that a mortgagee is permitted
or required to take by the FHA or VA, with respect to any FHA Loans or VA Loans,
as the case may be. Except as set forth in this Agreement, the Servicer shall
service the Mortgage Loans in strict compliance with the servicing provisions
related to the FNMA MBS Program (Special Servicing Option) of the FNMA Guides,
which include, but are not limited to, provisions regarding the liquidation of
Mortgage Loans, the collection of Mortgage Loan payments, the payment of taxes,
insurance and other charges, the maintenance of hazard insurance, the
maintenance of Mortgage Impairment Insurance Policies, the maintenance of
Fidelity Bond and Errors and Omissions Insurance, inspections, the restoration
of Mortgaged Property, the maintenance of PMI Policies, insurance claims, the
title, management and disposition of REO Property, permitted withdrawals with
respect to REO Property, REO reports, liquidation reports, and reports of
foreclosures and abandonments of Mortgaged Property, the transfer of Mortgaged
Property, the release of Mortgage Loan documents, annual statements, and
examination of records and facilities. In the event of any conflict,
inconsistency or discrepancy between any of the servicing provisions of this
Agreement and any of the servicing provisions of the FNMA Guides, the provisions
of this Agreement shall control and be binding upon the Seller, the Master
Servicer and the Servicer.
The Seller and the Servicer additionally agree as follows:
(a) The Servicer shall (A) record or cause to be recorded the Mortgage
or the Assignment of Mortgage, as applicable, with respect to all MERS Eligible
Mortgage Loans, in the name of MERS, or shall ascertain that such have
previously been so recorded; (B) prepare or cause to be prepared all Assignments
of Mortgage with respect to all Non-MERS Eligible Mortgage Loans; (C) record or
cause to be recorded, subject to Section 2.02(b) hereof, all Assignments of
Mortgage with respect to Non-MERS Mortgage Loans in the name of the Trustee; (D)
pay the recording costs pursuant to Section 2.02 hereof; and/or (E) track such
Mortgages and Assignments of Mortgage to ensure they have been recorded. The
Servicer shall be entitled to be paid by the Seller the fees set forth on
Schedule 1 hereto for the preparation and recordation of the Mortgages and
Assignments of Mortgage. After the expenses of such recording costs pursuant to
Section 2.02 hereof shall have been paid by the Servicer, the Servicer shall
submit to the Depositor a reasonably detailed invoice for reimbursement of
recording costs it incurred hereunder.
(b) The Servicer shall, in accordance with the relevant provisions of
the Cranston-Gonzales National Affordable Housing Act of 1990, as the same may
be amended from time to time, and the regulations provided in accordance with
the Real Estate Settlement Procedures Act, provide notice to the Mortgagor of
each Mortgage of the transfer of the servicing thereto to the Servicer.
(c) The Servicer shall be responsible for the preparation of and costs
associated with notifications to Mortgagors of the assumption of servicing by
the Servicer.
Consistent with the terms of this Agreement, the Servicer may waive any
late payment charge, assumption fee or other fee that may be collected in the
ordinary course of servicing the Mortgage Loans. The Servicer shall not make any
future advances to any obligor under any Mortgage Loan, and (unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Servicer, reasonably foreseeable) the Servicer shall not
permit any modification of any material term of any Mortgage Loan, including any
modification that would change the Mortgage Interest Rate, defer or forgive the
payment of principal or interest, reduce or increase the outstanding principal
balance (except for actual payments of principal) or change the final maturity
date on such Mortgage Loan. In the event of any such modification which permits
the deferral of interest or principal payments on any Mortgage Loan, the
Servicer shall, on the Business Day immediately preceding the Remittance Date in
any month in which any such principal or interest payment has been deferred,
make a Monthly Advance in accordance with Section 4.03, in an amount equal to
the difference between (a) such month's principal and one month's interest at
the Mortgage Loan Remittance Rate on the unpaid principal balance of such
Mortgage Loan and (b) the amount paid by the Mortgagor. The Servicer shall be
entitled to reimbursement for such advances to the same extent as for all other
advances made pursuant to Section 4.03. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered,
to execute and deliver on behalf of itself and the Trustee, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. Upon the request of the Servicer, the
Trustee shall execute and deliver to the Servicer any powers of attorney and
other documents, furnished to it by the Servicer and reasonably satisfactory to
the Trustee, necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
Notwithstanding anything to the contrary in this Agreement, the
Servicer shall not (unless the Servicer determines, in its own discretion, that
there exists a situation of extreme hardship to the Mortgagor), waive any
premium or penalty in connection with a prepayment of principal of any Mortgage
Loan, and shall not consent to the modification of any Mortgage Note to the
extent that such modification relates to payment of a prepayment premium or
penalty.
In servicing and administering any FHA Loans or VA Loans, the Servicer
shall comply strictly with the National Housing Act and the FHA Regulations, the
Servicemen's Readjustment Act, the VA Regulations and administrative guidelines
issued thereunder or pursuant thereto, and, to the extent permitted hereunder,
promptly discharge all of the obligations of the mortgagee thereunder and under
each Mortgage including the payment of any fees, premiums and charges and the
timely giving of notices.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, the FNMA Guides, the FHA Regulations and the VA Regulations,
and the Master Servicer's and the Seller's reliance on the Servicer.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the Closing Date until the date each Mortgage Loan
ceases to be subject to this Agreement, the Servicer shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loans and each related Mortgaged Property,
to the end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.
Section 3.03 Establishment of and Deposits to Custodial Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to the Mortgage Loans separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled as directed by the Master
Servicer. The Custodial Account shall be established with a Qualified
Depository. Any funds deposited in the Custodial Account may be invested in
Eligible Investments subject to the provisions of Section 3.11 hereof. Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 3.04. The creation of any Custodial Account shall be evidenced by a
letter agreement in the form of Exhibit B. A copy of such certification or
letter agreement shall be furnished to the Master Servicer and, upon request, to
any subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Custodial Account on a daily basis,
and retain therein, the following collections received by the Servicer and
payments made by the Servicer after the Closing Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor;
(vi) any Prepayment Interest Shortfall Amount;
(vii) all Advances made by the Servicer pursuant to Section 4.03;
(viii) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance policy;
(ix) any amounts received with respect to or related to any REO
Property or REO Disposition Proceeds; and
(x) any other amount required hereunder to be deposited by the
Servicer in the Custodial Account.
Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 3.04. Additionally, any other benefit
derived from the Custodial Account associated with the receipt, disbursement and
accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.
Section 3.04 Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Master Servicer in the amounts and in
the manner provided for in Section 4.01;
(ii) in the event the Servicer has elected not to retain the
Servicing Fee out of any Mortgagor payments on account of interest or other
recovery of interest with respect to a particular Mortgage Loan (including late
collections of interest on such Mortgage Loan, or interest portions of Insurance
Proceeds or Liquidation Proceeds) prior to the deposit of such Mortgagor payment
or recovery in the Custodial Account, to pay to itself the related Servicing Fee
from all such Mortgagor payments on account of interest or other such recovery
for interest with respect to that Mortgage Loan;
(iii) to pay itself investment earnings on funds deposited in the
Custodial Account;
(iv) to clear and terminate the Custodial Account upon the
termination of this Agreement;
(v) to transfer funds to another Qualified Depository in
accordance with Section 3.11 hereof;
(vi) to invest funds in certain Eligible Investments in
accordance with Section 3.11 hereof;
(vii) to reimburse itself for Monthly Advances of the Servicer's
funds made pursuant to Section 4.03, it being understood that, in the case of
any such reimbursement, the Servicer's right thereto shall be prior to the
rights of the Trust Fund; and
(viii) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Servicer's right to reimburse itself
pursuant to this subclause (viii) with respect to any Mortgage Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds and other amounts received in respect of the
related REO Property, and such other amounts as may be collected by the Servicer
from the Mortgagor or otherwise relating to the Mortgage Loan, it being
understood that, in the case of any such reimbursement, the Servicer's right
thereto shall be prior to the rights of the Trust Fund.
Section 3.05 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled as
directed by the Master Servicer. The Escrow Accounts shall be established with a
Qualified Depository in a manner that shall provide maximum available insurance
thereunder. Funds deposited in the Escrow Account may be drawn on by the
Servicer in accordance with Section 3.06. The creation of any Escrow Account
shall be evidenced by a letter agreement in the form of Exhibit C. A copy of
such certification or letter agreement shall be furnished to the Master Servicer
and, upon request, to any subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds that are to be applied to the restoration or repair of any Mortgaged
Property.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 3.06. The Servicer shall retain any interest paid on funds deposited in
the Escrow Account by the depository institution, other than interest on
escrowed funds required by law to be paid to the Mortgagor. Additionally, any
other benefit derived from the Escrow Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. shall accrue to the Servicer. To the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section 3.06 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, sewer rents, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items constituting Escrow
Payments for the related Mortgage;
(ii) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Loan;
(iii) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in accordance with the terms
of the related Mortgage and Mortgage Note;
(iv) for application to restoration or repair of the Mortgaged
Property in accordance with the FNMA Guides;
(v) for transfer to the Custodial Account of fire and hazard
insurance proceeds and Escrow Payments with respect to any FHA Loan or VA Loan,
where the FHA or the VA, respectively, has directed application of funds as a
credit against the proceeds of the FHA Insurance Contract or VA Loan Guaranty
Agreement;
(vi) to pay to the Servicer, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow Account;
and
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement.
Section 3.07 Maintenance of FHA Mortgage Insurance and VA Guaranty.
With respect to any FHA Loans and VA Loans, the Servicer shall maintain
and keep the FHA Mortgage Insurance and the VA Guaranty, respectively, in full
force and effect throughout the term of this Agreement and discharge its
obligations arising out of FHA Mortgage Insurance and the VA Guaranty
Certificate. The Servicer hereby agrees that it shall be liable to the Trustee
for any loss, liability or expense incurred by the Trust Fund by reason of any
FHA Mortgage Insurance or VA Guaranty being voided, reduced, released or
adversely affected by reason of the negligence or willful misconduct of the
Servicer. The Servicer will service and administer the Mortgage Loans in
accordance with the obligations of mortgagees under the Act and the applicable
regulations thereunder and under the Servicemen's Readjustment Act and VA
Regulations and will discharge all obligations of the mortgagee under each
Mortgage Loan including, with respect to FHA Loans and VA Loans, paying all FHA
and VA insurance premiums, fees or charges, as required, and, subject to the
right to assign the Mortgage Loan to the FHA or VA, as the case may be, will
take all action reasonably necessary to preserve the lien of such Mortgage,
including the defense of actions to challenge or foreclose such lien.
Section 3.08 Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall keep in force during the term of this Agreement a
Fidelity Bond and Errors and Omissions Insurance. Such Fidelity Bond and Errors
and Omissions Insurance shall be maintained with recognized insurers and shall
be in such form and amount as would permit the Servicer to be qualified as a
FNMA or FHLMC seller-servicer. The Servicer shall be deemed to have complied
with this provision if an affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. The
Servicer shall furnish to the Master Servicer a copy of each such bond and
insurance policy if (i) the Master Servicer so requests and (ii) the Servicer is
not an affiliate of Lehman Brothers Inc. at the time of such request.
Section 3.09 Notification of Adjustments.
With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Interest Rate on the related interest rate adjustment date
and shall adjust the Monthly Payment on the related mortgage payment adjustment
date, if applicable, in compliance with the requirements of applicable law and
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Interest Rate and
Monthly Payment adjustments. The Servicer shall promptly, upon written request
therefor, deliver to the Master Servicer such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by the Servicer or the receipt of
notice from the Master Servicer that the Servicer has failed to adjust a
Mortgage Interest Rate or Monthly Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
thereby.
Section 3.10 Completion and Recordation of Assignments of Mortgage and
FHA and VA Change Notices.
As soon as practicable after the Closing Date or the date on which a
Qualifying Substitute Mortgage Loan is delivered pursuant to Section 2.05 of the
Trust Agreement, as applicable (but in no event more than 90 days thereafter
except to the extent delays are caused by the applicable government agency), the
Servicer shall cause the endorsements on the Mortgage Note (if applicable), the
Assignments of Mortgage (subject to Section 3.01(a)), the assignment of security
agreement and the HUD form 92080 Mortgage Record Change with respect to all FHA
Loans to be completed in the name of the Trustee (or MERS, as applicable), and
shall give notice to the VA of a transfer of insurance credits, if applicable,
with respect to VA Loans on the form prescribed by the VA.
Section 3.11 Protection of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time. Such transfer shall be
made only upon obtaining the consent of the Master Servicer, which consent shall
not be withheld unreasonably.
The Servicer shall bear any expenses, losses or damages sustained by
the Master Servicer or the Trustee if the Custodial Account and/or the Escrow
Account are not demand deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Servicer be invested in Eligible Investments; provided that
in the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount") the
Servicer shall be obligated to invest the excess amount over the Insured Amount
in Eligible Investments on the same Business Day as such excess amount becomes
present in the Custodial Account or the Escrow Account. Any such Eligible
Investment shall mature no later than the Business Day immediately preceding the
related Remittance Date, provided, however, that if such Eligible Investment is
an obligation of a Qualified Depository (other than the Servicer) that maintains
the Custodial Account or the Escrow Account, then such Eligible Investment may
mature on the related Remittance Date. Any such Eligible Investment shall be
made in the name of the Servicer in trust for the benefit of the Trustee. All
income on or gain realized from any such Eligible Investment shall be for the
benefit of the Servicer and may be withdrawn at any time by the Servicer. Any
losses incurred in respect of any such investment shall be deposited in the
Custodial Account or the Escrow Account, by the Servicer out of its own funds
immediately as realized.
Section 3.12 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Trustee (or MERS, as applicable), or in the
event the Trustee is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an Opinion of Counsel obtained by the Servicer from
any attorney duly licensed to practice law in the state where the REO Property
is located. The Person or Persons holding such title other than the Trustee
shall acknowledge in writing that such title is being held as nominee for the
Trustee.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee.
Notwithstanding anything to the contrary contained in this Section
3.12, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Trustee or the Master Servicer otherwise requests, an environmental
inspection or review of such Mortgaged Property to be conducted by a qualified
inspector shall be arranged by the Servicer. Upon completion of the inspection,
the Servicer shall provide the Trustee and the Master Servicer with a written
report of such environmental inspection. In the event that the environmental
inspection report indicates that the Mortgaged Property is contaminated by
hazardous or toxic substances or wastes, the Servicer shall not proceed with
foreclosure or acceptance of a deed in lieu of foreclosure. In the event that
the environmental inspection report is inconclusive as to the whether or not the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
the Servicer shall not, without the prior approval of the Trustee, proceed with
foreclosure or acceptance of a deed in lieu of foreclosure. In such instance,
the Trustee shall be deemed to have approved such foreclosure or acceptance of a
deed in lieu of foreclosure unless the Trustee notifies the Servicer in writing,
within two (2) Business Days after its receipt of written notice of the proposed
foreclosure or deed in lieu of foreclosure from the Servicer, that it
disapproves of the related foreclosure or acceptance of a deed in lieu of
foreclosure. The Servicer shall be reimbursed for all Servicing Advances made
pursuant to this paragraph with respect to the related Mortgaged Property from
the Custodial Account.
The Servicer shall use its Best Efforts to dispose of the REO Property
as soon as possible and shall sell such REO Property in any event within three
years after title has been taken to such REO Property, unless (a) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (b) the Servicer determines,
and gives an appropriate notice to the Master Servicer to such effect, that a
longer period is necessary for the orderly liquidation of such REO Property. If
a period longer than three years is permitted under the foregoing sentence and
is necessary to sell any REO Property, (i) the Servicer shall report monthly to
the Master Servicer as to the progress being made in selling such REO Property
and (ii) if, with the written consent of the Trustee, a purchase money mortgage
is taken in connection with such sale, such purchase money mortgage shall name
the Servicer as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate participation agreement among
the Servicer and Trustee shall be entered into with respect to such purchase
money mortgage. Notwithstanding anything herein to the contrary, the Servicer
shall not be required to provide financing for the sale of any REO Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in 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 the amount
required above.
Subject to the approval of the Master Servicer as described in this
paragraph, the 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 interests of the Trust Fund. Prior to acceptance by the Servicer of
an offer to sell any REO Property, the Servicer shall notify the Master Servicer
and the Trustee of such offer in writing which notification shall set forth all
material terms of said offer (each a "Notice of Sale"). The Master Servicer
shall be deemed to have approved the sale of any REO Property unless the Master
Servicer notifies the Servicer in writing, within 2 Business Days after its
receipt of the related Notice of Sale, that it disapproves of the related sale.
With respect to any REO Property, upon a REO Disposition, the Servicer shall be
entitled to retain from REO Disposition Proceeds a disposition fee equal to the
lesser of (A) 1.5% of the Net Sale Proceeds or (B) $1,250; provided, however,
that (1) in the event that the REO Disposition Proceeds exceed $25,000, such
disposition fee shall not be less than $500 and (2) in the event that the REO
Disposition Proceeds are $25,000 or less, such disposition fee shall be equal to
$250. The proceeds of sale of the REO Property shall be promptly deposited in
the Custodial Account. After the expenses of such disposition shall have been
paid, the Servicer shall reimburse itself pursuant to Section 3.04 hereof for
any Servicing Advances it incurred with respect to such REO Property.
The Servicer shall withdraw from the Custodial Account funds necessary
for the proper operation, management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to the FNMA
Guides. The Servicer shall make monthly distributions on each Remittance Date to
the Master Servicer of the net cash flow from the REO Property (which shall
equal the revenues from such REO Property net of the expenses described in this
Section 3.12 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 3.13 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.02, the
Servicer shall furnish to the Master Servicer on or before the Remittance Date
each month a statement with respect to any REO Property covering the operation
of such REO Property for the previous month and the Servicer's efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as the Master Servicer shall
reasonably request.
Section 3.14 MERS.
(a) The Servicer shall take such actions as are necessary to cause the
Trustee to be clearly identified as the owner of each MERS Mortgage Loan on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership in
MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the MERS
Procedures Manual, as amended.
(c) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall promptly notify MERS as to any transfer of beneficial ownership
or release of any security interest in such Mortgage Loans.
(d) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall notify MERS as to any transfer of servicing pursuant to Section
3.15 or Section 9.01 within 10 Business Days of such transfer of servicing. The
Servicer shall cooperate with the Trustee, the Master Servicer and any successor
Servicer to the extent necessary to ensure that such transfer of servicing is
appropriately reflected on the MERS system.
Section 3.15 [Reserved.]
ARTICLE IV.
PAYMENTS TO MASTER SERVICER
Section 4.01 Remittances.
On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the Master Servicer (a) all amounts deposited in
the Custodial Account as of the close of business on the last day of the related
Due Period (net of charges against or withdrawals from the Custodial Account
pursuant to Section 3.04), plus (b) all Monthly Advances, if any, which the
Servicer is obligated to make pursuant to Section 4.03, minus (c) any amounts
attributable to Principal Prepayments, Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds or REO Disposition Proceeds received after the applicable
Prepayment Period, which amounts shall be remitted on the following Remittance
Date, together with any additional interest required to be deposited in the
Custodial Account in connection with such Principal Prepayment in accordance
with Section 3.03(vi), and minus (d) any amounts attributable to Monthly
Payments collected but due on a Due Date or Due Dates subsequent to the first
day of the month in which such Remittance Date occurs, which amounts shall be
remitted on the Remittance Date next succeeding the Due Date related to such
Monthly Payment.
With respect to any remittance received by the Master Servicer after
the Business Day on which such payment was due, the Servicer shall pay to the
Master Servicer 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 (2) 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 Business Day and ending with the Business Day on which
such payment is made, both inclusive. Such interest shall be remitted along with
the distribution payable on the next succeeding Remittance Date. The payment by
the 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.
All remittances required to be made to the Master Servicer shall be
made to the following wire account or to such other account as may be specified
by the Master Servicer from time to time:
The Chase Manhattan Bank
New York, New York
ABA #: 021-000-021
Account Name: Aurora Loan Services Inc.
Master Servicing Payment Clearing Account
Account Number: 066-611059
Beneficiary: Aurora Loan Services Inc.
For further credit to: SASCO 1999-ALS3
Section 4.02 Statements to Master Servicer.
Not later than the fifth Business Day of each month, the Servicer shall
furnish to the Master Servicer (a) a monthly remittance advice containing such
information in the form of FNMA form 2010 or such other form as shall be
required by the FNMA Guides or by the Master Servicer as to the accompanying
remittance and the period ending on the last day of the preceding month and (b)
all such information required pursuant to clause (a) above on a magnetic tape or
other similar media reasonably acceptable to the Master Servicer.
Not later than the seventeenth day of each month, the Servicer shall
furnish to the Master Servicer (a) a monthly payoff remittance advice regarding
any Principal Prepayment in full received on or after the seventeenth day of the
month preceding the month of such reporting date, but on or before the sixteenth
day of the month of such reporting date, containing such information and in such
format as is mutually acceptable to the Master Servicer and the Servicer, and in
any event containing sufficient information to permit the Master Servicer to
properly report Principal Prepayment in full information to the Trustee under
the Trust Agreement and (b) all such information required pursuant to clause (a)
above on a magnetic tape or other similar media reasonably acceptable to the
Master Servicer.
In addition, not more than 60 days after the end of each calendar year,
commencing December 31, 1999, the Servicer shall furnish to each Person who was
an owner of the Mortgage Loans at any time during such calendar year as required
by applicable law or if not required by applicable law, at the request of such
owner as to the aggregate of remittances for the applicable portion of such
year.
Such obligation of the Servicer 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 Internal Revenue Code as from time
to time are in force.
Beginning with calendar year 2000, the Servicer shall prepare and file
any and all tax returns, information statements or other filings for the portion
of the tax year 1999 and the portion of subsequent tax years for which the
Servicer has serviced some or all of the Mortgage Loans hereunder as such
returns, information statements or other filings are required to be delivered to
any governmental taxing authority or to the Master Servicer pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Master Servicer
with such information concerning the Mortgage Loans as is necessary for the
Master Servicer to prepare the Trust Fund's federal income tax return as the
Master Servicer may reasonably request from time to time.
Section 4.03 Monthly Advances by Servicer.
The Servicer shall make Monthly Advances through the Remittance Date
immediately preceding the distribution of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the related Mortgage Loans.
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation.
As consideration for servicing the Mortgage Loans subject to this
Agreement, the Servicer shall retain (a) the relevant Servicing Fee for each
Mortgage Loan remaining subject to this Agreement during any month and (b)
Ancillary Income. In addition, if at any time the Servicer is the Retained
Interest Holder with respect to any Mortgage Loans, then the Servicer, as the
Retained Interest Holder, shall retain an amount equal to the Retained Interest
relating to such Mortgage Loans; provided, that (i) the Trustee shall have no
obligation to make payment of the Retained Interest to the Servicer and (ii) the
Servicer's right to retain the Retained Interest is limited to (and the Retained
Interest may only be retained from) the interest portion (including recoveries
with respect to interest from Liquidation Proceeds to the extent permitted by
Section 3.02 of this Agreement) of the Monthly Payments collected by the
Servicer with respect to those Mortgage Loans for which payment is in fact made
of the entire amount of the Monthly Payment. The Servicing Fee shall be payable
monthly. The Servicing Fees shall be payable only at the time of and with
respect to those Mortgage Loans for which payment is in fact made of the entire
amount of the Monthly Payment or as otherwise provided in Section 3.04. The
obligation of the Trustee to pay the Servicing Fees is limited as provided in
Section 3.04. The aggregate of the Servicing Fees payable to the Servicer for
any month with respect to the Mortgage Loans shall be reduced by any Prepayment
Interest Shortfall Amount with respect to such month.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 5.02 Annual Audit Report.
On or before April 30 of each year, beginning with April 30, 2000,
Servicer shall, at its own expense, cause a firm of independent public
accountants (who may also render other services to Servicer), which is a member
of the American Institute of Certified Public Accountants, to furnish to the
Seller and Master Servicer (i) year-end audited (if available) financial
statements of the Servicer and (ii) a statement to the effect that such firm has
examined certain documents and records for the preceding fiscal year (or during
the period from the date of commencement of such servicer's duties hereunder
until the end of such preceding fiscal year in the case of the first such
certificate) and that, on the basis of such examination conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage Bankers,
such firm is of the opinion that Servicer's overall servicing operations have
been conducted in compliance with the Uniform Single Attestation Program for
Mortgage Bankers except for such exceptions that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers requires it to
report, in which case such exceptions shall be set forth in such statement.
Section 5.03 Annual Officer's Certificate.
On or before April 30 of each year, beginning with April 30, 2000, the
Servicer, at its own expense, will deliver to the Seller and Master Servicer a
Servicing Officer's certificate stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during such preceding fiscal year and
of performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by the Servicer to remedy
such default.
ARTICLE VI.
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS
Section 6.01 Representations, Warranties and Agreements of the
Servicer.
The Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to the Seller as of the Closing Date:
(a) Due Organization and Authority. Due Organization and Authority. The
Servicer is a corporation duly organized, validly existing and in good standing
under the laws of the state of its formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in
good standing in each state where a Mortgaged Property is located if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Servicer, and in any event the Servicer is in
compliance with the laws of any such state to the extent necessary to ensure the
enforceability of the terms of this Agreement; the Servicer has the full power
and authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer and all requisite action has been taken
by the Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Servicer;
(c) No Conflicts. Neither the execution and delivery of this Agreement,
the acquisition of the servicing responsibilities by the Servicer or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Servicer's organizational
documents or 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 violation
of any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject, or impair the ability of the Servicer to service the
Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Perform. The Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Servicer which, either in any
one instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the Servicer
to carry on its business substantially as now conducted, or in any material
liability on the part of the Servicer, or which would draw into question the
validity of this Agreement or of any action taken or to be taken in connection
with the obligations of the Servicer contemplated herein, or which would be
likely to impair materially the ability of the Servicer to perform under the
terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer with
this Agreement;
(g) Ability to Service. The Servicer is an FHA Approved Mortgagee, a VA
Approved Lender and an approved seller/servicer of conventional residential
mortgage loans for FNMA, FHLMC or GNMA, with the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is in good standing to service
mortgage loans for the FHA and the VA and either FNMA, FHLMC or GNMA. The
Servicer is a member in good standing of the MERS system;
(h) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains any untrue
statement of fact or omits to state a fact necessary to make the statements
contained therein not misleading; and
(i) No Commissions to Third Parties. The Servicer has not dealt with
any broker or agent or anyone else who might be entitled to a fee or commission
in connection with this transaction other than the Seller.
(j) Computer Systems. The computer systems utilized by the Servicer in
the performance of its servicing activities hereunder will be capable of
properly performing any calculations and recordkeeping functions with respect to
the Mortgage Loans on and after January 1, 2000.
Section 6.02 Remedies for Breach of Representations and Warranties of
the Servicer.
It is understood and agreed that the representations and warranties set
forth in Section 6.01 shall survive the engagement of the Servicer to perform
the servicing responsibilities as of the Closing Date hereunder and the delivery
of the Servicing Files to the Servicer and shall inure to the benefit of the
Seller and the Trustee. Upon discovery by either the Servicer, the Master
Servicer or the Seller of a breach of any of the foregoing representations and
warranties which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property or the interest
of the Seller or the Trustee, the party discovering such breach shall give
prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in Section 6.01
which materially and adversely affects the ability of the Servicer to perform
its duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or the
priority of the security interest on such Mortgaged Property, the Servicer shall
use its Best Efforts promptly to cure such breach in all material respects and,
if such breach cannot be cured, the Servicer shall, at the Trustee's or the
Master Servicer's option, assign the Servicer's rights and obligations under
this Agreement (or respecting the affected Mortgage Loans) to a successor
Servicer. Such assignment shall be made in accordance with Sections 9.01 and
9.02.
In addition, the Servicer shall indemnify the Seller and the Master
Servicer and hold each of them harmless against any Costs resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Servicer representations and warranties contained in this
Agreement. It is understood and agreed that the remedies set forth in this
Section 6.02 constitute the sole remedies of the Master Servicer and the Trustee
respecting a breach of the foregoing representations and warranties.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 6.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Seller or Master Servicer to the Servicer, (ii) failure by the Servicer to
cure such breach within the applicable cure period, and (iii) demand upon the
Servicer by the Seller or the Master Servicer for compliance with this
Agreement.
Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify the Seller, the Master Servicer and the
Trust Fund and hold them harmless against any and all Costs that the indemnified
party may sustain in any way related to (i) the failure of the Servicer to
perform its duties and service the Mortgage Loans in material compliance with
the terms of this Agreement or (ii) the failure of the Servicer to cause any
event to occur which requires its "Best Efforts" under this Agreement. The
Servicer shall immediately notify the Seller, the Master Servicer, the Trustee,
or any other relevant party if a claim is made by a third party with respect to
this Agreement or the Mortgage Loans, assume (with the prior written consent of
the indemnified party) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or any
indemnified party in respect of such claim and follow any written instructions
received from such indemnified party in connection with such claim. Each
indemnified party, as applicable, promptly shall reimburse the Servicer for all
amounts advanced by it pursuant to the preceding sentence except when the claim
is in any way related to the Servicer's indemnification pursuant to Section
6.02, or the failure of the Servicer to service and administer the Mortgage
Loans in material compliance with the terms of this Agreement. In the event a
dispute arises between an indemnified party and the Servicer with respect to any
of the rights and obligations of the parties pursuant to this Agreement, and
such dispute is adjudicated in a court of law, by an arbitration panel or any
other judicial process, then the losing party shall indemnify and reimburse the
winning party for all attorney's fees and other costs and expenses related to
the adjudication of said dispute.
ARTICLE VII.
THE SERVICER
Section 7.01 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which the 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, 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 (i)
having a net worth of not less than $25,000,000, and (ii) which is a FNMA-,
FHLMC-, and GNMA-approved servicer in good standing and an FHA approved
Mortgagee and a VA Approved Lender.
Section 7.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Seller, the Master
Servicer or the Trustee for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment, provided, however, that this provision shall not protect the Servicer
or any such person against any breach of warranties or representations made
herein, or failure to perform its obligations in strict compliance with any
standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Servicer and any director, 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 shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Servicer may, with the
consent of the Master Servicer, undertake any such action which it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the Servicer shall be entitled to
reimbursement from the Trust Fund for the reasonable legal expenses and costs of
such action.
Section 7.03 Limitation on Resignation and Assignment by the Servicer.
The Seller has entered into this Agreement with the Servicer in
reliance upon the independent status of the Servicer, and the representations as
to the adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, the Servicer shall neither assign its rights
under this Agreement or the servicing hereunder nor delegate its duties
hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets without, in each case, the prior
written consent of the Seller and the Master Servicer, which consent, in the
case of an assignment of rights or delegation of duties, shall be granted or
withheld in the discretion of the Seller and the Master Servicer, and which
consent, in the case of a sale or disposition of all or substantially all of the
property or assets of the Servicer, shall not be unreasonably withheld;
provided, that in each case, there must be delivered to the Master Servicer and
the Trustee a letter from each Rating Agency to the effect that such transfer of
servicing or sale or disposition of assets will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Certificates.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Master Servicer
or upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Master Servicer and the
Trustee which Opinion of Counsel shall be in form and substance acceptable to
the Master Servicer and the Trustee. No such resignation shall become effective
until a successor shall have assumed the Servicer's responsibilities and
obligations hereunder in the manner provided in Section 9.01.
Without in any way limiting the generality of this Section 7.03, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Seller and the Master
Servicer, then the Seller or the Master Servicer shall have the right to
terminate this Agreement upon notice given as set forth in Section 8.01, without
any payment of any penalty or damages and without any liability whatsoever to
the Servicer or any third party.
ARTICLE VIII.
TERMINATION
Section 8.01 Termination for Cause.
This Agreement shall be terminable at the option of the Seller or the
Master Servicer if any of the following events of default exist on the part of
the Servicer:
(i) any failure by the Servicer to remit to the Master Servicer
any payment required to be made under the terms of this Agreement which
continues unremedied for a period of two Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Master Servicer; or
(ii) failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement which continues unremedied for a period of
30 days; or
(iii) failure by the Servicer to maintain its license to do
business or service residential mortgage loans in any jurisdiction, if required
by such jurisdiction, where the Mortgaged Properties are located; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for three Business Days; or
(vii) the Servicer ceases to meet the qualifications of a FNMA,
FHLMC or GNMA lender/servicer or ceases to be an FHA Approved Mortgagee or
ceases to be a VA Approved Lender; or
(viii) the Servicer attempts, without the consent of the Trustee
and the Master Servicer, to assign the servicing of the Mortgage Loans or its
right to servicing compensation hereunder or the Servicer attempts, without the
consent of the Trustee and the Master Servicer, 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, in each case without complying fully with the provisions
of Section 7.03.
In each and every such case, so long as an event of default shall not
have been remedied, in addition to whatever rights the Seller or the Master
Servicer may have at law or equity to damages, including injunctive relief and
specific performance, the Seller or the Master Servicer, by notice in writing to
the Servicer, may terminate all the rights and obligations of the Servicer under
this Agreement and in and to the servicing contract established hereby and the
proceeds thereof.
Upon 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 a successor Servicer
appointed by the Seller and the Master Servicer. Upon written request from the
Seller, the Servicer shall prepare, execute and deliver to the successor entity
designated by the Seller any and all documents and other instruments, place in
such successor's possession all Servicing Files, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including but not limited to the transfer and endorsement
or assignment of the Mortgage Loans and related documents, at the Servicer's
sole expense. The Servicer shall cooperate with the Seller and the Master
Servicer 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.
By a written notice, the Seller and the Master Servicer may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
Section 8.02 Termination Without Cause.
This Agreement shall terminate upon: (i) the later of (a) the
distribution of the final payment or liquidation proceeds on the last Mortgage
Loan to the Master Servicer (or advances by the Servicer for the same), and (b)
the disposition of all REO Property acquired upon foreclosure of the last
Mortgage Loan and the remittance of all funds due hereunder, (ii) mutual consent
of the Servicer, Seller and the Master Servicer in writing or (iii) at the sole
discretion of the Seller (acting in its capacity as owner of the servicing
rights relating to the Mortgage Loans). Any such termination pursuant to clause
(iii) above shall be with 30 days' prior notice, in writing and delivered to the
Trustee, the Master Servicer and the Servicer by registered mail to the
addresses set forth in Section 9.03 of this Agreement (in the case of the
Servicer) or in the Trust Agreement (in the case of the Trustee or the Master
Servicer). The Servicer shall comply with the termination procedures set forth
in Sections 7.03, 8.01 and 9.01 hereof. The Master Servicer or the Trustee shall
have no right to terminate the Servicer pursuant to this Section 8.02.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement (a) pursuant to Sections 6.02, 7.03, 8.01 or
8.02(ii), the Master Servicer shall (i) succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth in
clauses (i) and (ii) of Section 7.01 and which shall succeed to all rights and
assume all of the responsibilities, duties and liabilities of the Servicer under
this Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement; or (b) pursuant
to Section 8.02(iii), the Seller shall appoint a successor having the
characteristics set forth in clauses (i) and (ii) of Section 7.01 and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement simultaneously with the
termination of the Servicer's responsibilities, duties and liabilities under
this Agreement. Any successor to the Servicer shall be subject to the approval
of the Master Servicer and, to the extent required by the Trust Agreement, the
Trustee, shall be a member in good standing of the MERS system (if any of the
Mortgage Loans are MERS Eligible Mortgage Loans, unless such Mortgage Loans are
withdrawn from MERS and Assignments of Mortgage are recorded in favor of the
Trustee at the expense of the successor Servicer) and shall be an FHA Approved
Mortgagee and a VA Approved Lender. Any approval of a successor servicer by the
Master Servicer and, to the extent required by the Trust Agreement, the Trustee,
shall be conditioned upon the receipt by the Master Servicer and the Trustee of
a letter from each Rating Agency to the effect that such transfer of servicing
will not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates. In addition, with respect to any FHA Loans
serviced hereunder, the Servicer shall provide notice of such change in
servicers to HUD on HUD form 92080 or such other form as prescribed by HUD,
within 10 days after such transfer of servicing. In connection with such
appointment and assumption, the Master Servicer or the Seller, as applicable,
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 under this Agreement. In the event that the Servicer's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Servicer shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 9.01 and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Sections 6.01 and the remedies available to the Master Servicer
and the Seller under Section 6.02 and 6.03, it being understood and agreed that
the provisions of such Sections 6.01, 6.02 and 6.03 shall be applicable to the
Servicer notwithstanding any such resignation or termination of the Servicer, or
the termination of this Agreement.
Within a reasonable period of time, but in no event longer than 30 days
of the appointment of a successor entity, the Servicer shall prepare, execute
and deliver to the successor entity any and all documents and other instruments,
place in such successor's possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer and
endorsement of the Mortgage Notes and related documents, and the preparation and
recordation of Assignments of Mortgage. The Servicer shall cooperate with the
Trustee, the Master Servicer or the Seller, as applicable, and such successor in
effecting the termination of the Servicer's responsibilities and rights
hereunder and the transfer of servicing responsibilities to the successor
Servicer, 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.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Trustee, the Servicer, the Master Servicer and the Seller an
instrument (i) accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 6.01 (including a
representation that the successor Servicer is a member of MERS, unless none of
the Mortgage Loans are MERS Mortgage Loans or MERS Eligible Mortgage Loans or
any such Mortgage Loans have been withdrawn from MERS and Assignments of
Mortgage are recorded in favor of the Trustee) and (ii) an assumption of the due
and punctual performance and observance of each covenant and condition to be
performed and observed by the Servicer under this Agreement, whereupon such
successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Servicer or termination of this Agreement pursuant to
Sections 6.02, 7.03, 8.01 or 8.02 shall not affect any claims that the Master
Servicer or the Trustee may have against the Servicer arising out of the
Servicer's actions or failure to act prior to any such termination or
resignation. In addition, in the event any successor Servicer is appointed
pursuant to Section 8.02(iii) of this Agreement, such successor Servicer must
satisfy the conditions relating to the transfer of servicing set forth in the
Trust Agreement.
The Servicer shall deliver promptly to the successor Servicer the funds
in the Custodial Account and Escrow Account and all Mortgage Loan documents and
related documents and statements held by it hereunder and the Servicer shall
account for all funds and shall execute and deliver such instruments and do such
other things as may reasonably be required to more fully and definitively vest
in the successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify the Trustee, the Seller and Master Servicer of such appointment in
accordance with the procedures set forth in Section 9.03.
Neither the Master Servicer nor any successor Servicer (including the
Seller and the Master Servicer) shall be liable for any acts or omissions of the
Servicer or any predecessor servicer. In particular, neither the Master Servicer
nor any successor Servicer (including the Seller and the Master Servicer) shall
be liable for any servicing errors or interruptions resulting from any failure
of the Servicer to maintain computer and other information systems that are
year-2000 compliant.
Section 9.02 Costs.
The Seller shall pay any legal fees and expenses of its attorneys.
Costs and expenses incurred in connection with the transfer of the servicing
responsibilities, including fees for delivering Servicing Files, shall be paid
by the Seller. Subject to Sections 2.02 and 3.01(a), the Depositor shall pay the
costs associated with the preparation, delivery and recording of Assignments of
Mortgages.
Section 9.03 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if sent by facsimile or mailed by
overnight courier, addressed as follows (or such other address as may hereafter
be furnished to the other party by like notice):
(i) if to the Seller:
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Attention: Manager, Contract Finance
Telephone No.: (212) 526-5837
Telecopier No.: (212) 526-6154
(ii) if to the Servicer:
Aurora Loan Services Inc.
2530 South Parker Road
Suite 601
Aurora, Colorado 80014
Attention: Rick Skogg
Telephone No.: (303) 632-3000
Telecopier No.: (303) 632-3001
and
Aurora Loan Services Inc.
601 Fifth Avenue
P.O. Box 1706
Scottsbluff, Nebraska 69361
Attention: Manager, Loan Administration
Telephone No.: (308) 635-3500
Telecopier No.: (308) 632-4287
(iii) if to the Master Servicer:
Aurora Loan Services Inc.
2530 South Parker Road
Suite 601
Aurora, Colorado 80014
Attention: E. Todd Whittemore
Telephone No.: (303) 632-3422
Telecopier No.: (303) 632-3123
Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee.
Section 9.04 Severability Clause.
Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is as close as possible to the economic effect of this Agreement
without regard to such invalidity.
Section 9.05 No Personal Solicitation.
From and after the Closing Date, the Servicer hereby agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Servicer's
behalf, to personally, by telephone or mail, solicit the borrower or obligor
under any Mortgage Loan (on a targeted basis) for any purposes of prepayment,
refinancing or modification of the related Mortgage Loan, provided, however,
that this limitation shall not prohibit Servicer from soliciting such Mortgagor
for purposes of prepayment, refinance or modification of any loan owned or
serviced by Servicer other than a Mortgage Loan. It is understood and agreed
that, among other marketing activities, promotions undertaken by Servicer which
are directed of the general public at large or which are directed generally to a
segment of the then existing customers of Servicer or any of its direct or
indirect subsidiaries (including, without limitation, the mailing of promotional
materials to Servicer's deposit customers by inserting such materials into
customer account statements, mass mailings based on commercially acquired
mailing lists and newspaper, radio and television advertisements) shall not
constitute solicitation under this section. In the event the Servicer does
refinance any Mortgage Loan as a result of a violation of the requirements set
forth in this Section 9.05, Servicer hereby agrees to pay to the Trust Fund an
amount equal to the difference, if any, between the amount that the Trust Fund
would have received if it had sold the Mortgage Loan to a third party, and the
proceeds received by the Trust Fund as result of such refinancing.
Section 9.06 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 9.07 Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Seller in the State of New York and shall
be deemed to have been made in the State of New York. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING
NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
Section 9.08 Further Agreements.
The Seller and the Servicer each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section 9.09 Intention of the Parties.
It is the intention of the parties that the Seller is conveying, and
the Servicer is receiving only a contract for servicing the Mortgage Loans.
Accordingly, the parties hereby acknowledge that the Trust Fund remains the sole
and absolute owner of the Mortgage Loans and all rights (other than the
servicing rights) related thereto.
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer, the Seller, the Trustee and the Master Servicer and
their respective successors and assigns. This Agreement shall not be assigned,
pledged or hypothecated by the Servicer to a third party except in accordance
with Section 7.03.
Section 9.11 Assignment by Lehman Capital.
The Seller shall have the right, upon notice to but without the consent
of the Servicer, to assign, in whole or in part, its interest under this
Agreement to the Depositor, which in turn shall assign such rights to the
Trustee, and the Trustee then shall succeed to all rights of the Seller under
this Agreement. All references to the Seller in this Agreement shall be deemed
to include its assignee or designee and any subsequent assignee or designee,
specifically including the Trustee.
Section 9.12 [Reserved.]
Section 9.13 Waivers.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
Section 9.14 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 9.15 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 9.16 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
<PAGE>
IN WITNESS WHEREOF, the Servicer, the Seller and the Master Servicer
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.,
as Seller
By: /s/ Joseph J. Kelly
-----------------------
Name: Joseph J. Kelly
Title: Vice President
AURORA LOAN SERVICES INC.,
as Servicer
By: /s/ Rick W. Skogg
-----------------------
Name: Rick W. Skogg
Title: President
AURORA LOAN SERVICES INC.,
as Master Servicer
By: /s/ Rick W. Skogg
-----------------------
Name: Rick W. Skogg
Title: President
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 199_
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of August 1, 1999
(the "Agreement"), we hereby authorize and request you to establish an account,
as a Custodial Account pursuant to Section 3.03 of the Agreement, to be
designated as "Aurora Loan Services Inc., in trust for the Master Servicer for
SASCO 1999-ALS3." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. This letter is submitted to you in
duplicate. Please execute and return one original to us.
AURORA LOAN SERVICES INC.
By:_____________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
_____________________________
Depository
By:__________________________
Name:
Title:
Date:
<PAGE>
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
_______ __, 199_
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of August 1, 1999
(the "Agreement"), we hereby authorize and request you to establish an account,
as an Escrow Account pursuant to Section 3.05 of the Agreement, to be designated
as "Aurora Loan Services Inc., in trust for the Master Servicer for SASCO
1999-ALS3." All deposits in the account shall be subject to withdrawal therefrom
by order signed by the Servicer. This letter is submitted to you in duplicate.
Please execute and return one original to us.
AURORA LOAN SERVICES INC.
By:_____________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
___________________________
Depository
By:_________________________
Title:
Date:
