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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : March 15, 2000
CHEC FUNDING, LLC
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(Exact name of Registrant as Specified in Charter)
Delaware 333-93255 75-2851805
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(State or Other (Commission (IRS Employer
(Jurisdiction of Incorporation) File Number) Identification No.)
2728 North Harwood Street, Dallas, Texas 75201
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (214) 981-5000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. OTHER EVENTS.
CHEC Funding, LLC, as depositor (the "Depositor") registered issuances of
Asset-Backed Certificates and Asset-Backed Notes 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.
333-93255) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, the Depositor caused Centex Home Equity Loan Trust
2000-A to issue $310,000,000 principal amount of Home Equity Loan Asset-Backed
Certificates, Series 2000-A (the "Certificates"), on March 15, 2000 (the
"Closing Date").
The Certificates were issued pursuant to a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of March 1, 2000 (the
"Cut-Off Date"), among the Depositor, Centex Credit Corporation d/b/a Centex
Home Equity Corporation, as a seller and servicer, CHEC Conduit Funding, LLC
as a seller and Bank One, National Association, as trustee.
Capitalized terms not defined herein have the meanings assigned in the Pooling
and Servicing Agreement attached hereto as Exhibit 4.1.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Exhibit No.
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4.1 Pooling and Servicing Agreement
99.1 Certificate Insurance Policy
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CHEC FUNDING, LLC
By: /s/ Jeffrey B. Upperman
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Name: Jeffrey B. Upperman
Title: Vice President
Date: March 23, 2000
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EXHIBIT INDEX
Exhibit Number Description
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4.1 Pooling and Servicing Agreement
99.1 Certificate Insurance Policy
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POOLING AND SERVICING AGREEMENT
Relating to
CENTEX HOME EQUITY LOAN TRUST 2000-A
Among
CHEC FUNDING, LLC,
as Depositor,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Seller,
CHEC CONDUIT FUNDING, LLC,
as Conduit Seller,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Servicer,
and
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
Dated as of March 1, 2000
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION
<S> <C> <C>
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.02. Use of Words and Phrases. . . . . . . . . . . . . . . . . 28
Section 1.03. Captions; Table of Contents . . . . . . . . . . . . . . . 29
Section 1.04. Opinions. . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. Establishment of the Trust. . . . . . . . . . . . . . . . 30
Section 2.02. Office. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.03. Purposes and Powers . . . . . . . . . . . . . . . . . . . 30
Section 2.04. Appointment of the Trustee; Declaration of Trust. . . . . 30
Section 2.05. Expenses of the Trust . . . . . . . . . . . . . . . . . . 30
Section 2.06. Ownership of the Trust. . . . . . . . . . . . . . . . . . 31
Section 2.07. Situs of the Trust. . . . . . . . . . . . . . . . . . . . 31
Section 2.08. Designation of Interests in REMICS. . . . . . . . . . . . 31
Section 2.09. Miscellaneous REMIC Provisions. . . . . . . . . . . . . . 34
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE
SERVICER AND THE SELLER; COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01. Representations and Warranties of the Depositor . . . . . 36
Section 3.02. Representations and Warranties of the Servicer. . . . . . 38
Section 3.03. Representations and Warranties of the Sellers . . . . . . 40
Section 3.04. Covenants of Sellers to Take Certain Actions with
Respect to the Home Equity Loans in Certain Situations. . 43
Section 3.05. Sale Treatment of the Home Equity Loans and
Qualified Replacement Mortgages . . . . . . . . . . . . . 53
Section 3.06. Acceptance by Trustee; Certain Substitutions of
Home Equity Loans; Certification by Trustee . . . . . . . 57
Section 3.07. Reserved. . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.08. Custodian . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.09. Cooperation Procedures. . . . . . . . . . . . . . . . . . 59
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. Issuance of Certificates. . . . . . . . . . . . . . . . . 60
Section 4.02. Sale of Certificates. . . . . . . . . . . . . . . . . . . 60
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ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.02. Forms . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.03. Execution, Authentication and Delivery. . . . . . . . . . 61
Section 5.04. Registration and Transfer of Certificates . . . . . . . . 62
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates . . . . 64
Section 5.06. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 65
Section 5.07. Cancellation. . . . . . . . . . . . . . . . . . . . . . . 65
Section 5.08. Limitation on Transfer of Ownership Rights. . . . . . . . 65
Section 5.09. Assignment of Rights. . . . . . . . . . . . . . . . . . . 67
ARTICLE VI COVENANTS
Section 6.01. Distributions . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.02. Money for Distributions to be Held in Trust;
Withholding . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.03. Protection of Trust Estate. . . . . . . . . . . . . . . . 69
Section 6.04. Performance of Obligations. . . . . . . . . . . . . . . . 70
Section 6.05. Negative Covenants. . . . . . . . . . . . . . . . . . . . 70
Section 6.06. No Other Powers . . . . . . . . . . . . . . . . . . . . . 71
Section 6.07. Limitation of Suits . . . . . . . . . . . . . . . . . . . 71
Section 6.08. Unconditional Rights of Owners to Receive
Distributions . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.09. Rights and Remedies Cumulative. . . . . . . . . . . . . . 72
Section 6.10. Delay or Omission Not Waiver. . . . . . . . . . . . . . . 72
Section 6.11. Control by Owners . . . . . . . . . . . . . . . . . . . . 72
Section 6.12. Indemnification by CHEC . . . . . . . . . . . . . . . . . 73
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. Collection of Money . . . . . . . . . . . . . . . . . . . 74
Section 7.02. Establishment of Accounts . . . . . . . . . . . . . . . . 74
Section 7.03. Flow of Funds . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.04. Supplemental Interest Reserve Fund. . . . . . . . . . . . 78
Section 7.05. Investment of Accounts. . . . . . . . . . . . . . . . . . 79
Section 7.06. Payment of Trust Expenses . . . . . . . . . . . . . . . . 79
Section 7.07. Eligible Investments. . . . . . . . . . . . . . . . . . . 79
Section 7.08. Accounting and Directions by Trustee. . . . . . . . . . . 81
Section 7.09. Reports by Trustee to Owners and Certificate
Insurer . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.10. Reports by Trustee. . . . . . . . . . . . . . . . . . . . 85
ARTICLE VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. Servicer and Sub-Servicers. . . . . . . . . . . . . . . . 87
Section 8.02. Collection of Certain Home Equity Loan Payments.. . . . . 88
Section 8.03. Sub-Servicing Agreements Between Servicer and
Sub-Servicers . . . . . . . . . . . . . . . . . . . . . . 88
Section 8.04. Successor Sub-Servicers . . . . . . . . . . . . . . . . . 89
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Section 8.05. Liability of Servicer; Indemnification. . . . . . . . . . 89
Section 8.06. No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners . . . . . . . . . . . . . . . . . . 90
Section 8.07. Assumption or Termination of Sub-Servicing
Agreement by Trustee. . . . . . . . . . . . . . . . . . . 90
Section 8.08. Principal and Interest Account. . . . . . . . . . . . . . 90
Section 8.09. Delinquency Advances and Servicing Advances . . . . . . . 92
Section 8.10. Compensating Interest; Repurchase of Home Equity
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 8.11. Maintenance of Insurance. . . . . . . . . . . . . . . . . 94
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution
Agreements. . . . . . . . . . . . . . . . . . . . . . . . 95
Section 8.13. Realization Upon Defaulted Home Equity Loans;
Workout of Home Equity Loans. . . . . . . . . . . . . . . 96
Section 8.14. Trustee to Cooperate; Release of Files. . . . . . . . . . 98
Section 8.15. Servicing Compensation. . . . . . . . . . . . . . . . . . 99
Section 8.16. Annual Statement as to Compliance . . . . . . . . . . . . 99
Section 8.17. Annual Independent Certified Public Accountants'
Reports . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 8.18. Access to Certain Documentation and Information
Regarding the Home Equity Loans . . . . . . . . . . . . .100
Section 8.19. Assignment of Agreement . . . . . . . . . . . . . . . . .100
Section 8.20. Removal of Servicer; Retention of Servicer;
Resignation of Servicer . . . . . . . . . . . . . . . . .100
Section 8.21. Inspections by Certificate Insurer; Errors and
Omissions Insurance . . . . . . . . . . . . . . . . . . .106
Section 8.22. Additional Servicing Responsibilities for Second
Mortgage Loans. . . . . . . . . . . . . . . . . . . . . .106
Section 8.23. The Group II Home Equity Loans. . . . . . . . . . . . . .106
Section 8.24. Merger, Conversion, Consolidation or Succession to
Business of Servicer. . . . . . . . . . . . . . . . . . .107
Section 8.25. Notices of Material Events. . . . . . . . . . . . . . . .107
Section 8.26. Indemnification by the Servicer . . . . . . . . . . . . .108
Section 8.27. Reports on Foreclosure and Abandonment of
Properties. . . . . . . . . . . . . . . . . . . . . . . .108
ARTICLE IX TERMINATION OF TRUST
Section 9.01. Termination of Trust. . . . . . . . . . . . . . . . . . .109
Section 9.02. Termination Upon Option of the Servicer . . . . . . . . .109
Section 9.03. Termination Upon Loss of REMIC Status . . . . . . . . . .110
Section 9.04. Disposition of Proceeds . . . . . . . . . . . . . . . . .112
Section 9.05. Netting of Amounts. . . . . . . . . . . . . . . . . . . .112
ARTICLE X THE TRUSTEE
Section 10.01. Certain Duties and Responsibilities . . . . . . . . . . .113
Section 10.02. Removal of Trustee for Cause. . . . . . . . . . . . . . .115
Section 10.03. Certain Rights of the Trustee . . . . . . . . . . . . . .117
Section 10.04. Not Responsible for Recitals or Issuance of
Certificates. . . . . . . . . . . . . . . . . . . . . . .118
Section 10.05. May Hold Certificates . . . . . . . . . . . . . . . . . .119
Section 10.06. Money Held in Trust . . . . . . . . . . . . . . . . . . .119
Section 10.07. Compensation and Reimbursement. . . . . . . . . . . . . .119
Section 10.08. Corporate Trustee Required; Eligibility . . . . . . . . .120
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Section 10.09. Resignation and Removal; Appointment of Successor . . . .120
Section 10.10. Acceptance of Appointment by Successor Trustee. . . . . .121
Section 10.11. Merger, Conversion, Consolidation or Succession to
Business of the Trustee . . . . . . . . . . . . . . . . .122
Section 10.12. Reporting; Withholding. . . . . . . . . . . . . . . . . .122
Section 10.13. Liability of the Trustee. . . . . . . . . . . . . . . . .123
Section 10.14. Appointment of Co-Trustee or Separate Trustee . . . . . .123
Section 10.15. Appointment of Custodians . . . . . . . . . . . . . . . .125
ARTICLE XI MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions. . . . . . . . . . .126
Section 11.02. Form of Documents Delivered to the Trustee. . . . . . . .126
Section 11.03. Acts of Owners. . . . . . . . . . . . . . . . . . . . . .127
Section 11.04. Notices, etc. to Trustee . . . . . . . . . . . . . . . .128
Section 11.05. Notices and Reports to Owners; Waiver of Notices. . . . .128
Section 11.06. Rules by Trustee. . . . . . . . . . . . . . . . . . . . .128
Section 11.07. Successors and Assigns. . . . . . . . . . . . . . . . . .129
Section 11.08. Severability. . . . . . . . . . . . . . . . . . . . . . .129
Section 11.09. Benefits of Agreement . . . . . . . . . . . . . . . . . .129
Section 11.10. Legal Holidays. . . . . . . . . . . . . . . . . . . . . .129
Section 11.11. Governing Law; Submission to Jurisdiction . . . . . . . .129
Section 11.12. Counterparts. . . . . . . . . . . . . . . . . . . . . . .130
Section 11.13. Usury . . . . . . . . . . . . . . . . . . . . . . . . . .130
Section 11.14. Amendment . . . . . . . . . . . . . . . . . . . . . . . .131
Section 11.15. Paying Agent; Appointment and Acceptance of Duties. . . .131
Section 11.16. REMIC Status. . . . . . . . . . . . . . . . . . . . . . .132
Section 11.17. Additional Limitation on Action and Imposition of
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . .134
Section 11.18. Appointment of Tax Matters Person . . . . . . . . . . . .135
Section 11.19. The Certificate Insurer . . . . . . . . . . . . . . . . .135
Section 11.20. Reserved. . . . . . . . . . . . . . . . . . . . . . . . .135
Section 11.21. Third Party Rights. . . . . . . . . . . . . . . . . . . .135
Section 11.22. Notices . . . . . . . . . . . . . . . . . . . . . . . . .135
Section 11.23. Rule 144A Information . . . . . . . . . . . . . . . . . .138
ARTICLE XII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. Trust Estate and Accounts Held for Benefit of the
Certificate Insurer . . . . . . . . . . . . . . . . . . .139
Section 12.02. Claims Upon the Policy; Policy Payments Account . . . . .139
Section 12.03. Effect of Payments by the Certificate Insurer;
Subrogation . . . . . . . . . . . . . . . . . . . . . . .140
Section 12.04. Notices to the Certificate Insurer. . . . . . . . . . . .141
Section 12.05. Third-Party Beneficiary . . . . . . . . . . . . . . . . .141
Section 12.06. Rights to the Certificate Insurer To Exercise
Rights of Owners. . . . . . . . . . . . . . . . . . . . .141
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SCHEDULE I-A SCHEDULE OF THE GROUP I HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF THE GROUP II HOME EQUITY LOANS
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SCHEDULE I-C SELLER SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-D CONDUIT SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-E INVESTMENT INSTRUCTIONS TO TRUSTEE
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATES
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATES
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATES
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATES
EXHIBIT B FORM OF CLASS X-IO CERTIFICATE
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF CERTIFICATE RE: HOME EQUITY LOANS PREPAID IN FULL AFTER
CUT-OFF DATE
EXHIBIT E-1 FORM OF TRUSTEE'S RECEIPT
EXHIBIT E-2 FORM OF CUSTODIAN'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT I-1 FORM OF CERTIFICATE REGARDING TRANSFER (ACCREDITED INVESTOR)
EXHIBIT I-2 FORM OF CERTIFICATE OF TRANSFER (RULE 144A)
EXHIBIT J HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT K DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT L DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT M FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
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POOLING AND SERVICING AGREEMENT, relating to CENTEX HOME EQUITY LOAN
TRUST 2000-A, dated as of March 1, 2000 by and among CHEC FUNDING, LLC, a
Delaware limited liability company, in its capacity as the depositor (the
"Depositor"), CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
a Nevada corporation ("CHEC") in its capacities as the seller (in such
capacity, the "Seller") and as the servicer (in such capacity, the
"Servicer"), CHEC CONDUIT FUNDING, LLC, a Delaware limited liability company
(the "Conduit Seller"; together with the Seller, the "Sellers") and BANK ONE,
NATIONAL ASSOCIATION, a national banking association, in its capacity as the
trustee (the "Trustee").
WHEREAS, the Seller wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution of the trust estate;
WHEREAS, the Seller and the Conduit Seller wish to sell to the Depositor,
the Depositor wishes to purchase from the Seller and the Conduit Seller and to
sell to the Trustee, and the Trustee wishes to purchase, the Home Equity Loans;
WHEREAS, the Servicer has agreed to service the Home Equity Loans, which
constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed and
authenticated by the Trustee, valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, Bank One, National Association is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, Financial Security Assurance Inc. (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Sellers, the Servicer, and the
Trustee hereby agree as follows:
CONVEYANCE
The Seller with respect to the Seller Home Equity Loans, and the Conduit
Seller with respect to the Conduit Home Equity Loans, each hereby bargains,
sells, conveys, assigns and transfers to the Depositor, in trust, without
recourse and for the exclusive benefit of the Owners of the Certificates and
the Certificate Insurer, all of its right, title and interest in and to (a)
any and all benefits accruing from the Home Equity Loans which the Depositor
is causing to be delivered to the Custodian on behalf of the Trustee herewith,
together with the related Home Equity Loan documents and the Depositor's
interest in any Property, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; and (b) proceeds of
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all the foregoing (including, but not by way of limitation, all proceeds of
any mortgage insurance, flood insurance, hazard insurance and title insurance
policy relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified herein (the "Home Equity Loan Assets").
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
without recourse, all the right, title and interest of the Depositor in and to
the Trust Estate.
In addition to the foregoing, the Depositor shall cause the Certificate
Insurer to deliver a Certificate Insurance Policy to the Trustee for the
benefit of the Owners of the Class A Certificates.
The Trustee acknowledges such sale, accepts the trusts hereunder in
accordance with the provisions hereof and the Trustee agrees to perform the
duties herein in accordance with the provisions of the Operative Documents.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"ACCOUNT": Any account established in accordance with Section 7.02 or
8.08 hereof.
"ADJUSTED CERTIFICATE RATE": As of any date of determination thereof, a
rate equal to the sum of (a) the Weighted Average Certificate Rate and (b) any
portion of the Premium Amount (calculated as a percentage of the outstanding
principal amount of Certificates) and the Trustee Fee (calculated as a
percentage of the outstanding Loan Balances as of the first day of the related
Remittance Period) in each case then accrued and outstanding.
"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.
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"AGREEMENT": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"ANNUAL LOSS PERCENTAGE (ROLLING TWELVE MONTH)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the
calendar month of each Remittance Period for the twelve immediately preceding
Remittance Periods and the denominator of which is the aggregate of the Loan
Balances as of the first day of the first such Remittance Period.
"APPRAISED VALUE": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity Loan which is a purchase money mortgage or
with respect to which the Property was sold within 12 months preceding the
time of origination, the sales price of the Property, if such sales price is
less than such appraised value.
"AUTHORIZED OFFICER": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the
Closing; with respect to the Trustee, any officer assigned to the Corporate
Trust Office (or any successor thereto), including any Vice President,
Assistant Vice President, Trust Officer, any Assistant Secretary, any trust
officer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for the administration of this Agreement or any other
officers of the Trustee to whom a matter arising under this Agreement may be
referred.
"AVAILABLE FUNDS": As to each Home Equity Loan Group and Distribution
Date, is the amount on deposit in the Certificate Account with respect to the
related Home Equity Loan Group on the Distribution Date, disregarding the
amounts of any Insured Payments to be made on the Distribution Date.
"AVAILABLE FUNDS SHORTFALL": As to each Home Equity Loan Group and
Distribution Date, an amount equal to the excess, if any, of (x) the aggregate
of the amounts required to be distributed pursuant to clauses (ii) and (iii)
of Section 7.03(b) over (y) the Available Funds for such payments for such
Home Equity Loan Group and Distribution Date.
"BUSINESS DAY": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in New York, New York, Dallas, Texas, the city
in which the Corporate Trust Office is located or, with respect to the
obligations of the Custodian hereunder, the State of California, are
authorized or obligated by law or executive order to be closed.
"CARRY-FORWARD AMOUNT": With respect to any Class of Class A
Certificates and any Distribution Date, an amount equal to the sum of (1) the
amount, if any, by which (x) the Current Interest for such Class for the
immediately preceding Distribution Date exceeded (y) the amount of the actual
distribution made to Owners of such Class with respect to interest on such
Class on
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the immediately preceding Distribution Date and (2) interest on such excess
for the related Interest Period at the related Certificate Rate for the Class
of Class A Certificates.
"CERTIFICATE": Any one of the Class A Certificates, the Class X-IO
Certificates or the Class R Certificates, each representing the interests and
the rights described in this Agreement.
"CERTIFICATE ACCOUNT": The segregated certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "Bank One, National Association, as Trustee on behalf of the
Owners of the Centex Home Equity Loan Trust 2000-A, Centex Home Equity Loan
Asset-Backed Certificates." The Certificate Account shall be an Eligible
Account.
"CERTIFICATE INSURANCE POLICY": The Financial Guaranty Insurance Policy
(number: 50922-N) dated March 15, 2000 with respect to the Class A
Certificates and all endorsements thereto, issued by the Certificate Insurer
for the benefit of the Owners of the Class A Certificates.
"CERTIFICATE INSURER": Financial Security Assurance Inc., a stock
insurance company organized under the laws of the State of New York and any
successor thereto.
"CERTIFICATE INSURER DEFAULT": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under
the Certificate Insurance Policy in accordance with its terms; or
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization that is final and
nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession
by a custodian, trustee, agent, or receiver of the Certificate Insurer of all
or any material portion of its property.
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"CERTIFICATE PRINCIPAL BALANCE": As of the Startup Day as to each of the
following Classes of Class A Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-l Certificates - $ 61,000,000
Class A-2 Certificates - $ 19,000,000
Class A-3 Certificates - $ 33,000,000
Class A-4 Certificates - $ 27,000,000
Class A-5 Certificates - $ 17,500,000
Class A-6 Certificates - $ 17,500,000
Class A-7 Certificates - $ 135,000,000
As of any time of determination after the Startup Day, with respect to a
Class of Class A Certificates, the Certificate Principal Balance as of the
Startup Day less the aggregate of all amounts actually distributed to such
Class in reduction of such Class Certificate Principal Balance pursuant to
Section 7.03 hereof on all prior Distribution Dates; PROVIDED, HOWEVER, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Certificate Principal Balance of a Class shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
The Class X-IO Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"CERTIFICATE RATE": Any of the Class A-1 Certificate Rate, the Class A-2
Certificate Rate, the Class A-3 Certificate Rate, the Class A-4 Certificate
Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate Rate or the
Class A-7 Certificate Rate.
"CHEC": Centex Credit Corporation d/b/a Centex Home Equity Corporation.
"CIVIL RELIEF ACT INTEREST SHORTFALLS": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in
the amount of interest collectible thereon for the most recently ended
Remittance Period as a result of the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended, the amount, if any, by which (i) interest collectible on
such Home Equity Loans during the most recently ended Remittance Period is
less than (ii) interest accrued thereon for such Remittance Period pursuant to
the Note at the related Coupon Rate.
"CLASS": Any Class of the Class A Certificates or the Class X-IO
Certificates or the Class R Certificates.
"CLASS A CERTIFICATE": Any one of the Group I Certificates or Group II
Certificates.
"CLASS A-1 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-l Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes
of the REMIC Provisions.
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"CLASS A-2 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes
of the REMIC Provisions.
"CLASS A-3 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes
of the REMIC Provisions.
"CLASS A-4 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes
of the REMIC Provisions.
"CLASS A-5 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes
of the REMIC Provisions.
"CLASS A-6 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes
of the REMIC Provisions.
"CLASS A-7 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes
of the REMIC Provisions.
"CLASS A-1 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-1 Certificates, 7.51% per annum.
"CLASS A-2 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-2 Certificates, 7.60% per annum.
"CLASS A-3 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-3 Certificates, 7.65% per annum.
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"CLASS A-4 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-4 Certificates, 8.00% per annum.
"CLASS A-5 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-5 Certificates, the lesser of (A) 8.25% per annum (or 8.75% per
annum for each Interest Period occurring after the Clean-Up Call Date) and (B)
the Group I Net WAC Cap for the Distribution Date.
"CLASS A-6 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-6 Certificates, the lesser of (A) 7.88% per annum and (B) the
Group I Net WAC Cap for the Distribution Date.
"CLASS A-7 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-7 Certificates, the lesser of (A) the Class A-7 Formula Rate and
(B) the Class A-7 Available Funds Cap for the Distribution Date.
"CLASS A-6 CALCULATION PERCENTAGE:" For any Distribution Date will be
the fraction, expressed as a percentage, the numerator of which is the
Certificate Principal Balance of the Class A-6 Certificates, and the
denominator of which is the total of the Certificate Principal Balances of the
Group I Certificates, in each case before giving effect to any distributions
in reduction of the Certificate Principal Balances of the Group I Certificates
pursuant to Section 7.03 hereof.
"CLASS A-6 LOCKOUT DISTRIBUTION AMOUNT": For any Distribution Date will
be an amount equal to the product of (1) the applicable Class A-6 Lockout
Percentage for the Distribution Date, (2) the Class A-6 Calculation Percentage
and (3) the Class A Principal Distribution Amount with respect to the Group I
Certificates for the Distribution Date. In no event shall the Class A-6
Lockout Distribution Amount exceed the outstanding Certificate Principal
Balance of the Class A-6 Certificates or the Class A Principal Distribution
Amount applicable to the Group I Certificates for the Distribution Date.
"CLASS A-6 LOCKOUT PERCENTAGE": For each Distribution Date will be as
follows:
<TABLE>
Distribution Date Lockout Percentage
----------------- ------------------
<S> <C>
April 2000 through March 2003 0%
April 2003 through March 2005 45%
April 2005 through March 2006 80%
April 2006 through March 2007 100%
April 2007 and thereafter 300%
</TABLE>
"CLASS A-7 AVAILABLE FUNDS CAP" with respect to any Interest Period and
the related Distribution Date will be a rate per annum equal to the fraction,
expressed as a percentage, the numerator of which is the product of (a) the
weighted average of the Net Coupon Rates (minus the Minimum Spread) on the
Group II Home Equity Loans as of the beginning of the related Remittance
Period and (b) the aggregate Loan Balance of the Group II Home Equity Loans as
of the beginning of the related Remittance Period, and the denominator of
which is the outstanding
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<PAGE>
Certificate Principal Balance of the Class A-7 Certificates (before giving
effect to payments of principal on the Distribution Date) (adjusted to an
effective rate, calculated by multiplying such fraction by 30 and dividing by
the actual number of days elapsed in the related Interest Period, reflecting
accrued interest calculated on the basis of a 360-day year and the actual
number of days elapsed).
"CLASS A-7 CERTIFICATEHOLDERS' INTEREST INDEX CARRYOVER": The sum of (A)
the excess of (1) the amount of interest the Class A-7 Certificates would
otherwise be entitled to receive on the Distribution Date had the rate been
calculated at the Class A-7 Formula Rate for the Distribution Date over (2)
the amount of interest payable on the Class A-7 Certificates at the Class A-7
Available Funds Cap for the Distribution Date and (B) the Class A-7
Certificateholders' Interest Index Carryover for all previous Distribution
Dates not previously paid to Class A-7 Certificateholders (including any
interest accrued thereon at the Class A-7 Formula Rate).
"CLASS A-7 FORMULA RATE": For any Distribution Date is the sum of (1)
One-Month LIBOR and (2) 0.24% per annum (or 0.48% per annum for each Interest
Period occurring after the Clean-Up Call Date).
"CLASS A DISTRIBUTION AMOUNT": For each Home Equity Loan Group and
Distribution Date shall be the sum of (x) Current Interest for the Class A
Certificates related to the Home Equity Loan Group and (y) the Class A
Principal Distribution Amount for the Home Equity Loan Group and all other
amounts distributed in reduction of the Certificate Principal Balances of the
related Class A Certificates pursuant to Section 7.03(b) hereof.
"CLASS A PRINCIPAL DISTRIBUTION AMOUNT": With respect to the Class A
Certificates of each Home Equity Loan Group and Distribution Date shall be the
lesser of:
(a) the related Available Funds, remaining after distributions pursuant
to clauses (i) and (ii) of Section 7.03(b); and
(b) the excess, if any, of
(1) the sum of (without duplication):
(A) the principal portion of all scheduled monthly payments on
the Home Equity Loans related to the Home Equity Loan Group actually
received by the Servicer during the related Remittance Period and any
Prepayments on the Home Equity Loans made by the Mortgagors of Home
Equity Loans in the related Home Equity Loan Group and actually
received by the Servicer during the related Remittance Period in each
case to the extent the amounts are received by the Trustee on or
prior to the Monthly Remittance Date;
(B) the outstanding principal balance of each Home Equity Loan
in the related Home Equity Loan Group that was repurchased by the
Seller or purchased by the Servicer on or prior to the related
Monthly Remittance Date in each case to the extent the amounts are
received by the Trustee on or prior to the Monthly Remittance Date;
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<PAGE>
(C) any Substitution Amounts relating to principal, delivered
by the Seller on the related Monthly Remittance Date in connection
with a substitution of a Home Equity Loan in the related Home Equity
Loan Group;
(D) all Net Liquidation Proceeds actually collected by or on
behalf of the Servicer with respect to the Home Equity Loans in the
related Home Equity Loan Group during the related Remittance Period
(to the extent the Net Liquidation Proceeds relate to principal) in
each case to the extent the amounts are received by the Trustee on or
prior to the Monthly Remittance Date;
(E) the amount of any Collateralization Deficit with respect to
the related Home Equity Loan Group for the Distribution Date; and
(F) the principal portion of the proceeds received by the
Trustee with respect to the related Home Equity Loan Group upon
termination of the Trust (to the extent the proceeds relate to
principal); over
(2) the amount of any Overcollateralization Release Amount with
respect to the related Home Equity Loan Group for the Distribution Date;
provided, however, on the Final Scheduled Distribution Date for each
class, the related Class A Principal Distribution Amount payable to such
Class shall be no less than the Certificate Principal Balance for such
Class of Class A Certificates.
"CLASS R CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed
hereto as Exhibit C, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein. The Class R Certificate shall
evidence (i) an interest designated as the Class R-1 Certificate which is the
"residual interest" in REMIC I and (ii) an interest designated as the Class
R-2 Certificate which is the residual interest in REMIC II for the purposes of
the REMIC Provisions. The Owner of the Class R Certificate shall be entitled
to separate such Certificate into its component Class R-1 and Class R-2
Certificate parts, as further described in the Class R Certificate attached
hereto as Exhibit C.
"CLASS X-IO CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class X-IO Certificate, substantially in the form annexed
hereto as Exhibit B, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for the
purposes of the REMIC Provisions.
"CLASS X-IO DISTRIBUTION AMOUNT": With respect to any Distribution Date,
the lesser of (i) the aggregate Available Funds, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(b)(i) through 7.03(b)(viii) hereof and (ii) the sum of the amounts
described in footnotes (5) and (6) of Section 2.08(b) for the current and for
all prior Distribution Dates less amounts distributed with respect to the
Class X-IO Certificates on prior Distribution Dates.
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"CLEAN-UP CALL DATE": The first Distribution Date on which the aggregate
Certificate Principal Balances of all Class A Certificates as of the close of
business on the last day of the immediately preceding Interest Period has
declined to 10% or less of the aggregate Certificate Principal Balance of the
Class A Certificates as of the Startup Day.
"CLOSING": As defined in Section 4.02 hereof.
"CODE": The Internal Revenue Code of 1986, as amended.
"COLLATERALIZATION DEFICIT": With respect to either Home Equity Loan
Group and Distribution Date, the amount, if any, by which (x) the related
aggregate of the Certificate Principal Balances with respect to such Home
Equity Loan Group, after taking into account the payment of all distributions
with respect to such Home Equity Loan Group on such Distribution Date (without
regard to any Insured Payment to be made on such Distribution Date in respect
of any Collateralization Deficit and except for any distributions in respect
of the Collateralization Deficit with respect to such Home Equity Loan Group),
exceeds (y) the aggregate Loan Balances of the Home Equity Loans in such Home
Equity Loan Group as of the close of business on the last day of the related
Remittance Period.
"COMPENSATING INTEREST": As defined in Section 8.10(a) hereof.
"CONDUIT HOME EQUITY LOANS": The home equity loans listed on the Conduit
Schedule of Home Equity Loans.
"CONDUIT SCHEDULE OF HOME EQUITY LOANS": The Schedule of Home Equity
Loans attached as Schedule I-D hereto.
"CONDUIT SELLER": CHEC Conduit Funding, LLC, a Delaware limited
liability company.
"CONDUIT SERVICER": CHEC in its capacity as servicer with respect to the
Conduit Warehousing Facility.
"CONDUIT WAREHOUSING FACILITY": The Mortgage Loan Warehousing Facility
dated November 16, 1999 among CHEC Conduit Funding, LLC, Centex Credit
Corporation, CHARTA Corporation, Corporate Receivables Corporation, Citibank,
N.A. and Citicorp North America, Inc., as Agent.
"CORPORATE TRUST OFFICE": The principal office of the Trustee at 1 Bank
One Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, Attn: Global
Corporate Trust Services (as of the Closing Date), or at such other address as
the Trustee may designate by notice to the Depositor, the Seller, the
Servicer, the Owners and the Certificate Insurer, or the principal office of
any successor Trustee hereunder.
"COUPON RATE": The rate of interest borne by each Note from time to time.
"CRAM DOWN LOSS": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an
order reducing the Loan Balance of
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such Home Equity Loan, the amount of such reduction. A "Cram Down Loss" shall
be deemed to have occurred on the date of issuance of such order.
"CUMULATIVE LOSS PERCENTAGE": As of any date of determination thereof,
the aggregate of all Realized Losses since the Startup Day as a percentage of
the aggregate Loan Balance of the Home Equity Loans as of the Cut-Off Date.
"CURRENT INTEREST": With respect to each Class of Class A Certificates
means, with respect to any Distribution Date: (1) the aggregate amount of
interest accrued at the related Certificate Rate on the Certificate Principal
Balance of the Class of Class A Certificates plus (2) the Carry-Forward
Amount, if any, with respect to the Class of Class A Certificates; provided,
however, that with respect to each Class of Class A Certificates, the amount
described in clause (1) above will be reduced by the Class' pro rata share of
any Civil Relief Act Interest Shortfalls (based on the amount of interest
otherwise due to such Class for such Interest Period) relating to such Home
Equity Loan Group during the related Remittance Period.
"CURRENT WAC EXCESS": With respect to any Distribution Date, the portion
of Current Interest being distributed with respect to the Class A-7
Certificates equal to interest accrued thereon at a rate equal to the excess
of the Class A-7 Certificate Rate over the Group II Net WAC Cap.
"CUSTODIAL AGREEMENT": The Custodial Agreement dated as of March 1, 2000
between the Custodian, the Servicer and the Trustee.
"CUSTODIAN": Bank One Trust Company, N.A., as Custodian on behalf of the
Trustee pursuant to the Custodial Agreement and any successor Custodian.
"CUT-OFF DATE": The later of (i) the opening of business on March 1,
2000 and (ii) the date of origination with respect to a Home Equity Loan, but
in no event later than the Startup Day.
"DELINQUENCY ADVANCE": As defined in Section 8.09(a) hereof.
"DELINQUENT": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related
Due Date. A Home Equity Loan is "30 days Delinquent" if such payment has not
been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there
is no such corresponding day (e.g., as when a 30-day month follows a 31-day
month in which a payment was due on the 31st day of such month) then on the
last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"DELIVERY ORDER": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Depositor to the Trustee on the Startup Day
pursuant to Section 4.01 hereof.
"DEPOSITOR": CHEC Funding, LLC, a Delaware limited liability company, or
any successor thereto.
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"DEPOSITORY": The Depository Trust Company, 7 Hanover Square, New York,
New York, 10004, and any successor Depository.
"DESIGNATED DEPOSITORY INSTITUTION": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the
Certificate Insurer, acting in its fiduciary capacity, having combined capital
and surplus of at least $100,000,000; PROVIDED, HOWEVER, that if the Principal
and Interest Account is not maintained with the Trustee, (i) such institution
shall have a long-term debt rating of at least "A" by Standard & Poor's and
"A2" by Moody's and (ii) the Servicer shall provide the Trustee and the
Certificate Insurer with a statement, which the Trustee will send to the
Owners, identifying the location and account information of the Principal and
Interest Account upon a change in the location of such account.
"DETERMINATION DATE": The 15th day of each month, or if such day is not
a Business Day, on the preceding Business Day, commencing in April 2000.
"DIRECT PARTICIPANT" or "DTC PARTICIPANT": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
"DISQUALIFIED ORGANIZATION": "Disqualified Organization" shall have the
meaning set forth from time to time in the definition thereof at Section
860E(e)(5) of the Code (or any successor statute thereto) and applicable to
the Trust.
"DISTRIBUTION DATE": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing
in the month following the Startup Day. The first Distribution Date will be
April 25, 2000.
"DUE DATE": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized long term debt obligations of which institution
shall be rated AA or higher by Standard & Poor's and, in the case of any
institution other than Bank One, National Association, Aa2 or higher by
Moody's, and in the highest short term rating category by each of the Rating
Agencies, and which is (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking
laws, (ii) an institution duly organized, validly existing and in good
standing under the applicable banking laws of any state, (iii) a national
banking association duly organized, validly existing and in good standing
under the federal banking laws, (iv) a principal subsidiary of a bank holding
company, or (v) approved in writing by the Certificate Insurer and each of the
Rating Agencies or (B) a segregated trust account or accounts maintained with
the Corporate Trust Office of the Trustee, or the trust department of a
federal or state chartered
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<PAGE>
depository institution acceptable to each Rating Agency and the Certificate
Insurer, having capital and surplus of not less than $100,000,000, acting in
its fiduciary capacity.
"ELIGIBLE INVESTMENTS": Those investments so designated pursuant to
Section 7.07 hereof.
"EXCHANGE ACT": The Securities and Exchange Act of 1934, as amended.
"EXTRA PRINCIPAL DISTRIBUTION AMOUNT": Means as to either the Group I or
Group II Certificates and any Distribution Date, the lesser of (1) the related
Target Deficiency and (2) the related Net Monthly Excess Cashflow Amount.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"FILE": The documents delivered to the Custodian on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Home
Equity Loan and any additional documents required to be added to the File
pursuant to this Agreement.
"FINAL CERTIFICATION": As defined in Section 3.06(c) hereof.
"FINAL DETERMINATION": As defined in Section 9.03(a) hereof.
"FINAL RECOVERY DETERMINATION": With respect to any defaulted Home
Equity Loan or REO Property (other than a Home Equity Loan purchased by the
Seller, the Depositor or the Servicer), a determination made by the Servicer
that all recoveries which the Servicer, in its reasonable business judgment
expects to be finally recoverable in respect thereof have been so recovered or
that the Servicer believes in its reasonable business judgment the cost of
obtaining any additional recoveries therefrom would exceed the amount of such
recoveries. The Servicer shall maintain records of each Final Recovery
Determination.
"FINAL SCHEDULED DISTRIBUTION DATE": As set out in Section 2.08(c)
hereof with respect to each Class A Certificate.
"FIRST MORTGAGE LOAN": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"FIXED RATE CERTIFICATES": Any of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-6 Certificates.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
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"FNMA GUIDE": FNMA's Servicing Guide, as the same may be amended by FNMA
from time to time.
"GROUP I": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group I in Schedule I-A hereto, including any Qualified
Replacement Mortgage delivered in replacement thereof. Group I refers, with
respect to the Conduit Home Equity Loans, to the Home Equity Loans listed in
the Conduit Schedule of Home Equity Loans that are also assigned to Group I in
Schedule I-A hereto, and with respect to the Seller Home Equity Loans, to the
Home Equity Loans listed in the Seller Schedule of Home Equity Loans that are
also assigned to Group I in Schedule I-A hereto.
"GROUP I CERTIFICATES": Any of the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates and the Class A-6 Certificates.
"GROUP I MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest received (including any
Delinquency Advances) during the related Remittance Period with respect to the
Home Equity Loans in Group I (net of the Group I Servicing Fees), (ii) all
Compensating Interest paid by the Servicer on such Monthly Remittance Date
with respect to Group I, (iii) the portions of the Loan Purchase Prices and
the Substitution Amount relating to interest on the Home Equity Loans in Group
I paid by the Seller or Servicer on or prior to such Monthly Remittance Date,
(iv) the interest portion of all Net Liquidation Proceeds actually collected
by the Servicer with respect to such Home Equity Loans in Group I during the
related Remittance Period, (v) the principal actually collected by the
Servicer with respect to Home Equity Loans in Group I during the related
Remittance Period, (vi) the outstanding principal balance of each such Home
Equity Loan in Group I that was purchased from the Trustee on or prior to such
Monthly Remittance Date, to the extent such outstanding principal balance was
actually deposited in the Principal and Interest Account, (vii) any
Substitution Amounts relating to principal delivered by the Seller in
connection with a substitution of a Home Equity Loan in Group I, to the extent
such Substitution Amounts were actually deposited in the Principal and
Interest Account on or prior to such Monthly Remittance Date, (viii) the
principal portion of all Net Liquidation Proceeds actually collected by the
Servicer with respect to such Home Equity Loans in Group I during the related
Remittance Period (to the extent such Net Liquidation Proceeds related to
principal) and (ix) the amount of investment losses required to be deposited
pursuant to Section 8.08(b).
"GROUP I NET WAC CAP": With respect to any Distribution Date, a rate per
annum equal to the weighted average of the Net Coupon Rates on the Group I
Home Equity Loans as of the beginning of the related Remittance Period.
"GROUP II": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group II in Schedule I-B hereto, including any Qualified
Replacement Mortgage delivered in replacement thereof. Group II refers, with
respect to the Conduit Home Equity Loans, to the Home Equity Loans listed in
the Conduit Schedule of Home Equity Loans that are also assigned to Group II
in
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Schedule I-B hereto; and with respect to the Seller Home Equity Loans, to the
Home Equity Loans listed in the Seller Schedule of Home Equity Loans that are
also assigned to Group II in Schedule I-B hereto.
"GROUP II CERTIFICATES": The Class A-7 Certificates.
"GROUP II MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest received (including any
Delinquency Advances) during the related Remittance Period with respect to the
Home Equity Loans in Group II (net of the Group II Servicing Fee), (ii) all
Compensating Interest paid by the Servicer on such Monthly Remittance Date
with respect to Group II, (iii) the portion of the Loan Purchase Prices and
Substitution Amount relating to interest on the Home Equity Loans in Group II
paid by the Seller or the Servicer on or prior to such Monthly Remittance
Date, (iv) the interest portion of all Net Liquidation Proceeds actually
collected by the Servicer with respect to the Home Equity Loans in Group II
during the related Remittance Period, (v) the principal actually collected by
the Servicer with respect to Home Equity Loans in Group II during the related
Remittance Period, (vi) the outstanding principal balance of each such Home
Equity Loan in Group II that was purchased from the Trustee on or prior to
such Monthly Remittance Date, to the extent such outstanding principal balance
was actually deposited in the Principal and Interest Account, (vii) any
Substitution Amounts relating to principal delivered by the Seller in
connection with a substitution of a Home Equity Loan in Group II, to the
extent such Substitution Amounts were actually deposited in the Principal and
Interest Account on or prior to such Monthly Remittance Date, (viii) the
principal portion of all Net Liquidation Proceeds actually collected by the
Servicer with respect to such Home Equity Loans in Group II during the related
Remittance Period (to the extent such Net Liquidation Proceeds related to
principal) and (ix) the amount of investment losses required to be deposited
pursuant to Section 8.08(b).
"GROUP II NET WAC CAP": With respect to any Distribution Date will be
the rate per annum equal to the weighted average Net Coupon Rates of the Group
II Home Equity Loans as of the beginning of the related Remittance Period
minus the Minimum Spread.
"GUARANTEED DISTRIBUTION" means, with respect to each Payment Date, the
distribution to be made to Owners in an aggregate amount equal to the sum of
the Current Interest and the sum of the Collateralization Deficits with
respect to each of the Group I and Group II Certificates and, without
duplication, on the Final Scheduled Distribution Date for each class, the then
outstanding principal balance of such Class of Certificates, in accordance
with the original terms of the Certificates when issued and without regard to
any amendment or modification of the Certificates or the Pooling and Servicing
Agreement except amendments or modifications to which Financial Security
Assurance Inc. has given its prior written consent.
"HIGHEST LAWFUL RATE": As defined in Section 11.13 hereof.
"HOME EQUITY LOAN ASSETS": has the meaning set forth under the heading
"CONVEYANCE" herein.
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"HOME EQUITY LOAN GROUP" or "GROUP": Group I or Group II, as the case may
be. References herein to the related Class of Class A Certificates, when used
with respect to a Home Equity Loan Group, shall mean (A) in the case of Group I,
the Group I Certificates and (B) in the case of Group II, the Group II
Certificates.
"HOME EQUITY LOANS": The Conduit Home Equity Loans and/or the Seller Home
Equity Loans, as applicable, together with any Qualified Replacement Mortgages
substituted therefor in accordance with this Agreement, as from time to time are
held as a part of the Trust Estate. Where applicable, the term "Home Equity
Loan" includes (i) the terms "First Mortgage Loan" and "Second Mortgage Loan",
and (ii) any Home Equity Loan which is Delinquent, relates to a foreclosure or
relates to a Property which is REO Property prior to such REO Property's
disposition by the Trust. Any home equity loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and assigned
to the Trust by the Depositor, in fact was not transferred and assigned to the
Trust for any reason whatsoever, including, without limitation, the
incorrectness of the statement set forth in Section 3.04(b)(x) hereof with
respect to such home equity loan, shall nevertheless be considered a "Home
Equity Loan" for all purposes of this Agreement.
"INDEMNIFICATION AGREEMENT": The Indemnification Agreement dated as of
March 15, 2000 among the Certificate Insurer, the Sellers and the Underwriters.
"INDIRECT PARTICIPANT": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"INSURANCE AGREEMENT": The Insurance Agreement dated as of March 15, 2000
among the Depositor, the Sellers, the Servicer, the Trustee and the Certificate
Insurer, as it may be amended from time to time.
"INSURANCE POLICY": Any hazard, flood, title or primary mortgage insurance
policy relating to a Home Equity Loan plus any amount remitted under Section
8.11 hereof.
"INSURED PAYMENT": Means as of any Distribution Date, any Guaranteed
Distribution.
"INTEREST PERIOD": With respect to each Distribution Date and (i) the
Fixed Rate Certificates, the period from the first day of the calendar month
preceding the month of the Distribution Date through the last day of the
calendar month with interest accruing such that interest on the basis of a
360-day year consisting of twelve 30-day months; and (ii) the Variable Rate
Certificates, the period from and including the preceding Distribution Date (or
the Closing Date in the case of the first Distribution Date) to and including
the day preceding the related Distribution Date with interest accruing on the
basis of the actual number of days in the related Interest Period and a year of
360 days.
"LATE PAYMENT RATE": As defined in the Insurance Agreement.
"LIBOR": With respect to any Interest Period for the Class A-7
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00
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a.m. (London time) on such date; provided that if such rate does not appear
on Telerate Page 3750, the rate for such date will be determined on the basis
of the rates at which one-month U.S. dollar deposits are offered by the
Reference Banks at approximately 11:00 a.m. (London time) on such date to
prime banks in the London interbank market. In such event, the Trustee will
request the principal London office of each of the Reference Banks to provide
a quotation of its rate. If at least two such quotations are provided, the
rate for that date will be the arithmetic mean of the quotations (rounded
upwards if necessary to the nearest whole multiple of 1/16%). If fewer than
two quotations are provided as requested, the rate for that date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected
by the Servicer, at approximately 11:00 a.m. (New York City time) on such
date for one-month U.S. dollar loan to leading European banks.
"LIBOR DETERMINATION DATE": With respect to any Interest Period for the
Class A-7 Certificates, the second London Business Day preceding the
commencement of such Interest Period (or in the case of the initial Interest
Period, March 13, 2000).
"LIQUIDATED LOAN": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"LIQUIDATION PROCEEDS": With respect to any Liquidated Loan, all amounts
(including the proceeds of any Insurance Policy) recovered by the Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"LOAN BALANCE": With respect to each Home Equity Loan and as of any date
of determination, the actual outstanding principal balance thereof on the
Cut-Off Date or relevant Replacement Cut-Off Date with respect to the Qualified
Replacement Mortgages less any principal payments relating to such Home Equity
Loan included in previous Monthly Remittance Amounts, PROVIDED, HOWEVER, that
the Loan Balance for any Home Equity Loan that has become a Liquidated Loan
shall be zero as of the first day of the Remittance Period following the
Remittance Period in which such Home Equity Loan becomes a Liquidated Loan, and
at all times thereafter.
"LOAN PURCHASE PRICE": With respect to any Home Equity Loan purchased from
the Trust on or prior to a Monthly Remittance Date pursuant to Section 3.04,
3.06(b) or 8.10(b) hereof, an amount equal to the outstanding principal balance
of such Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus all accrued and unpaid interest on such Home Equity
Loan at the Coupon Rate to but not including the date of such purchase together
with (without duplication) the aggregate amounts of (i) all unreimbursed
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan, (ii) all Delinquency Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan and (iii) all
reimbursed Delinquency Advances and Servicing Advances to the extent that
reimbursement is not made from the Mortgagor.
"LOAN-TO-VALUE RATIO": As of any particular date (i) with respect to any
First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance
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of the Note relating to such First Mortgage Loan and (ii) with respect to any
Second Mortgage Loan, the percentage obtained by dividing the Appraised Value
as of the date of origination of such Second Mortgage Loan into an amount
equal to the sum of (a) the remaining principal balance of the Senior Lien
relating to such First Mortgage Loan as of the date of origination of the
related Second Mortgage Loan and (b) the original principal balance of the
Note relating to such Second Mortgage Loan.
"LONDON BUSINESS DAY": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"MANUFACTURED HOME": A unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Mortgagor under the related
Home Equity Loan treated as real estate under applicable state law.
"MAXIMUM RATE": With respect to any Home Equity Loan in Group II, means
the maximum rate at which interest may accrue on such Home Equity Loan.
"MINIMUM SPREAD": A percentage per annum equal to 0% for Distribution
Dates which occur prior to April 2001 and 0.50% for Distribution Dates which
occur in April 2001 or thereafter.
"MONTHLY PAYMENT": With respect to any Home Equity Loan and any Remittance
Period, the payment of principal, if any, and interest due on the Due Date in
such Remittance Period pursuant to the related Note.
"MONTHLY REMITTANCE AMOUNT": The sum of the Group I Monthly Remittance
Amount and the Group II Monthly Remittance Amount.
"MONTHLY REMITTANCE DATE": The 18th day of each month, or if the 18th day
is not a Business Day, the preceding Business Day.
"MOODY'S": Moody's Investors Service, Inc. or any successor thereto.
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"MORTGAGOR": Each obligor on a Note.
"NET COUPON RATE": With respect to any Home Equity Loan in Group I or
Group II, means a rate per annum equal to the Coupon Rate of such Home Equity
Loan minus the sum of (i) the rate at which the Servicing Fee accrues, (ii) the
rate at which the Trustee Fee accrues and (iii) the applicable Premium Amount
(expressed as a per annum percentage of the aggregate Loan Balance of the Home
Equity Loans in Group I or Group II, as applicable).
"NET LIQUIDATION PROCEEDS": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of such Home Equity Loan
and unreimbursed Delinquency Advances
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relating to such Home Equity Loan. In no event shall Net Liquidation
Proceeds with respect to any Liquidated Loan be less than zero.
"NET MONTHLY EXCESS CASHFLOW": With respect to each Home Equity Loan Group
and Distribution Date, the Available Funds remaining for such Home Equity Loan
Group, if any, after the application of clauses (i) through (vi) of Section
7.03(b).
"90-DAY DELINQUENT LOAN": With respect to any Determination Date, all REO
Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, three
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
"90+ DELINQUENCY PERCENTAGE (ROLLING SIX MONTH)": With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the six immediately preceding Remittance Periods (or such
fewer number of Remittance Periods since the Cut-Off Date, in the case of the
first six Determination Dates) the numerator of each of which is equal to the
sum of (without duplication) (i) the aggregate Loan Balance of 90-Day Delinquent
Loans, and (ii) the aggregate outstanding principal balance of Home Equity Loans
in foreclosure and the denominator of which is the Loan Balance of all of the
Home Equity Loans as of the end of such Remittance Period.
"NONRECOVERABLE ADVANCE" means with respect to any Home Equity Loan for
which a Final Recovery Determination has been made, any Delinquency Advance or
Servicing Advance previously made and not reimbursed from proceeds on the
related Home Equity Loan or under Section 7.03(b)(xi) hereof which the Servicer
has determined, in good faith business judgment, as evidenced by an Officer's
Certificate delivered to the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not be ultimately
recovered.
"NOTE": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"OFFICER'S CERTIFICATE": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee and the
Certificate Insurer.
"OPERATIVE DOCUMENTS": Collectively, this Agreement, the Certificate
Insurance Policy, the Certificates, the Custodial Agreement, the Indemnification
Agreement and the Insurance Agreement.
"OPINION OF COUNSEL": A written Opinion of Counsel acceptable, in form and
substance, to the Trustee and the Certificate Insurer and delivered to the
Trustee, the Rating Agencies and the Certificate Insurer.
"ORIGINAL AGGREGATE LOAN BALANCE": The aggregate Loan Balances of all Home
Equity Loans as of the Cut-Off Date, which is $310,000,000.00.
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"OUTSTANDING": With respect to all Certificates of a Class, as of any date
of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen
for which replacement Certificates have been issued as provided for in
Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to
the Trustee.
"OVERCOLLATERALIZATION AMOUNT": With respect to each Home Equity Loan
Group and Distribution Date, the excess, if any, of (x) the aggregate Loan
Balance of the Home Equity Loans in the Home Equity Loan Group as of the close
of business on the last day of the preceding Remittance Period over (y) the
aggregate outstanding Certificate Principal Balances of the related Class A
Certificates as of the Distribution Date (after taking into account the payment
of the Class A Principal Distribution Amount related to the Home Equity Loan
Group on the Distribution Date).
"OVERCOLLATERALIZATION RELEASE AMOUNT": As to either the Group I or Group
II Certificates and any Distribution Date, the lesser of (1) the related Class A
Principal Distribution Amount for such Distribution Date and (2) the excess, if
any, of (A) the related Overcollateralization Amount over (B) the related Target
Overcollateralization Amount.
"OWNER": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 12.06
hereof.
"PAYING AGENT": Initially, the Trustee, and thereafter, the Trustee or any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 11.15 hereof and is authorized by the Trustee and the Depositor to
make payments on the Certificates on behalf of the Trustee.
"PERCENTAGE INTEREST": With respect to a Class of Class A Certificates, a
fraction, expressed as a decimal, the numerator of which is the initial Class A
Certificate Principal Balance represented by such Class A Certificate and the
denominator of which is the aggregate initial Class A Certificate Principal
Balance represented by all the Class A Certificates of such Class. With respect
to the Class X-IO or Class R Certificates, the portion of the Class evidenced
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thereby, expressed as a percentage, as stated on the face of such Certificate,
all of which shall total 100% with respect to the related Class.
"PERSON": Any individual, corporation, limited partnership, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"POLICY PAYMENTS ACCOUNT": The policy payments account maintained by the
Trustee pursuant to Section 12.02(b) hereof. The Policy Payments Account shall
be an Eligible Account.
"PREMIUM AMOUNT": With respect to each Group and each Distribution Date,
the percentage for such Group set forth in the letter dated the Startup Date
from the Certificate Insurer to the Seller setting forth the arrangement for the
premium on the Certificate Insurance Policy and certain related expense
arrangements multiplied by one-twelfth of the Certificate Principal Balance of
the related Classes of Class A Certificates.
"PREPAYMENT": Any payment of principal of a Home Equity Loan which is
received by the Servicer which is not a Scheduled Principal Payment and which is
not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment, Substitution Amounts, the portion of the purchase price of
any Home Equity Loan purchased from the Trust pursuant to Section 3.04, 3.06(b)
or 8.10(b) hereof representing principal and the proceeds of any Insurance
Policy which are to be applied as a payment of principal on the related Home
Equity Loan shall be deemed to be Prepayments for all purposes of this
Agreement.
"PRESERVATION EXPENSES": Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"PRINCIPAL AND INTEREST ACCOUNT": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof. The Principal and
Interest Account shall be an Eligible Account.
"PROHIBITED TRANSACTION": "Prohibited Transaction" shall have the meaning
set forth from time to time in the definition thereof at Section 860F(a)(2) of
the Code (or any successor statute thereto) and applicable to the Trust.
"PROPERTY": The underlying property securing a Home Equity Loan.
"PROSPECTUS": The Depositor's Prospectus dated March 2, 2000 constituting
part of the Registration Statement.
"PROSPECTUS SUPPLEMENT": The Centex Home Equity Loan Trust 2000-A
Prospectus Supplement dated March 2, 2000 to the Prospectus.
"PURCHASE OPTION PERIOD": As defined in Section 9.03(a) hereof.
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"QUALIFIED LIQUIDATION": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED MORTGAGE": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED REPLACEMENT MORTGAGE": A Home Equity Loan substituted for
another pursuant to Section 3.04 and 3.06(b) hereof, which (i) has a Coupon Rate
at least equal to the Coupon Rate of the Home Equity Loan being replaced; (ii)
is of the same or better property type or is a single family dwelling and the
same or better occupancy status or is a primary residence as the Home Equity
Loan being replaced, (iii) shall mature no later than the latest Final Scheduled
Distribution Date with respect to the related Home Equity Loan Group, (iv) has a
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Home Equity Loan at such time, (v) shall be
of the same or higher credit quality classification (determined in accordance
with the Seller's credit underwriting guidelines set forth in the Seller's
underwriting manual) as the Home Equity Loan which such Qualified Replacement
Mortgage replaces, (vi) shall be a First Mortgage Loan if the Home Equity Loan
which such Qualified Replacement Mortgage replaces was a First Mortgage Loan and
shall be a First Mortgage Loan or Second Mortgage Loan if the Home Equity Loan
which such Qualified Replacement Mortgage replaces was a Second Mortgage Loan,
(vii) has an outstanding principal balance as of the related Replacement Cut-Off
Date equal to or less than the outstanding principal balance of the replaced
Home Equity Loan as of such Replacement Cut-Off Date, (viii) shall not provide
for a "balloon" payment if the related Home Equity Loan did not provide for a
"balloon" payment (and if such related Home Equity Loan provided for a "balloon"
payment, such Qualified Replacement Mortgage shall have an original maturity of
not less than the original maturity of such related Home Equity Loan), (ix)
shall be a fixed rate Home Equity Loan if the Home Equity Loan being replaced is
in Group I or an adjustable rate Home Equity Loan if the Home Equity Loan being
replaced is in Group II, (x) satisfies the criteria set forth from time to time
in the definition thereof at Section 860G(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust, (xi) satisfies the representations
and warranties set forth in Section 3.04(b) hereof, (xii) shall not be 30 days
or more delinquent and (xiii) if such Home Equity Loan being replaced is in the
Group II, shall adjust based on the same index, have no lower margin, have the
same interval between adjustment dates and have a maximum Coupon Rate no lower
than, and a minimum Coupon Rate no lower than the Home Equity Loan being
replaced. In the event that one or more home equity loans are proposed to be
substituted for one or more Home Equity Loans, the Certificate Insurer may allow
the foregoing tests to be met on a weighted average basis or other aggregate
basis acceptable to the Certificate Insurer, as evidenced by a written approval
delivered to the Trustee by the Certificate Insurer, except that the
requirements of clauses (i), (iii), (iv), (ix), (x), (xi) and (xii) hereof must
be satisfied as to each Qualified Replacement Mortgage.
"RATING AGENCIES": Collectively, Moody's and Standard & Poor's.
"REALIZED LOSS": As to any Liquidated Loan (or, in the case of a Cram Down
Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not less
than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as of
the date of liquidation, (y) the amount of
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accrued but unpaid interest thereon and (z) the amount of any Cram Down Loss
with respect thereto is in excess of (B) the Net Liquidation Proceeds, if
any, realized thereon applied in reduction of such Loan Balance.
"RECORD DATE": With respect to (i) any Distribution Date and each Class of
Fixed Rate Certificates, the last Business Day of the calendar month immediately
preceding the calendar month in which such Distribution Date occurs and (ii) any
Distribution Date and the Variable Rate Certificates, the Business Day
immediately preceding such Distribution Date, or if definitive Certificates have
been issued, the last Business Day of the calendar month immediately preceding
the calendar month in which such Distribution Date occurs.
"REFERENCE BANKS": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, PROVIDED that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by CHEC which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which are not Affiliates of the Seller, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Seller.
"REGISTER": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"REGISTRAR": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"REGISTRATION STATEMENT": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-93255), including all amendments thereto and including the Prospectus and
Prospectus Supplement relating to the Class A Certificates.
"REIMBURSEMENT AMOUNT": With respect to each Home Equity Loan Group and
any Distribution Date, the sum of (x)(i) all Insured Payments previously paid to
the Trustee by the Certificate Insurer and not previously repaid to the
Certificate Insurer pursuant to Section 7.03(b) hereof plus (ii) interest
accrued on each such Insured Payment not previously repaid calculated at the
Late Payment Rate and (y)(i) any amounts then due and owing to the Certificate
Insurer under the Insurance Agreement (including, without limitation, any unpaid
Premium Amount relating to such Distribution Date or an earlier Distribution
Date) plus (ii) interest on such amounts at the Late Payment Rate. The
Certificate Insurer shall notify the Trustee, the Depositor and the Seller in
writing of the amount of any Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC I": The segregated group of assets consisting of the REMIC II
Regular Interests as defined in Section 2.08 and constituting a REMIC created
hereunder.
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"REMIC II": The segregated pool of assets consisting of all the assets of
the Trust Estate other than the Supplemental Interest Reserve Account and the
REMIC II Regular Interests and constituting a REMIC created hereunder. Expenses
and fees of the Trust shall be paid from REMIC II.
"REMIC OPINION": As defined in Section 3.04 hereof.
"REMIC PROVISIONS": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and revenue rulings promulgated thereunder, as the foregoing may be
in effect from time to time.
"REMITTANCE PERIOD": With respect to each Monthly Remittance Date, the
calendar month immediately preceding such Monthly Remittance Date.
"REO PROPERTY": A Property acquired by the Servicer on behalf of the Trust
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"REPLACEMENT CUT-OFF DATE": With respect to any Qualified Replacement
Mortgage, the opening of business of the first day of the calendar month in
which such Qualified Replacement Mortgage is conveyed to the Trust.
"REPRESENTATION LETTER": Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"RESIDUAL NET MONTHLY EXCESS CASHFLOW": With respect to any Distribution
Date, the aggregate Available Funds, if any, remaining after the making of all
applications, transfers and disbursements described in Sections 7.03(b)(i)
through 7.03(b)(xii) hereof. It is anticipated that there will not be any
Residual Net Monthly Excess Cashflow.
"SCHEDULE OF HOME EQUITY LOANS": The Conduit Schedule of Home Equity
Loans, the Seller Schedule of Home Equity Loans, Schedule I-A hereto or Schedule
I-B hereto, as the context may require.
"SCHEDULED PRINCIPAL PAYMENT": As of any date of calculation, with respect
to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
"SECOND MORTGAGE LOAN": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"SECURITIES ACT": The Securities Act of 1933, as amended.
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"SELLER": Centex Credit Corporation d/b/a Centex Home Equity Corporation,
a Nevada corporation.
"SELLER HOME EQUITY LOANS": The home equity loans listed on the Seller
Schedule of Home Equity Loans.
"SELLERS": The Seller and the Conduit Seller.
"SELLER SCHEDULE OF HOME EQUITY LOANS": The Schedule of Home Equity Loans
attached as Schedule I-C hereto.
"SENIOR LIEN": With respect to any Second Mortgage Loan, the home equity
loan relating to the corresponding Property having a first priority lien.
"SERVICER": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, and its permitted successors and assigns.
"SERVICER LOSS TEST": The Servicer Loss Test for any period set out below
is satisfied, if the Cumulative Loss Percentage for such period does not exceed
the percentage set out for such period below:
<TABLE>
<CAPTION>
Period Cumulative Loss Percentage
------ --------------------------
<S> <C>
April 2000 - March 2001 1.65%
April 2001 - March 2002 2.30%
April 2002 - March 2003 3.20%
April 2003 - March 2004 4.10%
April 2004 - March 2005 4.95%
April 2005 and thereafter 6.25%
</TABLE>
"SERVICER TERMINATION EVENT": As defined in Section 8.20(a) hereof.
"SERVICER TERMINATION TEST": The Servicer Termination Test is satisfied
for any date of determination thereof, if (x) the 90+ Delinquency Percentage
(Rolling Six Month) is less than or equal to 15%, (y) the Servicer Loss Test is
satisfied and (z) the Annual Loss Percentage (Rolling Twelve Month) for the
twelve month period immediately preceding the date of determination thereof is
less than 1.90%.
"SERVICING ADVANCE": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"SERVICING FEE": With respect to any Home Equity Loan Group and a
Remittance Period, an amount retained by the Servicer as compensation for
servicing and administration duties relating to the Home Equity Loans in such
Home Equity Loan Group pursuant to Section 8.15 hereof and equal to one month's
interest at 0.50% per annum of the then outstanding principal balance of such
Home Equity Loans as of the first day of each Remittance Period payable on a
monthly basis; provided, however, that if a successor Servicer is appointed
pursuant to Section
25
<PAGE>
8.20 hereof, the Servicing Fee shall be the amount as agreed upon by the
Trustee, the Certificate Insurer and the successor Servicer, and the per
annum rate at which the Servicing Fee is calculated shall not exceed 0.50%
per annum.
"60-DAY DELINQUENT LOAN": With respect to any Determination Date, all REO
Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, two
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. or any successor thereto.
"STARTUP DAY": March 15, 2000.
"SUB-SERVICER": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"SUB-SERVICING AGREEMENT": The written contract between the Servicer and
any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"SUBSTITUTION AMOUNT": With respect to the substitution of any Qualified
Replacement Mortgage for any Home Equity Loan, as of the related Replacement
Cut-Off Date, the excess, if any, of the outstanding principal balance of such
Home Equity Loan over the outstanding principal balance of the Qualified
Replacement Mortgage, together with the aggregate amount of all Delinquency
Advances and Servicing Advances made, and all accrued and unpaid interest with
respect to such Home Equity Loan.
"SUPPLEMENTAL INTEREST RESERVE FUND": The Supplemental Interest Reserve
Fund established and maintained as described in Section 7.02(a).
"TANGIBLE NET WORTH": Shall mean the difference between: (A) the tangible
assets of the Seller or Servicer, as applicable, and its Affiliates calculated
in accordance with GAAP, as reduced by adequate reserves in each case where a
reserve is appropriate; and (B) all indebtedness, including subordinated debt,
of the Seller or Servicer, as applicable, and its Affiliates; provided, however,
that (i) intangible assets such as patents, trademarks, trade names, copyrights,
licenses, good will, organization costs, advances or loans to, or receivables
from directors, officers, employees or affiliates, prepaid assets, amounts
relating to covenants not to compete, pension assets, deferred charges or
treasury stock of any securities unless the same are readily marketable in the
United States of America or are entitled to be used as a credit against federal
income tax liabilities, shall not be included in the calculation of (A) above,
(ii) securities included as tangible assets shall be valued at their current
market price or costs, whichever is lower and (iii) any write-up in book value
of any assets shall not be taken into account.
26
<PAGE>
"TARGET DEFICIENCY": As to either the Group I or Group II Certificates and
any Distribution Date, the excess, if any, of (1) the related Target
Overcollateralization Amount for such Distribution Date over (2) the related
Overcollateralization Amount for such Distribution Date after giving effect to
the distribution of the related Class A Principal Distribution Amount on such
Distribution Date; provided, however, that in no event will the Target
Deficiency be less than zero.
"TARGET OVERCOLLATERALIZATION AMOUNT": The required level of the
Overcollateralization Amount for each Home Equity Loan Group with respect to a
Distribution Date. The Target Overcollateralization Amount for Group I is set
forth in Exhibit L hereof. The Target Overcollateralization Amount for Group II
is set forth in Exhibit K hereof.
"TAX MATTERS PERSON": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code (or where the context
requires, the Trustee acting as agent for the Tax Matters Person).
"TELERATE PAGE 3750": The display designated as page "3750" on the Bridge
Telerate Service (or such other page as may replace page 3750 on that report for
the purpose of displaying London interbank offered rates of major banks).
"TERMINATION NOTICE": As defined in Section 9.03(a) hereof.
"TERMINATION PRICE": Means, with respect to Sections 9.02 and 9.03 hereof,
and on any date of determination thereof, an amount equal to the sum of (w) the
greater of (i) 100% of the aggregate outstanding principal balances of the Home
Equity Loans as of such date of determination less amounts remitted to the
Principal and Interest Account representing collections of principal on the Home
Equity Loans during the current Remittance Period, and (ii) the greater of (A)
the outstanding Certificate Principal Balance for the Class A Certificates and
(B) the fair market value of such Home Equity Loans (disregarding accrued
interest), (x) one month's interest on such amount (calculated at the Adjusted
Certificate Rate), (y) all Reimbursement Amounts and (z) the sum of the
aggregate amount of any unreimbursed Delinquency Advances, Servicing Advances,
Compensating Interest and any Delinquency Advances which the Servicer has
theretofore failed to remit.
"TRANSITION EXPENSES": Expenses incurred by the Trustee in connection with
the transfer of servicing upon the termination of the Servicer for a Servicer
Termination Event; provided that the amount shall not exceed $50,000 in any one
calendar year (and no more than $100,000 in the aggregate).
"TRUST": Centex Home Equity Loan Trust 2000-A, the trust created under
this Agreement which shall be comprised of two sub-trusts; one for Group I and
any Trust assets allocable to such Group I and the other for Group II and any
Trust assets allocable to such Group II.
"TRUST ESTATE": (a) The Home Equity Loan Assets and (b) such amounts as
may be held by the Trustee in the Certificate Account, together with investment
earnings on such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if
27
<PAGE>
any, inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer).
"TRUSTEE": Bank One, National Association, a national banking association,
not in its individual capacity but solely as Trustee under this Agreement, and
any successor hereunder.
"TRUSTEE FEE": The fee payable monthly to the Trustee on each Distribution
Date in an amount equal to $1,000.00.
"TRUSTEE REIMBURSABLE EXPENSES": As of any Distribution Date, the sum of
(a) any Trustee Fee and Transition Expenses not paid pursuant to clauses (i) or
(iv) of Section 7.03(b) on such Distribution Date and (b) any amounts owed
pursuant to Sections 2.05, 6.12, 7.06, 8.20(o), 10.07, 10.13, 11.16(a)(v)
hereof, and, if the Trustee is acting as Custodian, any Custodial Fees
(including all attorney fees and expenses).
"UNDERWRITERS": Salomon Smith Barney Inc., Lehman Brothers Inc. and
Prudential Securities Incorporated.
"VARIABLE RATE CERTIFICATES": The Class A-7 Certificates.
"VOTING RIGHTS": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X-IO
Certificates (such Voting Rights to be allocated among the holders of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class R
Certificates in the aggregate, or if separate Class R-1 and Class R-2
Certificates are issued, 0.50% to each such Class (such Voting Rights to be
allocated among the holders of Certificates of each such Class in accordance
with their respective Percentage Interests), and (c) the remaining Voting Rights
shall be allocated among Holders of the Classes of Class A Certificates in
proportion to the Certificate Principal Balances of their respective Class A
Certificates on such date.
"WEIGHTED AVERAGE CERTIFICATE RATE": As to the Class A Certificates and
any Distribution Date, the weighted average of the Class A-1 Certificate Rate,
the Class A-2 Certificate Rate, the Class A-3 Certificate Rate, the Class A-4
Certificate Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate Rate
and the Class A-7 Certificate Rate, weighted by, respectively, the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance, the
Class A-3 Certificate Principal Balance, the Class A-4 Certificate Principal
Balance, the Class A-5 Certificate Principal Balance, the Class A-6 Certificate
Principal Balance and the Class A-7 Certificate Principal Balance as of such
Distribution Date prior to taking into account any distributions to be made on
such Distribution Date.
Section 1.02. USE OF WORDS AND PHRASES.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof
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<PAGE>
include both the singular and the plural. Whenever used in this Agreement,
any pronoun shall be deemed to include both singular and plural and to cover
all genders.
Section 1.03. CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04. OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the creditors' rights generally and
by general principles of equity (whether considered in a proceeding or action in
equity or at law) and may state that no opinion is expressed on the availability
of the remedy of specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person hereunder must be
delivered by counsel upon whose opinion the addressee of such opinion may
reasonably rely, and such opinion may state that it is given in reasonable
reliance upon an opinion of another, a copy of which must be attached,
concerning the laws of a foreign jurisdiction. Any opinion delivered hereunder
shall be addressed to the Rating Agencies, the Certificate Insurer and the
Trustee.
END OF ARTICLE I
29
<PAGE>
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. ESTABLISHMENT OF THE TRUST.
The parties hereto do hereby create and establish, pursuant to the laws of
the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "Centex Home Equity Loan Trust 2000-A" and which shall contain
two subtrusts.
Section 2.02. OFFICE.
The office of the Trust shall be in care of the Trustee, addressed to Bank
One, National Association, at its Corporate Trust Office.
Section 2.03. PURPOSES AND POWERS.
The purpose of the Trust is to engage in the following activities and only
such activities: (i) the issuance of the Certificates and the acquiring, owning
and holding of Home Equity Loans and the Trust Estate in connection therewith;
(ii) activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, including the
investment of moneys in accordance with this Agreement; and (iii) such other
activities as may be required in connection with conservation of the Trust
Estate and distributions to the Owners; PROVIDED, HOWEVER, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either REMIC I or REMIC II as a REMIC.
Section 2.04. APPOINTMENT OF THE TRUSTEE; DECLARATION OF TRUST.
The Depositor hereby appoints the Trustee as trustee of the Trust effective
as of the Startup Day, to have all the rights, powers and duties set forth
herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners and the Certificate Insurer.
Section 2.05. EXPENSES OF THE TRUST.
All expenses of the Trust, including (i) the fees and reimbursable expenses
of the Trustee in connection with the performance of its duties hereunder and
(ii) to the extent not set forth herein, any other expenses of the Trustee that
have been reviewed and approved by the Seller, which review shall not be
required in connection with the enforcement of a remedy by the Trustee resulting
from a default under this Agreement shall be paid directly by the Seller.
Failure by the Seller to pay any such fees or other expenses shall not relieve
the Trustee of its obligations hereunder.
30
<PAGE>
Section 2.06. OWNERSHIP OF THE TRUST.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07. SITUS OF THE TRUST.
It is the intention of the parties hereto that the Trust constitute a trust
under the laws of the State of New York. The Trust will be created in the State
of New York. The Trust's only office will be at the office of the Trustee as
set forth in Section 2.02 hereof.
Section 2.08. DESIGNATION OF INTERESTS IN REMICS.
(a) The Trustee shall elect that each of REMIC I and REMIC II (which
together constitute the Trust) shall be treated as a REMIC under Section 860D of
the Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of REMIC II shall include the
Home Equity Loans, the Accounts, any REO Property and any proceeds of the
foregoing. The REMIC II Regular Interests shall constitute the assets of
REMIC I.
(b) REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class
II-M-1 and Class II-M-2 Interests (the "REMIC II Regular Interests"), which will
be uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II and (y) the Class R-2 Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class R-2 Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC I.
Any Net Monthly Excess Cashflow for either Group that is used to pay an
Extra Principal Distribution Amount pursuant to Section 7.03(b) (the "Turbo
Amount") and that is payable from interest on the Home Equity Loans will not be
paid as principal to the REMIC II Regular Interests, but instead a portion of
the interest payable with respect to the Class II-M-1 Interest which equals .01%
of the Turbo Amount that is applied to Group I Certificates will be payable as a
reduction of the principal balances of the Class II-A-1, Class II-A-2, Class
II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6 Interests, in the same
manner in which the Turbo Amount is allocated among the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, respectively, and a
portion of the interest payable with respect to the Class II-M-2 Interest which
equals .01% of the Turbo Amount that is applied to the Group II Certificates
will be payable as a reduction of the principal balances of the Class II-A-7
Interests (and will be accrued and added to principal on the Class II-M-1 and
Class II-M-2 Interests in the same proportion as interest otherwise payable on
such REMIC II Regular Interests is used to reduce principal on other REMIC II
Regular Interests as just described). Principal payments on Group I
shall be allocated 99.99% to the Class II-M-1 Interest, and .01% to the Class
II-A-1, Class II-A-2,
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<PAGE>
Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6 Interests until
paid in full. The aggregate amount of principal allocated to the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class
II-A-6 Interests shall be apportioned among such REMIC II Regular Interests
in the same manner in which principal from Group I is payable with respect to
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates, respectively. Notwithstanding the above, principal payments on
Group I that are attributable to the Overcollateralization Release Amount
shall be allocated 100% to the Class II-M-1 Interest. Principal payments on
Group II shall be allocated 99.99% to the Class II-M-2 Interest and .01% to
the Class II-A-7 Interests until paid in full. Notwithstanding the above,
the principal payments on Group II that are attributable to the
Overcollateralization Release Amount shall be allocated 100% to the Class
II-M-2 Interest. Realized losses shall be applied such that after all
distributions have been made on such Distribution Date: (i) the principal
balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class
II-A-5, Class II-A-6 and Class II-A-7 Interests are each .01% of the principal
balances of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6 and Class A-7 Certificates, respectively; (ii) the principal balance of
the Class II-M-1 Interest is equal to the aggregate Loan Balance of Group I
less the sum of the principal balances of the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6 Interests; and
(iii) the principal balance of the Class II-M-2 Interest is equal to the
aggregate Loan Balance of Group II less the principal balance of the Class
II-A-7 Interests. The REMIC II Certificates will have the following
designations and Certificate Rates, and distributions of principal and
interest thereon shall be allocated to the Certificates in the following manner:
<TABLE>
<CAPTION>
REMIC II Certificate Allocation of Allocation of
Certificates Initial Balance Rate Principal Interest
------------ --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
II-A-1 $ 6,100 (1) (3) (4)(5)
II-A-2 $ 1,900 (1) (3) (4)(5)
II-A-3 $ 3,300 (1) (3) (4)(5)
II-A-4 $ 2,700 (1) (3) (4)(5)
II-A-5 $ 1,750 (1) (3) (4)(5)
II-A-6 $ 1,750 (1) (3) (4)(5)
II-A-7 $13,500 (2) (3) (4)(6)
</TABLE>
<TABLE>
<CAPTION>
REMIC II Certificate Allocation of Allocation of
Certificates Initial Balance Rate Principal Interest
------------ --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
II-M-1 $174,983,076.56 (1) (3) (4)(5)
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<PAGE>
II-M-2 $134,986,936.38 (2) (3) (4)(6)
R-2 $0 0% N/A N/A(7)
</TABLE>
---------------
(1) The Certificate Rate on this REMIC II Regular Interest shall at any
time of determination equal the weighted average of the Net Coupon Rates of the
Home Equity Loans in Group I.
(2) The Certificate Rate on this REMIC II Regular Interest shall at any
time of determination equal the weighted average of the Net Coupon Rates of the
Home Equity Loans in Group II.
(3) Principal will be allocated to and apportioned among the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7 Certificates
in the same proportion as principal from the Home Equity Loans is payable with
respect to such Certificates, except that a portion of such principal in an
amount equal to the Overcollateralization Release Amount shall first be
allocated to the Class X-IO Certificates, and all principal will be allocated to
the Class X-IO Certificates after the principal balances of the Group I and
Group II Certificates have been reduced to zero.
(4) Except as provided in footnotes (5) and (6), interest will be
allocated among the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6 and Class A-7 Certificates in the same proportion as interest is payable on
such Certificates.
(5) Any interest with respect to this REMIC II Certificate in excess of
the product of (i) 10,000 times the weighted average coupon of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6 and Class
II-M-1 Interests where each of the Class II-A-1, Class II-A-2, Class II-A-3,
Class II-A-4, Class II-A-5, Class II-A-6 Interests is subject to a cap and floor
equal to the rate on each of Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-6 Certificates, respectively and the Class II-M-1 Interest is
subject to a cap equal to 0% and (ii) the principal balance of this REMIC II
Certificate, shall not be allocated to the Group I or Group II Certificates but
will be allocated to the Class X-IO Certificates. However, the Class X-IO
Certificates shall be subordinated to the extent provided in Section 7.03.
(6) Any interest with respect to this REMIC II Certificate in excess of
the product of (i) 10,000 times the weighted average coupon of the Class II-A-7
and Class II-M-2 Interests, where the Class II-A-7 Interest is subject to a cap
and floor equal to the lesser of the rate on Class A-7 Certificate or the Group
II Net WAC Cap, and the Class II-M-2 Interest is subject to a cap equal to 0%
and (ii) the principal balance of this REMIC II Certificate, shall not be
allocated to the Group I or Group II Certificates, but will be allocated to the
Class X-IO Certificates. However, the Class X-IO Certificates shall be
subordinated to the extent provided in Section 7.03.
(7) On each Distribution Date, available funds, if any, remaining in REMIC
II after payments of interest and principal and expenses of the Trust, as
designated above, will be
33
<PAGE>
distributed to the Class R-2 Certificate. The Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6 Certificates are
the "Group I Marker Classes", and the Class II-A-7 Certificates are the
"Group II Marker Classes" (collectively, the "Marker Classes"). It is
expected that there will not be any significant distributions on the Class
R-2 Certificates.
(c) The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7 and Class X-IO Certificates are hereby designated as "regular
interests" with respect to REMIC I (the "REMIC I Regular Certificates") and the
Class R-1 Certificate is hereby designated as the single "residual interest"
with respect to REMIC I. On each Distribution Date, available funds, if any,
remaining in REMIC I after payments of interest and principal as designated
herein shall be distributed to the Class R-1 Certificates. The beneficial
ownership interest in the REMIC I created hereunder shall be evidenced by the
interests having the following characteristics and terms:
<TABLE>
<CAPTION>
Initial Certificate Final Scheduled
Class Designation Principal Balance Distribution Date
----------------- ------------------- -----------------
<S> <C> <C>
Class A-1 $ 61,000,000 May 2018
Class A-2 $ 19,000,000 March 2022
Class A-3 $ 33,000,000 October 2026
Class A-4 $ 27,000,000 March 2029
Class A-5 $ 17,500,000 March 2030
Class A-6 $ 17,500,000 March 2030
Class A-7 $135,000,000 March 2030
Class X-IO (1) March 2030
Class R-1 (1) March 2030
</TABLE>
----------------
(1) The Class X-IO and Class R-1 Certificates do not have a Certificate
Principal Balance.
(d) For federal income tax purposes, the "latest possible maturity date"
for each of the REMIC I Regular Certificates and the REMIC II Regular Interests
is March 31, 2034.
Section 2.09. MISCELLANEOUS REMIC PROVISIONS.
(a) The Startup Day is hereby designated as the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(b) The Owner of the Tax Matters Person Residual Interest in each REMIC
created hereunder is hereby designated as "tax matters person" as defined in the
REMIC Provisions with respect to the REMIC.
(c) The Trust and each REMIC created hereunder shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
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<PAGE>
(d) The Trustee shall cause each REMIC created hereunder to elect to be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate to each
REMIC created hereunder.
(e) For all federal tax law purposes, amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
each respective REMIC created hereunder.
(f) The Trustee shall provide to the Internal Revenue Service and to the
person described in Section 860E(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-l(b)(5)(ii), or any successor
regulation thereto with respect to each REMIC created hereunder. Such
information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
35
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE SERVICER AND THE
SELLER; COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Trustee and
the Certificate Insurer that as of the Startup Day:
(a) The Depositor is a limited liability company duly formed and validly
existing under the laws governing its creation and existence, is in compliance
with the laws of each state in which any Property or the Depositor is located or
doing business and is in good standing in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite authority to own and operate its
properties, to carry out its business as presently conducted and as proposed to
be conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which it is a party by the Depositor and its performance and
compliance with the terms of this Agreement and the other Operative Documents to
which it is a party have been duly authorized by all necessary action on the
part of the Depositor and will not violate the Depositor's certificate of
formation or amended and restated limited liability company agreement or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which the Depositor is a party or by
which the Depositor is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default could materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which could materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Depositor is a party.
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(e) No litigation, proceeding or investigation is pending with respect to
which the Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of the Home Equity Loans or the Depositor's performance hereunder
and under the other Operative Documents to which the Depositor is a party.
(f) The statements contained in the Registration Statement which describe
the Depositor or matters or activities for which the Depositor is responsible in
accordance with the Operative Documents or which are attributed to the Depositor
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Depositor or omit to state a material fact required to be stated therein
or necessary in order to make the statements contained therein with respect to
the Depositor not misleading.
(g) Immediately prior to the sale and assignment by the Depositor to the
Trustee on behalf of the Trust of each Home Equity Loan, the Depositor had good
and equitable title to each Home Equity Loan (insofar as such title was conveyed
to it by the Sellers) subject to no prior lien, claim, participation interest,
mortgage, security interest, pledge, charge or other encumbrance or other
interest of any nature.
(h) As of the Startup Day, the Depositor has transferred all right, title
and interest in the Home Equity Loans to the Trustee on behalf of the Trust.
(i) The Depositor has not transferred the Home Equity Loans to the Trustee
on behalf of the Trust with any intent to hinder, delay or defraud any of its
creditors.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
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Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly formed and validly existing under
the laws governing its creation and existence, is in compliance with the laws of
each state in which any Property is located to the extent necessary to enable it
to perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its or their properties, to
carry out its or their business as presently conducted and as proposed to be
conducted and to enter into and discharge its or their obligations under this
Agreement and the other Operative Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other Operative
Document to which it is a party by the Servicer and its performance and
compliance with the terms hereof and thereof have been duly authorized by all
necessary action on the part of the Servicer and will not violate the Servicer's
articles of incorporation or by-laws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other instrument to
which the Servicer is a party or by which the Servicer is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Servicer or any of its
properties.
(c) This Agreement and the Operative Documents to which the Servicer is a
party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which might have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations of the
Servicer or its properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Servicer is a party.
(e) No litigation, proceeding or investigation is pending with respect to
which the Servicer has received service of process or, to the best of the
Servicer's knowledge, threatened against the Servicer which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Document or that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect the
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validity or the enforceability of the Home Equity Loans or its performance
hereunder and the other Operative Documents to which the Servicer is a party.
(f) The statements contained in the Registration Statement which describe
the Servicer or matters or activities for which the Servicer is responsible in
accordance with the Operative Documents or which are attributed to the Servicer
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Servicer or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein with respect to the
Servicer not misleading.
(g) The Servicing Fee is a "current (normal) servicing fee rate" as that
term is used in Statement of Financial Accounting Standards No. 65 issued by the
Financial Accounting Standards Board. Neither the Servicer nor any affiliate
thereof will report on any financial statements any part of the Servicing Fee as
an adjustment to the sales price of the Home Equity Loans.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(i) The collection practices used by the Servicer with respect to the Home
Equity Loans have been, in all material respects, legal, proper, prudent and
customary in the home equity mortgage servicing business.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
(k) The Servicer is not in default under any agreement involving financial
obligations or on any outstanding obligation which would materially adversely
impact the financial condition or operations of the Servicer or legal documents
associated with the transaction contemplated by this Agreement.
(l) There are no Sub-Servicers as of the Startup Day.
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(m) The Servicer covenants that it will terminate any Sub-Servicer within
ninety (90) days after being directed by the Certificate Insurer to do so.
(n) The Servicer represents and warrants that its computer and other
systems used in servicing the Home Equity Loans currently are capable of
operating in a manner so that on and after January 1, 2000 (i) the Servicer can
service the Home Equity Loans in accordance with the terms of this Agreement and
(ii) the Servicer can operate its business in the same manner as it is operating
on the date hereof.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event, within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Certificate Insurer or by the
Trustee with the written consent of the Certificate Insurer pursuant to Section
8.20 hereof; PROVIDED, HOWEVER, that if the Servicer can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
Section 3.03. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
Each of the Seller and the Conduit Seller, as applicable, hereby severally
and not jointly represents, warrants and covenants to the Depositor, the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) In the case of the Seller, that it is a corporation, and in the case
of the Conduit Seller, that it is a limited liability company, duly formed and
validly existing under the laws governing its creation and existence, is in
compliance with the laws of each state in which any Property or the Seller is
located or doing business and is in good standing in each jurisdiction in which
the nature of its business, or the properties owned or leased by it make such
qualification necessary. The Seller or the Conduit Seller, as applicable, has
all requisite authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which it is a party and its performance and compliance with the
terms of this Agreement and the other Operative Documents to which it is a party
have been duly authorized by all necessary action and will not violate its
articles of incorporation or by-laws, in the case of the Seller, or its amended
and restated limited liability company agreement or certificate of formation, in
the case
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of the Conduit Seller, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in a breach of, any material contract, agreement or other instrument
to which it is a party or by which it is bound or violate any statute or any
order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over it or any of its properties.
(c) This Agreement and the other Operative Documents to which it is a
party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Seller or the Conduit Seller, as applicable, enforceable against it in
accordance with the terms hereof and thereof, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) Neither the Seller nor the Conduit Seller, as applicable, is in
default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or governmental agency,
which default could materially and adversely affect the condition (financial or
other) or operations of the Seller or the Conduit Seller, as applicable, or its
properties or the consequences of which could materially and adversely affect
its performance hereunder and under the other Operative Documents to which it is
a party.
(e) No litigation, proceeding or investigation is pending with respect to
which the Seller or the Conduit Seller, as applicable, has received service of
process or, to the best of its knowledge, threatened against it which
litigation, proceeding or investigation might have consequences that would
prohibit its entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect the condition
(financial or otherwise) or operations of the Seller or the Conduit Seller, as
applicable, or its properties or might have consequences that would materially
and adversely affect the validity or enforceability of the Home Equity Loans or
its performance hereunder and under the other Operative Documents to which it is
a party.
(f) The statements contained in the Registration Statement which describe
the Seller or the Conduit Seller, as applicable, or matters or activities for
which it is responsible in accordance with the Operative Documents or which are
attributed to it therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Seller or the Conduit Seller, as applicable, or omit to
state a material fact required to be stated therein or necessary in order to
make the statements contained therein with respect to the Seller or the Conduit
Seller, as applicable, not misleading.
(g) Reserved.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller or the Conduit Seller, as applicable, makes no
such
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representation or warranty), that are necessary or advisable in connection
with the purchase and sale of the Certificates and the execution and delivery
by the Seller or the Conduit Seller, as applicable, of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents on the part of the Seller or the Conduit Seller, as
applicable, and the performance by the Seller or the Conduit Seller, as
applicable, of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(i) The origination practices used by the Seller with respect to the Home
Equity Loans have been, in all material respects, legal, proper, prudent and
customary in the mortgage lending business. All of the Home Equity Loans were
originated by the Seller.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller or the Conduit Seller, as applicable.
(k) The Trustee, the Seller and the Conduit Seller have no obligation to
register the Trust and the Trust has no obligation to register as an investment
company under the Investment Company Act of 1940, as amended.
(l) The Seller or the Conduit Seller, as applicable, is not insolvent, nor
will it be made insolvent by the transfer of the Home Equity Loans, nor is the
Seller or the Conduit Seller, as applicable, aware of any pending insolvency.
(m) The Seller or the Conduit Seller, as applicable, received fair
consideration and reasonably equivalent value in exchange for the sale of the
interests in the Home Equity Loans transferred by it.
(n) The Seller or the Conduit Seller, as applicable, did not sell any
interest in any Home Equity Loan with any intent to hinder, delay or defraud any
of its creditors.
(o) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(p) The Seller or the Conduit Seller, as applicable, is not in default
under any agreement involving financial obligations or on any outstanding
obligation which would materially adversely impact the financial condition or
operations of the Seller or the Conduit Seller, as applicable, or legal
documents associated with the transaction contemplated by this Agreement.
(q) To the best of the knowledge of the Seller or the Conduit Seller, as
applicable, there has been no material adverse change in any information
submitted by the Seller or the Conduit Seller, as applicable, in writing to the
Certificate Insurer with respect to the transactions
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contemplated by this Agreement (unless such information was subsequently
supplemented in writing to the Certificate Insurer).
(r) The sale, transfer, assignment and conveyance of Home Equity Loans by
the Seller or the Conduit Seller, as applicable, pursuant to this Agreement is
not subject to and will not result in any tax, fee or governmental charge
payable by the Seller or the Conduit Seller, as applicable, the Depositor or the
Trustee to any federal, state or local government ("Transfer Taxes") other than
Transfer Taxes which have or will be paid as due by the Seller or the Conduit
Seller, as applicable. The Seller shall pay, and otherwise indemnify and hold
the Certificate Insurer harmless, on an after-tax basis, from and against any
and all such Transfer Taxes (it being understood that the Certificate Insurer
shall have no obligation to pay such Transfer Taxes).
(s) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Seller or the Conduit Seller, as
applicable, contains any untrue statement of a material fact or omits to state
any material fact necessary to make the certificate, statement or report not
misleading.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Section 3.04. COVENANTS OF SELLERS TO TAKE CERTAIN ACTIONS WITH RESPECT TO
THE HOME EQUITY LOANS IN CERTAIN SITUATIONS.
(a) Upon the discovery by the Depositor, the Seller, the Conduit Seller,
the Servicer, the Certificate Insurer, any Sub-Servicer, any Owner, the
Custodian or the Trustee that the representations and warranties set forth in
clause (b) below were untrue in any material respect, without regard to any
limitation set forth therein concerning the knowledge of the Seller, the Conduit
Seller or the Servicer as to the facts stated therein as of the Startup Day (or
in the case of a Qualified Replacement Mortgage, as of the respective
replacement date) with the result that the interests of the Owners or of the
Certificate Insurer in the related Home Equity Loan are, or may be, materially
and adversely affected, the party discovering such breach shall give prompt
written notice to the other parties. Upon the earliest to occur of CHEC's
discovery, its receipt of notice of breach from any one of the other parties or
such time as a situation resulting from an existing statement which is untrue
materially and adversely affects the interests of the Owners or of the
Certificate Insurer, without regard to any limitation set forth therein
concerning the knowledge of CHEC as to the facts stated therein, CHEC hereby
covenants and warrants that it shall promptly cure such breach in all material
respects or that it shall on or before the second Monthly Remittance Date next
succeeding such discovery, receipt of notice or such time (i) substitute in lieu
of each Home Equity Loan which has given rise to the requirement for action by
CHEC a Qualified Replacement Mortgage and deliver the Substitution Amount to the
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Home Equity Loan from the Trust at a purchase price equal to the Loan Purchase
Price thereof, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account; PROVIDED, HOWEVER, that if CHEC
can establish to the reasonable satisfaction of the Certificate Insurer that it
is diligently pursuing remedial action, the period of time in which CHEC must
substitute a Qualified Replacement Mortgage or purchase such Home Equity Loan
may be extended with the written
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approval of the Certificate Insurer. It is understood and agreed that the
obligation of CHEC so to substitute or purchase any Home Equity Loan as to
which such a statement set forth below is untrue in any material respect and
has not been remedied shall constitute the sole remedy respecting a discovery
of any such statement which is untrue in any material respect in this Section
3.04 available to the Owners and the Trustee on behalf of the Owners.
Notwithstanding any provision of this Agreement to the contrary, with respect
to any Home Equity Loan which is not in default or as to which no default is
imminent, no repurchase or substitution pursuant to Section 3.04 or 3.06
shall be made unless CHEC obtains for the Trustee and the Certificate Insurer
at its expense an Opinion of Counsel experienced in federal income tax
matters to the effect that such a repurchase or substitution would not
constitute a Prohibited Transaction for the Trust or either REMIC created
hereunder or otherwise subject the Trust or either REMIC created hereunder to
tax and would not jeopardize the status of either REMIC created hereunder as
a REMIC (a "REMIC Opinion") addressed to the Trustee and the Certificate
Insurer and acceptable to the Certificate Insurer and the Trustee. CHEC
shall also deliver an Officer's Certificate to the Trustee and the Certificate
Insurer concurrently with the delivery of a Qualified Replacement Mortgage
pursuant to Sections 3.04 and 3.06(b) stating that such Home Equity Loan
meets the requirements of the definition of a Qualified Replacement Mortgage
and that all other conditions to the substitution thereof have been
satisfied. Any Home Equity Loan as to which repurchase or substitution was
delayed pursuant to this Section shall e repurchased or substituted for
(subject to compliance with Section 3.04 or 3.06(b), as the case may be) upon
the earlier of (a) the occurrence of a default or imminent default with
respect to such Home Equity Loan and (b) receipt by the Trustee and the
Certificate Insurer of a REMIC Opinion.
(b) The Seller, with respect to the Seller Home Equity Loans, and the
Servicer, in consideration of its appointment hereunder, with respect to the
Conduit Home Equity Loans and with respect to the Home Equity Loans taken as a
whole or by Group, hereby represents, warrants and covenants to the Trustee, the
Depositor, the Servicer, the Certificate Insurer and the Owners that as of the
Startup Day:
(i) The information with respect to each Home Equity Loan set
forth in the related Schedule of Home Equity Loans is true and correct in
all material respects as of the Cut-Off Date;
(ii) Each of the Seller and the Conduit Seller has transferred
good and marketable title to the Home Equity Loans (including the related
Notes) and other items of the Trust, and upon receipt of each Home Equity
Loan and other items of the Trust by the Trustee (including the related
Note), the Trust will have good and marketable title to such Home Equity
Loan (including the related Note) and such items of the Trust Estate, free
and clear of any lien, charge, mortgage, encumbrance or rights of others,
except as set forth in Section 3.04(b)(ix) and except for liens that will
be simultaneously released. All the original or certified documentation
set forth in Section 3.05 (including all material documents related
thereto) with respect to each Home Equity Loan has been delivered to the
Custodian on behalf of the Trustee on the Startup Day or as otherwise
provided in Section 3.05. To the Seller's or the Servicer's best
knowledge, no documentation contains any untrue statement of a material
fact or omits to state a fact necessary to make the statements contained
therein not misleading;
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(iii) Each Home Equity Loan being transferred to the Trust is a
Qualified Mortgage and is a Mortgage;
(iv) Each Property is a fee simple estate in a single parcel of
real property improved by a single family residential dwelling (except 524
Properties that are condominiums, townhouses, manufactured housing,
two-to-four family residential dwellings or PUDs), and no more than 1.9%
and 1.3%, respectively, of the aggregate Loan Balance of the Home Equity
Loans in Group I and Group II are secured Properties that are Manufactured
Homes, each of which is considered to be real property under the applicable
local law;
(v) As of the Cut-Off Date or Replacement Cut-Off Date, as
applicable, no Home Equity Loan has a combined Loan-to-Value Ratio in
excess of 100%;
(vi) Each Home Equity Loan is being serviced by the Servicer in
accordance with the terms of this Agreement;
(vii) The Note related to each Home Equity Loan in Group I bears a
current Coupon Rate of at least 7.49% per annum and the Note related to
each Home Equity Loan in Group II bears a current Coupon Rate of at least
7.99%;
(viii) Each Note with respect to the Home Equity Loans will provide
for a schedule of substantially level and equal Monthly Payments (or
periodic rate adjustments in the case of the Home Equity Loans in Group
II), which are sufficient to amortize fully the principal balance of such
Note on or before its maturity date, except for 180 Home Equity Loans,
representing approximately 7% of the aggregate Loan Balance of the Home
Equity Loans in Group I, which may provide for a "balloon" payment due at
the end of the 15th year, and no Home Equity Loan is a graduated payment
loan;
(ix) As of the Startup Day, each Mortgage is a valid and
enforceable first or second lien of record (or is in the process of being
recorded) on the Property subject in the case of any Second Mortgage Loan
only to a Senior Lien on such Property and subject in all cases to the
exceptions to title set forth in the title insurance policy or attorney's
opinion of title, with respect to the related Home Equity Loan, which
exceptions are generally acceptable to banking institutions in connection
with their regular mortgage lending activities, and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the Home
Equity Loans by the Seller or the Conduit Seller, as applicable, to the
Depositor and by the Depositor to the Trustee herein contemplated, the
Seller, the Conduit Seller and the Depositor, as the case may be, each held
good and indefeasible title to, and was the sole owner of, each Home Equity
Loan (including the related Note) conveyed by the Seller (or the Conduit
Seller, as applicable) subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in clause (ix) or
other liens which will be released
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simultaneously with such transfer and assignment; and immediately upon
the transfer and assignment herein contemplated, the Trustee will hold
good and indefeasible title to, and be the sole owner of, each Home Equity
Loan subject to no liens, charges, mortgages, encumbrances or rights of
others except as set forth in paragraph (ix) or other liens which will be
released simultaneously with such transfer and assignment;
(xi) As of the Cut-Off Date, none of the Home Equity Loans are
more than 30 days Delinquent (and none are more than 59 days Delinquent);
(xii) To the best of the knowledge of the Seller or the Servicer,
as applicable, there is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in good
repair;
(xiii) To the best of the knowledge of the Seller or the Servicer,
as applicable, there is no valid and enforceable right of offset, claim,
defense or counterclaim to any Note or Mortgage, including the obligation
of the related Mortgagor to pay the unpaid principal of or interest on such
Note nor has any such claim, defense, offset or counterclaim been asserted;
(xiv) To the best of the knowledge of the Seller or the Servicer,
as applicable, there is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are insured
against by any title insurance policy referred to in paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act (as amended by the Riegle Community Development and Regulatory
Improvement Act of 1994) and other consumer protection laws, usury, equal
credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) if a title
insurance policy is not available in the applicable state, an attorney's
opinion of title has been obtained but no title policy has been obtained,
or (b) a lender's title insurance policy, issued in standard American Land
Title Association form by a title insurance company authorized to transact
business in the state in which the related Property is situated, in an
amount at least equal to the original balance of such Home Equity Loan
together, in the case of a Second Mortgage Loan, with the then-original
principal amount of the mortgage note relating to the Senior Lien, insuring
the mortgagee's interest under the related Home Equity Loan as the holder
of a valid first or second mortgage lien of record on the real Property
described in the related Mortgage, as the case may be, subject only to
exceptions of the character referred to in paragraph (ix) above, was
effective on the date of the origination of such Home Equity Loan, and, as
of the Startup Day, such policy is valid and thereafter such policy shall
continue in full force and effect;
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(xvii) The improvements upon each Property are covered by a valid
and existing hazard insurance policy with a carrier generally acceptable to
the Servicer that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance
of the related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien), (B) the
minimum amount required to compensate for damage or loss on a replacement
cost basis or (C) the full insurable value of the Property;
(xviii) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration is in effect with
respect to such Property with a carrier generally acceptable to the
Servicer in an amount representing coverage not less than the least of (A)
the outstanding principal balance of the related Home Equity Loan
(together, in the case of a Second Mortgage Loan, with the outstanding
principal balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;
(xix) Each Mortgage and Note are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance with
their terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law),
and all parties to each Home Equity Loan had full legal capacity to execute
all documents relating to such Home Equity Loan and convey the estate
therein purported to be conveyed;
(xx) The Seller or the Servicer, as applicable, has caused and
will cause to be performed any and all acts required to be performed to
preserve the rights and remedies of the Trustee in any Insurance Policies
applicable to any Home Equity Loans delivered by the Seller or the Conduit
Seller including, without limitation, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments
of co-insured, joint loss payee and mortgagee rights in favor of the
Trustee;
(xxi) As of the Startup Day, no more than 0.3% of the aggregate
Loan Balance of the Home Equity Loans in either Home Equity Loan Group will
be secured by Properties located within any single zip code area;
(xxii) Each original Mortgage was recorded or is in the process of
being recorded, and all subsequent assignments of the original Mortgage
have been delivered for recordation or have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to perfect
the lien thereof as against creditors of or purchasers from the Seller or
the Conduit Seller (or, subject to Section 3.05 hereof, are in the process
of being recorded); each Mortgage and assignment of Mortgage is in
recordable form and
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is acceptable for recording under the laws of the jurisdiction in which
the property securing such Mortgage is located;
(xxiii) The terms of each Note and each Mortgage have not been
impaired, waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the Owners and the Certificate Insurer and which has been delivered to
the Trustee. The substance of any such waiver, alteration or modification
is reflected on the related Schedule of Home Equity Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to make
future advances thereunder. Any and all requirements as to completion of
any on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording such Home Equity Loans were paid
and the Mortgagor is not entitled to any refund of any amounts paid or due
under the related Note or Mortgage;
(xxv) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature, or
other contingent interest feature;
(xxvii) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxviii) Each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Home Equity Loan
in the event the related Property is sold without the prior consent of the
mortgagee thereunder;
(xxix) Any advances made after the date of origination of a Home
Equity Loan but prior to the Cut-Off Date have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the respective Schedule of Home Equity
Loans. The consolidated principal amount does not exceed the original
principal amount of the related Home Equity Loan. No Note permits or
obligates the Servicer to make future advances to the related Mortgagor at
the option of the Mortgagor;
(xxx) To the best of the knowledge of the Seller or the Conduit
Seller, as applicable, there is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a proceeding
currently occurring, and each Property is undamaged by waste, fire, water,
flood, earthquake, earth movement or other casualty;
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(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property, and
no improvements on adjoining properties encroach upon such Property, and
are stated in the title insurance policy and affirmatively insured;
(xxxii) To the best of the knowledge of the Seller or the
Servicer, as applicable, no improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of each Property and, with respect to the
use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities and such Property is lawfully occupied
under the applicable law;
(xxxiii) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Owners or the
Trust to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the related Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the benefits
of the security, including (A) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (B) otherwise by judicial foreclosure.
There is no homestead or other exemption other than any applicable
Mortgagor redemption rights available to the related Mortgagor which would
materially interfere with the right to sell the related Property at a
trustee's sale or the right to foreclose the related Mortgage;
(xxxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and none of the Servicer, the Seller, the Conduit
Seller nor the Conduit Servicer, as applicable, has waived any default,
breach, violation or event of acceleration or advanced funds, directly or
indirectly for the payment of any amount required under any Home Equity
Loan;
(xxxvi) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if any,
and which has been delivered to the Trustee;
(xxxvii) Reserved;
(xxxviii) Each Home Equity Loan was underwritten in accordance with
the credit underwriting guidelines of the Seller as set forth in the
Seller's Policies and Procedures
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Manual, as in effect on the date hereof and such Manual conforms in all
material respects to the description thereof set forth in the Registration
Statement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject property;
(xl) The Home Equity Loans were not selected for inclusion in
the Trust on any basis intended to adversely affect the Trust or the
Certificate Insurer;
(xli) No more than 3.8% and 2.4% of the aggregate Loan Balance of
the Home Equity Loans in Group I and Group II, respectively, are secured by
Properties that are non-owner occupied Properties (I.E., investor-owned and
vacation);
(xlii) The Seller or the Servicer, as applicable, has no actual
knowledge that there exist any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation on any Property, and no violations of any local, state or
federal environmental law, rule or regulation exist with respect to any
Property;
(xliii) The Seller (and the originator, if not the Seller) was
properly licensed or otherwise authorized, to the extent required by
applicable law, to originate or purchase each Home Equity Loan; and the
consummation of the transactions herein contemplated, including, without
limitation, the receipt of interest by the Owners and the ownership of the
Home Equity Loans by the Trustee as trustee of the Trust will not involve
the violation of such laws;
(xliv) With respect to each Property subject to a ground lease (i)
the current ground lessor has been identified and all ground rents which
have previously become due and owing have been paid; (ii) the ground lease
term extends, or is automatically renewable, for at least five years beyond
the maturity date of the related Home Equity Loan; (iii) the ground lease
has been duly executed and recorded; (iv) the amount of the ground rent and
any increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times; (v) the ground rent payment
is included in the borrower's monthly payment as an expense item in
determining the qualification of the borrower for such Home Equity Loan;
(vi) the Trust has the right to cure defaults on the ground lease; and
(vii) the terms and conditions of the leasehold do not prevent the free and
absolute marketability of the Property. As of the Cut-Off Date, the Loan
Balance of the Home Equity Loans with related Properties subject to ground
leases does not exceed 2.0% of the Original Aggregate Loan Balance;
(xlv) As of the Startup Day, with respect to any Second Mortgage
Loan, none of the Seller, the Servicer, the Conduit Seller nor the Conduit
Servicer, as applicable, has received a notice of default of any Senior
Lien secured by any Property which has not been cured by a party other than
the Seller;
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(xlvi) No Home Equity Loan is subject to a rate reduction pursuant
to a buydown program;
(xlvii) Reserved;
(xlviii) The Coupon Rate on each Home Equity Loan is calculated on
the basis of a year of 360 days with twelve 30-day months;
(xlix) Each Home Equity Loan was originated by the Seller, an
affiliate of the Seller or a broker for simultaneous assignment to the
Seller;
(l) Neither the operation of any of the terms of each Note and
each Mortgage nor the exercise of any right thereunder will render either
the Note or the Mortgage unenforceable, in whole or in part, nor subject it
to any right of rescission, claim set-off, counterclaim or defense,
including, without limitation, the defense of usury;
(li) Any adjustment to the Coupon Rate on a Home Equity Loan in
Group II has been legal, proper and in accordance with the terms of the
related Note;
(lii) No Home Equity Loan in Group II is subject to negative
amortization;
(liii) As of the Cut-Off Date, the FTC holder regulation provided
in 16 C.F.R. Part 433 applies to none of the Home Equity Loans;
(liv) As of the Cut-Off Date, a portion of the Home Equity Loans
are "mortgages" as defined in 15 U.S.C. 1602(aa), and with respect to each
such Home Equity Loan, no Mortgagor has or will have a claim or defense
under such Home Equity Loan;
(lv) Reserved;
(lvi) The rights with respect to each Home Equity Loan are
assignable by the Seller or the Conduit Seller, as applicable, without the
consent of any Person other than consents which will have been obtained on
or before the Startup Day;
(lvii) The Seller or the Conduit Seller, as applicable, has duly
fulfilled all obligations to be fulfilled on the lender's part under or in
connection with the origination, acquisition and assignment of the Home
Equity Loans and the related Mortgage and Note, and has done nothing to
impair the rights of the Trustee, the Certificate Insurer or the Owners in
payments with respect thereto;
(lviii) To the Seller's or the Servicer's, as applicable, knowledge,
the documents, instruments and agreements submitted by each Mortgagor for
loan underwriting were not falsified and contain no untrue statement of a
material fact and do not omit to state a material fact required to be
stated therein or necessary to make the information and statements
contained therein not misleading.
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(lix) No Home Equity Loan matures later than March 1, 2030;
(lx) The first date on which the applicable Mortgagor must make a
payment on each Home Equity Loan is no later than April 1, 2000, except
with respect to one Home Equity Loan, which represents 0.02% of the
Original Aggregate Loan Balance as of the Cut-Off Date, that provides for a
first payment on or after April 5, 2000; and
(lxi) With respect to each Home Equity Loan that is a Second
Mortgage Loan:
(a) The related Senior Lien does not provide for negative
amortization.
(b) None of the Servicer, the Seller, the Conduit Seller or
the Conduit Servicer, as applicable, has received, or is aware of, a
notice of default of any Senior Lien which has not been cured.
(c) To the best of the knowledge of the Seller or the
Servicer, as applicable, no funds provided to the Mortgagor from a
Second Mortgage Loan were concurrently used as a down payment for the
Senior Lien.
(c) In the event that any such repurchase pursuant to this Section results
in a prohibited transaction tax as specified in the REMIC Opinion delivered
pursuant to Section 3.04(a), the Trustee shall immediately notify the Seller in
writing thereof and the Seller will, within 10 days of receiving notice thereof
from the Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately available
funds. In the event that any Qualified Replacement Mortgage is delivered by the
Seller to the Trust pursuant to Section 3.04 or Section 3.06 hereof, the Seller
shall be obligated to take the actions described in Section 3.04(a) with respect
to such Qualified Replacement Mortgage upon the discovery by any of the Owners,
the Seller, the Servicer, the Certificate Insurer, any Sub-Servicer, the
Custodian or the Trustee that the statements set forth in subsection (b) above
are untrue in any material respect, without regard to any limitation set forth
therein concerning the knowledge of the Seller as to facts stated therein, on
the date such Qualified Replacement Mortgage is conveyed to the Trust such that
the interests of the Owners or the Certificate Insurer in the related Qualified
Replacement Mortgage are, or may be, materially and adversely affected;
PROVIDED, HOWEVER, that for the purposes of this subsection (c) the statements
in subsection (b) above referring to items "as of the Cut-Off Date" or "as of
the Startup Day" shall be deemed to refer to such items as of the date such
Qualified Replacement Mortgage is conveyed to the Trust. Notwithstanding the
fact that a representation contained in subsection (b) above may be limited to
the Seller's knowledge, such limitation shall not relieve the Seller of its
repurchase obligation under this Section and Section 3.05 hereof.
(d) It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Home Equity Loans (including Qualified Replacement Mortgage) to the
Trustee or the Custodian, on behalf of the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the
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repurchase or substitution of any Home Equity Loan pursuant to this Article
III or the eligibility of any Home Equity Loan for the purpose of this
Agreement.
Section 3.05. SALE TREATMENT OF THE HOME EQUITY LOANS AND QUALIFIED
REPLACEMENT MORTGAGES.
(a) The transfer by the Seller and the Conduit Seller to the Depositor and
by the Depositor to the Trustee of the Home Equity Loans set forth on the
applicable Schedule of Home Equity Loans is absolute and is intended by the
Owners and all parties hereto to be treated as a sale by the Seller, the Conduit
Seller and the Depositor.
In the event that any such conveyance is deemed to be a loan, the parties
intend that each of the Seller and the Conduit Seller shall be deemed to have
granted to the Depositor and the Depositor shall be deemed to have granted to
the Trustee a security interest in the Trust Estate, and that this Agreement
shall constitute a security agreement under applicable law.
(b) In connection with the transfer and assignment of the Home Equity
Loans, CHEC agrees to:
(i) deliver without recourse to the Custodian, on behalf of the
Trustee, on the Startup Day with respect to each Home Equity Loan, (A) the
original Notes endorsed in blank or to the order of the Trustee ("Pay to
the order of Bank One, National Association, as Trustee for Centex Home
Equity Loan Trust 2000-A, without recourse") and signed by manual signature
of the Seller or the Conduit Seller, as applicable, (B) (1) if the original
title insurance policy is not available, the original title insurance
commitment or a copy thereof certified as a true copy by the closing agent
or CHEC, and when available, the original title insurance policy or a copy
certified by the issuer of the title insurance policy or (2) if title
insurance is not available in the applicable state, the attorney's opinion
of title, (C) originals or copies of all intervening assignments certified
as true copies by the closing agent or CHEC, showing a complete chain of
title from origination to the Trustee, if any, including warehousing
assignments, if recorded, (D) originals of all assumption and modification
agreements, if any, (E) either: (1) the original Mortgage, with evidence of
recording thereon (if such original Mortgage has been returned to the
Seller or the Conduit Seller, as applicable, from the applicable recording
office) or a copy of the Mortgage certified as a true copy by the closing
attorney or an Authorized Officer of CHEC, or (2) a copy of the Mortgage
certified by the public recording office in those instances where the
original recorded Mortgage has been lost and (F) the original assignments
of Mortgages (as described in clause (b)(ii)) in recordable form and
acceptable for recording in the state or other jurisdiction where the
Property is located;
(ii) cause, within 60 days following the Startup Day with respect
to the Home Equity Loans, assignments of the Mortgages to "Bank One,
National Association, as Trustee of Centex Home Equity Loan Trust 2000-A
under the Pooling and Servicing Agreement dated as of March 1, 2000" to be
submitted for recording in the appropriate jurisdictions; PROVIDED,
FURTHER, that CHEC shall not be required to record an assignment of a
Mortgage if the Seller furnishes to the Trustee and the Certificate
Insurer, on or
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before the Startup Day, at CHEC's expense, an Opinion of Counsel with
respect to the relevant jurisdiction that such recording is not necessary
to PERFECT the Trustee's interest in the related Home Equity Loans (in
form and substance satisfactory to the Trustee, the Certificate Insurer
and the Rating Agencies); PROVIDED FURTHER, HOWEVER, notwithstanding the
delivery of any legal opinions, each assignment of Mortgage shall be
recorded by the Custodian on behalf of the Trustee at the expense of
CHEC upon the earliest to occur of: (i) reasonable direction by the
Certificate Insurer, (ii) the occurrence of a Servicer Termination
Event, (iii) if the Seller is not Servicer and with respect to any one
assignment of Mortgage, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage, or
(iv) the occurrence of a bankruptcy, insolvency or foreclosure relating
to the Seller or the Conduit Seller, as applicable;
(iii) deliver the title insurance policy or title searches, the
original Mortgages and such recorded assignments, together with originals
or duly certified copies of any and all prior assignments (other than
unrecorded warehouse assignments), to the Custodian, on behalf of the
Trustee, within 15 days of receipt thereof by CHEC, but in any event, with
respect to any Mortgage as to which original recording information has been
made available to the Seller, within one year after the Startup Day; and
(iv) furnish to the Trustee, the Certificate Insurer and the
Rating Agencies at CHEC's expense, an Opinion of Counsel with respect to
the sale and perfection of the Home Equity Loans delivered to the Trust in
form and substance satisfactory to the Certificate Insurer.
In instances where the original recorded Mortgage cannot be delivered by
CHEC to the Custodian on behalf of the Trustee prior to or concurrently with the
execution and delivery of this Agreement due to a delay in connection with
recording, CHEC may in lieu of delivering such original recorded Mortgage,
deliver to the Custodian on behalf of the Trustee a copy thereof, provided that
CHEC certifies that the original Mortgage has been delivered to a title
insurance company for recordation after receipt of its policy of title insurance
or binder therefor. In all such instances, the Seller will deliver or cause to
be delivered the original recorded Mortgage to the Custodian on behalf of the
Trustee promptly upon receipt of the original recorded Mortgage but in no event
later than one year after the Startup Day.
CHEC hereby confirms to the Trustee that it has made the appropriate
entries in its general accounting records, to indicate that such Home Equity
Loans have been transferred to the Trustee and constitute part of the Trust in
accordance with the terms of the trust created hereunder.
Notwithstanding anything to the contrary contained in this Section 3.05, in
those instances where the public recording office retains the original Mortgage,
the assignment of a Mortgage or the intervening assignments of the Mortgage
after it has been recorded, the Depositor and each of the Sellers shall be
deemed to have satisfied its obligations hereunder upon delivery to the
Custodian, on behalf of the Trustee of a copy of such Mortgage, such
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assignment or assignments of Mortgage certified by the public recording
office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred in
clause (b)(ii) above, CHEC shall deliver to the Custodian on behalf of the
Trustee, with a copy to the Trustee, a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by CHEC, which list
shall state the reason why CHEC has not yet submitted such Mortgage assignments
for recording. With respect to any Mortgage assignment disclosed on such list
as not yet submitted for recording for a reason other than a lack of original
recording information, the Custodian, on behalf of the Trustee, shall make an
immediate demand on CHEC to prepare such Mortgage assignments, and shall inform
the Certificate Insurer, in writing, of its failure to prepare such Mortgage
assignments. Thereafter, the Custodian, on behalf of the Trustee, shall
cooperate in executing any documents prepared by the Certificate Insurer and
submitted to the Custodian, on behalf of the Trustee in connection with this
provision. Following the expiration of the 60-day period referred to in clause
(b)(ii) above, CHEC shall promptly prepare a Mortgage assignment for any
Mortgage for which original recording information is subsequently received by
CHEC, and shall promptly deliver a copy of such Mortgage assignment to the
Custodian, on behalf of the Trustee. CHEC agrees that it will follow its normal
servicing procedures and attempt to obtain the original recording information
necessary to complete a Mortgage assignment. In the event that CHEC is unable
to obtain such recording information with respect to any Mortgage prior to the
end of the 18th calendar month following the Startup Day and has not provided to
the Custodian, on behalf of the Trustee a Mortgage assignment with evidence of
recording thereon relating to the assignment of such Mortgage to the Trustee,
the Custodian, on behalf of the Trustee shall notify CHEC of its obligation to
provide a completed assignment (with evidence of recording thereon) on or before
the end of the 20th calendar month following the Startup Day. A copy of such
notice shall be sent by the Custodian, on behalf of the Trustee to the
Certificate Insurer and the Trustee. If no such completed assignment (with
evidence of recording thereon) is provided before the end of such 20th calendar
month, the related Home Equity Loan shall be deemed to have breached the
representation contained in clause (xxii) of Section 3.04(b) hereof; PROVIDED,
HOWEVER, that if as of the end of such 20th calendar month CHEC demonstrates to
the satisfaction of the Certificate Insurer that it is exercising its best
efforts to obtain such completed assignment and, during each month thereafter
until such completed assignment is delivered to the Custodian, on behalf of the
Trustee, CHEC continues to demonstrate to the satisfaction of the Certificate
Insurer that it is exercising its best efforts to obtain such completed
assignment, the related Home Equity Loan will not be deemed to have breached
such representation. The requirement to deliver a completed assignment with
evidence of recording thereon will be deemed satisfied upon delivery of a copy
of the completed assignment certified by the applicable public recording office.
Copies of all Mortgage assignments received by the Custodian on behalf of
the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be accomplished
at the expense of the Seller.
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(c) In the case of Home Equity Loans which have been prepaid in full on or
after the Cut-Off Date and prior to the Startup Day, the Seller, in lieu of the
foregoing, will deliver within six (6) days after the Startup Day to the Trustee
a certification of an Authorized Officer in the form set forth in Exhibit D.
(d) CHEC shall transfer, assign, set over and otherwise convey without
recourse, to the Trustee all right, title and interest of CHEC in and to any
Qualified Replacement Mortgage delivered to the Custodian, on behalf of the
Trustee on behalf of the Trust by the Seller pursuant to Section 3.04 or 3.06
hereof and all its right, title and interest to principal and interest due on
such Qualified Replacement Mortgage on and after the applicable Replacement
Cut-Off Date; PROVIDED, HOWEVER, that CHEC shall reserve and retain all right,
title and interest in and to payments of principal and interest due on such
Qualified Replacement Mortgage prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection with
a repurchase or the conveyance of a Qualified Replacement Mortgage therefor, the
Trustee will transfer, assign, set over and otherwise convey without recourse or
representation, on CHEC's order, all of its right, title and interest in and to
such released Home Equity Loan and all the Trust's right, title and interest to
principal and interest due on such released Home Equity Loan after the
applicable Replacement Cut-Off Date, as the case may be; PROVIDED, HOWEVER, that
the Trust shall reserve and or and retain all right, title and interest in and
to payments of principal and interest due on such released Home Equity Loan
prior to such repurchase or the applicable Replacement Cut-Off Date, as the case
may be.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, CHEC agrees to (i)
deliver or cause to be delivered without recourse to the Custodian, on behalf of
the Trustee on the date of delivery of such Qualified Replacement Mortgage the
original Note relating thereto, endorsed in blank or to the order of the
Trustee, (ii) cause promptly to be recorded an assignment in the appropriate
jurisdictions, (iii) deliver or cause to be delivered the original Qualified
Replacement Mortgage and such recorded assignment, together with original or
duly certified copies of any and all prior assignments, to the Custodian, on
behalf of the Trustee within 15 days of receipt thereof by CHEC (but in any
event within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection with
a repurchase or the conveyance of a Qualified Replacement Mortgage the
Custodian, on behalf of the Trustee shall deliver on the date of such repurchase
or conveyance of such Qualified Replacement Mortgage and on the order of CHEC
(i) the original Note relating thereto, endorsed without recourse or
representation, in blank or to the order of, to CHEC, (ii) the original Mortgage
so released and all assignments relating thereto and (iii) such other documents
as constituted the File with respect thereto.
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(h) If a Mortgage assignment is lost during the process of recording, or
is returned from the recorder's office unrecorded due to a defect therein,
CHEC shall prepare or cause to be prepared a substitute assignment or cure
such defect, as the case may be, and thereafter cause each such assignment to
be duly recorded.
Section 3.06. ACCEPTANCE BY TRUSTEE; CERTAIN SUBSTITUTIONS OF HOME
EQUITY LOANS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver and the Trustee agrees to
cause the Custodian to execute and deliver on behalf of the Trustee on the
Startup Day an acknowledgment of receipt of the items delivered by CHEC in the
forms attached as Exhibit E-1 and E-2 hereto, respectively, and declares
through the Custodian that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets included in
the definition of Trust Estate and delivered to the Custodian, on behalf of
the Trustee, as Trustee in trust upon and subject to the conditions set forth
herein for the benefit of the Owners and the Certificate Insurer. The Trustee
agrees, for the benefit of the Owners and the Certificate Insurer, to cause
the Custodian to review such items within 45 days after the Startup Day (or,
with respect to any document delivered after the Startup Day, within 45 days
of receipt and with respect to any Qualified Replacement Mortgage, within 45
days after the assignment thereof) and to deliver to the Depositor, the
Seller, the Conduit Seller, the Servicer, the Trustee and the Certificate
Insurer a certification in the form attached hereto as Exhibit F (a "Pool
Certification") to the effect that, as to each Home Equity Loan listed in the
Schedule of Home Equity Loans (other than any Home Equity Loan paid in full or
any Home Equity Loan specifically identified in such Pool Certification as not
covered by such Pool Certification), (i) all documents required to be
delivered to it pursuant to Section 3.05(b)(i) of this Agreement have been
executed and are in its possession and that the Notes have been endorsed as
set forth in Section 3.05(b)(i) hereof, (ii) such documents have been reviewed
by it and have not been mutilated, damaged or torn and relate to such Home
Equity Loan and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Schedule of Home Equity Loans
accurately reflects the information set forth in the File. The Custodian, on
behalf of the Trustee, shall have no responsibility for reviewing any File
except as expressly provided in this subsection 3.06(a). Without limiting the
effect of the preceding sentence, in reviewing any File, the Custodian, on
behalf of the Trustee, shall hav no responsibility for determining whether any
document is valid and binding, whether the text of any assignment is in proper
form (except to determine if the Trustee is the assignee), whether any
document has been recorded in accordance with the requirements of any
applicable jurisdiction or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine whether a
document has been executed, that it appears to be what it purports to be, and,
where applicable, that it purports to be recorded. The Custodian, on behalf
of the Trustee, shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on
their face, nor shall the Custodian, on behalf of the Trustee, be under any
duty to determine independently whether there are any intervening assignments
or assumption or modification agreements with respect to any Home Equity Loan.
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(b) If the Custodian, on behalf of the Trustee during such 45-day period
finds any document constituting a part of a File which is not executed, has
not been received, or is unrelated to the Home Equity Loans identified in the
Schedule of Home Equity Loans, or that any Home Equity Loan does not conform
to the description thereof as set forth in the Schedule of Home Equity Loans,
the Custodian, on behalf of the Trustee shall promptly so notify the
Depositor, CHEC, the Owners and the Certificate Insurer. In performing any
such review, the Custodian, on behalf of the Trustee may conclusively rely on
CHEC as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the review of the items delivered
by the Seller pursuant to Section 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been executed and
received, relate to the Files identified in the Schedule of Home Equity Loans
and conform to the description thereof in the Schedule of Home Equity Loans.
CHEC agrees to use reasonable efforts to remedy a material defect in a
document constituting part of a File of which it is so notified by the
Custodian, on behalf of the Trustee. If, however, within 90 days after such
notice to it respecting such defect CHEC has not remedied the defect and the
defect materially and adversely affects the interest in the related Home
Equity Loan of the Owners or the Certificate Insurer, CHEC will (or will cause
an affiliate to) on the next succeeding Monthly Remittance Date (i) substitute
in lieu of such Home Equity Loan a Qualified Replacement Mortgage and deliver
the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest Account.
In connection with any proposed purchase or substitution of a Home Equity
Loan, CHEC shall cause at its expense to be delivered to the Trusteeand to the
Certificate Insurer an Opinion of Counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute a Prohibited Transaction for the Trust or would jeopardize the
status of either REMIC I or REMIC II as a REMIC, and CHEC shall only be
required to take either such action to the extent such action would not
constitute a Prohibited Transaction for the Trust or would not jeopardize the
status of either REMIC I or REMIC II as a REMIC. Any required purchase or
substitution, if delayed by the absence of such opinion, shall nonetheless
occur upon the earlier of (i) the occurrence of a default or imminent default
with respect to the Home Equity Loan or (ii) the delivery of such opinion.
(c) In addition to the foregoing, the Custodian, on behalf of the
Trustee also agrees to make a review during the 12th month after the Startup
Day indicating the current status of the exceptions previously indicated on
the Pool Certification (the "Final Certification"). After delivery of the
Final Certification, the Custodian, on behalf of the Trustee and the Servicer
shall provide to the Certificate Insurer and the Trustee no less frequently
than monthly updated certifications indicating the then current status of
exceptions, until all such exceptions have been eliminated.
Section 3.07. Reserved.
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Section 3.08. CUSTODIAN.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, and 8.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian on the Trustee's behalf
pursuant to the Custodial Agreement; provided, however, the Trustee shall
remain primarily liable for such obligations. The fees and expenses of the
Custodian will be paid by the Servicer.
If, pursuant to Section 4.12 of the Custodial Agreement, the Custodian
shall request written instructions from the Trustee, the Trustee hereby agrees
to promptly provide such instructions.
Section 3.09. COOPERATION PROCEDURES. CHEC shall, in connection with
the delivery of each Qualified Replacement Mortgage to the Custodian, on
behalf of the Trustee, provide the Trustee with information set forth in the
Schedules of Home Equity Loans with respect to such Qualified Replacement
Mortgage.
(a) The Seller, the Conduit Seller, the Depositor, the Servicer and the
Trustee covenant to provide each other with all data and information required
to be provided by them hereunder at the times required hereunder, and
additionally covenant reasonably to cooperate with each other in providing any
additional information required to be obtained by any of them in connection
with their respective duties hereunder.
(b) The Servicer shall maintain such accurate and complete accounts,
records and computer systems pertaining to each File as shall enable it and
the Trustee to comply with this Agreement. In performing its recordkeeping
duties the Servicer shall act in accordance with the servicing standards set
forth in this Agreement. The Servicer shall conduct, or cause to be
conducted, periodic audits of its accounts, records and computer systems as
set forth in Section 8.16 and 8.17 hereof. The Servicer shall promptly report
in writing to the Trustee any failure on its part to maintain its accounts,
records and computer systems herein provided and promptly take appropriate
action to remedy any such failure.
(c) CHEC further confirms to the Trustee that it has caused the portions
of the electronic ledger relating to the Home Equity Loans to be clearly and
unambiguously marked to indicate that such Home Equity Loans have been sold,
transferred, assigned and conveyed through the Depositor to the Trustee and
constitute part of the Trust Estate in accordance with the terms of the trust
created hereunder and that the Seller and the Conduit Seller will treat the
transaction contemplated by such sale, transfer, assignment and conveyance as
a sale for accounting purposes.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. ISSUANCE OF CERTIFICATES.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02. SALE OF CERTIFICATES.
At 11:00 a.m. New York City time on the Startup Day, at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038 (or
at such other location acceptable to the Seller), the Seller and the Conduit
Seller will sell and convey the Home Equity Loans and the money, instruments
and other property related thereto to the Depositor and the Depositor will
convey the Home Equity Loans and the money, instruments and other property
related thereto to the Trustee, and the Depositor will cause the Certificate
Insurance Policy to be delivered to the Trustee and the Trustee will deliver
(i) to the Underwriters (as designee of the Depositor), the Class A
Certificates with an aggregate Percentage Interest in each Class equal to 100%
registered in the name of Cede & Co. or in such other names as the
Underwriters shall direct, against payment to the Depositor of the purchase
price thereof by wire transfer of immediately available funds to the Trustee
as designee of the Depositor and (ii) to the respective registered owners
thereof (as designees of the Depositor, the Seller and the Conduit Seller),
Class R Certificates registered in the name of CHEC Residual Corporation, a
Nevada Corporation, and the Class X-IO Certificates, registered in the name of
CHEC Residual Corporation, a Nevada Corporation (all such events shall be
referred to herein as the "Closing").
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. TERMS.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein
with respect to the Certificates as to "principal" and "interest" thereof, no
debt of any Person is represented thereby, nor are the Certificates or the
underlying Notes guaranteed by any Person (except that the Notes may be
recourse to the Mortgagors thereof to the extent permitted by law and the
terms of the related Note and except for the rights of the Trustee on behalf
of the Owners of the Class A Certificates with respect to the Certificate
Insurance Policy). The Class A Certificates are payable solely from payments
received on or with respect to the Home Equity Loans (net of the Servicing
Fees, Trustee Fees, and Premium Amounts), moneys in the Principal and Interest
Account, except as otherwise provided herein, from earnings on moneys and the
proceeds of property held as a part of the Trust Estate and, upon the
occurrence of certain events, from Insured Payments. Each Certificate
entitles the Owner thereof to receive monthly on each Distribution Date, in
order of priority of distributions with respect to such Class of Certificates
as set forth in Section 7.03, a specified portion of such payments with
respect to the Home Equity Loans, certain related Insured Payments, PRO RATA
in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee,
any Certificate prior to the Trustee making the final distribution due
thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed canceled and shall no longer be
Outstanding for any purpose of this Agreement.
Section 5.02. FORMS.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the
Class A-6 Certificates, the Class A-7 Certificates, the Class X-IO
Certificates and the Class R Certificates shall be in substantially the forms
set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, B and C hereof,
respectively.
Section 5.03. EXECUTION, AUTHENTICATION AND DELIVERY.
Each Certificate shall be executed on behalf of the Trust, by the manual
signature of one of the Trustee's Authorized Officers at the written direction
of the Servicer. In addition, each Certificate shall be authenticated by the
manual signature of one of the Trustee's Authorized Officers at the written
direction of the Servicer.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Trustee shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication
of such Certificates.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04. REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall
have the right to inspect the Register upon reasonable notice during the
Trustee's normal hours and to obtain copies thereof, and the Trustee shall
have the right to rely upon a certificate executed on behalf of the Registrar
by an Authorized Officer thereof as to the names and addresses of the Owners
of the Certificates and the principal amounts and numbers of such
Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Voting Rights represented by the
Certificates then Outstanding with the consent of the Certificate Insurer,
such Owners shall give the Trustee, the Certificate Insurer and the Owners
prompt written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register. In connection with
any such appointment the reasonable fees of the Registrar shall be paid, as
expenses of the Trust, pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender for
registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee
shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of a like Class and in
the aggregate outstanding principal amount or Percentage Interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate outstanding principal amount or Percentage Interest
and bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and
deliver the Certificate or Certificates which the Owner making the exchange is
entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement
as the Certificates surrendered upon such registration of transfer or
exchange.
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(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise
provided in Subsection (h), be initially issued in the form of a single fully
registered Class A Certificate of such Class. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in the Register
in the name of Cede & Co., or any successor thereto, as nominee for the
Depository.
On the Startup Day, the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6 and Class A-7 Certificates shall be issued in denominations of
$1,000 and integral multiples of $1 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository in the form provided to
the Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time
as a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Class A
Certificates, (ii) the delivery to any Direct or Indirect Participant or any
other Person, other than a registered Owner of a Class A Certificate as shown
in the Register, of any notice with respect to the Class A Certificates or
(iii) the payment to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Class A Certificate as shown in the
Register, of any amount with respect to any distribution of principal or
interest on the Class A Certificates. No Person other than a registered Owner
of a Class A Certificate as shown in the Register shall receive a certificate
evidencing such Class A Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the registered
Owners of Class A Certificates appearing as registered Owners in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
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(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Class A Certificates and either of CHEC or the Trustee is unable to
locate a qualified successor or (ii) the Depositor at its sole option elects
to terminate the book-entry system through the Depository, the Class A
Certificates shall no longer be restricted to being registered in the Register
in the name of Cede & Co. (or a successor nominee) as nominee of the
Depository or (iii) after the occurrence of a Servicer Termination Event, the
beneficial owners of each Class of Class A Certificates representing
Percentage Interests aggregating not less than 51% advises the Trustee and
Depository through the Direct or Indirect Participants in writing that the
continuation of a book-entry system through the Depository to the exclusion of
definitive, fully registered certificates (the "Definitive Certificates") to
Owners is no longer in the best interests of the Owners. In the case of (i)
and (ii) above, CHEC may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating
a global book-entry system, as may be acceptable to the CHEC and at the
expense of CHEC, or such depository's agent or designee but, if CHEC does not
select such alternative global book-entry system and in the case of (iii)
above, then the Class A Certificates may be registered in whatever name or
names registered Owners of Class A Certificates transferring Class A
Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede
& Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates and all notices with respect to such
Class A Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in
the case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it to hold the Trustee and the Certificate Insurer harmless
(PROVIDED, THAT with respect to an Owner which is an institutional investor, a
letter of indemnity furnished by it shall be sufficient for this purpose),
then, in the absence of written notice to the Trustee or the Registrar that
such Certificate has been acquired by a bona fide purchaser, the Seller shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and aggregate principal amount, bearing a
number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment from the transferor or transferee
of the related Certificate of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other
expenses in connection with such issuance shall be an expense of the Trust.
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Every new Certificate issued pursuant to this Section in exchange for or
in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately
with any and all other Certificates of the same Class duly issued hereunder
and such mutilated, destroyed, lost or stolen Certificate shall not be valid
for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any Certificate,
the Certificate Insurer, the Trustee and any agent of the Trustee may treat
the Person in whose name any Certificate is registered as the Owner of such
Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice
to the contrary.
Section 5.07. CANCELLATION.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as
provided in this Section, except as expressly permitted by this Agreement.
All canceled Certificates may be held by the Trustee in accordance with its
standard retention policy in effect from time to time.
Section 5.08. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate (whether pursuant to a purchase, a transfer resulting from
a default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be
of no legal force or effect whatsoever and such transferee shall not be deemed
to be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no
event shall the Trustee accept surrender for transfer, registration of
transfer, or register the transfer, of any Class R Certificate nor
authenticate and make available any new Class R Certificate unless the Trustee
has received an affidavit from the proposed transferee in the form attached
hereto as Exhibit H. Each holder of a Class R Certificate by his acceptance
thereof, shall be deemed for all purposes to have consented to the provisions
of this Section 5.08(a).
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(b) No other sale or other transfer of record or beneficial ownership of
a Class X-IO or Class R Certificate shall be made unless such transfer is
exempt from the registration requirements of the Securities Act, and any
applicable state securities laws or is made in accordance with said Securities
Act and laws. In the event of any such a transfer: (i) in the case of
transfers for which an investment letter in the form of Exhibit I-1 is
provided by the transferee to the Trustee and the Certificate Insurer, the
Trustee or the Depositor shall require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Depositor, the Trustee and
the Certificate Insurer to the effect that such transfer may be made pursuant
to an exemption, describing the applicable exemption and the basis therefor,
from said Securities Act and laws or is being made pursuant to said Securities
Act and laws, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee, the Trust Estate or the Certificate Insurer; and (ii)
in the case of transfers for which an investment letter in the form of Exhibit
I-1 or I-2 is provided, the investment letter shall not be an expense of the
Depositor, the Trustee, the Trust Estate or the Certificate Insurer. The
Owner of a Class X-IO or Class R Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Certificate
Insurer, the Depositor and the Sellers against any liability that may result
if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
(c) No transfer of a Class X-IO or Class R Certificate shall be made
unless the Trustee shall have received either: (i) a representation letter
from the transferee of such Class X-IO or Class R Certificate, acceptable to
and in form and substance satisfactory to the Trustee and the Certificate
Insurer (which may be combined with the investment letter required by
subsection (b) above), to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 4975 of the Code (collectively, a "Plan"), nor is acting on behalf of
any Plan nor using the assets of any Plan to effect such transfer or (ii) in
the event that any Class X-IO or Class R Certificate is purchased by a Plan,
or by a person or entity acting on behalf of any Plan or using the assets of
any Plan to effect such transfer (including the assets of any Plan held in an
insurance company separate or general account), an Opinion of Counsel,
acceptable to and in form and substance satisfactory to the Trustee and the
Certificate Insurer, which Opinion of Counsel shall not be at the expense of
either the Trustee, the Certificate Insurer or the Trust, to the effect that
the purchase or holding of any Class X-IO or Class R Certificates will not
result in any non-exempt prohibited transaction under ERISA and/or Section
4975 of the Code, and will not subject the Trustee to any obligation or
liability in addition to those expressly undertaken under this Agreement.
Notwithstanding anything else to the contrary herein, any purported transfer
of a Certificate to or on behalf of any Plan without the delivery to the
Trustee and the Certificate Insurer of an Opinion of Counsel as described
above shall be null and void and of no effect.
(d) Reserved.
(e) No sale or other transfer of any Class X-IO Certificates or Class R
Certificate may be made to any Seller except in connection with (1) the
payment in partial consideration for the Home Equity Loans sold by the
applicable Seller or in payment of the Deferred Purchase Price (as defined in
the Conduit Warehouse Facility) by CHEC Funding LLC to CHEC on the Startup
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Day and (2) the contemporaneous transfer of such Certificates to CHEC Residual
Corporation, a Nevada corporation.
(f) Notwithstanding anything to the contrary contained in this Section
5.08, the Class R Certificates and Class X-IO Certificates may be transferred
to CHEC Residual Corporation, a Nevada corporation and wholly-owned subsidiary
of the Seller, without regard to Sections 5.08(b), (c) or (e) above.
Section 5.09. ASSIGNMENT OF RIGHTS.
Other than with respect to any Class R Certificates (unless the Trustee
shall have received a satisfactory Opinion of Counsel to the effect that such
action with respect to a Class R Certificate will not have an adverse effect
on the status of either REMIC I or REMIC II as a "REMIC") an Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute a transfer of an ownership interest sufficient
to render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01. DISTRIBUTIONS.
On each Distribution Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the
Certificates in accordance with the terms of the Certificates and this
Agreement. Such distributions shall be made (i) in the case of the Class A
Certificates registered in the name of the Depository, by wire transfer to the
Depository or (ii) in each other case, by check or draft mailed on each
Distribution Date or, if requested by any Owner (other than the Depository) of
(A) a Class A Certificate having an original principal balance of not less
than $1,000,000 or (B) a Class X-IO or Class R Certificate having a Percentage
Interest of not less than 10% in writing not later than one Business Day prior
to the applicable Record Date (which request does not have to be repeated
unless it has been withdrawn), to such Owner by wire transfer to an account
within the United States designated no later than five Business Days prior to
the related Record Date, made on each Distribution Date, in each case to each
Owner of record on the immediately preceding Record Date.
Section 6.02. MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST; WITHHOLDING.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If CHEC has appointed a Paying Agent pursuant to Section 11.15
hereof, the Trustee will, on the Business Day immediately preceding each
Distribution Date, deposit with such Paying Agent in immediately available
funds an aggregate sum sufficient to pay the amounts then becoming due (to the
extent funds are then available for such purpose in the Certificate Account
for the Class to which such amounts are due) such sum to be held in trust for
the benefit of the Owners entitled thereto.
(c) CHEC may at any time direct any Paying Agent to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) CHEC shall require the Paying Agent, including the Trustee on behalf
of the Trust to comply with all requirements of the Code and applicable state
and local law with respect to the withholding from any distributions made by
it to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith, and
the Trustee and Paying Agent agree to comply with such requirements.
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(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in
the escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid, upon delivery to the
Trustee of an Opinion of Counsel that such payment is permitted by applicable
law, first to the Certificate Insurer on account of any Reimbursement Amount
and second to the Depositor; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Depositor and
not to the Certificate Insurer for payment thereof (but only to the extent of
the amounts so paid to the Depositor) and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent before being required to make
any such payment, may at the expense of the Trust cause to be published once,
in the eastern edition of THE WALL STREET JOURNAL, notice that such money
remains unclaimed and that, after a date specified therein, which shall be not
fewer than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be paid to the Certificate Insurer on account
of any Reimbursement Amount or to the Depositor. The Trustee shall, at the
written direction of CHEC, also adopt and employ, at the expense of CHEC, any
other reasonable means of notification of such payment (including but not
limited to mailing notice of such payment to Owners whose right to or interest
in moneys due and payable but not claimed is determinable from the records of
the Registrar, the Trustee or any Paying Agent, at the last address of record
for each such Owner).
Section 6.03. PROTECTION OF TRUST ESTATE.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon written request of the
Certificate Insurer or, with the consent of the Certificate Insurer, at the
request of the Depositor, will from time to time execute and deliver all such
supplements and amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will take such
other action upon such request from the Depositor (with the consent of the
Certificate Insurer) or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
To the extent not covered by the indemnity or other security contemplated
by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any costs or
expenses associated with this section pursuant to Section 7.03(b)(x).
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(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer or the Owners as such rights are set forth in this
Agreement; PROVIDED, HOWEVER, that nothing in this Section shall require any
action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have
been requested by the Certificate Insurer or the Owners of a majority of the
Voting Rights represented by the Certificates then Outstanding with the
consent of the Certificate Insurer (unless a Certificate Insurer Default under
clause (a) of the definition thereof has occurred and is continuing);
PROVIDED, FURTHER, HOWEVER, that if there is a dispute with respect to
payments under the Certificate Insurance Policy the Trustee's first
responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or
with the Trustee's fiduciary duties, or adversely affect its rights,
indemnities and immunities hereunder.
Section 6.04. PERFORMANCE OF OBLIGATIONS.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05. NEGATIVE COVENANTS.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Owner by reason of the payment of any taxes
levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust in whole or in part, except
pursuant to Article IX hereof; or
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(v) (A) permit the validity or effectiveness of this Agreement
to be impaired, or permit any Person to be released from any covenant or
obligation with respect to the Trust or to the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the
proceeds thereof.
Section 6.06. NO OTHER POWERS.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07. LIMITATION OF SUITS.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policy,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Seller and the
Trustee of such Owner's intention to institute such proceeding;
(2) the Owners of not less than 51% of the Voting Rights represented by
the Certificates then Outstanding shall have made written request to
the Trustee to institute such proceeding in its own name as Trustee
establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amounts are owed to the Certificate Insurer, the
Certificate Insurer has consented in writing thereto (unless a
Certificate Insurer Default as defined in clause (a) of the
definition thereof has occurred and is continuing); and
(6) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Owners of a majority of
the Voting Rights represented by the Certificates then Outstanding;
it being understood and intended that no one or more Owners shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Owner of the same Class or to obtain or to seek to obtain priority or
preference over any other Owner of the same Class or to enforce any right
under this Agreement, except in the manner herein provided and for the equal
and ratable benefit of all the Owners of the same Class.
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In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing
less than a majority of the applicable Class of Certificates and each
conforming to paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer
in its sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provision of this Agreement.
Section 6.08. UNCONDITIONAL RIGHTS OF OWNERS TO RECEIVE DISTRIBUTIONS.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect
to such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee, the Certificate Insurer or to the Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. Except as otherwise provided herein, the
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.10. DELAY OR OMISSION NOT WAIVER.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee, the Certificate Insurer,
or by the Owners, as the case may be.
Section 6.11. CONTROL BY OWNERS.
The Certificate Insurer or the Owners of a majority of the Voting Rights
represented by the Certificates then Outstanding with the consent of the
Certificate Insurer may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Estate, including, but not limited
to, those powers set forth in Section 6.03 and Section 8.20 hereof, PROVIDED
THAT:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
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(3) the Trustee may take any other action deemed proper by the Trustee,
as the case may be, which is not inconsistent with such direction
(and which does not require Certificate Insurer consent or direction
pursuant to the terms of this Agreement); PROVIDED, HOWEVER, that
the Trustee need not take any action which it determines might
involve it in liability or may be unjustly prejudicial to the Owners
not so directing.
Section 6.12. INDEMNIFICATION BY CHEC.
CHEC agrees to indemnify and hold the Trustee, the Depositor, the
Certificate Insurer and each Owner harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor, the Certificate Insurer and any Owner sustain in any way related to
the failure of Sellers to perform their duties in compliance with the terms of
this Agreement. CHEC shall immediately notify the Trustee, the Depositor, the
Certificate Insurer and each Owner if a claim is made by a third party that
the Servicer has failed to perform its obligations to service and administer
the Home Equity Loans in compliance with the terms of this Agreement, and CHEC
shall assume (with the consent of the Trustee) the defense of any such claim
and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Depositor, the Servicer, the Sellers, the Trustee, the
Certificate Insurer and/or Owner in respect of such claim. The Trustee shall,
in accordance with instructions received from CHEC, reimburse CHEC only from
amounts otherwise distributable on the Class X-IO and the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence, except when
a final nonappealable adjudication determines that the claim relates directly
to the failure of the Sellers to perform its duties in compliance with the
terms of this Agreement. The provisions of this Section 6.12 shall survive
the termination of this Agreement, the resignation or removal of the Trustee
and the payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable
by the Trustee pursuant to this Agreement or the Certificate Insurance Policy,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b)
Insured Payments. The Trustee shall hold all such money and property received
by it as part of the Trust Estate and shall apply it as provided in this
Agreement.
Section 7.02. ESTABLISHMENT OF ACCOUNTS.
(a) The Depositor shall cause the Certificate Account and the Supplemental
Interest Reserve Fund to be established on the Startup Day, and the Trustee
shall maintain each of the Certificate Account and the Supplemental Interest
Reserve Fund, at the Corporate Trust Office as an Eligible Account to be held by
the Trustee in the name of the Trust on behalf of (i) in the case of the
Certificate Account, the Owners of the Certificates and the Certificate Insurer;
and (ii) in the case of the Supplemental Interest Reserve Fund, the Owners of
the Class A-7 Certificates.
(b) On each Determination Date the Trustee shall determine (subject to
the terms of Section 10.03(j) hereof, based solely on information provided to
it electronically or in writing by the Servicer) with respect to the
immediately following Distribution Date, the amounts that are expected to be
on deposit in the Certificate Account as of such Distribution Date.
Section 7.03. FLOW OF FUNDS.
(a) (i) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, with respect to Group I, the proceeds of
any liquidation of the assets of the Trust insofar as such assets relate to
Group I, all remittances made to the Trustee pursuant to Sections 8.08(d)(i)
and 8.09 with respect to Group I and the Group I Monthly Remittance Amount
remitted by the Servicer.
(ii) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, with respect to Group II, the proceeds
of any liquidation of the assets of the Trust insofar as such assets
relate to Group II, all remittances made to the Trustee pursuant to
Sections 8.08(d)(i) and 8.09 with respect to Group II and the Group II
Monthly Remittance Amount remitted by the Servicer.
(b) On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers (based solely on information provided
by the Servicer in writing), for each Home Equity Loan Group from amounts
deposited in the Certificate Account pursuant to subsection (a) for the
related Home Equity Loan Group in the following order of priority, and
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each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations:
(i) concurrently, to the Trustee and the Certificate Insurer,
the Trustee Fee and any Transition Expenses for the related Home Equity
Group and provided that no Certificate Insurer Default as defined in
clause (a) of the definition thereof has occurred and is continuing, the
Premium Amount for the related Classes of Class A Certificates for the
Distribution Date to the Certificate Insurer.
(ii) to the related Classes of Class A Certificates, the related
Current Interest for the Class on a pro rata basis based on each Class A
Certificate's Current Interest without priority among the Class A
Certificates for the Distribution Date.
(iii) to the related Classes of Class A Certificates, an amount
up to the related Class A Principal Distribution Amount in the following
order of priority:
(A) With respect to the Home Equity Loan Group relating to
the Group I Certificates, the Class A Principal Distribution Amount
applicable to the Group I Certificates shall be distributed as
follows:
(1) to the Certificateholders of the Class A-6
Certificates, an amount equal to the Class A-6 Lockout
Distribution Amount until the Certificate Principal Balance
of the Class A-6 Certificates has been reduced to zero; and
(2) The remainder as follows: first, to the Class A-1
Certificateholders until the Certificate Principal Balance
of the Class A-1 Certificates is reduced to zero; second,
to the Class A-2 Certificateholders until the Certificate
Principal Balance of the Class A-2 Certificates is reduced
to zero; third, to the Class A-3 Certificateholders until
the Certificate Principal Balance of the Class A-3
Certificates is reduced to zero; fourth, to the Class A-4
Certificateholders until the Certificate Principal Balance
of the Class A-4 Certificates is reduced to zero; fifth, to
the Class A-5 Certificateholders until the Certificate
Principal Balance of the Class A-5 Certificates is reduced
to zero; and sixth to the Class A-6 Certificate holders
until the Certificate Principal Balance of the Class A-6
Certificates has been reduced to zero;
provided, however, during the continuance of a Certificate Insurer
Default, if there is a Collateralization Deficit with respect to the
Group I Certificates, then the Class A Principal Distribution Amount
applicable to the Group I Certificates shall be distributed pro rata
to the Certificateholders of the Group I Certificates.
(B) With respect to the Home Equity Loan Group relating to
the Group II Certificates, the Class A Principal Distribution Amount
applicable to the Group
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II Certificates shall be distributed to the Certificateholders of the
Class A-7 Certificates, until the Certificate Principal Balance of
the Class A-7 Certificates is reduced to zero.
(iv) Concurrently, to the Trustee and the Certificate Insurer,
any unpaid Trustee Fee and any unpaid Transition Expenses for the
unrelated Home Equity Group and provided that no Certificate Insurer
Default as defined in clause (a) of the definition thereof has occurred
and is continuing, any unpaid Premium Amount for the unrelated Class or
Classes of Class A Certificates for the Distribution Date to the
Certificate Insurer.
(v) To the Classes of Class A Certificates with respect to the
unrelated Home Equity Loan Group, the amount of the Available Funds
Shortfall with respect to the other Home Equity Loan Group, allocated to
Current Interest on such Classes, to the extent of any shortfall in
Current Interest, and then to principal (allocated in the same order of
priority as provided in clause (iii) above);.
(vi) To the Certificate Insurer, in the following order of
priority, the sum of:
(1) Any Reimbursement Amount owed to the Certificate
Insurer with respect to the related Classes of Class A Certificates;
provided that if a Certificate Insurer Default as defined in clause
(a) of the definition thereof has occurred and is continuing, then
the priority of this allocations shall follow immediately after
clause (vii) below; and
(2) Any unpaid Reimbursement Amount owed to the
Certificate Insurer with respect to the unrelated Classes of Class A
Certificates; provided that if a Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred and is
continuing, then the priority of this allocations shall follow
immediately after clause (viii) below.
(vii) To the Classes of Class A Certificates with respect to the
related Home Equity Loan Group, an amount up to the Extra Principal
Distribution Amount for the related Home Equity Loan Group, until the
related Target Overcollateralization Amount is reached, such amounts to be
applied in reduction of the related Certificate Principal Balances in the
same order of priority as the Class A Principal Distribution Amount is to
be so applied for such Home Equity Loan Group pursuant to clause (iii)
above.
(viii) To the Classes of Class A Certificates with respect to the
unrelated Home Equity Loan Group, an amount equal to any Target Deficiency
for such Home Equity Loan Group remaining after the distributions above
with respect to the unrelated Home Equity Loan Group, such amounts to be
applied in reduction of the related Certificate Principal Balances in the
same order of priority as the Class A Principal Distribution Amount is to
be so applied for such Home Equity Loan Group pursuant to clause (iii)
above.
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(ix) To the Class X-IO Certificate, the lesser of the Class X-IO
Distribution Amount and the Class A-7 Interest Index Carryover, provided
that, pursuant to Section 7.04 hereof, on any Distribution Date as to
which there is any unpaid Class A-7 Interest Index Carryover, the Trustee
will transfer, from amounts that would otherwise be distributable to the
Class X-IO Certificates pursuant to this clause, the amount of any Class
A-7 Interest Index Carryover into the Supplemental Interest Reserve
Fund, for immediate transfer pursuant to this clause to the Class A-7
Certificates as payment of the Class A-7 Interest Index Carryover.
(x) To the Trustee as reimbursement for all Trustee
Reimbursable Expenses incurred in connection with its duties and
obligations under the Agreement, to the extent not paid as Transition
Expenses pursuant to clauses (i) or (iv) above.
(xi) To the Servicer to the extent of any unreimbursed
Delinquency Advances, unreimbursed Servicing Advances and unreimbursed
Compensating Interest.
(xii) To the Class X-IO Certificates, an amount equal to the
Class X-IO Distribution Amount less any amounts thereof applied pursuant
to clause (ix) above.
(xiii) To the Class R Certificates, the remainder.
(c) Reserved.
(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Distribution Dates to the Owners of the related
Class A Certificates on account of principal pursuant to Section 7.03(b) shall
not exceed the original Certificate Principal Balance of the related Class A
Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Policy Payments Account. On each Distribution Date,
pursuant to Section 12.02(b) hereof, such amounts will be transferred from the
Policy Payments Account to the Certificate Account and the Trustee shall
distribute such Insured Payments, or the proceeds thereof, to the Owners of
such Class A Certificates, first, to the payment of any unpaid Current
Interest for such Class or Classes of Class A Certificates on a pro rata
basis, and second, any remaining Guaranteed Distributions shall be applied to
the related Class A Principal Distribution Amount on the related Distribution
Date, in the same order of priority as described in Section 7.03(b)(iii).
(f) The Trustee or Paying Agent shall (i) receive for each Owner of the
Class A Certificates any Insured Payment from the Certificate Insurer and (ii)
disburse the same to the Owners of the related Class A Certificates as set
forth in Section 7.03(e). Insured Payments disbursed by the Trustee or Paying
Agent from proceeds of the Certificate Insurance Policy shall not be
considered payment by the Trust, nor shall such payments discharge the
obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the Reimbursement Amount
pursuant to Section 7.03(b) hereof. Nothing contained in
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this paragraph shall be construed so as to impose duties or obligations on the
Trustee that are different from or in addition to those expressly set forth in
this Agreement.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class X-IO and Class R Certificates to receive
distributions in respect of the Class X-IO and Class R Certificates shall be
subject and subordinate to the preferential rights of the holders of the Class
A Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with
the foregoing, the ownership interests of the Owners of the Class X-IO and
Class R Certificates in amounts deposited in the Accounts from time to time
shall not vest unless and until such amounts are distributed in respect of the
Class X-IO and Class R Certificates in accordance with the terms of this
Agreement. Notwithstanding anything contained in this Agreement to the
contrary, and the Owners of the Class X-IO and Class R Certificates shall not
be required to refund any amount properly distributed on the Class X-IO and
Class R Certificates pursuant to this Section 7.03.
Section 7.04. SUPPLEMENTAL INTEREST RESERVE FUND. On the Closing Date,
the holders of the Class X-IO Certificates will deposit, or cause to be
deposited, into the Supplemental Interest Reserve Fund, $10,000. On each
Distribution Date as to which there is Current WAC Excess or Class A-7
Interest Index Carryover, the Trustee has been directed to, and shall
therefore, deposit into the Supplemental Interest Reserve Account an amount
equal to the Current WAC Excess of the Current Interest on the Class A-7
Certificates which is payable pursuant to Section 7.03(b)(ii), and/or the
Class A-7 Interest Index Carryover pursuant to Section 7.03(b)(ix). If no
current WAC Excess or Class A-7 Interest Index Carryover are payable on a
Distribution Date, the Trustee shall deposit into the Supplemental Reserve
Account on behalf of the Class X-IO Certificateholders an amount such that
when added to other amounts already on deposit in the fund, the aggregate
amount on deposit therein is equal to $10,000. For federal and state income
tax purposes, the Class X-IO Certificateholders will be deemed to be the
owners of the Supplemental Interest Reserve Fund and all amounts deposited
into the Supplemental Interest Reserve Fund (other than the initial $10,000
deposit) shall be treated as amounts distributed by REMIC II with respect to
the Class X-IO Distribution Amount. Amounts held in the Supplemental Interest
Reserve Fund and not distributable to the Class A-7 Certificateholders on any
Distribution Date will be invested by the Trustee in investments designated by
the Class X-IO Certificateholders having maturities on or prior to the next
succeeding Distribution Date on which such amounts will be distributable to
the Class A-7 Certificateholders. Upon the termination of the Trust, or the
payment in full of the Class A-7 Certificates, all amounts remaining on
deposit in the Supplemental Interest Reserve Fund will be released from the
lien of the Trust and distributed to the Class X-IO Certificateholders or
their designees. The Supplemental Interest Reserve Fund will be part of the
Trust but not part of any REMIC Pool and any payments to the Class A-7
Certificates of Current WAC Excess and Supplemental Interest Amounts will not
be payments with respect to a "regular interest" in a REMIC within the meaning
of Code Section 860G(a)(1).
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Section 7.05. INVESTMENT OF ACCOUNTS.
(a) Consistent with any requirements of the Code, all or a portion of any
Account held by the Trustee for the benefit of the Owners may (i) remain
uninvested or (ii) be invested and reinvested by the Trustee as directed in
writing by the Servicer in the name of the Trustee for the benefit of the Owners
and the Certificate Insurer in one or more Eligible Investments bearing interest
or sold at a discount. The bank serving as Trustee or any affiliate thereof may
be the obligor on any investment which otherwise qualifies as an Eligible
Investment. No investment in any Account shall mature later than the Business
Day immediately preceding the next Distribution Date. Amounts held in the
Certificate Account shall be invested in Eligible Investments, which Eligible
Investments shall mature no later than the Business Day preceding the
immediately following Distribution Date or, if such Eligible Investments are an
obligation of the Trustee or are money market funds for which the Trustee or any
affiliate is the manager or the adviser, such Eligible Investments shall mature
no later than the following Distribution Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
as directed in writing by the Servicer a sufficient amount of the investments in
such Account. No investments will be liquidated prior to maturity unless the
proceeds thereof are needed for disbursement.
(c) All income or other gain from investment in the Certificate Account
held by the Trustee shall be withdrawn by the Trustee and, remitted to the
Servicer (except with respect to all income or other gain from investment earned
on the Business Day immediately preceding a Distribution Date, which amounts
shall be retained by the Trustee). Any investment losses on amounts held in the
Certificate Account shall, promptly upon realization of such loss, be
contributed by the Servicer to the Trustee for deposit in the Certificate
Account.
Section 7.06. PAYMENT OF TRUST EXPENSES.
(a) The Trustee shall make demand on the Seller to pay and the Seller
shall pay the amount of the expenses of the Trust referred to in Section 2.05,
and the Seller shall promptly pay such expenses directly to the Persons to whom
such amounts are due, from amounts distributed pursuant to clause (x) of Section
7.03(b). With respect to the Certificate Account the Trustee shall receive all
income and other gains from investments as described in Section 7.05(c).
(b) The Seller shall pay directly on the Startup Day the reasonable fees
and expenses of counsel to the Trustee.
Section 7.07. ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States, FHLMC
senior debt obligations, and FNMA senior debt obligations, but
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excluding any of such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-1 by
Standard & Poor's and P-1 by Moody's; provided that any such certificates of
deposit must be secured at all times by collateral described in clause (a) or
(b) above, such collateral must be held by a third party and the Trustee must
have a perfected first priority security interest in such collateral;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is A2 or better by Moody's and BBB by Standard & Poor's)
which has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in (a),
(c), or (e) above with any registered broker/dealer subject to the Securities
Investors Protection Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection Corporation or any
commercial bank, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed short-term or long term obligation rated P-1 or Aa2, respectively,
or better by Moody's and A-1+ or AA, respectively, or better by Standard &
Poor's, provided:
a. A master repurchase agreement or specific written repurchase
agreement governs the transaction;
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank
which is a member of the FDIC and which has combined capital, surplus and
undivided profits of not less than $125,000,000, or (c) a bank approved in
writing for such purpose by the Certificate Insurer, and the Trustee shall
have received written confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the Trustee;
c. A perfected first security interest under the Uniform Commercial
Code, or book entry procedures prescribed at 31 CFR 306.1 ET SEQ. or 31 CFR
350.0 ET SEQ., in such securities is created for the benefit of the
Trustee;
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d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than weekly marked-to-market at current market price plus interest and will
liquidate the collateral securities if any deficiency in the required
collateral percentage is not restored within two business days of such
valuation; and
e. The fair market value of the collateral securities in relation
to the amount of the repurchase obligation, including principal and
interest, is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's;
(j) Any money market fund rated AAAm or AAAm-G by Standard & Poor's and
Aaa by Moody's which funds are registered under the Investment Company Act of
1940 and whose shares are registered under the Securities Act of 1933, including
any such fund that is managed by the Trustee or any affiliate of the Trustee or
for which the Trustee or any of its affiliates acts as an adviser; and
(k) Any other investment permitted by each of the Rating Agencies and the
Certificate Insurer;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Distribution Date unless otherwise provided in this Agreement
and that no instrument described hereunder may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08. ACCOUNTING AND DIRECTIONS BY TRUSTEE.
By 12:00 noon New York time, on each Distribution Date (or such earlier
period as shall be agreed by the Seller and the Trustee), the Trustee shall
notify (subject to the terms of Section 10.03(j) hereof, based solely on
information provided to the Trustee by the Servicer and upon which the Trustee
may conclusively rely) the Seller, the Depositor, each Owner and the Certificate
Insurer, of the following information with respect to such Distribution Date
(which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account as of the
related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes in the aggregate on the next
Distribution Date;
(3) The amount of any Extra Principal Distribution Amount for each Group;
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(4) The amount of any Insured Payment to be made by the Certificate
Insurer on such Distribution Date;
(5) The application of the amounts described in clauses (1), (3) and (4)
above in respect of the distribution of the Class A Distribution
Amount on such Distribution Date in accordance with Section 7.03
hereof;
(6) The Class A Certificate Principal Balance, the aggregate amount of the
principal of each Class of the Class A Certificates to be paid on such
Distribution Date and the remaining Certificate Principal Balance of
each Class of Class A Certificates following any such payment;
(7) The amount, if any, of any Realized Losses for each Group for the
related Remittance Period; and
(8) The amount of any Collateralization Deficit, any Overcollateralization
Release Amount and the Target Overcollateralization Amount for each
Group.
Section 7.09. REPORTS BY TRUSTEE TO OWNERS AND CERTIFICATE INSURER.
(a) On each Distribution Date the Trustee shall transmit a report in
writing to each Owner, the Underwriters, the Depositor, the Certificate Insurer,
Standard & Poor's and Moody's setting forth:
(i) the amount of the distribution with respect to such Owners'
Certificates (based on a Certificate in the original principal amount of
$1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any Prepayments
in full or other Prepayments or other recoveries of principal included
therein with respect to Group I and Group II (based on a Certificate in the
original principal amount of $1,000) and any related Extra Principal
Distribution Amount;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution to the Owners of any Class of the Class
A Certificates on such Distribution Date was less than the related Class A
Distribution Amount on such Distribution Date, the related Carry-Forward
Amount and the allocation thereof to the related Classes of Class A
Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Distribution
Date;
(vi) the principal amount of each Class of Class A Certificate
which will be Outstanding and the aggregate Loan Balance of each Group
after giving effect to any payment of principal on such Distribution Date;
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(vii) the Overcollateralization Amount, Target
Overcollateralization Amount and Collateralization Deficit for each Group,
if any, remaining after giving effect to all distributions and transfers on
such Distribution Date;
(viii) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and the
regulations promulgated thereunder to assist the Owners in computing their
market discount;
(ix) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution with respect to each Group;
(x) the weighted average Coupon Rate of the Home Equity Loans in
each Group;
(xi) the amount of any Carry-Forward Amounts;
(xii) such other information as the Certificate Insurer or any
Owner may reasonably request with respect to Delinquent Home Equity Loans;
(xiii) the weighted average gross margin of the Home Equity Loans
in Group II;
(xiv) the largest home equity loan balance outstanding in each
Group;
(xv) the Class A-7 Certificate Rate for the related Distribution
Date;
(xvi) the Class A-7 Certificateholders' Interest Index Carryover
paid to the Owners of the Class A-7 Certificates for such Distribution Date
and any Class A-7 Certificateholders' Interest Index Carryover remaining
unpaid;
(xvii) the Class A-1 Certificate Rate for the related Distribution
Date;
(xviii) the Class A-2 Certificate Rate for the related Distribution
Date;
(xix) the Class A-3 Certificate Rate for the related Distribution
Date;
(xx) the Class A-4 Certificate Rate for the related Distribution
Date;
(xxi) the Class A-5 Certificate Rate for the related Distribution
Date;
(xxii) the Class A-6 Certificate Rate for the related Distribution
Date;
(xxiii) the Class A-7 Certificate Rate for the related Distribution
Date;
(xxiv) the Group I Net WAC Cap, the Group II Net WAC Cap and the
Class A-7 Available Funds Cap for such Distribution Date; and
(xxv) the Reimbursement Amount, if any, for such Distribution.
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The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(ii) and in clause (b) below to enable the Trustee to perform its
reporting obligations under this Section, and such obligations of the Trustee
under this Section are conditioned upon such information being received and the
information provided in clauses (ii), (ix) and (x) above shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on each Distribution Date the Trustee will distribute to
each Owner, the Certificate Insurer, the Underwriters, Standard & Poor's and
Moody's, together with the information described in Subsection (a) preceding,
the following information with respect to each Home Equity Loan Group and for
both Groups in the aggregate which is hereby required to be prepared by the
Servicer and furnished to the Trustee for such purpose on or prior to the
related Monthly Remittance Date:
(i) the number and aggregate principal balances of Home Equity
Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or
more days Delinquent, as of the close of business on the last Business Day
of the calendar month immediately preceding the Distribution Date, (d) the
numbers and aggregate Loan Balances of all Home Equity Loans as of such
Distribution Date after giving effect to any payment of principal on the
last day of the Remittance Period immediately preceding the Distribution
Date and (e) the percentage that each of the amounts represented by clauses
(a), (b) and (c) represent as a percentage of the respective amounts in
clause (d);
(ii) the status and the number and dollar amounts of all Home
Equity Loans in foreclosure proceedings as of the close of business on the
last Business Day of the calendar month immediately preceding such
Distribution Date, separately stating, for this purpose, all Home Equity
Loans with respect to which foreclosure proceedings were commenced in the
immediately preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances of (a) the
related Mortgages involved in bankruptcy proceedings as of the close of
business on the last Business Day of the calendar month immediately
preceding such Distribution Date and (b) Home Equity Loans that are
"balloon" loans;
(iv) the existence and status of any REO Properties, as of the
close of business of the last Business Day of the month immediately
preceding the Distribution Date;
(v) the book value of any REO Property as of the close of business
on the last Business Day of the calendar month immediately preceding the
Distribution Date;
(vi) cumulative Realized Losses, incurred on the Home Equity Loans
from the Startup Day to and including the Remittance Period immediately
preceding the Distribution Date;
(vii) the amount of Net Liquidation Proceeds realized on the Home
Equity Loans during the Remittance Period immediately preceding the
Distribution Date;
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(viii) the Annual Loss Percentage (Rolling Twelve Month) with
respect to such Distribution Date; and
(ix) the 90+ Delinquency Percentage (Rolling Six Month) with
respect to such Distribution Date.
The Trustee shall forward such report (together with the information
described in (a) above) concurrently with each distribution to the
Certificateholders, the Rating Agencies and the Certificate Insurer.
(c) The Trustee shall, on behalf of the Trust, cause to be filed with the
Commission any periodic reports required to be filed on behalf of the Trust
under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder. Upon the request of the Trustee, each of the Seller, the
Servicer and the Depositor shall cooperate with the Trustee in the preparation
of any such report and shall provide to the Trustee in a timely manner all such
information or documentation as is in the possession of such Person and that the
Trustee may reasonably request in connection with the performance of its duties
and obligations under this Section.
(i) The Trustee shall file with the Commission a Form 15 with
respect to the Trust as soon as practicable following the first date on
which the conditions to filing thereof have been satisfied. Following the
filing of such Form 15, the Trustee will submit a certificate addressed to
an officer of the Depositor certifying that all filings under the Exchange
Act have been made and shall attach a copy of acceptance slips for such
filings. On the Startup Day, the Depositor shall provide the Trustee with
a letter at Closing, substantially in the form attached hereto as Exhibit
M, instructing the Trustee, as filing agent, to comply with the reporting
obligations for the Trust under the Exchange Act.
Section 7.10. REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Depositor, the Seller, the Certificate
Insurer and each Owner, with respect to the amount on deposit in the Certificate
Account (including the amount therein relating to each Group) and the identity
of the investments included therein, as the Depositor, the Seller, any Owner or
the Certificate Insurer may from time to time reasonably request. Without
limiting the generality of the foregoing, the Trustee shall, at the reasonable
request of the Depositor, the Seller, any Owner or the Certificate Insurer
transmit promptly to the Depositor, the Seller, any Owner and the Certificate
Insurer copies of all accountings of receipts in respect of the Home Equity
Loans furnished to it by the Servicer and shall notify the Seller and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
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(c) The Trustee will make the report referred to in Section 7.09 herein
(and, at its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders and other parties
to the Agreement upon request. Parties are entitled to have a paper copy mailed
to them via first Class mail by calling the Trustee and indicating such in
writing. The Trustee shall have the right to change the way the report referred
to in Section 7.09 herein is distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. SERVICER AND SUB-SERVICERS.
Acting directly or through one or more Sub-Servicers as provided in Section
8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the terms of the respective Home Equity
Loans, and with prudent and reasonable care, using the degree of skill and
attention that the Servicer exercises with respect to comparable home equity
loans that it services for itself or others and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable but without regard to: (i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer may have with
the related Mortgagor; (ii) the ownership of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction.
Subject to Section 8.03 hereof, the Servicer may, and is hereby authorized
to, perform any of its servicing responsibilities with respect to all or certain
of the Home Equity Loans through a Sub-Servicer as it may from time to time
designate, but no such designation of a Sub-Servicer shall serve to release the
Servicer from any of its obligations under this Agreement. Such Sub-Servicer
shall have the rights and powers of the Servicer which have been delegated to
such Sub-Servicer with respect to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to Sections
8.13 and 8.14, the Servicer in its own name or in the name of a Sub-Servicer is
hereby authorized and empowered to execute and deliver, on behalf of itself, the
Owners and the Trustee or any of them, (i) 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 Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; PROVIDED, HOWEVER, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and PROVIDED, FURTHER, however, that Section
8.13(a) and Section 8.14(a) shall each constitute a revocable power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of mortgage without recourse) with respect to any Home Equity Loan
held by the Trustee hereunder paid in full or foreclosed (or with respect to
which payment in full has been escrowed). Revocation of the power of attorney
created by the final proviso of the preceding sentence shall take effect upon
(i) the receipt by the Servicer of written notice thereof from the Trustee, (ii)
a Servicer Termination Event or (iii) the termination of the Trust. The Trustee
shall at the written direction of the Servicer execute any documentation
furnished to it by the Servicer for recordation by the
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Servicer in the appropriate jurisdictions, as shall be necessary to effectuate
the foregoing. Subject to Sections 8.13 and 8.14, the Trustee shall, if
necessary, execute a limited power of attorney in the form reasonably
acceptable to the Trustee to the Servicer or any Sub-Servicer and furnish
them with any other documents as the Servicer or such Sub-Servicer shall
reasonably request to enable the Servicer and such Sub-Servicer to carry out
their respective servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the Trustee
and, if requested by the Certificate Insurer, the Certificate Insurer, the
details concerning the servicing of the Home Equity Loans on computer generated
tape, diskette or other machine readable format which is mutually agreeable.
The Servicer shall give prompt written notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02. COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Home Equity Loans, and shall, to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any applicable Insurance Policy, follow collection procedures for
all Home Equity Loans at least as rigorous as those described in the FNMA Guide.
Consistent with the foregoing, the Servicer may in its discretion waive or
permit to be waived any late payment charge, prepayment charge, assumption fee
or any penalty interest in connection with the prepayment of a Home Equity Loan
or any other fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation. In the event the Servicer shall consent to
the deferment of the due dates for payments due on a Note, the Servicer shall
(i) notify the Certificate Insurer on a monthly basis of all Home Equity Loans
for which any deferment has been granted and the terms of such deferment and
(ii) nonetheless make payment of any required Delinquency Advance with respect
to the payments so extended to the same extent as if such installment were due,
owing and Delinquent and had not been deferred, and shall be entitled to
reimbursement therefor in accordance with Section 8.09(a) hereof. The Servicer
shall not consent to any such deferment with respect to the same Note more than
once in any 12 month period or more than 3 times during the life of the Home
Equity Loan unless the Certificate Insurer has been given written notice of such
proposed action and its consent has been obtained or it has failed to object
within ten days of receipt.
Section 8.03. SUB-SERVICING AGREEMENTS BETWEEN SERVICER AND SUB-SERVICERS.
The Servicer may, with the prior written consent of the Certificate Insurer
and the Trustee, enter into Sub-Servicing Agreements for any servicing and
administration of Home
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Equity Loans with any institution which is acceptable to the Certificate
Insurer and the Trustee and which, (x) is in compliance with the laws of each
state necessary to enable it to perform its obligations under such
Sub-Servicing Agreement, (y) has experience servicing home equity loans that
are similar to the Home Equity Loans and (z) has equity of not less than
$5,000,000 (as determined in accordance with generally accepted accounting
principles). The Servicer shall give written notice to the Trustee, the
Owners, the Certificate Insurer and the Rating Agencies of the appointment of
any Sub-Servicer (and shall receive the confirmation of the Rating Agencies
that such Sub-Servicer shall not result in a withdrawal or downgrading by any
Rating Agency of the rating or the shadow rating of the Class A
Certificates). For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Home Equity Loans when any Sub-Servicer has
received such payments. Each Sub-Servicer shall be required to service the
Home Equity Loans in accordance with this Agreement and any such
Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement. Each Sub-Servicing Agreement shall provide
that the Trustee (if acting as successor Servicer) or any other successor
Servicer shall have the option to terminate such agreement without payment of
any fees if the original Servicer is terminated or resigns. The Servicer
shall deliver to the Trustee and the Certificate Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof
promptly upon the Servicer's execution and delivery of such instrument.
Section 8.04. SUCCESSOR SUB-SERVICERS.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and to
either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05. LIABILITY OF SERVICER; INDEMNIFICATION.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer agrees to indemnify and hold the Trustee, the Depositor,
the Certificate Insurer and each Owner harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Trustee, the Depositor, the
Certificate Insurer and any Owner may sustain in any way related to the failure
of the Servicer to perform its duties and service the Home Equity Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee in writing, the Depositor, the Certificate Insurer and each
Owner if a claim is made by a third party with respect to this Agreement, and
the Servicer shall assume (with the consent of the Trustee and the Certificate
Insurer) the defense of any such claim and pay all expenses in
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connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Trustee, the Depositor, the Certificate Insurer and/or Owner in
respect of such claim. The Trustee shall, in accordance with written
instructions received from the Servicer, reimburse the Servicer only from
amounts otherwise distributable on the Class R Certificates for all amounts
advanced by it pursuant to the preceding sentence, except when a final
nonpayable adjudication determines that the claim relates directly to the
failure of the Servicer to perform its duties in compliance with the Agreement.
The provisions of this Section 8.05(b) shall survive the termination of this
Agreement, the resignation or removal of the Trustee, and the payment of the
outstanding Certificates.
Section 8.06. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER, TRUSTEE OR
THE OWNERS.
Any Sub-Servicing Agreement and any other transactions or services relating
to the Home Equity Loans involving a Sub-Servicer shall be deemed to be between
the Sub-Servicer and the Servicer alone and the Trustee and the Owners shall not
be deemed parties thereto and shall have no claims, rights, obligations, duties
or liabilities with respect to any Sub-Servicer except as set forth in Section
8.07.
Section 8.07. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20 or another successor Servicer, it is
understood and agreed that the Servicer's rights and obligations under any
Sub-Servicing Agreement then in force between the Servicer and a Sub-Servicer
shall be assumed simultaneously by the Trustee or another successor Servicer
without act or deed on part of the Trustee; PROVIDED, HOWEVER, that the Trustee
(if acting as successor Servicer) or any other successor Servicer may, with the
consent of the Certificate Insurer, and shall, at the direction of the
Certificate Insurer, terminate the Sub-Servicer as provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at the
expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08. PRINCIPAL AND INTEREST ACCOUNT.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account, which shall be an
Eligible Account. The Principal and Interest Account shall be identified on the
records of the Designated Depository Institution as follows: Bank One, National
Association, as Trustee on behalf of Financial Security Assurance Inc. and the
Owners of the Centex Home Equity Loan Trust 2000-A Home Equity Loan Asset-Backed
Certificates. If the institution at any time holding the Principal and Interest
Account ceases to be eligible as a Designated Depository Institution hereunder,
then the Servicer shall immediately be required to name a successor institution
meeting the requirements
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for a Designated Depository Institution hereunder. If the Servicer fails to
name such a successor institution, then the Principal and Interest Account
shall thenceforth be held as a trust account at the Corporate Trust Office of
the Trustee. The Servicer shall notify the Trustee, the Certificate Insurer
and the Owners if there is a change in the name, account number or
institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all receipts
required pursuant to Subsection (c) below and related to the Home Equity Loans
to the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trust for the benefit of the Owners. The Trust shall
be divided into two separate sub-trusts; one for Group I and any Trust assets
allocable to such Group I and the other for Group II and any Trust assets
allocable to such Group II. Any investment earnings on funds held in the
Principal and Interest Account shall be for the account of the Servicer and may
only be withdrawn from the Principal and Interest Account by the Servicer
immediately following the remittance of the Monthly Remittance Amount by the
Servicer in accordance with the terms hereof. Any investment losses on amounts
held in the Principal and Interest Account shall be for the account of the
Servicer and promptly upon the realization of such loss shall be contributed by
the Servicer to the Principal and Interest Account. Any references herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account no
later than the second Business Day after receipt, all principal collected and
interest due on the Home Equity Loans (net of the Servicing Fee related to such
Home Equity Loans) on and after the Cut-Off Date and the Replacement Cut-Off
Date, as applicable, including any Prepayments and Net Liquidation Proceeds,
other recoveries or amounts related to the Home Equity Loans received by the
Servicer and any income from REO Properties, but net of (i) Net Liquidation
Proceeds to the extent such Net Liquidation Proceeds exceed the sum of (A) the
Loan Balance of the related Home Equity Loan immediately prior to liquidation,
plus (B) accrued and unpaid interest on such Home Equity Loan (net of the
related Servicing Fee) and (C) any unrecovered Cram Down Losses, (ii)
reimbursements for unreimbursed Delinquency Advances (but solely from amounts
received on the related Home Equity Loan) and (iii) reimbursements for amounts
deposited in the Principal and Interest Account representing payments of
principal and/or interest on a Note by a Mortgagor which are subsequently
returned by a depository institution as unpaid.
(d) The Servicer may make withdrawals from the Principal and Interest
Account, with respect to each Home Equity Loan Group, for the following
purposes:
(A) on each Monthly Remittance Date, to pay itself the related
Servicing Fees to the extent such Servicing Fees are not
retained by the Servicer;
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(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the Principal
and Interest Account in error;
(D) to reimburse itself pursuant to Section 8.09(a) for unrecovered
Delinquency Advances and unrecovered Servicing Advances (in
each case, solely from amounts recovered on the related Home
Equity Loan);
(E) Nonrecoverable Advances; and
(F) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article IX.
(i) The Servicer shall (a) remit to the Trustee for deposit in
the Certificate Account by wire transfer, or otherwise make funds available
in immediately available funds, without duplication, the Monthly Remittance
Amount allocable to a Remittance Period not later than the related Monthly
Remittance Date, and (b) on each Monthly Remittance Date, deliver to the
Trustee, the Depositor and the Certificate Insurer, a monthly servicing
report, with respect to each Home Equity Loan Group, containing (without
limitation) the following information: principal and interest collected in
respect of the Home Equity Loans, scheduled principal and interest that was
due on the Home Equity Loans, relevant information with respect to
Liquidated Loans, if any, summary and detailed delinquency reports,
Liquidation Proceeds and other similar information concerning the servicing
of the Home Equity Loans and any other information requested by the
Certificate Insurer (including, without limitation, a liquidation report
with respect to each Liquidated Loan). In addition, the Servicer shall
inform the Trustee and the Certificate Insurer on each Monthly Remittance
Date, with respect to each Home Equity Loan Group, of the amounts of any
Loan Purchase Prices or Substitution Amounts so remitted during the related
Remittance Period, and of the Loan Balance of the Home Equity Loan having
the largest Loan Balance as of such date. The Servicer shall deliver
copies of the monthly statement for the Principal and Interest Account to
the Certificate Insurer promptly upon receipt thereof.
(ii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(i)(b) and in Section 7.09(b) to enable the
Trustee to perform its reporting requirements under Section 7.09 and to
make the allocations and disbursements set forth in Sections 7.02 and 7.03.
Section 8.09. DELINQUENCY ADVANCES AND SERVICING ADVANCES.
(a) On or before each Monthly Remittance Date, the Servicer shall be
required to remit to the Trustee for deposit to the Certificate Account out of
the Servicer's own funds or from collections on any Home Equity Loans that are
not required to be distributed on the Distribution Date occurring during the
month in which such remittance is made (all or any portion of such
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amount to be replaced on future Monthly Remittance Dates to the extent
required for distribution) any Delinquent payment of interest with respect to
each Delinquent Home Equity Loan, which payment was not received on or prior
to the last day of the related Remittance Period. Such amounts of the
Servicer's own funds so deposited are "Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business Day for
any Delinquency Advances paid from the Servicer's own funds, from late
collections on the related Home Equity Loan as provided in Section 8.08(d) or as
otherwise provided in Section 7.03(b).
Notwithstanding the foregoing, in the event that the Servicer determines in
its reasonable business judgment in accordance with the servicing standards set
out herein that any proposed Delinquency Advance would not be recoverable, the
Servicer shall not be required to make Delinquency Advances with respect to such
Home Equity Loan. To the extent that the Servicer previously has made
Delinquency Advances with respect to a Home Equity Loan that the Servicer
subsequently determines are Nonrecoverable Advances, the Servicer shall be
entitled to reimbursement for such aggregate Nonrecoverable Advances from
collections on any Home Equity Loan on deposit in the Principal and Interest
Account. The Servicer shall deliver an Officer's Certificate of such
determination as to why such amount would not be recoverable to the Trustee and
the Certificate Insurer; the Trustee shall promptly furnish a copy of such
notice to the Owners of the Class R Certificates upon request; PROVIDED,
FURTHER, that the Servicer shall be entitled to recover any unreimbursed
Delinquency Advances from Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses incurred
in the performance of its servicing obligations, including, but not limited to,
(i) Preservation Expenses, (ii) the cost of any enforcement or judicial
proceedings, including foreclosures, (iii) the cost of the management and
liquidation of REO Property, (iv) advances required by Section 8.13(a), and (v)
expenses incurred pursuant to Section 8.22 except to the extent that such
amounts are determined by the Servicer in its reasonable business judgment not
to be recoverable. Such costs will constitute "Servicing Advances". The
Servicer may recover a Servicing Advance (x) from the Mortgagors to the extent
permitted by the Home Equity Loans or, if not theretofore recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(b)(xi). The Servicer shall be entitled to recover
the Servicing Advances from the Liquidation Proceeds on the related Home Equity
Loan prior to the payment of the Liquidation Proceeds to any other party to this
Agreement. In no case may the Servicer recover Servicing Advances from the
principal and interest payments on any other Home Equity Loan except as provided
in Section 7.03(b)(xi).
Section 8.10. COMPENSATING INTEREST; REPURCHASE OF HOME EQUITY LOANS.
(a) If any Prepayment of a Home Equity Loan occurs during any calendar
month, any shortfall between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full month's interest at the Coupon
Rate that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but not in excess of the aggregate Servicing Fee for
the related Remittance Period) shall be deposited by the Servicer to the
Principal and
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Interest Account (or if such difference is an excess, the Servicer shall retain
such excess) on the next succeeding Monthly Remittance Date and shall be
included in the Monthly Remittance Amount to be made available to the Trustee
on such Monthly Remittance Date. The Servicer may recover any unreimbursed
payments of Compensating Interest as provided in Section 7.03(b)(xi).
(b) Subject to the clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which becomes a 60-Day Delinquent Loan, or any Home Equity Loan as to which
enforcement proceedings have been brought by the Servicer pursuant to Section
8.13; PROVIDED, HOWEVER, that the Servicer may not purchase any such Home Equity
Loan unless (i) the aggregate principal balance of all such Home Equity Loans so
repurchased would not exceed 5% of the Original Aggregate Loan Balance (unless
otherwise consented in writing by the Certificate Insurer) and (ii) the Servicer
has delivered to the Trustee and the Certificate Insurer at the Servicer's
expense, an Opinion of Counsel acceptable to the Certificate Insurer and to the
Trustee to the effect that such a purchase would not constitute a Prohibited
Transaction for the Trust or otherwise subject the Trust to tax and would not
jeopardize the status of REMIC I or REMIC II as REMICs. Any such Home Equity
Loan so purchased shall be purchased by the Servicer on or prior to a Monthly
Remittance Date at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be deposited in the Principal and Interest Account.
(c) If a Home Equity Loan to be purchased by the Servicer pursuant to
clause (b) above, is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans (including Home Equity Loans relating to REO
Property), the Servicer may purchase such Home Equity Loan without having first
notified the Certificate Insurer of such purchase. In all other cases, the
Servicer must notify the Certificate Insurer and the Trustee, in writing, of its
intent to purchase a Home Equity Loan and the Servicer may not purchase such
Home Equity Loan without the written consent of the Certificate Insurer.
(d) The Net Liquidation Proceeds from the disposition of any REO Property
shall be deposited in the Principal and Interest Account and remitted to the
Trustee as part of the Monthly Remittance Amount remitted by the Servicer to the
Trustee.
Section 8.11. MAINTENANCE OF INSURANCE.
(a) (i) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a carrier generally acceptable
to the Servicer that provides for fire and extended coverage, and which provides
for a recovery by the Trust of insurance proceeds relating to such Home Equity
Loan in an amount not less than the least of (A) the outstanding principal
balance of the Home Equity Loan (plus the related senior lien loan, if any), (B)
the minimum amount required to compensate for damage or loss on a replacement
cost basis and (C) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, and shall be named as loss payee. The policies
shall require the insurer to provide the mortgagee with 30 days' notice prior to
any cancellation or as otherwise required by law. (ii) As an alternative to
maintaining a hazard insurance policy with respect to each Home Equity Loan as
described in
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Clause (i), the Servicer may maintain a blanket hazard insurance policy or
policies if the insurer or insurers of such policies are rated investment
grade by Moody's and Standard & Poor's.
(b) If the Home Equity Loan at the time of origination (or if required by
federal law, at any time thereafter) relates to a Property in an area identified
in the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, the Servicer will cause to be maintained with respect
thereto a flood insurance policy in a form meeting the requirements of the then
current guidelines of the Federal Insurance Administration with a carrier
generally acceptable to the Servicer in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust and the Certificate Insurer out of the Servicer's own funds
for any loss to the Trust or the Certificate Insurer resulting from the
Servicer's failure to advance premiums for such insurance required by this
Section when so permitted by the terms of the Mortgage as to which such loss
relates.
(c) Amounts collected by the Servicer under any Insurance Policy shall be
deposited into the Principal and Interest Account.
Section 8.12. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall (except as provided below), to the extent it has knowledge of
such conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Home Equity Loan under any "due-on-sale" clause
contained in the related Mortgage or Note; PROVIDED, HOWEVER, that the Servicer
shall not exercise any such right if the "due-on-sale" clause, in the reasonable
belief of the Servicer, is not enforceable under applicable law, or the
Servicer, in a manner consistent with reasonable commercial practice, and only
if the Servicer reasonably believes assumption by the purchaser would not
materially and adversely affect the interests of the Owners or of the
Certificate Insurer, permits the purchaser of the related Property to assume
such Home Equity Loan. An Opinion of Counsel, provided at the expense of the
Servicer, to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall enter into an
assumption and modification agreement with the person to whom such property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the Mortgage
documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; PROVIDED, HOWEVER, that to the
extent any such substitution of liability agreement would be delivered by the
Servicer outside of its usual procedures for home equity loans held in its own
portfolio the Servicer shall, prior to executing and delivering such agreement,
obtain the prior written consent of the Certificate Insurer. The Home Equity
Loan, as assumed, shall conform in all material respects to the requirements,
representations and warranties of this Agreement. The Servicer shall notify the
Trustee in writing that any such
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assumption or substitution agreement has been completed by forwarding to the
Custodian on the Trustee's behalf the original copy of such assumption or
substitution agreement (indicating the File to which it relates) which copy
shall be added by the Trustee or by the Custodian on the Trustee's behalf to
the related File and which shall, for all purposes, be considered a part of
such File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording
any such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, no material term of the Home Equity
Loan (including, without limitation, the required monthly payment on the
related Home Equity Loan, the stated maturity, the outstanding principal
amount or the Coupon Rate) shall be changed nor shall any required monthly
payments of principal or interest be deferred or forgiven. Any fee collected
by the Servicer or the Sub-Servicer for consenting to any such conveyance or
entering into an assumption or substitution agreement shall be retained by or
paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13. REALIZATION UPON DEFAULTED HOME EQUITY LOANS; WORKOUT OF
HOME EQUITY LOANS.
(a) The Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 35 months from the close of the taxable year
of its acquisition by the Trust, at such price as the Servicer in good faith
deems necessary to comply with this covenant unless the Servicer obtains for the
Certificate Insurer and the Trustee, an Opinion of Counsel (the expense of which
opinion shall be a Servicing Advance) experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee, addressed to the
Certificate Insurer, the Trustee and the Servicer, to the effect that the
holding by the Trust of such REO Property for any greater period will not result
in the imposition of taxes on "Prohibited Transactions" of the Trust or either
REMIC as defined in Section 860F of the Code or cause either REMIC to fail to
qualify as a REMIC under the REMIC Provisions at any time that any Certificates
are Outstanding. Notwithstanding the generality of the foregoing provisions,
the Servicer shall manage, conserve, protect and operate each REO Property for
the Owners solely for the purpoe of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as
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"foreclosure property within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by either REMIC created hereunder of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code
or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions. Pursuant to its efforts to sell such REO
Property, the Servicer shall either itself or through an agent selected by
the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests
of the Owners, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Owners for the period prior to the sale of
such REO Property. The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation, on a Property in
determining whether to foreclose upon or otherwise comparably convert the
ownership of such Property. If the Servicer has actual knowledge of any
environmental or hazardous waste risk with respect to the Property that the
Servicer is contemplating acquiring in foreclosure or deed in lieu of
foreclosure, the Servicer will cause an environmental inspection of the
Property in accordance with the servicing standards set forth in this
Agreement. The Servicer shall not take any such action with respect to any
Property known by the Servicer to contain such wastes or substances or to be
within one mile of the site of such wastes or substances, without the prior
written consent of the Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan, when it has recovered, whether through trustee's sale, foreclosure
sale or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan" and the Servicer shall promptly submit a liquidation report to
the Certificate Insurer in form acceptable to the Certificate Insurer.
(c) The Servicer shall not agree to any modification, waiver or amendment
of any provision of any Home Equity Loan unless, in the Servicer's good faith
judgment, such modification, waiver or amendment would minimize the loss that
might otherwise be experienced with respect to such Home Equity Loan and only in
the event of a payment default with respect to such Home Equity Loan or in the
event that a payment default with respect to such Home Equity Loan is reasonably
foreseeable by the Servicer; PROVIDED, HOWEVER, that no such modification,
waiver or amendment shall extend the maturity date of such Home Equity Loan
beyond the Remittance Period related to the Final Scheduled Distribution Date of
the latest Class of Class A Certificates remaining in the Trust.
Notwithstanding anything set out in this Section 8.13(c) or elsewhere in this
Agreement to the contrary, the Servicer shall be permitted to modify, waive or
amend any provision of a Home Equity Loan if required by statute or a court of
competent jurisdiction to do so.
(d) The Servicer has no intent to foreclose on any Mortgage based on the
delinquency characteristics as of the Startup Day; provided, that the foregoing
does not prevent the Servicer from initiating foreclosure proceedings on any
date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
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Section 8.14. TRUSTEE TO COOPERATE; RELEASE OF FILES.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Custodian, on behalf of the Trustee, a written request of the Servicer signed by
an Authorized Officer which states the purpose of the release of a File. Upon
receipt of such written request, the Custodian, on behalf of the Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer is authorized to give,
as attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account or to the Trustee.
(b) The Servicer shall have the right (upon receiving the prior written
consent of the Certificate Insurer) to accept applications of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not exceed
the Loan-to-Value Ratio and debt-to-income ratio of such Note on the Cut-Off
Date, and any increase in the Loan-to-Value Ratio shall not exceed 5% unless
approved in writing by the Certificate Insurer; and (z) the lien priority of the
related Mortgage is not affected. Upon receipt by the Trustee of an Officer's
Certificate executed on behalf of the Servicer setting forth the action proposed
to be taken in respect of a particular Home Equity Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to the Servicer the consent or partial
release so requested by the Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Officer's Certificate delivered
by the Servicer pursuant to this paragraph. The Servicer shall notify the
Certificate Insurer and the Rating Agencies if an application is approved under
clause (y) above without approval in writing by the Certificate Insurer.
(c) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Custodian, on behalf of the Trustee, shall release the related File
to the Servicer, promptly upon a written request of the Servicer signed by an
Authorized Officer, which states the purpose of the release of a File; provided,
however, that no more than 5% of the outstanding Home Equity Loans (by number)
shall be released to the Servicer at any time without the consent of the
Certificate Insurer. Such receipt shall obligate the Servicer to return the
File to the Custodian, on behalf of the Trustee, when the need therefore by the
Servicer no longer exists.
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(d) In all cases where the Servicer directs the Custodian, on behalf of
the Trustee, to sign any document or to release a File within a particular
period of time, the Servicer shall notify an Authorized Officer of the Trustee
by telephone of such need and the Trustee shall thereon use its best efforts to
comply with the Servicer's needs, but in any event will comply within two
Business Days of such request.
(e) No costs associated with the procedures described in this Section 8.14
shall be an expense of the Trust.
Section 8.15. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan Group. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(i) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the
Certificate Insurer and the successor Servicer.
The right to receive the Servicing Fee may not be transferred in whole or
in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16. ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before July
31 of each year, commencing in 2001, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer
during such preceding calendar 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.
The Servicer shall deliver to the Trustee, the Depositor, the Certificate
Insurer and the Rating Agencies, promptly after having obtained knowledge
thereof but in no event later than five Business Days thereafter, written notice
by means of an Officer's Certificate of any event which with the giving of
notice or the lapse of time would become a Servicer Termination Event.
Section 8.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS.
On or before July 31 of each year, commencing in 2001, the Servicer, at its
own expense (or if the Trustee is then acting as Servicer, at the expense of the
Seller), shall cause to be delivered to the Trustee, the Certificate Insurer,
the Depositor, and the Rating Agencies a letter or
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letters of a firm of independent, nationally recognized certified public
accountants reasonably acceptable to the Certificate Insurer stating that
such firm has examined the Servicer's overall servicing operations in
accordance with the requirements of the Uniform Single Attestation Program
for Mortgage Bankers, and stating such firm's conclusions relating thereto.
In the event such firm requires the Trustee to agree to the procedures
performed by such firm, the Servicer shall direct the Trustee in writing to
so agree; it being understood and agreed that the Trustee will deliver such
letter of agreement in conclusive reliance upon the direction of the
Servicer, and the Trustee makes no independent inquiry or investigation as
to, and shall have no obligation or liability in respect of, the sufficiency,
validity, or correctness of such procedures.
Section 8.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE HOME EQUITY LOANS.
The Servicer shall provide to the Trustee and the Certificate Insurer
access to the documentation regarding the Home Equity Loans and the Trust, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a copy
of such computer tape to the Trustee and in addition shall provide a copy of
such computer tape to the Trustee, and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request.
Section 8.19. ASSIGNMENT OF AGREEMENT.
Other than with respect to entering into Sub-Servicing Agreements pursuant
to Section 8.03 hereof, the Servicer may not assign its obligations under this
Agreement, in whole or in part, unless it shall have first obtained the written
consent of the Trustee and the Certificate Insurer, which such consent shall not
be unreasonably withheld; PROVIDED, HOWEVER, that any assignee must meet the
eligibility requirements set forth in Section 8.20(h) hereof for a successor
servicer.
Section 8.20. REMOVAL OF SERVICER; RETENTION OF SERVICER; RESIGNATION OF
SERVICER.
(a) The Certificate Insurer or the Trustee (with the prior written consent
of the Certificate Insurer) may remove the Servicer upon the occurrence of any
of the following events (each a "Servicer Termination Event"):
(i) The Servicer shall (I) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar entity with
respect to itself or its property, (II) admit in writing its inability
to pay its debts generally as they become due, (III) make a general
assignment for the benefit of creditors, (IV) be adjudicated a bankrupt
or insolvent, (V) commence a voluntary case under the federal bankruptcy
laws of the United States of America or any state bankruptcy law or
similar laws or file a voluntary petition or answer seeking reorganization,
an arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or
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insolvency proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Servicer an
order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or similar entity with respect to the Servicer or
of all or any substantial part of its assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Servicer in good faith, the same shall
(A) result in the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any
period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder and shall continue in default thereof for a period of
thirty (30) days (one (1) Business Day in the case of a delay in making a
payment or deposit required of the Servicer under this Agreement) after the
earlier of (a) actual knowledge of an officer of the Servicer or (b)
receipt of notice from the Trustee or the Certificate Insurer of said
failure; PROVIDED, HOWEVER, that if the Servicer can demonstrate to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the
written approval of the Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02 or in the other
Operative Documents which materially and adversely affects the interests of
the Owners or the Certificate Insurer which remains unremedied for a period
of sixty (60) days after the earlier of the Servicer's discovery or receipt
of notice thereof; PROVIDED, HOWEVER, that if the Servicer can demonstrate
to the reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be extended
with the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of the
Servicer with or into any other entity, unless (1) the Servicer or an
Affiliate of the Servicer is the surviving entity of such combination or
(2) the surviving entity (A) is servicing at least $300,000,000 of home
equity loans that are similar to the Home Equity Loans, (B) has Tangible
Net Worth of not less than $15,000,000 (as determined in accordance with
generally acceptable account principles), (C) is consented to by the
Certificate Insurer (such consent not to be unreasonably withheld) and (D)
agrees to assume the Servicer's obligations hereunder; or
(vi) The Certificate Insurer notifies the Trustee of an Event of
Default under the Insurance Agreement; or
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(vii) The Servicer shall be declared in default of its credit
facility by its credit facility provider, which default, if left uncured,
would result in termination or acceleration of amounts owed thereunder; or
(viii) Centex Corporation or its successors shall fail to own,
directly or indirectly, at least 51% of the Servicer unless (a) the
Servicer shall be rated at least investment grade by each Rating Agency or
(b) the Servicer shall have at all times committed financing capacity in a
total amount of at least three times the Servicer's average loan
originations funded during the immediately preceding three calendar months.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall continue to act as servicer under this Agreement until removed as set
forth in this Section 8.20 and a successor Servicer has assumed the servicing
obligations. After the occurrence of a Servicer Termination Event, the
Certificate Insurer or the Trustee (with the prior written consent of the
Certificate Insurer) may remove the Servicer by written notice to the Servicer.
Such termination shall be effective on the date specified in such notice,
provided that a successor Servicer or the Trustee has assumed the servicing
obligations. Upon the effective date of termination of the Servicer or on the
last day of the servicing term as provided in subparagraph (c), the Trustee (or
another successor Servicer appointed by the Certificate Insurer) shall assume
the servicing obligations hereunder. Notwithstanding the foregoing, the parties
hereto agree that the Trustee, in its capacity as successor Servicer,
immediately will assume all of the obligations of the Servicer to make
Delinquency Advances and the Trustee will assume the other duties of the
Servicer as soon as practicable, but in no event later than 90 days after the
Trustee becomes successor Servicer pursuant to the preceding sentence.
Notwithstanding the foregoing, the Trustee, in its capacity as successor
Servicer, shall not be responsible for the lack of information and or documents
that it cannot obtain through reasonable efforts. The Certificate Insurer may
appoint a successor Servicer other than the Trustee. Until a successor Servicer
has been appointed by the Certificate Insurer, the Trustee shall be the
successor Servicer in all respects without further action, and all authority and
power of the Servicer under this agreement shall pass to and be vested in the
Trustee on and after the effective date of termination. Notwithstanding
anything herein to the contrary, in no event shall the Trustee be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee aid
hereunder and the amount necessary to induce any Successor Servicer to act as
Successor Servicer under this Agreement and the transactions set forth or
provided for therein.
(c) Following the Servicer's receipt of written notice of the failure of
the Servicer to satisfy the Servicer Termination Test, the Servicer shall act as
the Servicer hereunder for a term commencing on the date the Servicer has
received notice from the Certificate Insurer of such failure and expiring on the
date that is the last day of the calendar quarter in which such notice is
received by the Servicer (the "Initial Term"). Thereafter, the Initial Term
shall be extendible in the sole discretion of the Certificate Insurer by written
notice (each, a "Servicer Extension Notice") of the Certificate Insurer (or the
Trustee if a Certificate Insurer Default then exists) for successive terms of
three months. Each Servicer Extension Notice shall be delivered by the
Certificate Insurer to the other parties to this Agreement. The Servicer hereby
agrees that upon the receipt of any Servicer Extension Notice, the Servicer
shall be bound for the duration of the
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term covered by any Servicer Extension Notice to act as the Servicer, subject
to and in accordance with this Agreement. The Servicer agrees that if, as of
the fifteenth day prior to the last day of any servicing term, the Trustee
shall not have received a Servicer Extension Notice from the Certificate
Insurer, the Trustee shall, within five days thereafter, give written notice
of such non-receipt to the Certificate Insurer and the Servicer. The failure
of the Certificate Insurer to deliver a Servicer Extension Notice by the end
of any servicing term shall result in automatic termination of the Servicer.
(d) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except upon (i) determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement or (ii) written consent of the
Certificate Insurer and the Trustee. Any such determination under clause (i)
shall be evidenced by an Opinion of Counsel acceptable to the Trustee and the
Certificate Insurer at the expense of the Servicer to such effect which shall be
delivered to the Trustee and the Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective until
the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its own
expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(g) Any collections due to the Trust then being held by the Servicer prior
to its removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee (A) may,
unless the Certificate Insurer has appointed a successor Servicer other than the
Trustee, solicit bids for a successor servicer as described below and (B) until
such time as another successor Servicer is appointed by the Certificate Insurer,
shall assume the duties and obligations of the Servicer hereunder. The Trustee
agrees to act as Servicer during the solicitation process and shall assume all
duties and obligations of the Servicer. The Certificate Insurer may appoint a
successor Servicer other than the Trustee. If the Certificate Insurer fails to
appoint a successor Servicer, the Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Servicer, appoint, or
petition a court of competent jurisdiction to appoint, any housing and home
finance institution, bank or mortgage servicing institution which has been
designated as an approved seller-servicer by FNMA or FHLMC for first and second
home equity loans and having equity of not less than $5,000,000 (or such lower
level as may be acceptable to the Certificate Insurer), as determined in
accordance with generally accepted accounting principles and
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acceptable to the Certificate Insurer as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. The compensation of any
successor Servicer (other than the Trustee in its capacity as successor
Servicer) so appointed shall be the amount agreed to between the successor
Servicer, the Certificate Insurer and the Trustee (up to a maximum of 0.50%
per annum on the outstanding principal balance of each Home Equity Loan),
together with the other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided in Sections 8.08 and
8.15; PROVIDED, HOWEVER, that if the Trustee becomes the successor Servicer
it shall receive as its compensation the same compensation paid to the
Servicer immediately prior to the Servicer's removal or resignation;
PROVIDED, FURTHER, HOWEVER, that the predecessor Servicer agrees to pay to
the Trustee or other successor Servicer at such time that it becomes such
successor Servicer a set-up fee of twenty-five dollars ($25) for each Home
Equity Loan then included in the Trust Estate. The amount payable in excess
of twenty-five dollars ($25) per Home Equity Loan, if any, shall be payable
to the successor Servicer and reimbursable pursuant to Section 7.03(b)(x)
hereof. The Trustee shall be obligated to serve as successor Servicer
whether or not the fee described in this section is paid by the Servicer, but
shall in any event be entitled to receive, and to enforce payment of, such
fee from the Servicer.
(i) In the event the Trustee elects to solicit bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to servicing compensation in accordance
with clause (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price it will pay to obtain
servicing provided that the Certificate Insurer has given its prior written
consent. The Trustee shall deduct from any sum received by the Trustee from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Trustee or the
Trust from the Servicer shall be paid by the Trustee to the predecessor Servicer
at the time of such sale, transfer and assignment to the Servicer's successor.
(j) The Trustee and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing. The predecessor Servicer agrees to cooperate with the Trustee and
any successor Servicer in effecting the termination of the predecessor
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the Principal and Interest Account by the Servicer or
which are thereafter received with respect to the Home Equity Loans. Any
amounts and documents which are property of the Trust held by the predecessor
Servicer shall be held in trust on behalf of the Trustee until
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transferred to the successor Servicer or Trustee. Neither the Trustee nor
any other successor Servicer shall be held liable by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion
thereof caused by (i) the failure of the Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Servicer. If the
Servicer resigns or is replaced hereunder, the Servicer agrees to reimburse
the Trust, the Owners and the Certificate Insurer for the costs and expenses
associated with the transfer of servicing to the replacement Servicer, but
subject to a maximum reimbursement to all such parties in the amount of
twenty-five dollars ($25) for each Home Equity Loan then included in the
Trust Estate. The amount payable in excess of twenty-five dollars ($25) per
Home Equity Loan, if any, shall be payable to the successor Servicer and
reimbursable pursuant to Section 7.03(b)(x) hereof.
(k) The Trustee or any other successor Servicer, upon assuming the duties
of Servicer hereunder, shall immediately (i) record all assignments of Home
Equity Loans not previously recorded in the name of the Trustee pursuant to
Section 3.05(b)(ii) as a result of an Opinion of Counsel and (ii) make all
Delinquency Advances and deposit them to the Principal and Interest Account
which the Servicer has theretofore failed to remit with respect to the Home
Equity Loans.
(l) The Servicer which is being removed or is resigning shall give notice
to the Mortgagors, and to the Rating Agencies of the transfer of the servicing
to the successor.
(m) The Trustee shall give notice to the Certificate Insurer, the
Depositor, the Owners, the Trustee, the Seller, and to the Rating Agencies of
the occurrence of any event described in paragraphs (a) above of which the
Trustee is aware.
(n) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.21(b) and
shall be entitled to the Servicing Fee and all of the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of any
of its representations or warranties contained herein or in any related document
or agreement.
(o) The Trustee shall be entitled to be reimbursed pursuant to Sections
7.03(b) for all Transition Expenses (other than amounts reimbursed pursuant to
paragraph (j) above), including, without limitation, any costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Home Equity Loans properly and
effectively.
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Section 8.21. INSPECTIONS BY CERTIFICATE INSURER; ERRORS AND OMISSIONS
INSURANCE.
(a) At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer, any Owner of a Class X-IO or Class R
Certificate, or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
PROVIDED, HOWEVER, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
(b) The Servicer (including the Trustee if it shall become the Servicer
hereunder) agrees to maintain errors and omissions coverage and a fidelity bond,
each at least to the extent required by Section 305 of Part I of FNMA Guide or
any successor provision thereof; PROVIDED, HOWEVER, that in any event that the
fidelity bond or the errors and omissions coverage is no longer in effect, the
Servicer shall notify the Trustee, the Certificate Insurer and the Owners.
Section 8.22. ADDITIONAL SERVICING RESPONSIBILITIES FOR SECOND MORTGAGE
LOANS.
The Servicer shall file (or cause to be filed) a request for notice of any
action by a superior lienholder under a superior lien for the protection of the
Trustee's interest, where permitted by local law and whenever applicable state
law does not require that a junior lienholder be named as a party defendant in
foreclosure proceedings in order to foreclose such junior lienholder's equity of
redemption.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations under a First Mortgage Loan, or has
declared or intends to declare a default under the mortgage or the promissory
note secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust, whatever actions are necessary to protect the interests of the Owners and
the Certificate Insurer, and/or to preserve the security of the related Home
Equity Loan, subject to the application of the REMIC Provisions. The Servicer
shall advance the necessary funds to cure the default or reinstate the lien
securing a First Mortgage Loan, if such advance is in the best interests of the
Certificate Insurer and the Owners; PROVIDED, HOWEVER, that no such additional
advance need be made if such advance would be nonrecoverable from Liquidation
Proceeds on the related Home Equity Loan. The Servicer shall thereafter take
such action as is necessary to recover the amount so advanced. Any expenses
incurred by the Servicer pursuant to this Section 8.22 shall be Servicing
Advances.
Section 8.23. THE GROUP II HOME EQUITY LOANS.
The Servicer shall enforce each Home Equity Loan in Group II in accordance
with its terms and shall timely calculate, record, report and apply all interest
rate adjustments in accordance with the related Note. The Servicer's records
shall, at all times, reflect the then Coupon Rate and monthly payment and the
Servicer shall timely notify the Mortgagor of any changes to the Coupon Rate or
the Mortgagor's monthly payment. If the Servicer fails to make either a timely
or accurate adjustment to the Coupon Rate or monthly payment or to notify the
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Mortgagor of such adjustments, upon the Servicer's discovery of such error and
such continued failure, the Servicer shall pay from its own funds any shortage.
If the Servicer's continued failure after notice thereof to make a scheduled
change affects the Trust's rights to make future adjustments under the terms of
such Home Equity Loan, the Servicer shall repurchase such Home Equity Loan in
accordance with the provisions hereof. Any amounts paid by the Servicer
pursuant to this Section shall not be an advance and shall not be reimbursable
from the proceeds of any Home Equity Loan.
Section 8.24. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF SERVICER. Any corporation into which the Servicer may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Servicer shall be a party or
any corporation succeeding to all or substantially all of 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 provided that such corporation meets the qualifications set forth in
Section 8.20(h) and the resulting corporation has a Tangible Net Worth of at
least $15,000,000.
Section 8.25. NOTICES OF MATERIAL EVENTS. The Servicer shall give prompt
notice to the Certificate Insurer, the Trustee, and the Rating Agencies of the
occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has knowledge
which results, or which with notice or the passage of time, or both, would
result in the occurrence of a default by the Seller, or the Servicer under any
Operative Document or would constitute a material breach of a representation,
warranty or covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against the Seller or the
Servicer to which the Servicer has knowledge in any federal, state or local
court or before any governmental body or agency or before any arbitration board
or any such proceedings threatened by any governmental agency, which, if
adversely determined, would have a material adverse effect upon any of the
Seller's or the Servicer's ability to perform its obligations under any
Operative Document;
(c) The commencement of any proceedings by or against the Seller or the
Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested for the Seller or the Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of any of the Seller's or the Servicer's business
that the Seller or the Servicer is to cease or desist, or to undertake any
practice, program, procedure or policy employed by the Seller or the Servicer in
the conduct of the business of any of them, and such cessation or undertaking
will materially and adversely affect the conduct of the Seller's or the
Servicer's business or its ability to perform under the Operative Documents or
materially and adversely affect the financial affairs of the Seller or the
Servicer.
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Section 8.26. INDEMNIFICATION BY THE SERVICER. The Servicer agrees to
indemnify and hold the Trustee, the Depositor, the Certificate Insurer and each
Owner harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, the Depositor, the Certificate Insurer and any
Owner may sustain in any way related to the failure of the Servicer to perform
its duties and service the Home Equity Loans in compliance with the terms of
this Agreement. A party against whom a claim is brought shall immediately
notify the other parties and the Rating Agencies if a claim is made by a third
party with respect to this Agreement, and the Servicer shall assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Certificate Insurer, the Servicer, the Trustee and/or Owner in respect of such
claim.
Section 8.27. REPORTS ON FORECLOSURE AND ABANDONMENT OF PROPERTIES. On or
before February 28th of each year beginning in 2001, the Servicer shall file the
reports of foreclosures and abandonments of any Property required by Code
Section 6050J with the Internal Revenue Service and provide a copy of such
filing to the Trustee. The reports from the Servicer shall be in a form and
substance sufficient to meet the reporting requirements imposed by such Section
6050J.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01. TERMINATION OF TRUST.
The Trust created hereunder and all obligations created by this Agreement
will terminate upon the payment to the Owners of all Certificates from amounts
other than those available under the Certificate Insurance Policy of all amounts
held by the Trustee and required to be paid to such Owners pursuant to this
Agreement and payment in full of all amounts owed to the Certificate Insurer
upon the later to occur of (a) the final payment or other liquidation (or any
advance made with respect thereto) of the last Home Equity Loan in the Trust
Estate, (b) the disposition of all property acquired in respect of any Home
Equity Loan remaining in the Trust Estate and (c) at any time if a Qualified
Liquidation of both Home Equity Loan Groups within the Trust is effected as
described in Section 9.02. To effect a termination of this Agreement pursuant
to clause (c) above, the Owners of all Certificates then Outstanding shall
provide to the Trustee and the Certificate Insurer, at their expense, an Opinion
of Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Servicer either shall sell or
purchase the Home Equity Loans and the Trustee shall distribute the proceeds of
the liquidation of the Trust Estate. In no event, however, will the Trust
created by this Agreement continue beyond the expiration of twenty-one (21)
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the United Kingdom, living
on the date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02. TERMINATION UPON OPTION OF THE SERVICER.
(a) On any Monthly Remittance Date after the Clean-Up Call Date, the
Servicer may determine to purchase, in whole only, and may cause the purchase
from the Trust of all (but not fewer than all) Home Equity Loans and all
property theretofore acquired in respect of any Home Equity Loan by foreclosure,
deed in lieu of foreclosure, or otherwise then remaining in the Trust Estate (i)
on terms agreed upon between the Certificate Insurer, the Servicer and the
Owners of the Class X-IO and Class R Certificates (if such terms result in
payment to the Holders of the Class A Certificates of their entire balance and
interest at their Certificate Rate (and any Carry-Forward Amount)), or (ii) in
the absence of such an agreement, at a price equal to the Termination Price. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) In the event that the Servicer purchases all Home Equity Loans and
each REO Property remaining in the Trust Estate pursuant to Section 9.02(a), the
Trust Estate shall be terminated in accordance with the following additional
requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of the
REMICs created hereunder pursuant to
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Treasury regulation Section 1.860F-1 and shall satisfy all requirements
of a qualified liquidation under Section 860F of the Code and any
regulations thereunder;
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Trustee shall
sell all of the assets of the Trust Estate to the Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates and payment of all amounts owed to the Certificate Insurer,
the Trustee shall distribute or credit, or cause to be distributed or
credited, to the Owners of the Class X-IO and Class R Certificates all cash
on hand in the Trust Estate (other than cash retained to meet claims), and
the Trust Estate shall terminate at that time.
(c) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(d) In connection with any such purchase, the Servicer shall provide to
the Trustee and the Certificate Insurer an Opinion of Counsel at the expense of
the Servicer experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that such purchase and
liquidation constitutes a Qualified Liquidation of REMIC I and REMIC II.
(e) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Servicer or the Certificate Insurer, as
the case may be, or otherwise upon their order, in a manner similar to that
described in Section 8.14 hereof. The Servicer will promptly prepare and record
assignments of mortgage from the Trustee to the appropriate person.
Section 9.03. TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a final determination by the Internal Revenue Service or by
a court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that either REMIC created hereunder does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners of
a majority in Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation, as contemplated
by Section 860F(a)(4) of the Code and (ii) the Certificate Insurer may notify
the Trustee of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Home Equity Loan then remaining in the Trust Estate at a price
equal to the Termination Price.
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Upon receipt of such direction from the Certificate Insurer, the Trustee
shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. If, during
the Purchase Option Period, the Owners of the Class R Certificates have not
exercised the option described in the immediately preceding paragraph, then upon
the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Trustee shall sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust Estate, each in accordance with the
plan of complete liquidation, such that, if so directed, the liquidation of the
Trust Estate, the distribution of the proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 60th day, or
such later day as the Certificate Insurer or the Owners of the Class A
Certificates with the consent of the Certificate Insurer shall permit or direct
in writing, after the expiration of the Purchase Option Period and (ii) in the
event that the Certificate Insurer has given the Trustee notice of the
Certificate Insurer's determination to purchase the Trust Estate described in
clause (a)(ii) preceding the Certificate Insurer shall, within 60 days, purchase
all (but not fewer than all) Home Equity Loans and al property theretofore
acquired by foreclosure, deed in lieu of foreclosure or otherwise in respect of
any Home Equity Loan then remaining in the Trust Estate. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase. The foregoing opinion shall be deemed satisfactory
unless the Certificate Insurer gives the Owners of a majority of the Percentage
Interest of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt by the Certificate Insurer of such
opinion.
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Section 9.04. DISPOSITION OF PROCEEDS.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
Termination Price or other liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for distribution in accordance with the
priorities set forth in Section 7.03(b) hereof; provided, however, that any
amounts representing unreimbursed Delinquency Advances and Servicing Advances
theretofore funded by the Servicer from the Servicer's own funds shall be paid
by the Trustee to the Servicer from the proceeds of the Trust Estate.
Notwithstanding the foregoing, no distribution of the proceeds of any
Termination Price shall be made to the Owners of the Class X-IO and Class R
Certificates until all such amounts have been applied in reduction of any
outstanding Class A-7 Certificateholders' Interest Index Carryover.
Section 9.05. NETTING OF AMOUNTS.
If any Person paying the Termination Price would receive a portion of the
amount to be paid, such Person may net any such amount against the Termination
Price otherwise payable.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions or any other resolutions,
statements, reports, documents, orders or other instruments which by any
provision hereof are specifically required to be furnished to the Trustee, shall
be under a duty to examine the same to determine whether or not on their face
they conform to the requirements of this Agreement; PROVIDED, HOWEVER, that the
Trustee shall not be responsible for the accuracy or content of any resolution,
Certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Certificate Insurer, the Sellers or the Depositor
hereunder. If any such instrument is found not to conform in any material
respect to the requirements of this Agreement, the Trustee shall notify the
Certificate Insurer if it cannot be timely corrected. Notwithstanding the
foregoing, if a Servicer Termination Event of which an Authorized Officer of the
Trustee shall have actual knowledge has occurred and has not been cured or
waived, the Trustee shall exercise such of the rights and powers vested in it by
this Agreement, and 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) Notwithstanding the appointment of the Servicer hereunder, the Trustee
is hereby empowered to perform the duties of the Servicer it being expressly
understood, however, that the foregoing describes a power and not an obligation
of the Trustee (unless the Servicer shall have resigned or been terminated and a
successor Servicer shall not have been appointed pursuant to the terms of this
Agreement), and that all parties hereto agree that, prior to any termination of
the Servicer, the Servicer and, thereafter, the Trustee or any other successor
servicer shall perform such duties. Specifically, and not in limitation of the
foregoing, the Trustee shall upon termination or resignation of the Servicer,
and pending the appointment of any other Person as successor Servicer have the
power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
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(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) This subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) The Trustee shall not be personally liable for any error of judgment
made in good faith by an Authorized Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) The Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the
direction of the Certificate Insurer or of the Owners of a majority
in Percentage Interest of the Certificates of the affected Class or
Classes and the Certificate Insurer relating to the time, method
and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such Certificates;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default unless an Authorized Officer
of the Trustee shall have received written notice thereof or an
Authorized Officer shall have actual knowledge thereof. In the
absence of receipt of such notice, the Trustee may conclusively
assume that there is no default; and
(v) Subject to the other provisions of this Agreement and without
limiting the generality of this Section l0.01, 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 rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance or (C) to see to the payment
or discharge of any tax, assessment, or other governmental charge
or any lien or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust Estate.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
(e) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
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that repayment of such funds or indemnity reasonably satisfactory to it
against such risk or liability is not reasonably assured to it. None of the
provisions contained in this Agreement shall in any event require the Trustee
to perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement, except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms
of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) 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 third parties as a
consequence of the assignment of any of the Mortgage Loans hereunder or may
otherwise pertain to its interests in any of the Mortgaged Properties; provided,
however, that the Trustee shall use commercially reasonable efforts to deliver
to the Servicer any such complaint, claim, demand, notice, or other document
which is delivered to the Corporate Trust Office of the Trustee and contains
sufficient information to enable an Authorized Officer of the Trustee to
identify it as pertaining to a Mortgage or a Mortgaged Property.
(i) The Trustee hereby agrees to disclose the Premium Amount to any Person
upon request.
Section 10.02. REMOVAL OF TRUSTEE FOR CAUSE.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled
hereto on any Distribution Date any amounts available for distribution that
it has received in accordance with the terms hereof; (PROVIDED, HOWEVER,
that any such failure which is due to circumstances beyond the control of
the Trustee shall not be a cause for removal hereunder); or
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(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall prove to be incorrect in any material respect as of the time
when the same shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after there shall have
been given, by registered or certified mail, to the Trustee by the Seller,
the Certificate Insurer, or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Class A
Certificates then Outstanding, or, if there are no Class A Certificates
then Outstanding, by such Percentage Interests represented by the Class
X-IO Certificates, or if there are no Class X-IO Certificates then
Outstanding, by such Percentage Interests represented by the Class R
Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Trustee,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
The Depositor shall give to the Certificate Insurer and the Rating Agencies
notice of the occurrence of any such event of which the Depositor is aware.
(b) If any event described an Paragraph (a) occurs and is continuing, then
and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or if there are no Class A Certificates
then outstanding by such majority of the Percentage Interests represented by the
Class X-IO Certificates or if there are no Class X-IO Certificates then
Outstanding by such majority of the Percentage Interests represented by the
Class R Certificates, may, whether or not the Trustee resigns pursuant to
Section l0.09(b) hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor Trustee pursuant to the terms of Section l0.09 hereof.
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Section 10.03. CERTAIN RIGHTS OF THE TRUSTEE.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request and
may conclusively rely and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the Certificate
Insurer, or the Owners of any Class of Certificates mentioned herein shall be
sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the advice of such counsel
or any opinion of counsel (selected in good faith by the Trustee) shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reasonable reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the request or direction of any of
the Owners pursuant to this Agreement, unless such Owners shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, unless requested in writing to do so by the Owners; 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 cost, expense or liability
as a condition precedent to taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
nominees or custodians and shall not be responsible for any willful misconduct
or gross negligence on the part of any agent, attorney, custodian or nominee
appointed with due care;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person and within
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its rights or powers under this Agreement other than as to validity and
sufficiency of its authentication of the Certificates;
(i) the right of the Trustee to perform any discretionary act enumerated
in this Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required to
furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate or the Certificate Insurer (either in
writing or orally with prompt written or telecopy confirmations), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information;
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder;
(l) In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon. The Trustee shall have
no liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity. The Trustee shall invest and reinvest
amounts held in the Certificate Account in Eligible Investments as set forth in
Schedule I-E hereto; and
(m) In the event that the Trustee is also acting as Registrar, transfer
agent or Paying Agent hereunder, the rights and protections afforded to the
Trustee pursuant to this section shall also be afforded to the Registrar,
transfer agent and Paying Agent.
Section 10.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.
The recitals and representations contained herein and in the Certificates,
except the execution and authentication of the Certificates, shall be taken as
the statements of the Depositor, and the Trustee assumes no responsibility for
their correctness (other than with respect to such execution and
authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, of the Certificates, the Certificate Insurance
Policy or any Home Equity Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Certificate Insurer, the
Seller or the Servicer in respect of the Home Equity Loans or deposited into or
withdrawn from the Principal and Interest Account or the Certificate Account by
the Depositor, the Servicer or the Seller, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have
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notice or knowledge of any default unless an Authorized Officer of the
Trustee shall have received written notice thereof or an Authorized Officer
has actual knowledge thereof. In the absence of receipt of such notice, the
Trustee may conclusively assume that no default has occurred.
Section 10.05. MAY HOLD CERTIFICATES.
The Trustee, any Paying Agent, Registrar or any other agent of the Trust,
in its individual or any other capacity, may become an Owner or pledged of
Certificates and may otherwise deal with the Trust, the Certificate Insurer and
the other parties hereto with the same rights it would have if it were not
Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other trust funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Depositor and except to the extent
of income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity and income or other gain
actually received by the Trustee on Eligible Investments.
Section 10.07. COMPENSATION AND REIMBURSEMENT.
As compensation for its services hereunder, the Trustee shall be entitled
to receive the Trustee Fee, any investment income or other benefit derived from
funds or Eligible Investments in the Certificate Account to the extent permitted
by Section 7.05(c), and such other amounts as separately agreed with the Seller.
Except as otherwise provided in this Agreement, the Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Trust and
held harmless against any loss, liability, or "unanticipated out-of-pocket"
expense incurred or paid to third parties (which expenses shall not include
salaries paid to employees, or allocable overhead, of the Trustee) in connection
with or any claim or legal action or any pending or threatened claim or legal
action arising out of or in connection with the acceptance or administration of
its trusts hereunder or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. All such amounts described in the preceding
sentence shall constitute Trustee Reimbursable Expenses. It is understood by
the parties hereto that a "claim" as used in this paragraph includes any claim
for indemnification made by the Custodian under the applicable provisions of the
Custodial Agreement. The Trustee and any director, officer, employee or agent
of the Trustee shall be indemnified by the Seller and held harmless against any
loss, liability or reasonable expenses incurred by the Trustee in performing its
duties as Tax Matters Person for the REMICs created under this Agreement, other
than any loss, liability or expense incurred by reason of willful misfeasance or
bad faith. When the Trustee incurs expenses or provides services after the
occurrence of a default and the commencement of a voluntary or involuntary case
under Title 11 of the United States Code or any other applicable federal or stat
bankruptcy, insolvency or similar law involving any of the Sellers or the
Servicer, the expenses and fees for such services
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are intended to constitute expenses of administration under such laws. The
provisions of this Section 10.07 shall survive the resignation or removal of
the Trustee and the termination of this Agreement.
Section 10.08. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, or any state, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's and A2 by Moody's. If such
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the Certificate
Insurer, resign immediately in the manner and with the effect hereinafter
specified in this Article X.
Section 10.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
the Seller and by mailing notice of resignation by first-class mail, postage
prepaid, to the Certificate Insurer and the Owners at their addresses appearing
on the Register. A copy of such notice shall be sent by the resigning Trustee
to the Rating Agencies. Upon receiving notice of resignation, the Depositor
shall promptly appoint a successor Trustee or Trustees acceptable to the
Certificate Insurer by written instrument, in duplicate, executed on behalf of
the Trust by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so resigning and one copy to the
successor Trustee or Trustees. If no successor Trustee shall have been
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor Trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and appropriate, appoint a successor
Trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor Trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the
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Depositor, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.
(d) The Owners of a majority of the Voting Rights represented by the Class
A Certificates with the prior written consent of the Certificate Insurer, or, if
there are no Class A Certificates then Outstanding, by such majority of the
Voting Rights represented by the Class X-IO and Class R Certificates, may at any
time remove the Trustee and appoint a successor Trustee acceptable to the
Certificate Insurer by delivering to the Trustee to be removed, to the successor
Trustee so appointed, to the Depositor, to the Servicer and to the Certificate
Insurer, copies of the record of the act taken by the Owners, as provided for in
Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Depositor shall promptly appoint a successor Trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Depositor. If no
successor Trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Depositor on behalf of the Trust to the Certificate Insurer and
to its predecessor Trustee an instrument accepting such appointment hereunder
and stating its eligibility to serve as Trustee hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, duties and obligations of its
predecessor hereunder; but, on request of the Depositor, the Certificate Insurer
or the successor Trustee, such predecessor
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Trustee shall, upon payment of its charges then unpaid, execute and deliver
an instrument transferring to such successor Trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
Trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Depositor shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing upon the Register and
to the Certificate Insurer. The Depositor shall send a copy of such notice to
the Rating Agencies. If the Depositor fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF THE TRUSTEE.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the pan of any of the parties hereto; PROVIDED, HOWEVER,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12. REPORTING; WITHHOLDING.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared by the Seller and required to be filed by the
Trust, including other reports that must be filed with the Owners, such as the
Internal Revenue Service's Form 1066 and Schedule Q. The Trustee
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shall, upon written request of the Seller, collect any forms or reports from
the Owners determined by the Seller to be required under applicable federal,
state and local tax laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the Trustee
any information necessary to enable the Trustee to meet its obligations under
subsections (a), (b) and (c) above.
Section 10.13. LIABILITY OF THE TRUSTEE.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Sellers, the Certificate Insurer, the
Servicer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In addition,
the Depositor and CHEC covenant and agree to indemnify the Trustee and the
Servicer (if the Servicer is also the Trustee) and their officers, directors,
agents and employees from, and hold it harmless against, any and all losses,
liabilities, damages, claims or expenses (including legal fees and expenses) of
whatsoever kind arising out of or in connection with the performance of its
duties hereunder other than those resulting from the negligence or bad faith.
The Trustee and any director, officer, employee or agent of the Trustee may
conclusively rely and shall be fully protected in acting or refraining from
acting in good faith on any Certificate, notice or other document of any kind
PRIMA FACIE properly executed and submitted by the Authorized Officer of any
Person respecting any matters arising hereunder. The provisions of this Section
10.13 shall survive the resignation or removal of the Trustee, termination of
this Agreement and the payment of the outstanding Certificates. When the
Trustee incurs expenses or provides services after the occurrence of a default
and the commencement of a voluntary or involuntary case under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law involving on the Sellers or the Servicer, the expenses
and fees for such services are intended to constitute expenses of administration
under such laws.
Section 10.14. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the
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power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee and reasonably acceptable to the Certificate
Insurer to act as co-Trustee or co-Trustees, jointly with the Trustee, of all
or any part of the Trust Estate or separate Trustee or separate Trustees of
any part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners and the Certificate Insurer, such
title to the Trust Estate, or any part thereof, and, subject to the other
provisions of this Section 10.14, such powers, duties, obligations, rights
and trusts as the Servicer and the Trustee may consider necessary or
desirable. If the Servicer shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, or in the case any
event indicated in Section 8.20(a) shall have occurred and be continuing, the
Trustee subject to reasonable approval of the Certificate Insurer alone shall
have the power to make such appointment. No co-Trustee or separate Trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 10.08 and no notice to Owner of the appointment of any
co-Trustee or separate Trustee shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate Trustee or co-Trustee jointly
(it being understood that such separate Trustee or co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer, and the Certificate Insurer and the Trustee
acting jointly may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer and the Certificate Insurer.
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Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15. APPOINTMENT OF CUSTODIANS.
The Trustee may appoint one or more Custodians to hold all or a portion of
the Files as agent for the Trustee, by entering into a Custodial Agreement
acceptable to the Certificate Insurer. Subject to this Article X, the Trustee
agrees to comply with the terms of the Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the Owners
of the Certificates and the Certificate Insurer.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Depositor, the Sellers, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, each of the Sellers, the
Certificate Insurer or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied
with, except that in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of
this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Agreement (including one furnished pursuant to specific requirements
of this Agreement relating to a particular application or request) shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by counsel, unless such Authorized Officer
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such
certificate or opinion of an Authorized Officer of the Trustee or any Opinion
of Counsel may be based, insofar as it relates to factual matter upon a
certificate or opinion of, or representations by, one or more Authorized
Officers of the Depositor, either of the Sellers or the Servicer, stating
that the information with respect to such factual matters is in the
possession of the Depositor, either of the Sellers or the Servicer, unless
such
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Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect
to such matters are erroneous. Any Opinion of Counsel may also be based,
insofar as it relates to factual matters, upon a certificate or opinion of,
or representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
unless such counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such
matters are erroneous. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03. ACTS OF OWNERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Seller. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the
Owners signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Trustee and
the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner
of every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether
or not notation of such action is made upon such Certificates.
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Section 11.04. NOTICES, ETC. TO TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with the Trustee
by any Owner, the Certificate Insurer, the Depositor, either of the Sellers
or the Servicer shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with and received by the Trustee
at its Corporate Trust Office as set forth in Section 2.02 hereof.
Section 11.05. NOTICES AND REPORTS TO OWNERS; WAIVER OF NOTICES.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report
is required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report.
In any case where a notice or report to Owners is mailed in the manner
provided above, neither the failure to mail such notice or report nor any
defect in any notice or report so mailed to any particular Owner shall affect
the sufficiency of such notice or report with respect to other Owners, and
any notice or report which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given or provided. Notwithstanding
the foregoing, if the Servicer is removed or resigned or the Trust is
terminated, notice of any such events shall be made by overnight courier,
registered mail or telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any Rating Agency that rated
any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06. RULES BY TRUSTEE.
The Trustee may make reasonable rules for any meeting of Owners.
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Section 11.07. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 11.08. SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.09. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and
the parties hereto and their successors hereunder, any benefit or any legal
or equitable right, remedy or claim under this Agreement.
Section 11.10. LEGAL HOLIDAYS.
In any case where the date of any Distribution Date, any other date on
which any distribution to any Owner is proposed to be paid, or any date on
which a notice is required to be sent to any Person pursuant to the terms of
this Agreement (with the exception of any Monthly Remittance Date) shall not
be a Business Day, then (notwithstanding any other provision of the
Certificates or this Agreement) payment or mailing need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made or mailed on the nominal date of any such Distribution
Date, or such other date for the payment of any distribution to any Owner or
the mailing of such notice, as the case may be, and no interest shall accrue
for the period from and after any such nominal date, provided such payment is
made in full on such next succeeding Business Day. In any case where the
date of any Monthly Remittance Date or any Monthly Reporting Date shall not
be a Business Day, then payment or mailing need not be made on such date, but
must be made on the preceding Business Day.
Section 11.11. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with
certainty that this Agreement will be governed by and construed and
interpreted in accordance with the law of a state having a well-developed
body of commercial and financial law relevant to transactions of the type
contemplated herein, this Agreement and each Certificate shall be construed
in accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein, without giving
effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and
any court in the State of New York located in the City and County of New
York, and any appellate court from any thereof, in any action, suit or
proceeding brought against it or in connection with this Agreement or any of
the related documents or the transactions contemplated hereunder or for
recognition or
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enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. The parties hereto agree
that a final judgment in any such action, suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. To the extent permitted by applicable
law, the parties hereto hereby waive and agree not to assert by way of
motion, as a defense or otherwise in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such courts,
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that the related
documents or the subject matter thereof may not be litigated in or by such
courts.
(c) Each of the Depositor, Seller, the Conduit Seller and the Servicer
hereby irrevocably appoints and designates the Trustee as its true and lawful
attorney and duly authorized agent for acceptance of service of legal process
with respect to any action, suit or proceeding set forth in paragraph (b)
hereof. Each of the Sellers and the Servicer agrees that service of such
process upon the Trustee shall constitute personal service of such process
upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, either of the Sellers, the Servicer or the Certificate
Insurer or third-party beneficiary hereunder, as the case may be, to serve
process in any other manner permitted by law or to start legal proceedings
relating to any of the Home Equity Loans against any Mortgagor in the courts
of any jurisdiction.
Section 11.12. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 11.13. USURY.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed
the maximum nonusurious rate of interest allowed by the applicable laws of
the State of New York or any applicable law of the United States permitting a
higher maximum nonusurious rate that preempts such applicable New York laws,
which could lawfully be contracted for, charged or received (the "Highest
Lawful Rate"). In the event any payment of interest on any Certificate
exceeds the Highest Lawful Rate, the Trust stipulates that such excess amount
will be deemed to have been paid to the Owner of such Certificate as a result
of an error on the part of the Trustee acting on behalf of the Trust and the
Owner receiving such excess payment shall promptly, upon discovery of such
error or upon notice thereof from the Trustee on behalf of the Trust, refund
the amount of such excess or, at the option of such Owner, apply the excess
to the payment of principal of such Certificate, if any, remaining unpaid.
In addition, all sums paid or agreed to be paid to the Trustee for the
benefit of Owners of Certificates for the use, forbearance or detention of
money shall, to the extent
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permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14. AMENDMENT.
(a) The Trustee, the Depositor, the Sellers and the Servicer, may at
any time and from time to time, with the prior written approval of the
Certificate Insurer but without the giving of notice to or the receipt of the
consent of the Owners, amend this Agreement, and the Trustee shall consent to
the amendment for the purposes of (i) if accompanied by an approving Opinion
of Counsel and Officer's Certificate which shall not be at the expense of the
Trustee experienced in federal income tax matters, removing the restriction
against the transfer of a Class R Certificate to a Disqualified Organization
(as such term is defined in the Code), (ii) complying with the requirements
of the Code including any amendments necessary to maintain REMIC status of
each REMIC, (iii) curing any ambiguity, (iv) correcting or supplementing any
provisions of this Agreement which are inconsistent with any other provisions
of this Agreement or (v) for any other purpose, provided that in the case of
clause (v), such amendment shall not adversely affect in any material respect
any Owner. Any such amendment shall be deemed not to adversely affect in any
material respect any Owner if such Owner shall have consented thereto in
writing or if there is delivered to the Trustee written notification from
each Rating Agency that such amendment will not cause such Rating Agency to
reduce its then current rating assigned to the Class A Certificates without
regard to the Certificate Insurance Policy. Notwithstanding anything to the
contrary, no such amendment shall (a) change in any manner the amount of, or
delay the timing of, payments which are required to be distributed to any
Owner without the consent of the Owner of such Certificate, (b) change the
percentages of Percentage Interest which are required to consent to any such
amendments, without the consent of the Owners of all Certificates of the
Class or Classes affected then outstanding or (c) affect in any manner the
terms or provisions of the Certificate Insurance Policy. The Trustee shall
not berequired to execute any amendment or supplement if it affects its
rights, duties, immunities or indemnities.
(b) The Certificate Insurer and the Rating Agencies shall be provided
by the Seller and the Depositor with copies of any amendments to this
Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause
either REMIC created hereunder to fail to qualify as a REMIC at any time that
any of the Certificates are outstanding.
Section 11.15. PAYING AGENT; APPOINTMENT AND ACCEPTANCE OF DUTIES.
The Trustee is hereby appointed Paying Agent. The Seller may, subject
to the eligibility requirements for the Trustee set forth in Section 10.08
hereof, including, without limitation, the prior written consent of the
Certificate Insurer, appoint one or more other Paying Agents or successor
Paying Agents.
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Each Paying Agent, immediately upon such appointments shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent
will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Distribution Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the Owners
entitled thereto until such sums shall be paid to such Owners or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving
at least sixty (60) days written notice to the Trustee. Any such Paying
Agent may be removed at any time by an instrument filed with such Paying
Agent and signed by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no
successor, to the Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16. REMIC STATUS.
(a) The parties hereto intend that each REMIC created hereunder shall
constitute, and that the affairs of each REMIC created hereunder shall be
conducted so as to qualify it as a REMIC in accordance with the REMIC
Provisions. In furtherance of such intention, Bank One, National
Association, or such other person designated pursuant to Section 11.18 hereof
shall act as agent for the Trust and as Tax Matters Person for the Trust and
that in such capacity it shall: (i) prepare or cause to be prepared and
filed, at its own expense, in a timely manner, annual tax returns and any
other tax return required to be filed by each REMIC created hereunder using a
calendar year as the taxable year for such REMIC; (ii) in the related first
such tax return, make (or cause to be made) an election satisfying the
requirements of the REMIC Provisions, on behalf of each REMIC created
hereunder, for it to be treated as a REMIC; (iii) at the Tax Matters Person's
expense, prepare and forward, or cause to be prepared and forwarded, to the
Owners all information, reports or tax returns required with respect to each
REMIC created hereunder, including Schedule Q to Form 1066, as, when and in
the form required to be provided to the Owners, and to the Internal Revenue
Service and any other relevant governmental taxing
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authority in accordance with the REMIC Provisions and any other applicable
federal, state or local laws, including without limitation information
reports relating to "original issue discount" as defined in the Code based
upon the prepayment assumption and calculated by using the "Issue Price"
(within the meaning of Section 1273 of the Code) of the Certificates of the
related Class; provided that the tax return filed on Schedule Q to Form 1066
shall be prepared and forwarded to the Owners of the Class R Certificates no
later than 50 days after the end of the period to which such tax return was
due; (iv) not take any action or omit to take any action that would cause the
termination of the REMIC status of either REMIC created hereunde, except as
provided under this Agreement; (v) represent, the Trust or each REMIC created
hereunder in any administrative or judicial proceedings relating to an
examination or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust or each REMIC
created hereunder, enter into settlement agreements with any governmental
taxing agency, extend any statute of limitations relating to any tax item of
the Trust or each REMIC created hereunder, and otherwise act on behalf of the
Trust or each REMIC created hereunder in relation to any tax matter involving
the Trust or each REMIC created hereunder (the legal expenses and costs of
any such action described in this subsection (v) and any liability resulting
therefrom shall constitute expenses of the Trust and shall constitute Trustee
Reimbursable Expenses, unless such legal expenses and costs are incurred by
reason of the Trustee's willful misfeasance, bad faith or negligence; (vi)
comply with all statutory or regulatory requirements with regard to its
conduct of activities pursuant to the foregoing clauses of this Section
11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Class R
Certificates required of a "tax matters person" pursuant to subtitle F of the
Code and the Treasury Regulations thereunder; (vii) make available
information necessary for the computation of any tax imposed (A) on
transferor of residual interests to certain Disqualified Organizations or (B)
on pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of the Trustee or such other designated Tax
Matters Person pursuant to this Section 11.16 shall survive the termination
or discharge of this Agreement.
(b) The Sellers, the Depositor, the Trustee and the Servicer covenant
and agree for the benefit of the Owners and the Certificate Insurer (i) to
take no action which would result in the termination of REMIC status for
either REMIC created hereunder, (ii) not to engage in any "prohibited
transaction", as such term is defined in Section 860F(a)(2) of the Code,
(iii) not to engage in any other action which may result in the imposition on
the Trust of any other taxes under the Code and (iv) to cause the Servicer
not to take or engage in any such action, to the extent that either of the
Sellers is aware of any such proposed action by the Servicer.
(c) Each REMIC created hereunder shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant
to a plan of liquidation in accordance with Article IX hereof).
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(e) None of the Depositor, either of the Sellers or the Trustee shall
enter into any arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, other than as
expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
either of the Sellers may engage in any of the transactions prohibited by
such clauses, provided that the Trustee shall have received an Opinion of
Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer to the effect that such transaction does not result in a
tax imposed on the Trustee or cause a termination of REMIC status for either
REMIC created hereunder; PROVIDED, HOWEVER, that such transaction is
otherwise permitted under this Agreement.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust created hereunder as defined in Section 860F(a)(2) of the Code,
on "net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Date
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed
by the Code or any applicable provisions of state or local tax laws, such tax
shall be charged (i) to the Trustee if such tax arises out of or results from
the willful misfeasance, bad faith or negligence in performance by the
Trustee of any of its obligations under Article X, (ii) to the Servicer if
such tax arises out of or results from a breach by the Servicer of any of its
obligations under Article VIII or otherwise.
Section 11.17. ADDITIONAL LIMITATION ON ACTION AND IMPOSITION OF TAX.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an Opinion of Counsel experienced
in federal income tax matters acceptable to the Certificate Insurer at the
expense of the party seeking to take such action but in no event at the
expense of the Trust to the effect that such transaction does not result in a
tax imposed on the Trust or either REMIC created hereunder or cause a
termination of REMIC status for either REMIC created hereunder, (i) sell any
assets in the Trust Estate, (ii) accept any contribution of assets after the
Startup Day, (iii) allow the Servicer to foreclose upon any Home Equity Loan
if such foreclosure would result in a tax on the Trust or either REMIC
created hereunder or cause termination of REMIC status for either REMIC
created hereunder or (iv) agree to any modification of this Agreement. To
the extent that sufficient amounts cannot be so retained to pay or provide
for the payment of such tax, the Trustee is hereby authorized to and shall
segregate, into a separate non-interest bearing account, the net income from
any such Prohibited Transactions of each REMIC created hereunder and use such
income, to the extent necessary, to pay such tax; PROVIDED THAT, to the
extent that any such income is paid to the Internal Revenue Service, the
Trustee shall retain an equal amount from future amounts otherwise
distributable to the Owners of Class R Certificates and shall distribute such
retained amounts to the Owners of Class A Certificates to the extent they are
fully reimbursed and then to the Owners of the Class R Certificates. If any
tax, including interest penalties or assessments, additional amounts or
additions to tax, is imposed on the Trust, such tax shall be charged against
amounts otherwise distributable to the owners of the Class R Certificates on
a PRO RATA basis. The Trustee is hereby authorized to and shall retain from
amounts otherwise distributable to the Owners of the Class R Certificates
sufficient funds to pay or provide for the payment of, and to actually pay,
such tax as is legally owed by the Trust (but such authorization shall not
prevent the
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Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings).
Section 11.18. APPOINTMENT OF TAX MATTERS PERSON.
A Tax Matters Person will be appointed for each REMIC created hereunder
for all purposes of the Code and such Tax Matters Person will perform, or
cause to be performed, such duties and take, or cause to be taken, such
actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for each REMIC created hereunder
shall be the Trustee as long as it owns a Class R Certificate. If the
Trustee does not own a Class R Certificate, the Tax Matters Person will be
the holder of the largest percentage interest in the Class R Certificates.
The Trustee is hereby irrevocably appointed to act as the agent of the Tax
Matters Person for all purposes of the Code and regulations thereunder.
Section 11.19. THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer hereunder (except for the
Certificate Insurer's right of prior approval of amendments to this Agreement
that affect the Certificate Insurer's right to receive payments or the
priority of such payments to the Certificate Insurer under Section 7.03),
including but not limited to consent rights, shall be suspended and shall run
to the benefit of the Owners and shall be exercisable by a vote of Owners
holding Certificates representing at least a 51% Percentage Interest of all
Class A Certificates during any period in which there exists a Certificate
Insurer Default; PROVIDED, that the right of the Certificate Insurer to
receive the Premium Amount or any Reimbursement Amounts shall not be
suspended if such Certificate Insurer Default was a default other than a
default under clause (a) of the definition thereof. If a Certificate Insurer
Default shall cease to exist, the rights of the Certificate Issuer shall be
immediately restored. At such time as the Class A Certificates are no longer
Outstanding hereunder and the Certificate Insurer has received all
Reimbursement Amounts, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20. RESERVED.
Section 11.21. THIRD PARTY RIGHTS.
The Trustee, the Sellers, the Servicer, the Depositor and the Owners
agree that the Certificate Insurer shall be deemed a third-party beneficiary
of this Agreement as if it were a party hereto.
Section 11.22. NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
THE TRUSTEE: Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Office
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Tel: (312) 407-8810
Fax: (312) 407-1708
THE DEPOSITOR: CHEC Funding, LLC
2728 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
Fax: (214) 756-4580
THE SELLER: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
2828 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
Fax: (214) 756-4580
THE CONDUIT SELLER: CHEC Conduit Funding, LLC
2728 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
Fax: (214) 756-4580
THE SERVICER: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
2828 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
Fax: (214) 756-4580
THE CUSTODIAN: Bank One Trust Company, N.A.
465 N. Halstead, Suite 140
Pasadena, CA 91107
Attention: Laurie Meder
Tel: (626) 351-3100
Fax: (626) 351-3150
THE CERTIFICATE
INSURER: Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Re: Centex Home Equity Loan Trust 2000-A
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Tel: (212) 826-0100
Fax: (212) 339-3518 or (212) 339-3529
(in each case in which notice or other communication to the
Certificate Insurer refers to a Servicer Termination Event,
a claim on the Certificate Insurance Policy or with respect
to which failure on the part of the Certificate Insurer to
respond shall be deemed to constitute consent or acceptance,
then a copy should also be sent to the attention of each of
the General Counsel and the Head-Financial Guaranty Group
and shall be marked to indicate "URGENT MATERIAL ENCLOSED.")
THE UNDERWRITERS: Salomon Smith Barney
390 Greenwich Street
6th Floor
New York, NY 10013
Attention: Paul Humphrey
Tel: (212) 723-9548
Fax: (212) 723-8591
Lehman Brothers
3 World Financial Center
200 Vesey Street
New York, NY 10285
Attention: Aadit Sehasayee
Tel: (212) 526-9262
Fax: (212) 526-7415
Prudential Securities
One New York Plaza
14th Floor
New York, NY 10292
Attention: Brendan Keane
Tel: (212) 778-4231
Fax: (212) 778-7401
MOODY'S: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
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STANDARD & POOR'S: Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc.
55 Water Street
41st Floor
New York, New York 10041
Attention: Residential Mortgage Group
Tel: (212) 438-2000
Fax: (212) 438-2661
Section 11.23. RULE 144A INFORMATION. For so long as any of the Class
R or Class X-IO Certificates are "restricted securities" within the meaning
of Rule 144A under the Securities Act, the Servicer (or if the Trustee is
then acting as Servicer, CHEC) agrees to provide to any Owner of the Class R
or Class X-IO Certificate and to any prospective purchaser of Class R or
Class X-IO Certificates designated by such an Owner, upon the request of such
Owner or prospective purchaser, the information specified below which is
intended to satisfy the conditions set forth in Rule 144A(d)(4) under the
Securities Act; PROVIDED that this Section 11.23 shall require, as to the
Trustee or CHEC, only that the Servicer (or if the Trustee is then acting as
Servicer, CHEC) provide publicly available information regarding it or the
Trustee in response to any such request; and PROVIDED FURTHER that the
Servicer (or if the Trustee is then acting as Servicer, CHEC) shall be
obligated to provide only such basic, material information concerning the
structure of the Class R or Class X-IO Certificates and distributions
thereon, the nature, performance and servicing of the Home Equity Loans
supporting the Certificates, and any credit enhancement mechanism, if any,
associated with the Certificates. Any recipient of information provided
pursuant to this Section 11.23 shall agree that such information shall not be
disclosed or used for any purpose other than the evaluation of the Class R or
Class X-IO Certificates by the prospective purchaser. The Trustee shall have
no responsibility for the sufficiency under Rule 144A of any information so
provided by the Servicer to any Owner or prospective purchaser of Class R or
Class X-IO Certificates.
END OF ARTICLE XI
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ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and
in the Certificates to the benefit of Owners of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee shall cooperate in
all reasonable respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain
the Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to
the benefit of or actions on behalf of the Owners shall be deemed to include
the Certificate Insurer. Unless a Certificate Insurer Default exists, the
Servicer shall not terminate any Sub-Servicing Agreements without the prior
consent of the Certificate Insurer.
Section 12.02. CLAIMS UPON THE POLICY; POLICY PAYMENTS ACCOUNT
(a) In the event that an Insured Payment becomes due pursuant to the
terms of the Certificate Insurance Policy, the Trustee shall submit a Notice
(in the form attached to the Certificate Insurance Policy) in accordance with
the terms of the Certificate Insurance Policy and in sufficient time that
payment will be made under the Certificate Insurance Policy on the related
Distribution Date.
(b) The Trustee shall establish and maintain a separate special purpose
trust account for the benefit of the Owners of the Class A Certificates and
the Certificate Insurer referred to herein as the "Policy Payments Account"
over which the Trustee shall have exclusive control and sole right of
withdrawal. The Policy Payments Account shall be an Eligible Account. The
Trustee shall deposit any amount paid under the Certificate Insurance Policy
into the Policy Payments Account and distribute such amount only for purposes
of payment to the Owners of the related Class A Certificates of the Insured
Payments for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Seller, the
Depositor, the Custodian, the Trustee or the Trust. Amounts paid under the
Certificate Insurance Policy shall be transferred to the Certificate Account
in accordance with the next succeeding paragraph and disbursed by the Trustee
to Owners of the related Class A Certificates in accordance with Section
7.03(e). It shall not be necessary for such payments to be made by checks or
wire transfers separate from the checks or wire transfers used to pay the
Insured Payments with other funds available to make such payment. However,
the amount of any payment of principal of or interest on the related Class A
Certificates to be paid from funds transferred from the Policy Payments
Account shall be noted as provided in paragraph (c) below in the Register and
in the statement to be furnished to Owners of the Class A Certificates
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pursuant to Section 7.08. Funds held in the Policy Payments Account shall
not be invested by the Trustee.
On any Distribution Date with respect to which a claim has been made
under the Certificate Insurance Policy, the amount of funds received by the
Trustee as a result of any claim under the Certificate Insurance Policy, to
the extent required to make the Insured Payment on such Distribution Date
shall be withdrawn from the Policy Payments Account and deposited in the
Certificate Account and applied by the Trustee, directly to the payment in
full of the Insured Payment due on the related Class of Class A Certificates
in accordance with Section 7.03(e). Funds received by the Trustee as a
result of any claim under the Certificate Insurance Policy shall be deposited
by the Trustee in the Policy Payments Account and used solely for payment to
the Owners of the Class A Certificates and may not be applied to satisfy any
costs, expenses or liabilities of the Servicer, the Seller, the Depositor,
the Custodian, the Trustee or the Trust. Any funds remaining in the Policy
Payments Account on the first Business Day following a Distribution Date
shall be remitted to the Certificate Insurer, pursuant to the instructions of
the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Class A Certificate from
moneys received under the Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon one Business Day's prior notice to the
Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent (as defined in the Certificate Insurance Policy) of any
proceeding or the institution of any action, of which an Authorized Officer
of the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law
(a "Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Owner of a Class A Certificate by its purchase of such
Certificate, the Servicer and the Trustee hereby agree that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to such Preference Claim, including without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without limitation
of the foregoing, the Certificate Insurer shall be subrogated to the rights
of the Servicer, the Trustee and each Owner of a Class A Certificate in the
conduct of any such Preference Claim, including, without limitation, all
rights of any party to an adversary proceeding action with respect to any
court order issued in connection with any such Preference Claim.
Section 12.03. EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER; SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which
is made with moneys received pursuant to the terms of the Certificate
Insurance Policy shall not be considered payment of such Certificates from
the Trust and shall not result in the payment of or the provision for the
payment of the principal of or interest on such Certificates within the
meaning of Section 7.03. The Depositor,
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<PAGE>
the Servicer and the Trustee acknowledge, and each Owner by its acceptance of
a Certificate agrees, that without the need for any further action on the
part of the Certificate Insurer, the Depositor, the Servicer, the Trustee or
the Registrar (a) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on any Class A
Certificates to the Owners of such Certificates, the Certificate Insurer will
be fully subrogated to the rights of such holders to receive such principal
and interest from the Trust and (b) the Certificate Insurer shall be paid
such principal and interest but only from the sources and in the manner
provided herein for the payment of such principal and interest.
The Trustee, the Sellers, the Depositor and the Servicer shall cooperate
in all respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests
of the Owners as otherwise set forth therein.
Section 12.04. NOTICES TO THE CERTIFICATE INSURER.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Owners
shall also be sent to the Certificate Insurer.
Section 12.05. THIRD-PARTY BENEFICIARY.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06. RIGHTS TO THE CERTIFICATE INSURER TO EXERCISE RIGHTS OF
OWNERS.
By accepting its Certificate, each Owner of a Class A Certificate agrees
that unless a Certificate Insurer Default exists, the Certificate Insurer
shall have the right to exercise all rights of the Owners of the Class A
Certificates as specified under this Agreement without any further consent of
the Owners of the Class A Certificates and that the Owners of Class A
Certificates may not exercise such rights except with the written consent of
the Certificate Insurer.
Section 12.07. TRUSTEE TO HOLD THE CERTIFICATE INSURANCE POLICY.
The Trustee will hold the Certificate Insurance Policy in trust as agent
for the Owners of the Class A Certificates for the purpose of making claims
thereon and distributing the proceeds thereof. Neither the Certificate
Insurance Policy nor the amounts paid on the Certificate Insurance Policy
will constitute part of the Trust created by this Agreement. Each Owner of
Class A Certificates, by accepting its Class A Certificates, appoints the
Trustee as attorney-in-fact for the purpose of making claims on the
Certificate Insurance Policy.
Section 12.08. TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE
INSURER.
Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the
Certificate Insurer:
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(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 8.20 hereof;
(b) agree to any amendment pursuant to Section 11.14 hereof; or
(c) undertake any litigation with respect to the Trust.
END OF ARTICLE XII
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IN WITNESS WHEREOF, the Depositor, the Sellers, the Servicer and the
Trustee have caused this Agreement to be duly executed their respective
officers thereunto duly authorized, all as of the day and year first above
written.
CHEC FUNDING, LLC,
as Depositor
By: /s/Jeffrey B. Upperman
------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Seller
By: /s/Jeffrey B. Upperman
------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
CHEC CONDUIT FUNDING, LLC
as Conduit Seller
By: /s/Jeffrey B. Upperman
------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Servicer
By: /s/Jeffrey B. Upperman
------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
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BANK ONE, NATIONAL ASSOCIATION
as Trustee
By: /s/Mark J. Frye
------------------------------
Name: Mark J. Frye
Title: Assistant Vice President
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<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of March, 2000, before me personally came Jeffrey B.
Upperman to me known that he is a Vice President of CHEC Funding, LLC, a
Delaware limited liability agreement; and that he signed his name thereto by
order of the sole member of said company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/Amy Mellon
-----------------------------------
Notary Public
145
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of March 2000, before me personally came Jeffrey B.
Upperman to me known that he is a Vice President of Centex Credit Corporation
d/b/a Centex Home Equity Corporation, a Nevada corporation and that he signed
his name thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/Amy Mellon
-----------------------------------
Notary Public
146
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of March, 2000, before me personally came Jeffrey B.
Upperman to me known that he is a Vice President of CHEC Conduit Funding,
LLC, a Delaware limited liability corporation and that he signed his name
thereto by order of Centex Credit Corporation d/b/a Centex Home Equity
Corporation, the sole member of CHEC Conduit Funding, LLC.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/Amy Mellon
-----------------------------------
Notary Public
147
<PAGE>
STATE OF ILLINOIS )
: ss.:
COOK COUNTY )
On the 15th day of March, 2000, before me personally came Mark J. Frye,
to me known that he is an Assistant Vice President of Bank One, National
Association, described in and that he executed the above instrument as
Trustee; and that he signed his name thereto by order of the Board of
Directors of said bank.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/Nilda Sierra
-----------------------------------
Notary Public
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<PAGE>
SCHEDULE I-A
GROUP I SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate Trust
Office and by the Servicer.
I-A-1
<PAGE>
SCHEDULE I-B
GROUP II SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate Trust
Office and by the Servicer.
I-B-1
<PAGE>
SCHEDULE I-C
SELLER SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-C-1
<PAGE>
SCHEDULE I-D
CONDUIT SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-D-1
<PAGE>
SCHEDULE I-E
INVESTMENT INSTRUCTIONS TO TRUSTEE
<TABLE>
<CAPTION>
Account Eligible Investment
------- -------------------
<S> <C>
(1) Certificate Account One Group Institutional Prime Fund
(2) Supplemental Interest Reserve Fund One Group Institutional Prime Fund
</TABLE>
I-E-1
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-1
(7.51% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-1-1 152314 BY5
CUSIP
61,000,000 May 2018
Original Class A-1 Certificate March 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
CEDE & CO.
A-1-1
<PAGE>
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer), and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-1 Certificates over the period
from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-1 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to April 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-1 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-1-2
<PAGE>
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor
(the "Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class A-2
(the "Class A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"),
Class A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5
Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7 (the
"Class A-7 Certificates"), Class X-IO (the "Class X-IO Certificates"), and
Class R-1 and Class R-2 (together, the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates
and the Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and
the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing April 25, 2000, the Owners of the Class A-1 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-1 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
A-1-3
<PAGE>
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-1 Certificates. The Percentage
Interest of each Class A-1 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate
Principal Balance of such Class A-1 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-1 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall
release the Servicer from any of its obligations under the Pooling and
Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
A-1-4
<PAGE>
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as
by paying through the Trustee or Paying Agent), to the Owners of such Class
A-1 Certificates, the Certificate Insurer will be subrogated to the rights of
such Owners of Class A-1 Certificates with respect to such Insured Payment,
shall be deemed to the extent of the payments so made to be a registered Owner
of such Class A-1 Certificates and shall receive all future distributions of
the Class A-1 Distribution Amount until all such Insured Payments by the
Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of
all amounts held by the Trustee and required to be paid to such Owners
pursuant to the Pooling and Servicing Agreement and payment in full of all
amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto)
of the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to
the effect that each such liquidation constitutes a Qualified Liquidation, and
the Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the
Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each
such liquidation constitutes a Qualified Liquidation, each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly Remittance Date
after the Clean-Up Call Date. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer
A-1-5
<PAGE>
have the right to exercise any trust or power set forth in Section 6.11 of the
Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage
Interest will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner
and upon all future Owners of the Certificate and of any Certificate issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------------
Title:
--------------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------
Title:
------------------------------
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-2
(7.60% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-2-1 152314 BZ2
CUSIP
19,000,000 March 2022
Original Class A-2 Certificate March 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
CEDE & CO.
Registered Owner
A-2-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer), and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-2 Certificates over the period
from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-2 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to April 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-2 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-2-2
<PAGE>
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class A-2 (the "Class A-2 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor
(the "Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Assocation, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-3 (the "Class A-3 Certificates"),
Class A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5
Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7 (the
"Class A-7 Certificates"), Class X-IO (the "Class X-IO Certificates"), and
Class R-1 and Class R-2 (together, the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates
and the Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and
the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing April 25, 2000, the Owners of the Class A-2 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-2 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-2 Certificates. The Percentage
Interest of each Class A-2 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate
Principal Balance of such Class A-2 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-2 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for
A-2-3
<PAGE>
distribution to the Owners provided that timely notice has been given to the
Certificate Insurer by the Trustee. "Insured Payments" shall have the meaning
as provided therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall
release the Servicer from any of its obligations under the Pooling and
Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as
by paying through the Trustee or Paying Agent), to the Owners of such Class
A-2 Certificates, the Certificate Insurer will be subrogated to the rights of
such Owners of Class A-2 Certificates with respect to such Insured Payment,
shall be deemed to
A-2-4
<PAGE>
the extent of the payments so made to be a registered Owner of such Class A-2
Certificates and shall receive all future distributions of the Class A-2
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of
all amounts held by the Trustee and required to be paid to such Owners
pursuant to the Pooling and Servicing Agreement and payment in full of all
amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto)
of the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to
the effect that each such liquidation constitutes a Qualified Liquidation, and
the Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the
Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each
such liquidation constitutes a Qualified Liquidation, each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly Remittance Date
after the Clean-Up Call Date. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer have the right to exercise any trust or
power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney
A-2-5
<PAGE>
duly authorized in writing, and thereupon one or more new Certificates of the
like Class, tenor and a like Percentage Interest will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner
and upon all future Owners of the Certificate and of any Certificate issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------------
Title:
--------------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------
Title:
------------------------------
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-3
(7.65% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
NO: A-3-1 152314 CA6
CUSIP
33,000,000 October 2026
Original Class A-3 Certificate March 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
A-3-1
<PAGE>
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer), and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-3 Certificates over the period
from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-3 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to April 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-3 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-3-2
<PAGE>
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class A-3 (the "Class A-3 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor
(the "Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5
Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7 (the
"Class A-7 Certificates"), Class X-IO (the "Class X-IO Certificates"), and
Class R-1 and Class R-2 (together, the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates
and the Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and
the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing April 25, 2000, the Owners of the Class A-3 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-3 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-3 Certificates. The Percentage
Interest of each Class A-3 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate
Principal Balance of such Class A-3 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-3 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for
A-3-3
<PAGE>
distribution to the Owners provided that timely notice has been given to the
Certificate Insurer by the Trustee. "Insured Payments" shall have the meaning
as provided therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall
release the Servicer from any of its obligations under the Pooling and
Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as
by paying through the Trustee or Paying Agent), to the Owners of such Class
A-3 Certificates, the Certificate Insurer will be subrogated to the rights of
such Owners of Class A-3 Certificates with respect to such Insured Payment,
shall be deemed to
A-3-4
<PAGE>
the extent of the payments so made to be a registered Owner of such Class A-3
Certificates and shall receive all future distributions of the Class A-3
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of
all amounts held by the Trustee and required to be paid to such Owners
pursuant to the Pooling and Servicing Agreement and payment in full of all
amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto)
of the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to
the effect that each such liquidation constitutes a Qualified Liquidation, and
the Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the
Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each
such liquidation constitutes a Qualified Liquidation, each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly Remittance Date
after the Clean-Up Call Date. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer have the right to exercise any trust or
power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney
A-3-5
<PAGE>
duly authorized in writing, and thereupon one or more new Certificates of the
like Class, tenor and a like Percentage Interest will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner
and upon all future Owners of the Certificate and of any Certificate issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable for new
Class A-3 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-3-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------------
Title:
--------------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------
Title:
------------------------------
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-4
(8.00% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-4-1 152314 CB4
CUSIP
27,000,000 March 2029
Original Class A-4 Certificate March 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
CEDE & CO.
A-4-1
<PAGE>
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer), and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-4 Certificates over the period
from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-4 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to April 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-4 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-4-2
<PAGE>
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class A-4 (the "Class A-4 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor
(the "Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-3 (the "Class A-3 Certificates"), Class A-5 (the "Class A-5
Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7 (the
"Class A-7 Certificates"), Class X-IO (the "Class X-IO Certificates"), and
Class R-1 and Class R-2 (together, the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates
and the Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and
the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing April 25, 2000, the Owners of the Class A-4 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-4 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-4 Certificates. The Percentage
Interest of each Class A-4 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate
Principal Balance of such Class A-4 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-4 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the Distribution Date for
A-4-3
<PAGE>
distribution to the Owners provided that timely notice has been given to the
Certificate Insurer by the Trustee. "Insured Payments" shall have the meaning
as provided therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall
release the Servicer from any of its obligations under the Pooling and
Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as
by paying through the Trustee or Paying Agent), to the Owners of such Class
A-4 Certificates, the Certificate Insurer will be subrogated to the rights of
such Owners of Class A-4 Certificates with respect to such Insured Payment,
shall be deemed to
A-4-4
<PAGE>
the extent of the payments so made to be a registered Owner of such Class A-4
Certificates and shall receive all future distributions of the Class A-4
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of
all amounts held by the Trustee and required to be paid to such Owners
pursuant to the Pooling and Servicing Agreement and payment in full of all
amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto)
of the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to
the effect that each such liquidation constitutes a Qualified Liquidation, and
the Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the
Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each
such liquidation constitutes a Qualified Liquidation, each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly Remittance Date
after the Clean-Up Call Date. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer have the right to exercise any trust or
power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney
A-4-5
<PAGE>
duly authorized in writing, and thereupon one or more new Certificates of the
like Class, tenor and a like Percentage Interest will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner
and upon all future Owners of the Certificate and of any Certificate issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------------
Title:
--------------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------
Title:
------------------------------
A-4-7
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-5
(8.25% CERTIFICATE RATE, OR 8.75% CERTIFICATE RATE ON OR AFTER
THE CLEAN-UP CALL DATE)
(SUBJECT TO GROUP I NET WAC CAP)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-5-1 152314 CC2
CUSIP
$17,500,000 March 2030
Original Class A-5 Certificate March 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
CEDE & CO.
A-5-1
<PAGE>
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer), and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-5 Certificates over the period
from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-5 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to April 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-5 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-5-2
<PAGE>
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class A-5 (the "Class A-5 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor
(the "Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7 (the
"Class A-7 Certificates"), Class X-IO (the "Class X-IO Certificates"), and
Class R-1 and Class R-2 (together, the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates
and the Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and
the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing April 25, 2000, the Owners of the Class A-5 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-5 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-5 Certificates. The Percentage
Interest of each Class A-5 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate
Principal Balance of such Class A-5 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-5 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for
A-5-3
<PAGE>
distribution to the Owners provided that timely notice has been given to the
Certificate Insurer by the Trustee. "Insured Payments" shall have the meaning
as provided therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall
release the Servicer from any of its obligations under the Pooling and
Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as
by paying through the Trustee or Paying Agent), to the Owners of such Class
A-5 Certificates, the Certificate Insurer will be subrogated to the rights of
such Owners of Class A-5 Certificates with respect to such Insured Payment,
shall be deemed to
A-5-4
<PAGE>
the extent of the payments so made to be a registered Owner of such Class A-5
Certificates and shall receive all future distributions of the Class A-5
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of
all amounts held by the Trustee and required to be paid to such Owners
pursuant to the Pooling and Servicing Agreement and payment in full of all
amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto)
of the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to
the effect that each such liquidation constitutes a Qualified Liquidation, and
the Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the
Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each
such liquidation constitutes a Qualified Liquidation, each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly Remittance Date
after the Clean-Up Call Date. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer have the right to exercise any trust or
power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney
A-5-5
<PAGE>
duly authorized in writing, and thereupon one or more new Certificates of the
like Class, tenor and a like Percentage Interest will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner
and upon all future Owners of the Certificate and of any Certificate issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------------
Title:
--------------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------
Title:
------------------------------
A-5-7
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC")
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-6
(7.88% CERTIFICATE RATE SUBJECT TO GROUP I NET WAC CAP)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-6-1 152314 CD0
CUSIP
$17,500,000 March 2030
Original Class A-6 Certificate March 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
CEDE & CO.
A-6-1
<PAGE>
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-B to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer), and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-6 Certificates over the period
from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-6 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to April 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-6 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-6-2
<PAGE>
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class A-6 (the "Class A-6 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor
(the "Depositor"), CHEC Conduit Funding, LLC as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-7 (the
"Class A-7 Certificates"), Class X-IO (the "Class X-IO Certificates"), and
Class R-1 and Class R-2 (together, the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates
and the Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and
the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing April 25, 2000, the Owners of the Class A-6 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-6 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-6 Certificates. The Percentage
Interest of each Class A-6 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate
Principal Balance of such Class A-6 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-6 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for
A-6-3
<PAGE>
distribution to the Owners provided that timely notice has been given to the
Certificate Insurer by the Trustee. "Insured Payments" shall have the meaning
as provided therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall
release the Servicer from any of its obligations under the Pooling and
Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as
by paying through the Trustee or Paying Agent), to the Owners of such Class
A-6 Certificates, the Certificate Insurer will be subrogated to the rights of
such Owners of Class A-6 Certificates with respect to such Insured Payment,
shall be deemed to
A-6-4
<PAGE>
the extent of the payments so made to be a registered Owner of such Class A-6
Certificates and shall receive all future distributions of the Class A-6
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of
all amounts held by the Trustee and required to be paid to such Owners
pursuant to the Pooling and Servicing Agreement and payment in full of all
amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto)
of the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to
the effect that each such liquidation constitutes a Qualified Liquidation, and
the Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the
Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each
such liquidation constitutes a Qualified Liquidation, each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly Remittance Date
after the Clean-Up Call Date. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer have the right to exercise any trust or
power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney
A-6-5
<PAGE>
duly authorized in writing, and thereupon one or more new Certificates of the
like Class, tenor and a like Percentage Interest will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendments. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner
and upon all future Owners of the Certificate and of any Certificate issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for new
Class A-6 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------------
Title:
--------------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------
Title:
------------------------------
A-6-7
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-7
(VARIABLE CERTIFICATE RATE, WITH AN INCREASE IN MARGIN ON OR AFTER THE CLEAN-UP
CALL DATE)
(SUBJECT TO AVAILABLE FUNDS CAP)
Representing Certain Interests in a Pool of Group II Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
Group II Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer ("Centex
Home Equity Loan Trust 2000-A") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
NO: A-7-1 152314 CE8
CUSIP
135,000,000 March 2030
Original Class A-7 Certificate March 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
A-7-1
<PAGE>
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group II listed in SCHEDULE
I-B to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group II as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible Investments
held by the Servicer), and (c) proceeds of all the foregoing (including, but not
by way of limitation, all proceeds of any mortgage insurance, flood insurance,
hazard insurance and title insurance policy relating to the Home Equity Loans,
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-7 Certificates over the period from
the date of initial issuance of the Certificates to the final Distribution Date
for the Class A-7 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to April 25, 2000 (the
first Distribution Date) be less than the original Certificate Principal Balance
of the Class A-7 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
(as defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed canceled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-7-2
<PAGE>
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class A-7 (the "Class A-7 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2000, the Owners of the Class A-7 Certificates as of the
close of business on the last Business Day immediately preceding a Distribution
Date, or if Definitive Certificates have been issued, as of the close of
business on the last Business Day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date") will
be entitled to receive the Class A-7 Distribution Amount relating to such
Certificate on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-7 Certificate will be entitled to receive
such Owner's Percentage Interest in the amounts due on such Distribution Date to
the Owners of the Class A-7 Certificates. The Percentage Interest of each Class
A-7 Certificate as of any date of determination will be equal to the percentage
obtained by dividing the original Certificate Principal Balance of such Class
A-7 Certificate on the Startup Day by the aggregate Certificate Principal
Balance of the Class A-7 Certificates on the Startup Day.
A-7-3
<PAGE>
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the Distribution Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the
Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf of
the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Home Equity Loans insured or guaranteed by
CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
Certificate Insurance Policy, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the
A-7-4
<PAGE>
Owners of such Class A-7 Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-7 Certificates with
respect to such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-7 Certificates and
shall receive all future distributions of the Class A-7 Distribution Amount
until all such Insured Payments by the Certificate Insurer have been fully
reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement and payment in full of all amounts owed to
the Certificate Insurer upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (c) at any time
if a Qualified Liquidation of the Trust Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement pursuant to
clause (c) above, the Owners of all Certificates then Outstanding shall provide
the Trustee and the Certificate Insurer, at such Owners' expense, an Opinion of
Counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes a
Qualified Liquidation, and the Servicer shall either sell the Home Equity Loans
and the Trustee shall distribute the proceeds of the liquidation of the Trust
Estate, or the Servicer shall distribute equitably in kind all of the assets of
the Trust Estate to the remaining Owners of the Certificates to the effect that
each such liquidation constitutes a Qualified Liquidation, each in accordance
with such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Servicer
may, at its option, purchase from the Trust all remaining Home Equity Loans and
other property then constituting the Trust Estate, and thereby effect early
retirement of the Certificates, on any Monthly Remittance Date after the
Clean-Up Call Date. In addition, under certain circumstances relating to the
qualification of REMIC I and REMIC II as REMICs under the Code, the Home Equity
Loans may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of
A-7-5
<PAGE>
transfer in form satisfactory to the Registrar duly executed by, the Owner
hereof or his attorney duly authorized in writing, and thereupon one or more
new Certificates of the like Class, tenor and a like Percentage Interest will
be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Distribution
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable for new
Class A-7 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
A-7-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Title:
---------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------
Title:
-------------------------------
A-7-7
<PAGE>
EXHIBIT B
FORM OF CLASS X-IO CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS X-IO CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE WAS ISSUED ON MARCH 15, 2000 AT A PRICE (INCLUSIVE OF ACCRUED
INTEREST AT CLOSING) EQUAL TO ____% OF THE ORIGINAL AGGREGATE LOAN BALANCE.
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL
INTEREST PAYMENTS TO BE RECEIVED ON THIS SECURITY ARE TREATED AS PART OF THE
CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY. ACCORDINGLY, THE CERTIFICATE
WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO
APPROXIMATELY ____% OF THE ORIGINAL AGGREGATE LOAN BALANCE. THE MONTHLY YIELD
TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY
____%, AND THE AMOUNT OF OID ALLOCABLE TO THE FIRST INTEREST PERIOD MARCH 15,
2000 THROUGH APRIL 25, 2000 IS EQUAL TO APPROXIMATELY ____% OF THE ORIGINAL
AGGREGATE LOAN BALANCE. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND
THE OID AMOUNTS SPECIFIED ABOVE WAS BASED ON: (I) A METHOD EMBODYING AN
ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT ASSUMPTION OF ___% PREPAYMENT
ASSUMPTION WITH RESPECT TO THE GROUP I HOME EQUITY LOANS AND ___% CPR WITH
RESPECT TO THE GROUP II HOME EQUITY LOANS (EACH AS DEFINED IN THE PROSPECTUS
SUPPLEMENT), AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING
CONVENTION. THE ACTUAL YIELD TO MATURITY, PREPAYMENT EXPERIENCE, AND OID
AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
B-1
<PAGE>
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS X-IO
(REGULAR INTEREST)
Representing Certain Interests in a Pool of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
Group I Home Equity Loans and certain other property held by the Trust.)
NO: X-IO-1
Date: March 15, 2000
Percentage Interest _____%
CHEC RESIDUAL CORPORATION
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in SCHEDULE I-A to the
Pooling and Servicing Agreement which the Seller is causing to be delivered to
the Depositor and the Depositor is causing to be delivered to the Trustee,
together with the related Home Equity Loan documents and the Depositor's
interest in any Property, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account, together with investment
earnings on such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, inclusive of investment
earnings thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer), and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class X-IO (the
B-2
<PAGE>
"Class X-IO Certificates") and issued under and subject to the terms,
provisions and conditions of that certain Pooling and Servicing Agreement
dated as of March 1, 2000 (the "Pooling and Servicing Agreement") by and
among Centex Credit Corporation d/b/a Centex Home Equity Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
CHEC Funding, LLC, in its capacity as Depositor (the "Depositor"), CHEC
Conduit Funding, LLC, as Conduit Seller, and Bank One, National Association,
in its capacity as the Trustee (the "Trustee"), to which Pooling and
Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the
Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Asset-Backed Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates") and Class
R-1 and Class R-2 (together, the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6
Certificates and the Class A-7 Certificates shall be together referred to as
the "Class A Certificates" and the Class A Certificates, the Class X-IO
Certificates and the Class R Certificates are together referred to herein as
the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2000, the Owners of the Class X-IO Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class X-IO Distribution Amount relating
to such Certificate on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Class X-IO Certificates having an
aggregate Percentage Interest of at least ___% (by wire transfer or otherwise)
to the account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
B-3
<PAGE>
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Home Equity Loans insured or guaranteed by
CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans, all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement and payment in full of all amounts owed to
the Certificate Insurer upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (c) at any time
when a Qualified Liquidation of the Trust Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement pursuant to
clause (c) above, the Owners of all Certificates then Outstanding shall provide
the Trustee and the Certificate Insurer, at such Owners' expense, an Opinion of
Counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes a
Qualified Liquidation, and the Servicer shall either sell the Home Equity Loans
and the Trustee shall distribute the proceeds of the liquidation of the Trust
Estate, or the Servicer shall distribute equitably in kind all of the assets of
the Trust Estate to the remaining Owners of the Certificates to the effect that
each such liquidation constitutes a Qualified Liquidation, each in accordance
with such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Servicer
may, at its option, purchase from the Trust all remaining Home Equity Loans and
other property then constituting the Trust Estate, and thereby effect early
retirement of the Certificates, on any Monthly Remittance Date after the
Clean-Up Call Date. In addition, under certain circumstances relating to the
qualification of REMIC I and REMIC II as REMICs under the Code, the Home Equity
Loans may be sold, thereby effecting the early retirement of the Certificates.
B-4
<PAGE>
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Distribution
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class X-IO Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class X-IO Certificates are exchangeable for new
Class X-IO Certificates evidencing the same Percentage Interest as the Class
X-IO Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
B-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Title:
---------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------
Title:
-------------------------------
B-6
<PAGE>
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS OWNERSHIP OF
EACH OF THE SOLE CLASSES OF "RESIDUAL INTERESTS" IN TWO "REAL ESTATE MORTGAGE
INVESTMENT CONDUITS" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES 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 CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THE
PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE
CLASS R CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF
THE FORM OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND
AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A
C-1
<PAGE>
DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR GENERALLY
WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF (A) THE
AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS CERTIFICATE
OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND
(B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR PURPOSES OF
THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES REGULATED
INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS,
PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T
OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CLASS R CERTIFICATE REPRESENTS A RESIDUAL INTEREST IN EACH OF REMIC I
AND REMIC II FOR FEDERAL INCOME TAX PURPOSES.
C-2
<PAGE>
CENTEX HOME EQUITY LOAN TRUST 2000-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS R
(RESIDUAL INTEREST)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation d/b/a Centex Home
Equity Corporation. This Certificate represents a fractional ownership interest
in the Trust Estate as defined below.)
NO: R-1_
Date: March 15, 2000
Percentage Interest _____%
CHEC Residual Corporation
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in SCHEDULE I-A and
SCHEDULE I-B to the Pooling and Servicing Agreement which the Seller is causing
to be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee, together with the related Home Equity Loan documents and the
Seller's interest in any Property which secured a Home Equity Loan but which has
been acquired by foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts as may be held by the Trustee in the Certificate
Account, together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
THIS CERTIFICATE IS AN ASSET-BACKED CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
C-3
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-A, Home Equity Loan
Asset-Backed Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 2000 (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-A Home Equity Loan Pass-Through Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO (the "Class
X-IO Certificates"), and Class R-1 and Class R-2 (together, the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates, the
Class X-IO Certificates and the Class R Certificates are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2000, each owner of a Class R Certificate as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which a Distribution Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Class R Certificates having an
aggregate Percentage Interest of at least 10% (by wire transfer or otherwise) to
the account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
C-4
<PAGE>
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Home Equity Loans insured or guaranteed by
CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans, all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement and payment in full of all amounts owed to
the Certificate Insurer upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (c) at any time
when a Qualified Liquidation of the Trust Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement pursuant to
clause (c) above, the Owners of all Certificates then Outstanding shall provide
the Trustee and the Certificate Insurer, at such Owners' expense, an Opinion of
Counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes a
Qualified Liquidation, and the Servicer shall either sell the Home Equity Loans
and the Trustee shall distribute the proceeds of the liquidation of the Trust
Estate, or the Servicer shall distribute equitably in kind all of the assets of
the Trust Estate to the remaining Owners of the Certificates to the effect that
each such liquidation constitutes a Qualified Liquidation, each in accordance
with such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Servicer
may, at its option, purchase from the Trust all remaining Home Equity Loans and
other property then constituting the Trust Estate, and thereby effect early
retirement of the Certificates, on any Monthly Remittance Date after the
Clean-Up Call Date. In addition, under certain circumstances relating to the
qualification of REMIC I and REMIC II as REMICs under the Code, the Home Equity
Loans may be sold, thereby effecting the early retirement of the Certificates.
C-5
<PAGE>
The Class R Certificates evidence ownership in the "residual interest" in
REMIC I and the "residual interest" in REMIC II. The registered Owner of a
Class R Certificate will be entitled to separate such Certificate into such
component parts. The Trustee shall, upon delivery to it of this Class R
Certificate and a written request of the registered Owner thereof to separate
such Certificate into its component parts, issued to such registered Owner in
exchange for such Class R Certificate (i) a separately transferable, certified
and fully registered security (a "Class R-1 Certificate) that will, from the
date of its issuance, represent the Owner's Percentage Interest in the residual
interest in REMIC I and (ii) a separately transferable, certified and fully
registered security (a "Class R-2 Certificate") that will, from the date of its
issuance, represent the Owner's Percentage Interest in the residual interest in
REMIC II. The Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection with such exchange of this
Class R Certificate.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Distribution
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R
C-6
<PAGE>
Certificates are exchangeable for new Class R Certificates evidencing the
same Percentage Interest as the Class R Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
C-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Title:
---------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------
Title:
-------------------------------
C-8
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, ______________________ of Centex Credit
Corporation d/b/a Centex Home Equity Corporation ("Centex"), hereby certify that
between the "Cut-Off Date" (as defined in the Pooling and Servicing Agreement
dated as of March 1, 2000 among CHEC Funding, LLC, as Depositor, CHEC Conduit
Funding, LLC, as Conduit Seller, Centex, as Seller and Servicer, and Bank One,
National Association, as Trustee) and the "Startup Day," the following schedule
of "Home Equity Loans" (each as defined in the Pooling and Servicing Agreement)
have been prepaid in full.
Account Original Current Date
Number Name Amount Balance Paid Off
Dated: March 15, 2000
By:
-------------------------------------
Title:
----------------------------------
D-1
<PAGE>
EXHIBIT E-1
TRUSTEE ACKNOWLEDGMENT
Reference is made to that certain Pooling and Servicing Agreement dated as
of March 1, 2000 (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as depositor, CHEC Conduit Funding, LLC, as Conduit Seller, Centex Credit
Corporation d/b/a Centex Home Equity Corporation, as seller and servicer, and
Bank One, National Association, as trustee (the "Trustee"). Capitalized terms
used herein but not defined herein have the meaning assigned to them in the
Pooling and Servicing Agreement.
The Trustee hereby acknowledges the receipt of the sum of $___________ to
be deposited in the Certificate Account.
Dated: March 15, 2000
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Name:
Title:
E-1
<PAGE>
EXHIBIT E-2
FORM OF CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
The Bank One Trust Company, N.A., in its capacity as custodian (the
"Custodian") under the Custodial Agreement dated as of March 1, 2000, among the
Custodian and Bank One, National Association, in its capacity as trustee (the
"Trustee") under that certain Pooling and Servicing Agreement dated as of March
1, 2000 ("the Pooling and Servicing Agreement") among CHEC Funding, LLC, as
depositor (the "Depositor"), CHEC Conduit Funding, LLC, as a Seller, Centex
Credit Corporation d/b/a Centex Home Equity Corporation, a Nevada corporation,
as seller and servicer ("Centex"), and the Trustee, as trustee, hereby
acknowledges receipt (subject to review as required by Section 3.06(a) of the
Pooling and Servicing Agreement) of the items delivered to it by Centex with
respect to the Initial Home Equity Loans pursuant to Section 3.05(b)(i) of the
Pooling and Servicing Agreement.
The Schedule of Initial Home Equity Loans is attached to this receipt as
Schedule I.
The Custodian hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling and
Servicing Agreement as required thereby.
BANK ONE TRUST COMPANY, N.A.
as Custodian
By:
------------------------------------
Name:
Title:
Dated: March 15, 2000
E-2
<PAGE>
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bank One Trust
Company, N.A., in its capacity as custodian (the "Custodian") under the
Custodial Agreement dated March 1, 2000, between the Custodian and Bank One,
National Association, acting in its capacity as trustee (the "Trustee") of a
certain pool of home equity loans (the "Pool") heretofore conveyed in trust to
the Trustee, pursuant to that certain Pooling and Servicing Agreement dated as
of March 1, 2000, (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, as seller and servicer ("Centex"), CHEC Conduit Funding, LLC, as a
seller and Trustee, as trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Home Equity Loans, and the
Seller is required to remedy such defects or take certain other action, all as
set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Custodian to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined that
all required documents (or certified copies of documents listed in Section 3.05
of the Pooling and Servicing Agreement) have been executed or received, and that
such documents relate to the Home Equity Loans identified in the Schedule of
Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
F-1-1
<PAGE>
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Pooling and Servicing Agreement.
BANK ONE TRUST COMPANY, N.A., as Custodian
By:
----------------------------------------
Name:
Title
Dated: April 30, 2000
F-1-2
<PAGE>
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated as
of March 1, 2000 (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as Depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, as Seller and Servicer, CHEC Conduit Funding,
LLC, as a Seller and Bank One, National Association, as Trustee (the "Trustee"),
THE DEPOSITOR HEREBY CERTIFIES that all conditions precedent to the issuance of
the Centex Home Equity Loan Trust 2000-A Home Equity Loan Asset-Backed
Certificates, Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class X-IO and Class R (the "Certificates"), HAVE BEEN SATISFIED, and
HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said Certificates, and to
RELEASE said Certificates to the owners thereof, or otherwise upon their order.
Instructions regarding the registration of the Certificates are attached hereto.
Very truly yours,
CHEC FUNDING, LLC
By:
-----------------------------------
Title:
--------------------------------
Dated: March 15, 2000
G-1
<PAGE>
EXHIBIT H
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"),
a [savings institution] [corporation] duly organized and existing under the laws
of [the State of _________] [the United States], on behalf of which he makes
this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
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 certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
H-1-1
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ___ day of __________, 2000.
[NAME OF INVESTOR]
By:
------------------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
- -------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, and acknowledged to me 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 ____________, 2000.
- -----------------
NOTARY PUBLIC
COUNTY OF
--------------------
STATE OF
---------------------
My commission expires the _ day of _______________, 2000.
H-1-2
<PAGE>
EXHIBIT I-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2000-A
Home Equity Loan Asset-Backed Certificates
("CERTIFICATES")
Gentlemen:
In connection with our purchase on the date hereof of the above-referenced
Certificates from ___________________ ("Seller"), [PURCHASER] (the "Purchaser")
hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment purposes
only for] the Purchaser's own account and not with a view to or for sale or
transfer in connection with any distribution thereof in any manner which would
violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and will
not be registered under the Act and may not be resold or transferred unless they
are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of March 1, 2000 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
- --------------------
(1) Not required if the Purchaser is a broker/dealer.
I-1
<PAGE>
5. The Purchaser is not an employee benefit plan subject to Section 406
of ERISA nor a plan or other arrangement subject to Section 406 of ERISA nor a
plan or other arrangement subject to Section 4975 of the Code (collectively, a
"Plan"), nor is acting on behalf of any Plan nor using the assets of any Plan to
effect such transfer or (ii) in the event that any Class X-IO or Class R
Certificate is purchased by a Plan, or by a person or entity acting on behalf of
any Plan or using the assets of any Plan to effect such transfer (including the
assets of any Plan held in an insurance company separate or general account), an
Opinion of Counsel, acceptable to and in form and substance satisfactory to the
Trustee and the Certificate Insurer, which Opinion of Counsel shall not be at
the expense of either the Trustee, the Certificate Insurer or the Trust, to the
effect that the purchase or holding of any Class X-IO or Class R Certificates
will not result prohibited transaction under ERISA and/or Section 4975 of the
Code, and will not subject the Trustee to any obligation or liability in
addition to those expressly undertaken under this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate to
or on behalf of any Plan without the delivery to the Trustee and the Certificate
Insurer of an Opinion of Counsel as described above shall be null and void and
no effect;
6. If the Purchaser sells any of the Certificates at its option, it will
(i) obtain from any investor that purchases any Certificate from it a letter
substantially in the form of Exhibit J-1 or J-2 to the Pooling and Servicing
Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an Opinion of Counsel to be delivered, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate Register,
its address, including telecopier number and telephone number, is as follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate the
provisions of the first sentence of Section 5.08(d) of the Pooling and Servicing
Agreement.
I-1-2
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed by
its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
I-1-3
<PAGE>
EXHIBIT I-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2000-A
Home Equity Loan Asset-Backed Certificates,
Class ___-_____ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the above-referenced
Certificates from ______________________ ("Seller") hereby certify that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated
as of March 1, 2000 (the "Pooling and Servicing Agreement") pursuant to which
the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the Certificates
represent interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and this paragraph 5 or
(ii) deliver an Opinion of Counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
I-2-1
<PAGE>
6. We are acquiring the Certificates for our own account and the source
of funds is not an employee benefit plan subject to Section 406 of ERISA nor a
plan or other arrangement subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 4975 of the Code (collectively, a "Plan"), nor is
acting on behalf of any Plan nor using the assets of any Plan to effect such
transfer or (ii) in the event that any Class X-IO or Class R Certificate is
purchased by a Plan, or by a person or entity acting on behalf of any Plan or
using the assets of any Plan to effect such transfer (including the assets of
any Plan held in an insurance company separate or general account), an Opinion
of Counsel, acceptable to and in form and substance satisfactory to the Trustee
and the Certificate Insurer, which Opinion of Counsel shall not be at the
expense of either the Trustee, the Certificate Insurer or the Trust, to the
effect that the purchase or holding of any Class X-IO or Class R Certificates
will not result prohibited transaction under ERISA and/or Section 4975 of the
Code, and will not subject the Trustee to any obligation or liability in
addition to those expressly undertaken under this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate to
or on behalf of any Plan without the delivery to the Trustee and the Certificate
Insurer of an Opinion of Counsel as described above shall be null and void and
no effect;
7. We certify that for purposes of the Certificate Register, our address,
including telecopier number and telephone number, is as follows:
-----------------------------------------
-----------------------------------------
-----------------------------------------
telecopier: -----------------------------
telephone: ------------------------------
8. If we sell any of the Certificates, we will obtain from any purchaser
from us the same representations contained in the foregoing paragraph 6 and this
paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of
the first sentence of Section 5.08(d) of the Pooling and Servicing Agreement.
I-2-2
<PAGE>
IN WITNESS WHEREOF, we have signed this certificate as of the date first
written above.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
I-2-3
<PAGE>
EXHIBIT J
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
LOAN NUMBER BORROWER NAME ORIGINAL LOAN AMOUNT EXCEPTION
- ----------- ------------- -------------------- ---------
J-1
<PAGE>
EXHIBIT K
DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"GROUP II DELINQUENCY AMOUNT" means the sum of (without duplication) (i)
the aggregate Loan Balance of the Home Equity Loans in Group II which are 90-Day
Delinquent Loans, (ii) the aggregate Loan Balance of Home Equity Loans in Group
II in foreclosure and (iii) the aggregate outstanding principal balance of Home
Equity Loans in Group II relating to REO Properties.
"GROUP II INITIAL TARGET OVERCOLLATERALIZATION AMOUNT" means the Group
II Target Percentage times the Original Group II Pool Balance.
"GROUP II TARGET OVERCOLLATERALIZATION AMOUNT" means:
(a) for any Distribution Date occurring during the period commencing on
the Startup Day and ending on the thirtieth Distribution Date following the
Startup Day, the greater of: (i) the Group II Initial Target
Overcollateralization Amount, (ii) if the Step-Up Test is not satisfied, 90% of
the Group II Delinquency Amount and (iii) if the Step-Up Spread Squeeze Test is
met, an amount equal to the Group II Target Overcollateralization Amount for
such Distribution Date determined as if the Step-Up Spread Squeeze Test is not
met plus the Spread Squeeze Overcollateralization Increase Amount.
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, (x) if the Step-Down Test is satisfied the greatest of (i)
11.50% of the aggregate Loan Balance of the Home Equity Loans in Group II, (ii)
0.50% of the Original Group II Pool Balance, (iii) the Group II Initial Target
Overcollateralization Amount less the product of (A) the excess of the Group II
Initial Target Overcollateralization Amount over the amount set forth in clause
(b)(x)(i) and (B) fraction (not to exceed 1.0), the numerator of which is a
whole number equal to the number of Distribution Dates since the most recent of
the 30th Distribution Date and the most recent Distribution Date on which the
Step-Down Test was not met and the denominator of which is 3 and (iv) if the
Step-Up Spread Squeeze Test is met an amount equal to the Group II Target
Overcollateralization Amount for any Distribution Date determined as if the
Step-Up Spread Squeeze Test were not met plus the Spread Squeeze
Overcollateralization Amount and (y) if the Step-Down Test is not met, the
amount set forth in clause (a).
The Certificate Insurer may, in its sole discretion, modify this definition
of Group II Target Overcollateralization Amount for the purpose of reducing or
eliminating, in whole or in part, the definition hereof. The Trustee and the
Rating Agencies shall be notified in writing of such modification prior to the
related Distribution Date and such modification shall not result in a
downgrading of the then-current ratings of the Class A Certificates, without
regard to the Certificate Insurance Policy.
K-1
<PAGE>
"GROUP II TARGET PERCENTAGE" means 6.00%.
"ORIGINAL GROUP II POOL BALANCE" means the aggregate Loan Balance of the
Home Equity Loans in Group II as of the Cut-off Date.
"SPREAD SQUEEZE CONDITION" means the Spread Squeeze Condition will be met
with respect to any Distribution Date after the March 2001 Distribution Date if
the Spread Squeeze Percentage for such Distribution Date is less than 2.50%.
"SPREAD SQUEEZE OVERCOLLATERALIZATION INCREASE AMOUNT" means for any
Distribution Date on which the Step Up Spread Squeeze Test is met, an amount
equal to the product obtained by multiplying (i) three, (ii) the excess, if any,
of 2.50% over the Spread Squeeze Percentage for such Distribution Date and (iii)
the aggregate Loan Balance of the Group II Home Equity Loans as of the Cut-off
Date.
"SPREAD SQUEEZE PERCENTAGE" means with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the product
of 12 and the Net Monthly Excess Cashflow for the Group II Home Equity Loans for
such Distribution Date, and the denominator of which is the aggregate Loan
Balance of the Group II Home Equity Loans as of the end of the related
Collection Period.
"STEP-UP SPREAD SQUEEZE TEST" means the Step Up Spread Squeeze Test will be
met with respect to any Distribution Date on which the Spread Squeeze Condition
is satisfied.
"STEP-DOWN LOSS TEST" is satisfied for any period set out below, if the
Cumulative Loss Percentage for such period does not exceed the percentage set
out for such period below:
<TABLE>
<CAPTION>
Period Cumulative Loss Percentage
------ --------------------------
<S> <C>
September 2002 - August 2003 2.00%
September 2003 - August 2004 2.65%
September 2004- August 2005 3.30%
September 2005 - thereafter 4.00%
</TABLE>
"STEP-DOWN TEST" is satisfied for any date of determination thereof, if (x)
the 90+ Delinquency Percentage (Rolling Six Month) is less than 11.00%, (y) the
Step-Down Loss Test is satisfied, and (z) the Annual Loss Percentage (Rolling 12
Month) for the twelve month period immediately preceding the date of
determination is less than 0.85%.
"STEP-UP LOSS TEST" is satisfied for any period set out below, if the
Cumulative Loss Percentage for such period does not exceed the percentage set
out for such period below:
K-2
<PAGE>
<TABLE>
<CAPTION>
Period Cumulative Loss Percentage
------ --------------------------
<S> <C>
April 2000 - March 2001 1.40%
April 2001 - March 2002 1.95%
April 2002 - March 2003 2.70%
April 2003 - March 2004 3.45%
April 2004 - March 2005 4.20%
April 2005 - thereafter 4.90%
</TABLE>
"STEP-UP TEST" is satisfied for any date of determination thereof, if (x)
the 90+ Delinquency Percentage (Rolling Six Month) is less than 12.00%, (y) the
Step-Up Loss Test is satisfied, and (z) the Annual Loss Percentage (Rolling 12
Month) for the twelve month period immediately preceding the date of
determination is less than 1.00%.
K-3
<PAGE>
EXHIBIT L
DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"GROUP I DELINQUENCY AMOUNT" means the sum (with duplication) of (i) the
aggregate Loan Balance of the Home Equity Loans in Group I which are 90-Day
Delinquent Loans, (ii) the aggregate Loan Balance of the Home Equity Loans in
Group I in foreclosure plus (iii) the aggregate outstanding principal balance of
Home Equity Loans in Group I relating to REO Properties.
"GROUP I INITIAL TARGET OVERCOLLATERALIZATION AMOUNT" means the Group I
Target Percentage times the Original Group I Pool Balance.
"GROUP I TARGET OVERCOLLATERALIZATION AMOUNT" means:
(a) for any Distribution Date occurring during the period commencing on
the Startup Day and ending on the thirtieth Distribution Date following the
Startup Day, the greater of: (i) the Group I Initial Target
Overcollateralization Amount, and (ii) if the Step-Up Test is not satisfied, 90%
of the Group I Delinquency Amount.
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, (x) if the Step Down Test is satisfied the greatest of (i)
8.00% of the aggregate Loan Balance of the Home Equity Loans in the Group I,
(ii) 0.50% of the Original Group I Pool Balance, and (iii) the Group I Initial
Target Overcollateralization Amount less the product of (A) the excess of the
Group I Initial Target Overcollateralization Amount over the amount set forth in
clause (b)(x)(i) and (B) fraction (not to exceed 1.0), the numerator of which is
a whole number equal to the number of Distribution Dates since the most recent
of the 30th Distribution Date and the most recent Distribution Date on which the
Step-Down Test was not met and the denominator of which is 3 and (y) if the
Step-Down Test is not met, the amount set forth in clause (a).
The Certificate Insurer may, in its sole discretion, modify the definition
of Group I Target Overcollateralization Amount for the purpose of reducing or
eliminating, in whole or in part, the definition hereof. The Trustee and the
Rating Agencies shall be notified in writing of such modification prior to the
related Distribution Date and such modification shall not result in a
downgrading of the then-current ratings of the Class A Certificates, without
regard to the Certificate Insurance Policy.
"GROUP I TARGET PERCENTAGE" means 4.10%.
"ORIGINAL GROUP I POOL BALANCE" means the aggregate Loan Balance of the
Home Equity Loans in Group I as of the Cut-off Date.
"STEP-DOWN LOSS TEST" is as defined in Exhibit L.
"STEP-DOWN TEST" is as defined in Exhibit L.
L-1
<PAGE>
"STEP-UP LOSS TEST" is as defined in Exhibit L.
"STEP-UP TEST" is as defined in Exhibit L.
L-2
<PAGE>
EXHIBIT M
FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE SECURITIES EXCHANGE ACT
OF 1934
________, 200_
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Re: Centex Home Equity Loan Trust 2000-A
Home Equity Loan Asset-Backed Certificates,
SERIES 2000-A
-------------------------------------------
Ladies and Gentlemen:
Pursuant to and in reference to Section 7.09(c) of the Pooling and
Servicing Agreement dated as of March 1, 2000 relating to the above referenced
Certificates, please note the following:
(a) CIK Number for Centex Home Equity Loan Trust 2000-A (the
"Trust"): .
(b) CCC for the Trust: .
In order to comply with the reporting obligations for the Trust under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Trustee must file within 15 days following each Distribution Date a copy of the
report distributed by the Trustee to the Certificateholders in a current report
on Form 8-K. Such reports provide all current information ordinarily of interest
to the Certificateholders. The Trustee must also report on a current report on
Form 8-K any significant occurrences during the reporting period that would be
reportable under Item 1, Item 2, Item 4 and Item 5. In addition, the Trustee
should cause the filing of an annual report on Form 10-K within 90 days
following the end of the Trust's fiscal year containing the following
information:
Part I, Item 3. A description of any material pending litigation;
Part I, Item 4. A description of any submission matters to vote of
Certificateholders;
Part II, Item 5. A statement of the number of Certificateholders and the
principal market, if any, in which the Certificates
trade;
Part II, Item 9. A statement as to any changes in or disagreements with
the independent public accounts for the Trust;
Part IV, Item 14. A copy of the annual certificate of compliance by an
officer of the Servicer, and any Subservicer and the
audit of the servicing by the independent accounting
firm.
M-1
<PAGE>
Promptly after filing the Form 10-K, the Trustee should file a Form 15 in
accordance with Section 7.09(c) of the Pooling and Servicing Agreement,
deregistering the Trust and terminating the reporting obligations under the
All filings must be made through the Edgar System and all acceptance slips from
the filings should be saved as they will be needed for the annual certificate.
CHEC FUNDING, LLC
By:
-----------------------------------
Name:
Title:
M-2
<PAGE>
FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 50922-N
Certificates: $310,000,000 Original Principal Date of Issuance: 3/15/2000
Amount Centex Home Equity
Trust 2000-A, Centex Home Equity
Loan Asset-Backed Certificates,
Series 2000-A, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-7
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
the Trustee for the benefit of each Holder, subject only to the terms of this
Policy (which includes each endorsement hereto), the full and complete
payment of Guaranteed Distributions with respect to the Certificates of the
Trust referred to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be made
following receipt by Financial Security of notice as described in Endorsement
No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated
on the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the
Certificate. "Trustee", "Guaranteed Distributions" and "Term of this Policy"
shall have the meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in
respect of this Policy are nonrefundable for any reason whatsoever. This
Policy may not be canceled or revoked during the Term of this Policy. An
acceleration payment shall not be due under this Policy unless such
acceleration is at the sole option of Financial Security. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE
76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Robert P. Cochran
--------------------------------
AUTHORIZED OFFICER
<PAGE>
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: The Trust Fund Held by the Trustee Under the Pooling
and Servicing Agreement, dated as of March 1, 2000,
among Bank One, National Association as Trustee, CHEC
Funding, LLC as Depositor, and Centex Credit
Corporation d/b/a Centex Home Equity Corporation
("CHEC") as Seller and Servicer, and CHEC Conduit
Funding, LLC, as Seller.
CERTIFICATES: $310,000,000 Original Principal Amount Centex Home
Equity Trust 2000-A, Centex Home Equity Loan
Asset-Backed Certificates, Series 2000-A, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
and Class A-7
POLICY NO.: 50922-N
DATE OF ISSUANCE: March 15, 2000
1. DEFINITIONS. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
provided in the Pooling and Servicing Agreement unless the context shall
otherwise require.
"BUSINESS DAY" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in the City of New York, the State
of Texas or the city in which the corporate trust office of the Trustee is
located are authorized or obligated by law or executive order to be closed.
"GUARANTEED DISTRIBUTIONS" means, with respect to each Payment Date, the
distribution to be made to Holders in an aggregate amount equal to the sum of
the Current Interest and the sum of the Collateralization Deficits with
respect to each of the Group I and Group II Certificates and, without
duplication, on the Final Scheduled Distribution Date for each Class of
Certificates, the then outstanding Certificate Principal Balance of such
Class of Certificates, in accordance with the original terms of the
Certificates when issued and without regard to any amendment or modification
of the Certificates or the Pooling and Servicing Agreement except amendments
or modifications to which Financial Security has given its prior written
consent. Guaranteed Distributions shall not include, nor shall coverage be
provided under this Policy in respect of, any taxes, withholding or other
charge imposed by any governmental authority.
"POLICY" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
<PAGE>
Policy No.: 50922-N Date of Issuance: March 15, 2000
"POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement, dated as of March 1, 2000 among Bank One, National Association as
Trustee, CHEC Funding, LLC as Depositor, Centex Credit Corporation d/b/a
Centex Home Equity Corporation ("CHEC") as Seller and Servicer, and CHEC
Conduit Funding, LLC, as Seller, as amended from time to time with the
consent of Financial Security.
"RECEIPT" and "RECEIVED" mean actual delivery to Financial Security and
to the Fiscal Agent (as defined below), if any, prior to 12:00 noon, New York
City time, on a Business Day; delivery either on a day that is not a Business
Day, or after 12:00 noon, New York City time, shall be deemed to be receipt
on the next succeeding Business Day. If any notice or certificate given
hereunder by the Trustee is not in proper form or is not properly completed,
executed or delivered, it shall be deemed not to have been Received, and
Financial Security or its Fiscal Agent shall promptly so advise the Trustee
and the Trustee may submit an amended notice.
"TERM OF THIS POLICY" means the period from and including the Date of
Issuance to and including the date on which (i) the Class A Certificate
Principal Balance is zero, (ii) any period during which any payment on the
Certificates could have been avoided in whole or in part as a preference
payment under applicable bankruptcy, insolvency, receivership or similar law
has expired, and (iii) if any proceedings requisite to avoidance as a
preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and nonappealable order in resolution of each such proceeding
has been entered.
"TRUSTEE" means Bank One, National Association in its capacity as
Trustee under the Pooling and Servicing Agreement and any successor in such
capacity.
2. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS. Following Receipt by Financial Security of a notice and
certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of Financial Security on
the later to occur of (a) 12:00 noon, New York City time, on the third
Business Day following such Receipt; and (b) 12:00 noon, New York City time,
on the Payment Date to which such claim relates. Payments due hereunder in
respect of Guaranteed Distributions will be disbursed by wire transfer of
immediately available funds to the Policy Payments Account established
pursuant to the Pooling and Servicing Agreement or, if no such Policy
Payments Account has been established, to the Trustee for deposit to the
Certificate Account.
Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions, including any acceleration payment,
whether or not any notice and certificate shall have been Received by
Financial Security as provided above, provided, however, that by acceptance
of this Policy the Trustee agrees to provide upon request to Financial
Security a notice and certificate in respect of any such payments made by
Financial Security. Financial Security shall be entitled to pay hereunder
any amount in respect of Guaranteed Distributions on an accelerated basis at
any time or from time to time, in whole or in part, prior to the scheduled
date of payment thereof; Guaranteed Distributions insured hereunder shall not
include interest, in respect of principal paid hereunder on an accelerated
basis, accruing from after the date of such
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<PAGE>
Policy No.: 50922-N Date of Issuance: March 15, 2000
payment of principal. Financial Security's obligations hereunder in respect
of Guaranteed Distributions shall be discharged to the extent funds are
disbursed by Financial Security as provided herein whether or not such funds
are properly applied by the Trustee.
3. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS AVOIDED AS PREFERENCE PAYMENTS. If any Guaranteed Distribution
is avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of
the funds of Financial Security on the later of (a) the date when due to be
paid pursuant to the Order referred to below or (b) the first to occur of (i)
the fourth Business Day following Receipt by Financial Security from the
Trustee of (A) a certified copy of the order of the court or other
governmental body which exercised jurisdiction to the effect that the Holder
is required to return principal or interest distributed with respect to the
Certificates during the Term of this Policy because such distributions were
avoidable as preference payments under applicable bankruptcy law (the
"Order"), (B) a certificate of the Holder that the Order has been entered and
is not subject to any stay and (C) an assignment duly executed and delivered
by the Holder, in such form as is reasonably required by Financial Security
and provided to the Holder by Financial Security, irrevocably assigning to
Financial Security all rights and claims of the Holder relating to or arising
under the Certificates against the debtor which made such preference payment
or otherwise with respect to such preference payment or (ii) the date of
Receipt by Financial Security from the Trustee of the items referred to in
clauses (A), (B) and (C) above if, at least four Business Days prior to such
date of Receipt, Financial Security shall have Received written notice from
the Trustee that such items were to be delivered on such date and such date
was specified in such notice. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order and not to the Trustee or any Holder directly (unless a Holder has
previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which
case such payment shall be disbursed to the Trustee for distribution to such
Holder upon proof of such payment reasonably satisfactory to Financial
Security). In connection with the foregoing, Financial Security shall have
the rights provided pursuant to Sections 12.02(d) and 12.03 of the Pooling
and Servicing Agreement.
4. GOVERNING LAW. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
5. FISCAL AGENT. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trustee at the notice address specified in
the Pooling and Servicing Agreement specifying the name and notice address of
the Fiscal Agent. From and after the date of receipt of such notice by the
Trustee, (i) copies of all notices and documents required to be delivered to
Financial Security pursuant to this Policy shall be simultaneously delivered
to the Fiscal Agent and to Financial Security and shall not be deemed
Received until Received by both and (ii) all payments required to be made by
Financial Security under this Policy may be made directly by Financial
Security or by the Fiscal Agent on behalf of Financial Security. The Fiscal
Agent is the agent of Financial Security only and the Fiscal Agent shall in
no event be liable to any Holder for any acts of the
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<PAGE>
Policy No.: 50922-N Date of Issuance: March 15, 2000
Fiscal Agent or any failure of Financial Security to deposit, or cause to be
deposited, sufficient funds to make payments due under this Policy.
6. WAIVER OF DEFENSES. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the
benefit of each Holder, all rights (whether by counterclaim, set off or
otherwise) and defenses (including, without limitation, the defense of
fraud), whether acquired by subrogation, assignment or otherwise, to the
extent that such rights and defenses may be available to Financial Security
to avoid payment of its obligations under this Policy in accordance with the
express provisions of this Policy.
7. NOTICES. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security
as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, N.Y. 10022
Attention: Senior Vice President - Surveillance
Re: Centex Home Equity Trust 2000-A
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. PRIORITIES. In the event any term or provision of the face of this
Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. EXCLUSIONS FROM INSURANCE GUARANTY FUNDS. This Policy is not covered
by the Property/Casualty Insurance Security Fund specified in Article 76 of
the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to
Article 14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance
Code.
10. SURRENDER OF POLICY. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this
Policy.
4
<PAGE>
Policy No.: 50922-N Date of Issuance: March 15, 2000
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Robert P. Cochran
------------------------------
Authorized Officer
5
<PAGE>
Policy No.: 50922-N Date of Issuance: March 15, 2000
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of Bank One, National
Association (the "Trustee"), hereby certifies to Financial Security Assurance
Inc. ("Financial Security"), with reference to Financial Guaranty Insurance
Policy No. 50922-N dated March 15, 2000 (the "Policy") issued by Financial
Security in respect of the Centex Home Equity Trust 2000-A, Centex Home
Equity Loan Asset-Backed Certificates, Series 2000-A, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, and Class A-7 (the
"Certificates"), that:
(i) The Trustee is the Trustee under the Pooling and Servicing
Agreement for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Certificate Account and available for distribution to
the Holders pursuant to the Pooling and Servicing Agreement on
[insert applicable Distribution Date] (the "Distribution Date") will be
$___________ (the "Shortfall") less than the Current Interest with
respect to the Payment Date ($____________); the sum of the
Subordination Deficits with respect to Group I and Group II is
__________[; the Distribution Date is the Final Scheduled Distribution
Date for the Class __ Certificates and the Shortfall in available principal
to reduce the Certificate Principal Balance of such Class[es] to zero is
$_________ (the "Final Principal Amount")].
(iii) The Trustee is making a claim under the Policy for the sum of
(a) the Shortfall and (b) the Subordination Deficit [and (c) the Final
Principal Amount] with respect to the Distribution Date, to be applied to
distributions of principal or interest or both with respect to the
Certificates.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and apply
the same directly to the payment of Guaranteed Distributions on the
Certificates when due; (b) not apply such funds for any other purpose;
(c) not commingle such funds with other funds held by the Trustee and
(d) maintain an accurate record of such payments with respect to each
Certificate and the corresponding claim on the Policy and proceeds
thereof and, if the Certificate is required to be presented for such
payment, shall stamp on each such Certificate the legend "$[insert
applicable amount] paid by Financial Security and the balance hereof has
been canceled and reissued" and then shall deliver such Certificate to
Financial Security.
A-1
<PAGE>
Policy No.: 50922-N Date of Issuance: March 15, 2000
(v) The Trustee, on behalf of the Holders, hereby assigns to
Financial Security the rights of the Holders with respect to the
Certificates to the extent of any payments under the Policy, including,
without limitation, any amounts due to the Holders in respect of
securities law violations arising from the offer and sale of the
Certificates. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The Trustee shall take such
action and deliver such instruments as may be reasonably requested or
required by Financial Security to effectuate the purpose or provisions
of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the Holders,
hereby appoints Financial Security as agent and attorney-in-fact for the
Trustee and each such Holder in any legal proceeding with respect to the
Certificates. The Trustee hereby agrees that Financial Security may at
any time during the continuation of any proceeding by or against any
debtor with respect to which a Preference Claim (as defined below) or
other claim with respect to the Certificates is being asserted under the
United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency
Proceeding") direct all matters relating to such Insolvency Proceeding,
including without limitation, (A) all matters relating to any claim in
connection with an Insolvency Proceeding seeking the avoidance as a
preferential transfer of any payment made with respect to the
Certificates (a "Preference Claim"), (B) the direction of any appeal of
any order relating to any Preference Claim at the expense of Financial
Security but subject to reimbursement as provided in the Insurance
Agreement and (C) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition, the Trustee hereby agrees
that Financial Security shall be subrogated to, and the Trustee on its
behalf and on behalf of each Holder, hereby delegates and assigns, to
the fullest extent permitted by law, the rights of the Trustee and each
Holder in the conduct of any Insolvency Proceeding, including, without
limitation, all rights of any party to an adversary proceeding or action
with respect to any court order issued in connection with any such
Insolvency Proceeding.
(vii) Payments should be made by wire transfer directed to [SPECIFY
POLICY PAYMENTS ACCOUNT OR CERTIFICATE ACCOUNT].
Unless the context otherwise requires, capitalized terms used in
this Notice of Claim and Certificate and not defined herein shall have the
meanings provided in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Notice of Claim and Certificate as of the ____ day of _______, _________.
BANK ONE, NATIONAL ASSOCIATION
By:
--------------------------------
Title:
-------------------------------
A-2
<PAGE>
Policy No.: 50922-N Date of Issuance: March 15, 2000
- --------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on _________ by ________________________
Confirmation Number _______________________________________
A-3
