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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 30, 2000
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Delta Funding Corporation
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(Exact name of registrant as specified in its charter)
New York 333-96001 11-2609517
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) ID Number)
1000 Woodbury Road, Woodbury, New York 11797
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (516) 364-8500
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
This Current Report on Form 8-K is being filed to file a copy of the
Pooling and Servicing Agreement dated as of February 29, 2000, among Delta
Funding Corporation, as seller and servicer, and Norwest Bank Minnesota,
National Association, as trustee (the "Pooling and Servicing Agreement"), in
connection with the issuance by Delta Funding Home Equity Loan Trust 2000-1 of
Home Equity Loan Asset-Backed Certificates, Series 2000-1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.1 Pooling and Servicing Agreement.
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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 thereunto duly authorized.
DELTA FUNDING CORPORATION
By: /s/ Dawn Ceccarini
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Name: Dawn Ceccarini
Title: Vice President
Dated: April 13, 2000
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EXHIBIT INDEX
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Exhibit Page
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4.1 Pooling and Servicing Agreement.
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EXECUTION COPY
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DELTA FUNDING CORPORATION,
as Seller and Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of February 29, 2000
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Home Equity Loan Asset-Backed Certificates
Series 2000-1
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. Definitions....................................................1
Section 1.02. Interest Calculations.........................................37
ARTICLE II
Conveyance of Initial Mortgage Loans; Original Issuance of Certificates Tax
Treatment
Section 2.01. Conveyance of Initial Mortgage Loans..........................37
Section 2.02. Acceptance by Trustee.........................................40
Section 2.03. Representations and Warranties Regarding the Seller and
the Servicer................................................42
Section 2.04. Representations and Warranties of the Seller Regarding
the Mortgage Loans..........................................44
Section 2.05. Substitution of Mortgage Loans................................52
Section 2.06. Execution and Authentication of Certificates..................53
Section 2.07. Designation of Interests in REMICs............................53
Section 2.08. Designation of Startup Day of REMIC...........................59
Section 2.09. REMIC Certificate Maturity Date...............................59
Section 2.10. Tax Returns and Reports to Certificateholders.................59
Section 2.11. Tax Matters Person............................................60
Section 2.12. REMIC Related Covenants.......................................60
Section 2.13. Subsequent Transfers..........................................64
Section 2.14. The Custodian.................................................66
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer..................................................66
Section 3.02. Collection of Certain Mortgage Loan Payments..................68
Section 3.03. Withdrawals from the Collection Account.......................70
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.....................................................71
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy...........72
Section 3.06. Management and Realization Upon Defaulted Mortgage Loans......72
Section 3.07. Trustee to Cooperate..........................................73
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer.....................................................74
Section 3.09. Annual Statement as to Compliance.............................74
Section 3.10. Annual Servicing Review.......................................75
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans...........................................75
Section 3.12. Maintenance of Certain Servicing Insurance Policies...........75
Section 3.13. Reports to the Securities and Exchange Commission.............76
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Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received
from Individuals and Returns Relating to Cancellation of
Indebtedness.................................................76
Section 3.15. Advances by the Servicer......................................76
Section 3.16. Optional Purchase of Defaulted Mortgage Loans.................77
Section 3.17. Superior Liens................................................77
Section 3.18. Assumption Agreements.........................................78
Section 3.19. Payment of Taxes, Insurance and Other Charges.................78
Section 3.20. Covenants and Representations of the Servicer Regarding
Prepayment Charges...........................................79
ARTICLE IV
Certificate Insurance Policy, Initial Interest Coverage Account and
Pre-Funding
Section 4.01. Certificate Insurance Policy..................................79
Section 4.02. Initial Interest Coverage Account and Pre-Funding Account.....80
Section 4.03. Claims Upon the Certificate Insurance Policy..................82
ARTICLE V
Payments and Statements to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.................................................83
Section 5.02. Compensating Interest.........................................87
Section 5.03. Statements....................................................87
Section 5.04. Distribution Account..........................................91
Section 5.05. Investment of Accounts........................................91
Section 5.06. Allocation of Losses..........................................92
Section 5.07. LIBOR Carryover Fund..........................................93
Section 5.08. Net Rate Cap Fund.............................................93
ARTICLE VI
The Certificates
Section 6.01. The Certificates..............................................94
Section 6.02. Registration of Transfer and Exchange of Certificates.........95
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.............99
Section 6.04. Persons Deemed Owners........................................100
Section 6.05. Appointment of Paying Agent..................................100
ARTICLE VII
The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer.....................100
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller or the Servicer..................100
Section 7.03. Limitation on Liability of the Servicer and Others...........101
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Section 7.04. Servicer Not to Resign.......................................101
Section 7.05. Delegation of Duties.........................................102
Section 7.06. Indemnification of the Trust by the Servicer.................102
ARTICLE VIII
Default
Section 8.01. Events of Default............................................102
Section 8.02. Appointment of Successor.....................................105
Section 8.03. Waiver of Defaults...........................................106
Section 8.04. Notification to Certificateholders...........................106
Section 8.05. Rights of the Certificate Insurer............................106
Section 8.06. Certificate Insurer Default..................................106
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee............................................107
Section 9.02. Certain Matters Affecting the Trustee........................108
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans........110
Section 9.04. Trustee May Own Certificates.................................111
Section 9.05. Trustee Fees and Expenses....................................111
Section 9.06. Eligibility Requirements for Trustee.........................111
Section 9.07. Resignation or Removal of Trustee............................112
Section 9.08. Successor Trustee............................................112
Section 9.09. Merger or Consolidation of Trustee...........................113
Section 9.10. Appointment of Co-Trustee or Separate Trustee................113
Section 9.11. Limitation of Liability......................................114
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection....................................114
Section 9.13. Suits for Enforcement........................................115
ARTICLE X
Termination
Section 10.01. Termination.................................................115
Section 10.02. Additional Termination Requirements.........................117
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment...................................................118
Section 11.02. Recordation of Agreement....................................119
Section 11.03. Limitation on Rights of Certificateholders..................120
Section 11.04. Governing Law...............................................121
Section 11.05. Notices.....................................................121
Section 11.06. Severability of Provisions..................................122
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Section 11.07. Assignment..................................................122
Section 11.08. Certificates Nonassessable and Fully Paid...................122
Section 11.09. Third-Party Beneficiaries...................................123
Section 11.10. Counterparts................................................123
Section 11.11. Effect of Headings and Table of Contents....................123
Section 11.12. Mortgage Loans and Accounts Held for Benefit of the
Certificate Insurer........................................123
Section 11.13. Effect of Payments by the Certificate Insurer;
Subrogation................................................123
Section 11.14. Notices to the Certificate Insurer..........................124
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EXHIBIT A FORMS OF OFFERED CERTIFICATES..................................A-1
EXHIBIT B FORM OF CLASS BIO CERTIFICATE..................................B-1
EXHIBIT B-1 FORM OF CLASS R CERTIFICATES.................................B-1-1
EXHIBIT B-2 FORM OF CLASS P CERTIFICATE..................................B-2-1
EXHIBIT C MORTGAGE LOAN SCHEDULE.........................................C-1
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT..........................D-1
EXHIBIT E FORM OF MORTGAGE NOTE..........................................E-1
EXHIBIT F FORM OF MORTGAGE...............................................F-1
EXHIBIT G TRANSFER AFFIDAVITS............................................G-1
EXHIBIT H LETTER OF REPRESENTATIONS......................................H-1
EXHIBIT I FORM OF REQUEST FOR RELEASE FOR DOCUMENTS......................I-1
EXHIBIT J [RESERVED].....................................................J-1
EXHIBIT K FORM OF CUSTODIAL AGREEMENT....................................K-1
EXHIBIT L DELINQUENCY AND LOSS INFORMATION.............................. L-1
EXHIBIT M FORM OF TRANSFEROR CERTIFICATE ................................M-1
EXHIBIT N-1 FORM OF INVESTMENT LETTER [NON-RULE 144A]....................N-1-1
EXHIBIT N-2 FORM OF RULE 144A LETTER ....................................N-2-1
EXHIBIT O FORM OF INITIAL CERTIFICATION..................................O-1
EXHIBIT P FORM OF CUSTODIAN FINAL CERTIFICATION..........................P-1
EXHIBIT Q SUBSEQUENT FUNDING PARAMETERS..................................Q-1
EXHIBIT R PREPAYMENT CHARGE SCHEDULE.....................................R-1
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This Pooling and Servicing Agreement, dated as of February 29, 2000, among
Delta Funding Corporation, as Seller and Servicer (the "Seller" and the
"Servicer", respectively) and Norwest Bank Minnesota, National Association, as
Trustee (the "Trustee").
W I T N E S S E T H T H A T:
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In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
Accounts: Collectively, the Collection Account, the Initial Interest
Coverage Account, the Pre-Funding Account and the Distribution Account.
Addition Notice: The notice given pursuant to Section 2.13 with respect to
the transfer of Subsequent Mortgage Loans to the Trust pursuant to such Section.
Adjusted Certificate Rate: As to any class of Senior Certificates and any
date of determination, a per annum rate equal to the sum of (i) the applicable
Certificate Rate, (ii) the Premium Percentage and (iii) the Trustee Fee Rate. As
to any class of Subordinate Certificates and any date of determination, a per
annum rate equal to the sum of (i) the applicable Certificate Rate and (ii) the
Trustee Fee Rate.
Adjusted Senior Principal Distribution Amount: As to any Distribution
Date, the excess of (i) the Senior Principal Distribution Amount for such
Distribution Date over (ii) the Group A Principal Distribution Amount for such
Distribution Date.
Adjustable Rate Certificates: Class A-1A Certificates.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Aggregate Principal Amount: As to any Distribution Date, the sum of the
Basic Principal Amount for each Loan Group plus, on the first Distribution Date,
the Class P Deposit.
Agreement: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
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Allocated Pre-Funded Amount: As to Loan Group F or Loan Group A and any
date of determination, the portion, if any, of the Pre-Funded Amount allocable
to Loan Group F or Loan Group A, as applicable, and on deposit in the
Pre-Funding Account.
Applied Realized Loss Amounts: As to any Distribution Date, an amount
equal to the excess, if any, of (i) the aggregate of the Class Principal
Balances of the Offered Certificates, after giving effect to all distributions
on such Distribution Date over (ii) the sum of (x) the Pool Balance as of the
last day of the related Due Period and (y) the Pre-Funded Amount, if any.
Appraised Value: The appraised value of the Mortgaged Property based upon
the appraisal made by or for the originator at the time of the origination of
the related Mortgage Loan.
Approved Servicer: For purposes of Sections 3.01(b), 7.04 and 8.02 hereof
any of the following:
1. An affiliate of Norwest Bank Minnesota, National Association that
services mortgage loans similar to the Mortgage Loans.
2. If at the relevant time, the aggregate Class Principal Balance of
the Senior Certificates is more than 50% of the aggregate Class
Principal Balance of all the Certificates, the Person approved by
Holders of Certificates evidencing at least 51% of the Voting Rights
in the Trust.
3. If at the relevant time, the aggregate Class Principal Balance of
the Senior Certificates is 50% or less of the aggregate Class
Principal Balance of all the Certificates, a Person who is an
approved servicer by S&P.
Asset-Backed Security: A security that is primarily serviced by the cash
flow of a discrete pool of Receivables or other financial assets, either fixed
or revolving, that by their terms convert into cash within a fixed time period
plus any rights or other assets designed to assure the servicing or timely
distribution of proceeds to the securityholders.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee.
Authorized Newspaper: A newspaper of general circulation in the Borough of
Manhattan, The City of New York, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays, Sundays
and holidays.
Available Funds: As to either Loan Group and any Distribution Date, the
sum, without duplication of the following amounts with respect to the Mortgage
Loans in such Loan Group and the immediately preceding Due Period: (i) scheduled
and unscheduled payments of principal and interest on the Mortgage Loans
received by the Servicer (net of amounts representing the Servicing
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Fee with respect to each Mortgage Loan and reimbursement for related Monthly
Advances and Servicing Advances); (ii) Net Liquidation Proceeds and Insurance
Proceeds with respect to the Mortgage Loans (net of amounts applied to the
restoration or repair of a Mortgaged Property); (iii) the Purchase Price for
repurchased Defective Mortgage Loans with respect to such Loan Group and any
related Substitution Adjustment Amounts; (iv) payments from the Servicer in
connection with (a) Monthly Advances, (b) Compensating Interest and (c) the
termination of the Trust with respect to the Mortgage Loans as provided in this
Agreement; (v) on the Distribution Dates during and immediately following the
Funding Period, amounts from the Initial Interest Coverage Account in respect of
the Capitalized Interest Requirement for the related Classes of Offered
Certificates; and (vi) on the Distribution Date at or immediately following the
end of the Funding Period, any related Excess Funding Amount.
Available Funds Cap: As to either Loan Group and any Distribution Date,
(A) in the case of Loan Group F, Certificate Group F (other than the Class IOF
Certificates) and any Class of Subordinate Certificates, the lower of the Loan
Group F Cap and the Loan Group A Cap and (B) in the case of Loan Group A and
Certificate Group A, the Loan Group A Cap.
Available LIBOR Carryover Amount: As to any Distribution Date, the lesser
of (i) the amounts remaining after distributions pursuant to clauses C.1 through
C.11 of Section 5.01(a) and (ii) the excess, if any, of (x) the Interest
Remittance Amount for Loan Group A for such Distribution Date over (y) the sum
of distributions pursuant to clauses B.1 and B.2 of Section 5.01(a) and the
Group A Subordination Increase Amount.
Balloon Loan: Any Mortgage Loan that provided on the date of origination
for scheduled monthly payment in level amounts substantially lower than the
amount of the final scheduled payment.
Basic Principal Amount: As to either Loan Group and any Distribution Date,
an amount equal to the sum of the following amounts (without duplication) with
respect to the Mortgage Loans in such Loan Group and the immediately preceding
Due Period: (i) each payment of principal on a Mortgage Loan received by the
Servicer during such Due Period, including all full and partial principal
prepayments; (ii) the Net Liquidation Proceeds allocable to principal received
by the Servicer with respect to any Liquidated Mortgage Loan during such Due
Period; (iii) the portion of the Purchase Price allocable to principal of all
repurchased Defective Mortgage Loans with respect to such Due Period; (iv) any
Substitution Adjustment allocable to principal received on or prior to the
previous Determination Date and not yet distributed; (v) any Monthly Advances
with respect to scheduled payments of principal due during the related Due
Period and (vi) any related Excess Funding Amount.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or, if at any time after the execution of this Agreement the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
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Book-Entry Certificate: Any Regular Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City, the State of Texas or the city in which
the Corporate Trust Office of the Trustee or the executive office of the
Certificate Insurer is located are authorized or obligated by law or executive
order to close.
Capitalized Interest Requirement: With respect to each Pre-Funding
Distribution Date, (A) the sum of (i) the amount of interest accruing during the
related Interest Period for the Classes of Offered Certificates in a Certificate
Group (other than the Notional Amount Certificates) at the weighted average
Adjusted Certificate Rate thereof on the related Senior Portion of the related
Group Allocated Pre-Funded Amount as of the first day of the related Due Period
and (ii) interest at the Adjusted Certificate Rate for the Notional Amount
Certificates on an amount equal to the product of (x) the Allocated Pre-Funded
Amount for Loan Group F and (y) a fraction, the numerator of which is the
Notional Amount of the Notional Amount Certificates and the denominator of which
is the Loan Group Balance of Loan Group F plus the Allocated Pre-Funded Amount
for Loan Group F as of the end of the second preceding Due Period plus (B) the
amount of interest accrued during the related Interest Period for the
Subordinate Certificates at the weighted average Adjusted Certificate Rate
thereof on the Subordinate Portion of the Group Allocated Pre-Funded Amount for
Loan Group F as of the first day of the related Due Period, minus (C) 30 days'
interest on each Subsequent Mortgage Loan with a Due Date on or before April 1,
2000, minus (D) interest on the Pre-Funded Amount at a rate equal to one-twelfth
of 2.50%.
Certificate: Any Offered Certificate, Class P Certificate, Class BIO
Certificate or Residual Certificate.
Certificate Group: Either Certificate Group A or Certificate Group F, as
the context requires.
Certificate Group A: The Class A-1A Certificates.
Certificate Group F: The Class A-1F, Class A-2F, Class A-3F, Class A-4F,
Class A-5F, Class A-6F and Class IOF Certificates.
Certificate Group Balance: As to either Certificate Group and any date of
determination, the aggregate of the Class Principal Balances of the Classes of
Certificates in such Certificate Group.
Certificate Index: The rate for one month United States dollar deposits
quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of any Interest Period relating to the
Adjustable Rate Certificates. "Telerate Page 3750" means the
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display designated as page 3750 on Bridge Telerate Service (or such other page
as may replace page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks). If such rate does not appear on such
page (or such other page as may replace that page on that service, or if such
service is no longer offered, such other service for displaying LIBOR or
comparable rates as may be reasonably selected by the Trustee after consultation
with the Servicer), the rate will be the Reference Bank Rate. If no such
quotations can be obtained and no Reference Bank Rate is available, the
Certificate Index will be the Certificate Index applicable to the preceding
Distribution Date. On the second LIBOR Business Day immediately preceding each
Distribution Date, the Trustee shall determine the Certificate Index for the
Interest Period commencing on such Distribution Date and inform the Servicer of
such rate.
Certificate Insurance Policy: The Certificate Guaranty Insurance Policy
(No. 50916-N), and all endorsements thereto dated the Closing Date, issued by
the Certificate Insurer for the benefit of the Holders of each Class of Senior
Certificates, a copy of which is attached hereto as Exhibit J.
Certificate Insurer: Financial Security Assurance Inc., a monoline
insurance company organized and created under the laws of the State of New York,
or any successor thereto.
Certificate Insurer Default: One of the following events shall have
occurred and be continuing:
(i) the Certificate Insurer fails to make a payment
required under the Certificate Insurance Policy in accordance
with its terms;
(ii) the Certificate Insurer (A) files any petition or
commences any case or proceeding under any provision or chapter of
the United States Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment for
the benefit of its creditors, or (C) has an order for relief entered
against it under the United States Bankruptcy Code or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and
nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority
enters a final and nonappealable order, judgment or decree (1)
appointing a custodian, trustee, agent or receiver for the
Certificate Insurer or for all or any material portion of its
property or (2) authorizing the taking of possession by a Custodian,
trustee, agent or receiver of the Certificate Insurer (or the taking
of possession of all or any material portion of the property of the
Certificate Insurer).
Certificate Margin: As to the Adjustable Rate Certificates, the applicable
amount set forth below:
Certificate Margin
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Class (1) (2)
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A-1A 0.26% 0.52%
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(1) Prior to or on the Optional Termination Date.
(2) After the Optional Termination Date.
Certificate Owner: The Person who is the beneficial owner of a Book-Entry
Certificate.
Certificate Rate: As to any Class of Certificates, the respective per
annum rate set forth or described below:
Class Certificate Rate
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A-1F 7.38% (1)
A-2F 7.58% (1)
A-3F 7.69% (1)
A-4F 7.94% (1)
A-5F 8.09% (1)(2)
A-6F 7.87% (1)(2)
IOF 6.40%
A-1A (3)
M-1 8.09% (1)(2)
M-2 8.09% (1)(2)
B 8.09% (1)(2)
P 0.00%
BIO (4)
R-1 0.00%
R-2 0.00%
R-3 0.00%
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(1) As to any Distribution Date, the lesser of (x) the fixed rate set forth and
(y) the applicable Available Funds Cap.
(2) On any Distribution Date after the Optional Termination Date, the
Certificate Rate shall increase by 50 basis points (0.50% per annum).
(3) As to any Distribution Date, a per annum rate equal to the least of (x) the
sum of the Certificate Index and the applicable Certificate Margin, (y) 14% and
(z) the applicable Available Funds Cap. The initial Certificate Rate for the
Class A-1A Certificates is 6.39250% per annum.
(4) Calculated as provided in Section 2.07.
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Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Offered Certificate registered in the name of the Seller or any Person known
to a Responsible Officer to be an Affiliate of the Seller and (y) any Offered
Certificate for which the Seller or any Person known to a Responsible Officer to
be an Affiliate of the Seller is the Certificate Owner or Holder shall be deemed
not to be outstanding (unless to the knowledge of a Responsible Officer (i) the
Seller or such Affiliate is acting as trustee or nominee for a Person who is not
an Affiliate of such Seller and who makes the voting decision with respect to
such Offered Certificates or (ii) the Seller or such Affiliate is the
Certificate Owner or Holder of all the Certificates of a Class, but only with
respect to the Class as to which the Seller or such Affiliate owns all the
Certificates) and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect any such consent, direction, waiver or request has been
obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act, the amount by which (i)
interest collectible on such Mortgage Loan during such Due Period is less than
(ii) one month's interest on the Principal Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the application of the
Civil Relief Act.
Class: All Certificates having the same designation.
Class A-1A Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-1A Certificate pursuant to Section 6.01.
Class A-1F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-1F Certificate pursuant to Section 6.01.
Class A-2F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-2F Certificate pursuant to Section 6.01.
Class A-3F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-3F Certificate pursuant to Section 6.01.
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Class A-4F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-4F Certificate pursuant to Section 6.01.
Class A-5F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-5F Certificate pursuant to Section 6.01.
Class A-6F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-6F Certificate pursuant to Section 6.01.
Class A-6F Percentage: As to any Distribution Date, the applicable
percentage set forth below:
Distribution Dates Percentages
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April 2000-March 2003................ 0%
April 2003-March 2005................ 45%
April 2005-March 2006................ 80%
April 2006-March 2007................ 100%
April 2007 and thereafter............ 300%
Class A-6F Principal Distribution Amount: As to any Distribution Date, the
product of (i) the applicable Class A-6F Percentage and (ii) the product of (x)
the Adjusted Senior Principal Distribution Amount and (y) a fraction, the
numerator of which is the Class Principal Balance of the Class A-6F Certificates
immediately prior to such Distribution Date, and the denominator of which is the
aggregate Class Principal Balance of the Offered Certificates in Group F
immediately prior to such Distribution Date.
Class B Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class B Certificate pursuant to Section 6.01.
Class BIO Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit B and designated as
a Class BIO Certificate pursuant to Section 6.01.
Class BIO Distribution Amount: As to any Distribution Date, the amount
allocable to the Class BIO Certificates as provided in Section 2.07 for such
Distribution Date and all prior Distribution Dates, less the aggregate of all
amounts distributed or deemed distributed with respect to the Class BIO
Certificates on prior Distribution Dates.
Class B Principal Distribution Amount: On any Distribution Date on and
after the Stepdown Date and so long as a Trigger Event is not in effect, an
amount equal to the excess of (1) the sum of (A) the aggregate Class Principal
Balance of the Senior Certificates (after giving effect
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to the distribution of the Senior Principal Distribution Amount on such
Distribution Date), (B) the Class Principal Balance of the Class M-1
Certificates (after giving effect to the distribution of the Class M-1 Principal
Distribution Amount on such Distribution Date), (C) the Class Principal Balance
of the Class M-2 Certificates (after giving effect to the distribution of the
Class M-2 Principal Distribution Amount on such Distribution Date) and (D) the
Class Principal Balance of the Class B Certificates immediately prior to such
Distribution Date, over (2) the lesser of (A) 96.30% of the Pool Balance as of
the last day of the related Due Period and (B) the Pool Balance as of the last
day of the related Due Period minus the OC Floor, provided, however, that after
the Class Principal Balances of the Senior, Class M-1 and Class M-2 Certificates
are reduced to zero, the Class B Principal Distribution Amount for such
Distribution Date will equal 100% of the Principal Distribution Amount.
Class Interest Carryover Shortfall: As to any Class of Regular
Certificates and any Distribution Date, an amount equal to the sum of (i) the
excess of the related Class Monthly Interest Amount for the preceding
Distribution Date and any outstanding Class Interest Carryover Shortfall with
respect to such Class on such preceding Distribution Date, over the amount in
respect of interest that is actually distributed to the Holders of such Class on
such preceding Distribution Date plus (ii) one month's interest on such excess,
to the extent permitted by law, at the related Certificate Rate.
Class Interest Distribution: As to any Class of Regular Certificates and
Distribution Date, an amount equal to the sum of (a) the related Class Monthly
Interest Amount and (b) any Class Interest Carryover Shortfall for such Class of
Certificates for such Distribution Date.
Class IOF Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class IOF Certificate pursuant to Section 6.01.
Class M-1 Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class M-1 Certificate pursuant to Section 6.01.
Class M-1 Principal Distribution Amount: As to any Distribution Date on or
after the Stepdown Date, 100% of the Principal Distribution Amount if the Class
Principal Balance of each Class of Senior Certificates has been reduced to zero
and a Trigger Event exists, or, if a Trigger Event is not in effect, the excess
of (1) the sum of (A) the aggregate Class Principal Balance of the Senior
Certificates (after giving effect to distributions of the Senior Principal
Distribution Amount for such Distribution Date) and (B) the Class Principal
Balance of the Class M-1 Certificates immediately prior to such Distribution
Date over (2) the lesser of (A) 78.70% of the Pool Balance as of the last day of
the related Due Period and (B) the Pool Balance as of the last day of the
related Due Period minus the OC Floor.
Class M-2 Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class M-2 Certificate pursuant to Section 6.01.
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Class M-2 Principal Distribution Amount: As to any Distribution Date on or
after the Stepdown Date, 100% of the Principal Distribution Amount if the
aggregate Class Principal Balance of each of the Senior and Class M-1
Certificates has been reduced to zero and a Trigger Event exists, or, if a
Trigger Event is not in effect, the excess of (1) the sum of (A) the aggregate
Class Principal Balance of the Senior Certificates (after giving effect to
distributions of the Senior Principal Distribution Amount for such Distribution
Date), (B) the Class Principal Balance of the Class M-1 Certificates (after
giving effect to distribution of the Class M-1 Principal Distribution Amount for
such Distribution Date) and (C) the Class Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (2) the lesser of
(A) 87.80% of the Pool Balance as of the last day of the related Due Period and
(B) the Pool Balance as of the last day of the related Due Period minus the OC
Floor.
Class Monthly Interest Amount: As to any Distribution Date and Class of
Regular Certificates, interest (i) for the related Interest Period at the
related Certificate Rate on the related Class Principal Balance or Notional
Amount minus (ii) such Class' pro rata portion of any Civil Relief Act Interest
Shortfall experienced by Loan Group F or Loan Group A, as applicable, during the
related Due Period based on the amount of interest to which each such Class
would otherwise be entitled in the absence of such shortfall.
Class P Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit B-2 and designated
as a Class P Certificate pursuant to Section 6.01.
Class P Deposit: $100.00.
Class P Principal Distribution Date: The Distribution Date on which the
aggregate Class Principal Balance of the Offered Certificate is reduced to zero
after the Due Period in which the last Prepayment Charge expires by its terms as
shown on the Prepayment Charge Schedule.
Class Principal Balance: As of any date of determination and Class of
Certificates, other than the Notional Amount Certificates, the Original Class
Principal Balance for such Class reduced by the sum of all amounts previously
distributed to the Certificateholders of such Class in respect of principal from
the related Principal Distribution Amount on all previous Distribution Dates
and, in the case of any Class of Subordinate Certificates, reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.
Class Principal Carryover Shortfall: As to any Class of Subordinate
Certificates and any Distribution Date, the excess, if any, of (i) the sum of
(x) the amount of the reduction in the Class Principal Balance of that Class of
Subordinate Certificates on such Distribution Date and (y) the amount of such
reductions on prior Distribution Dates over (ii) the amount distributed in
respect of principal thereof on prior Distribution Dates.
Class R-1 Certificate: Any Certificate designated as such and executed and
authenticated by the Trustee substantially in the form set forth in Exhibit B-1
hereto.
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Class R-2 Certificate: Any Certificate designated as such and executed and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.
Class R-3 Certificate: Any Certificate designated as such and executed and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.
Class R Certificateholder: The Holder of a Residual Certificate.
Closing Date: March 30, 2000.
Code: The Internal Revenue Code of 1986, as the same may be amended from
time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage Loan,
the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the related First Lien, if any, as of the date
of origination of the Mortgage Loan, divided by the Appraised Value.
Compensating Interest: As to any Distribution Date, the amount calculated
pursuant to Section 5.02.
Cooperative Corporation: The entity that holds title (fee or an acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The designated offices of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which offices at the date of the execution of this
Agreement are located, for Certificate transfer services, at
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Norwest Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0113, Attn: Corporate Trust Services - Delta Funding Home Equity Loan
Trust 2000-1, and for all other purposes at 11000 Broken Land Parkway, Columbia,
Maryland 21044-3562, Attn: Corporate Trust Services Delta Funding Home Equity
Loan Trust 2000-1, and which are the respective addresses to which notices to
and correspondence with the Trustee should be directed.
Cumulative Loss Event: For any Distribution Date in the applicable period
below, if Cumulative Net Losses exceed the applicable percentage of the
aggregate Original Class Principal Balances of the Offered Certificates:
Number of
Distribution Dates Percentages
------------------ -----------
37-48 2.00%
49-60 2.40%
61-72 2.70%
73-84 2.85%
85 and thereafter 3.00%
Cumulative Net Losses: As of any date of determination, the aggregate of
the Liquidation Loan Losses incurred from the Cut-Off Date through the end of
the calendar month preceding such date of determination.
Curtailment: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not intended
to satisfy the Mortgage Loan in full, nor is intended to cure a delinquency.
Custodial Agreement: The Custodial Agreement, as amended and supplemented
from time to time, dated as of the date hereof, by and among the Trustee, Delta,
and the Custodian in the form set forth as Exhibit K hereto.
Custodian: The Person acting as custodian under the Custodial Agreement
from time to time, initially, Bank One Trust Company, N. A.
Cut-Off Date: The close of business on February 29, 2000, except that the
Cut-Off Date for any Mortgage Loan originated after February 29, 2000, will be
the date of origination of such Mortgage Loan.
Cut-Off Date Pool Principal Balance: $232,143,920.37.
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Loan
pursuant to Section 2.02 or 2.04).
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Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution pursuant to Section 2.02 or 2.04.
Deficiency Amount: With respect to any Distribution Date, the amount, if
any, by which the Guaranteed Distributions for such Distribution Date exceeds
the Available Funds for such Distribution Date that will be available to make
payment of the Guaranteed Distributions on such Distribution Date pursuant to
Section 5.01.
Definitive Certificates: As defined in Section 6.02(c).
Delinquency Amount: As to any date of determination, the aggregate
Principal Balance of the Mortgage Loans that are (a) 60 or more days delinquent
or (b) in bankruptcy or foreclosure and REO Properties.
Delinquency Event: A Delinquency Event shall have occurred and be
continuing, if at any time the Three Month Delinquency Rate exceeds 50% of the
Senior Enhancement Percentage.
Delta: Delta Funding Corporation, a New York corporation, or any successor
thereto.
Deposit Date: As to any Distribution Date, the Business Day preceding such
Distribution Date.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of the Regular
Certificates. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the fourth
Business Day prior to such Distribution Date.
Distribution Account: The account established and maintained by the
Trustee pursuant to Section 5.04. The Distribution Account shall be an Eligible
Account.
Distribution Date: The fifteenth day of each month, or, if such day is not
a Business Day, then the next Business Day, beginning in April 2000.
Due Date: As to any Mortgage Loan, the day of the month on which the
Monthly Payment is due from the Mortgagor.
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Due Period: With respect to the first Distribution Date the period from
and including March 1, 2000 through and including April 1, 2000 (except that
with respect to payments due on March 1, 2000, only collections of principal are
included). With respect to each Distribution Date thereafter for collections of
both interest and principal, the period from and including the second day of the
month preceding the month of such Distribution Date to and including the first
day of the month of such Distribution Date.
DCR: Duff & Phelps Credit Rating Co. or its successor in interest.
Electronic Ledger: The electronic master record of home equity mortgage
loans maintained by the Servicer.
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose debt obligations at the time of any deposit therein
have the highest short-term debt rating by the Rating Agencies and whose
accounts are insured to the maximum extent provided by either the Savings
Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation established by such fund with a minimum
long-term unsecured debt rating of A by S&P and A2 by Moody's, and which is any
of (A) a federal savings and loan association duly organized, validly existing
and in good standing under the federal banking laws, (B) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (C) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (D) a principal
subsidiary of a bank holding company; (ii) a segregated trust account maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity; (iii) maintained at Norwest Bank
Minnesota, National Association so long as its debt obligations at the time of
any deposit therein have a short-term debt rating of at least A-1 for S&P, P-1
for Moody's and F-1 for Fitch; or (iv) otherwise acceptable to each Rating
Agency as evidenced by a letter from each Rating Agency to the Trustee, without
reduction or withdrawal of the then current ratings of the Certificates without
giving effect to the Certificate Insurance Policy.
Eligible Investments: One or more of the following (excluding any callable
investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition thereof,
provided that the short-term unsecured debt obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in its highest short-term rating category (which is "A-1+"
for S&P, "P-1" for Moody's and "F-1+" for Fitch);
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(iii) certificates of deposit, time deposits and bankers'
acceptances of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof and
subject to supervision and examination by federal and/or state banking
authorities, provided that the unsecured short-term debt obligations of
such depository institution or trust company at the date of acquisition
thereof have been rated by S&P and Fitch in their respective highest
unsecured short-term debt rating category;
(iv) commercial paper (having original maturities of not more than
90 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by S&P and Fitch in their respective highest short-term rating
categories;
(v) short term investment funds ("STIFS") sponsored by any trust
company or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each Rating Agency in their respective highest rating
category of long term unsecured debt;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund including any such fund that is
managed by the Trustee or an Affiliate of the Trustee or for which the
Trustee or an Affiliate acts as advisor and throughout the time as the
interest is held in such fund has a rating of "AAA" by S&P, "Aaa" by
Moody's, or "AAA" by Fitch; and
(vii) other obligations or securities that are acceptable to each
Rating Agency as an Eligible Investment hereunder and will not result in a
reduction in the then current rating of the Certificates, as evidenced by
a letter to such effect from such Rating Agency and with respect to which
the Servicer has received confirmation that, for tax purposes, the
investment complies with the last clause of this definition;
provided that no instrument described hereunder 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; provided, further, 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 its stated maturity; and provided further, that if S&P is rating
any of the Certificates, an instrument described hereunder shall be rated the
applicable rating of S&P set forth above.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance after deducting all
scheduled principal payments due in the month of substitution (or in the case of
a substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not less than 95% of the
Principal Balance of the Defective Mortgage Loan; (ii) have a Loan Rate not less
than the Loan Rate of the Defective
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Mortgage Loan and not more than 1% in excess of the Loan Rate of such Defective
Mortgage Loan; (iii) if such Defective Mortgage Loan is in Loan Group A, have a
Loan Rate based on the same Loan Index with adjustments to such Loan Rate made
on the same interval between Interest Rate Adjustment Dates as that of the
Defective Mortgage Loan and have a Margin that is not less than the Margin of
the Defective Mortgage Loan and not more than 100 basis points higher than the
Margin for the Defective Mortgage Loan; (iv) have a Mortgage of the same or
higher level of priority as the Mortgage relating to the Defective Mortgage Loan
at the time such Mortgage was transferred to the Trust; (v) have a remaining
term to maturity not more than six months earlier and not later than the
remaining term to maturity of the Defective Mortgage Loan; (vi) comply with each
representation and warranty set forth in Section 2.04 (deemed to be made as of
the date of substitution); (vii) have an original Combined Loan-to-Value Ratio
not greater than that of the Defective Mortgage Loan; (viii) if such Defective
Mortgage Loan is in Loan Group A, have a Lifetime Rate Cap and a Periodic Rate
Cap no lower than the Lifetime Rate Cap and Periodic Rate Cap, respectively,
applicable to such Defective Mortgage Loan; (ix) have a credit risk not less
than the credit risk of the Defective Mortgage Loan; and (x) be of the same type
of Mortgaged Property as the Defective Mortgage Loan or a detached single family
residence. More than one Eligible Substitute Mortgage Loan may be substituted
for a Defective Mortgage Loan if such Eligible Substitute Mortgage Loans meet
the foregoing attributes in the aggregate.
ERISA Restricted Certificate: Each Subordinate Certificate, the Class BIO
Certificates, the Class P Certificates and each Residual Certificate.
Escrow Repair Loan: A Mortgage Loan as to which the Seller holds a portion
of the proceeds in escrow pending repair of the related Mortgaged Property as
specified in the related Mortgage and Mortgage Note.
Event of Default: As defined in Section 8.01.
Excess Funding Amount: As to either Loan Group F or Loan Group A, the
related Allocated Pre-Funded Amount remaining on deposit in the Pre-Funding
Account at the end of the Funding Period.
Excess Interest: As to any Distribution Date, the Available Funds
remaining after the application of payments pursuant to clauses 1 through 7 of
Section 5.01(a)C.
Excess Overcollateralization Amount: As to any Distribution Date, the
lesser of (i) the Aggregate Principal Amount for such Distribution Date and (ii)
the excess, if any, of (x) the Overcollateralization Amount (assuming 100% of
the Aggregate Principal Amount is distributed on the Offered Certificates) over
(y) the Required Overcollateralization Amount.
Expense Fee Rate: The sum of the Servicing Fee Rate and the Trustee Fee
Rate, which is 0.5250% per annum.
Fannie Mae: Federal National Mortgage Association.
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FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Final Scheduled Distribution Date: As to any Class of Certificates, the
Distribution Date occurring in the respective month set forth below:
Final Scheduled Final Scheduled
Class Distribution Date Class Distribution Date
- ----- ----------------- ----- -----------------
A-1F December 15, 2017 IOF March 15, 2003
A-2F February 15, 2022 A-1A March 15, 2030
A-3F October 15, 2026 M-1 May 15, 2030
A-4F August 15, 2028 M-2 May 15, 2030
A-5F May 15, 2030 B May 15, 2030
A-6F May 15, 2030
First Lien: With respect to any Mortgage Loan which is a second priority
lien, the mortgage loan relating to the corresponding Mortgaged Property having
a first priority lien.
Fiscal Agent: As defined in the Certificate Insurance Policy.
Fitch: Fitch IBCA, Inc., or its successor in interest.
Fixed Rate Certificates: All Classes of Offered Certificates other than
the Adjustable Rate Certificates.
Foreclosure Profits: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid through
the date of receipt of the final Liquidation Proceeds) of such Liquidated
Mortgage Loan immediately prior to the final recovery of its Liquidation
Proceeds.
Freddie Mac: The Federal Home Loan Mortgage Corporation.
Funding Period: The period from the Closing Date until the earliest of (i)
the date on which the amount on deposit in the Pre-Funding Account is less than
$100,000, (ii) the date on which an Event of Default occurs under this Agreement
or (iii) the close of business on April 28, 2000.
GAAP: Generally accepted accounting principles as in effect from time to
time, consistently applied.
Group Allocated Pre-Funded Amount: As to Certificate Group F and the
Subordinate Certificates, the Allocated Pre-Funded Amount for Loan Group F. As
to Certificate Group A, the Allocated Pre-Funded Amount for Loan Group A.
Group A Certificates: The Class A-1A Certificates.
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Group A Principal Distribution Amount: As to any Distribution Date, the
lesser of (A) the greater of (i) the product of (x) the Senior Principal
Distribution Amount for such Distribution Date and (y) a fraction, the numerator
of which is the Class Principal Balance of the Class A-1A Certificates
immediately prior to such Distribution Date, and the denominator of which is the
aggregate Class Principal Balance of all of the Senior Certificates immediately
prior to such Distribution Date, and (ii) the excess, if any, of (x) the Class
Principal Balance of the Class A-1A Certificates immediately prior to such
Distribution Date over (y) the sum of the Loan Group Balance of Loan Group A and
the related Allocated Pre-Funded Amount as of the last day of the related Due
Period or (B) the Senior Principal Distribution Amount.
Group A Subordination Increase Amount: As to any Distribution Date, the
product of (i) the Subordination Increase Amount, if any, for such Distribution
Date and (ii) a fraction the numerator of which is the sum of the Loan Group
Balance of Loan Group A and the related Allocated Pre-Funded Amount as of the
end of the second preceding Due Period (or as of the Cut-Off Date, in the case
of the first Distribution Date) and the denominator of which is the sum of the
Pool Balance and the aggregate Pre-Funded Amount as of the end of the second
preceding Due Period (or as of the Cut-Off Date, in the case of the first
Distribution Date).
Group F Certificates: The Class A-1F, Class A-2F, Class A-3F, Class A-4F,
Class A-5F, Class A-6F and Class IOF Certificates.
Guaranteed Distributions: For any Distribution Date and each Class of
Senior Certificates, the sum of (x) the Class Monthly Interest Amount on each
Class of Senior Certificates, plus (y) the Subordination Deficit, plus (z)
without duplication of clause (y) the outstanding Class Principal Balance of
each Class of Senior Certificates (other than the Notional Amount Certificates)
on their respective Final Scheduled Distribution Dates after giving effect to
distributions thereon on that Distribution Date, determined in accordance with
the original terms of the Senior Certificates when issued and without regard to
any subsequent amendment or modification of the Senior Certificates or this
Agreement except amendments or modifications to which the Certificate Insurer
has given its prior written consent. Guaranteed Distributions shall not include,
nor shall coverage be provided under the Certificate Insurance Policy in respect
of, any taxes, withholding or other charges imposed by a governmental authority
due to, or in connection with, the payment of any Guaranteed Distributions to a
Holder.
Initial Interest Coverage Account: The Initial Interest Coverage Account
established pursuant to Section 4.02.
Initial Interest Deposit: An amount equal to the sum of (i) 30 days'
interest at the weighted average initial Adjusted Certificate Rate of the Group
F Certificates (excluding the Notional Amount Certificates) on the related
Senior Portion of the original Principal Balance of each Mortgage Loan in the
related Loan Group with a first Due Date after the initial Due Period, (ii)
interest at the Adjusted Certificate Rate for the Notional Amount Certificates
on an amount equal to the product of (x) the original Principal Balance of each
Mortgage Loan in the related Loan Group with a first Due Date after the Initial
Due Period and (y) a fraction the numerator of which is the Notional Amount of
the Notional Amount Certificates and the denominator of which is the Loan
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Group Balance of Loan Group F plus the allocated Pre-Funded Amount for Loan
Group F as of the end of the preceding Due Period, (iii) 18 days' interest at
the Adjusted Certificate Rate for the Class A-1A Certificates on the original
Principal Balance of each Mortgage Loan in the related Loan Group with a first
Due Date after the initial Due Period and (iii) 30 days' interest at the
weighted average Adjusted Certificate Rate of the Subordinate Certificates on
the related Subordinate Portion of the original Principal Balance of each
Mortgage Loan in Loan Group F with a first Due Date after the initial Due
Period, i.e., $200,692.87, consisting of $179,033.89 for Certificate Group F and
the Subordinate Certificates and $21,658.98 for Certificate Group A.
Initial Mortgage Loan Schedule: The schedule of Initial Mortgage Loans
included in the Trust as of the Cut-Off Date, specifying with respect to each
such Initial Mortgage Loan the information set forth on Exhibit C attached
hereto.
Initial Mortgage Loans: The Initial Mortgage Loans transferred to the
Trust pursuant to Section 2.01, as set forth in Exhibit C hereto.
Insurance Agreement: The Insurance Agreement dated as of February 29,
2000, among the Servicer, the Seller, and the Certificate Insurer, including any
amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Certificate Insurer) pursuant to any insurance policy covering a Mortgage Loan
or Mortgaged Property, or amounts required to be paid by the Servicer pursuant
to Section 3.05, net of any component thereof (i) covering any expenses incurred
by or on behalf of the Servicer in connection with obtaining such proceeds, (ii)
applied to the restoration or repair of the related Mortgaged Property, (iii)
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures or (iv) required to be paid to any holder of a mortgage senior to
such Mortgage Loan.
Insured Payments: As to any Distribution Date, amounts actually paid under
the Certificate Insurance Policy.
Interest Period: For the Fixed Rate Certificates, the calendar month
preceding the month of the applicable Distribution Date, calculated on the basis
of a 360-day year comprised of twelve 30-day months. For the Adjustable Rate
Certificates, the period from the prior Distribution Date (or, in the case of
the first Distribution Date, from the Closing Date) through the day preceding
the current Distribution Date, calculated on the basis of a 360-day year and the
actual number of days elapsed in such period; provided, however, that interest
accrued on any Class of Certificates at the applicable Available Funds Cap,
shall be calculated on the basis of a 360-day year comprised of twelve 30-day
months.
Interest Rate Adjustment Date: With respect to each Mortgage Loan in Loan
Group A, the date or dates on which the Loan Rate is subject to adjustment in
accordance with the related Mortgage Note.
Interest Remittance Amount: As to either Loan Group and any Distribution
Date, the portion of the Available Funds for such Loan Group that constitutes
amounts in respect of interest.
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LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in the State of New York or in the city of
London, England are required or authorized by law to be closed.
LIBOR Carryover: As to the Adjustable Rate Certificates and any
Distribution Date, the sum of (i) the excess, if any, of (A) the related Class
Monthly Interest Amount calculated on the basis of the lesser of (x) 14% and (y)
the Certificate Index plus the applicable Certificate Margin over (B) the
related Class Monthly Interest Amount for such Distribution Date, (ii) any LIBOR
Carryover remaining unpaid from prior Distribution Dates and (iii) 30 days'
interest on the amount in clause (ii) calculated on the basis of the lesser of
(x) 14% and (y) the Certificate Index plus the applicable Certificate Margin.
LIBOR Carryover Fund: The account established and maintained pursuant to
Section 5.07.
LIBOR Carryover Fund Deposit: As defined in Section 5.07.
Lifetime Rate Cap: With respect to each Mortgage Loan in Loan Group A, the
maximum Loan Rate permitted over the life of such Mortgage Loan, as provided by
the terms of the related Mortgage Note.
Liquidated Mortgage Loan: As to any Distribution Date, a Mortgage Loan
with respect to which the Servicer has determined, in accordance with the
servicing procedures specified herein as of the end of the preceding Due Period,
that all Liquidation Proceeds which it expects to recover with respect to such
Mortgage Loan (including the disposition of the related REO Property) have been
received.
Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount, if
any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon is in excess of the Liquidation Proceeds realized thereon net of
unreimbursed Servicing Fees, Servicing Advances and Monthly Advances with
respect thereto.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received in
connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.
Loan Group: Either Loan Group F or Loan Group A, as the context requires.
Loan Group A: The pool of Mortgage Loans identified in the related
Mortgage Loan Schedule as having been assigned to Loan Group A.
Loan Group A Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group A as of such date.
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Loan Group A Cap: The weighted average Net Loan Rate of the Mortgage Loans
in Loan Group A minus the Premium Amount with respect to the Class A-1A
Certificates expressed as a per annum rate.
Loan Group Balance: Either the Loan Group F Balance or the Loan Group A
Balance, as applicable.
Loan Group F: The pool of Mortgage Loans identified in the related
Mortgage Loan Schedule as having been assigned to Loan Group F.
Loan Group F Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group F as of such date.
Loan Group F Cap: A per annum rate equal to (i) the weighted average Net
Loan Rate of the Mortgage Loans in Loan Group F minus (ii) the product of (x)
the Certificate Rate on the Notional Amount Certificates and (y) a fraction, the
numerator of which is the Notional Amount of such Notional Amount Certificates
immediately prior to such Distribution Date, and the denominator of which is the
Loan Group Balance of Loan Group F and the related Allocated Pre-Funded Amount
as of the end of the second preceding Due Period and minus (iii) the Premium
Amount with respect to the Group F Certificates, expressed as a per annum rate.
Loan Index: With respect to each Interest Rate Adjustment Date for each
Mortgage Loan in Loan Group A that is identified on the Mortgage Loan Schedule
as having a LIBOR Loan Index, the average of the interbank offered rate for
six-month U.S. dollar denominated deposits in the London Market, as determined
according to the terms of the related Note.
Loan Rate: With respect to any Mortgage Loan as of any day, the per annum
rate of interest applicable under the related Mortgage Note to the calculation
of interest for such day on the Principal Balance.
Maintenance: With respect to any Cooperative Unit, the rent paid by the
Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Majority Certificateholder: The Holder or Holders of Certificates
evidencing Voting Rights in excess of 51% in the aggregate.
Margin: As to any Mortgage Loan in Loan Group A, the percentage set forth
as the "Margin" for such Mortgage Loan on the Mortgage Loan Schedule.
Monthly Advance: An advance made by the Servicer pursuant to Section 3.15.
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan.
Moody's: Moody's Investors Service, Inc. or its successor in interest.
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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
Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
a particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: With respect to any date, the schedule of Mortgage
Loans constituting assets of the Trust, which list shall consist of the Initial
Mortgage Loan Schedule, together with the Subsequent Mortgage Loan Schedule
reflecting the Subsequent Mortgage Loans transferred to the Trust on the Closing
Date. The Initial Mortgage Loan Schedule is the schedule set forth herein as
Exhibit C, which schedule sets forth as to each Initial Mortgage Loan: (i) the
Cut-Off Date Principal Balance, (ii) the account number, (iii) the original
principal amount, (iv) the CLTV as of the date of the origination of the related
Initial Mortgage Loan, (v) the Due Date, (vi) the Loan Rate as of the Cut-Off
Date, (vii) the first date on which a Monthly Payment is or was due under the
Mortgage Note, (viii) the original stated maturity date of the Mortgage Note and
if the Mortgage Loan is a Balloon Loan, the amortization terms, (ix) the
remaining number of months to maturity as of the Cut-Off Date, (x) the state in
which the related Mortgaged Property is situated, (xi) the type of property,
(xii) the lien status, (xiii) the applicable Loan Group and (xiv) with respect
to each Mortgage Loan in Loan Group A, (a) the Periodic Rate Cap, (b) the
Margin, (c) the Lifetime Rate Cap and (d) the next Interest Rate Adjustment Date
after the Cut-Off Date. The Seller shall indicate to the Trustee which Mortgage
Loans, if any, are Cooperative Loans. The Mortgage Loan Schedule will be amended
by the Servicer from time to time to reflect the substitution of an Eligible
Substitute Mortgage Loan for a Defective Mortgage Loan from time to time
hereunder.
Mortgage Loans: The mortgage loans that are transferred and assigned to
the Trustee pursuant to Sections 2.01, 2.06 and 2.13, together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Servicer or
the Seller, as the case may be, from time to time pursuant to Section 2.02, 2.04
or 3.16, as from time to time are held by the Custodian on behalf of the Trustee
as a part of the Trust, such mortgage loans originally so held being identified
in the Mortgage Loan Schedule delivered on the Closing Date.
Mortgage Note: With respect to a Mortgage Loan, the note pursuant to which
the related mortgagor agrees to pay the indebtedness evidenced thereby which is
secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property and
improvements thereon, securing a Mortgage Loan, which, with respect to a
Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.
Mortgagor: The obligor or obligors under a Mortgage Note.
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Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing Advances and
Monthly Advances with respect thereto.
Net Loan Rate: With respect to any Mortgage Loan as to any day, the Loan
Rate less the Expense Fee Rate.
Net Rate Cap Carryover: As to any Distribution Date and Certificate Group
F (other than the Class IOF Certificates) or any Class of Subordinate
Certificates, the sum of (i) the excess, if any, of the related Class Monthly
Interest Amount, calculated at the applicable Certificate Rate (without regard
to the Available Funds Cap), over the Class Monthly Interest Amount for such
Distribution Date, (ii) any Net Rate Cap Carryover remaining unpaid from prior
Distribution Dates and (iii) 30 days' interest on the amount in clause (ii)
calculated at the applicable Certificate Rate (without regard to the Available
Funds Cap).
Net Rate Cap Fund: The account established and maintained pursuant to
Section 5.08.
Net Rate Cap Fund Deposit: As defined in Section 5.08.
Ninety Day Delinquency Rate: As to any Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 90 or more days delinquent as of the
last day of such Due Period or (b) REO Property and Mortgage Loans in
foreclosure or in bankruptcy and the denominator of which is the sum of the Loan
Group Balances as of the last day of such Due Period.
Nonrecoverable Advances: With respect to any Mortgage Loan, (i) any
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Seller and the Trustee no later than the Business Day following
such determination, would not be ultimately recoverable pursuant to Sections
3.03(ii) or (vi).
Notional Amount: The Notional Amount of the Class IOF Certificates for any
Distribution Date prior to the 37th Distribution Date will equal the lesser of
(i) the Loan Group Balance of Loan Group F as of the end of the second preceding
Due Period and (ii) the applicable amount set forth below:
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Distribution Date Notional Amount
----------------- ---------------
1 through 3 $61,000,000
4 through 6 $58,000,000
7 through 9 $54,500,000
10 through 12 $48,000,000
13 through 15 $42,500,000
16 through 18 $37,000,000
19 through 21 $32,500,000
22 through 24 $28,000,000
25 through 27 $24,000,000
28 through 30 $21,000,000
31 through 33 $18,000,000
34 through 36 $15,000,000
On and after the 37th Distribution Date, the Notional Amount of the
Notional Amount Certificates will be zero.
Notional Amount Certificates: The Class IOF Certificates.
OC Floor: An amount equal to 0.50% of the aggregate Original Class
Principal Balance of the Offered Certificates as of the Closing Date (i.e.,
$1,250,000.00).
Offered Certificates: The Senior Certificates and the Subordinate
Certificates.
Officer's Certificate: A certificate signed by the President, an Executive
Vice President, a Senior Vice President, a First Vice President, a Vice
President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Servicer and
delivered to the Trustee or the Custodian.
Opinion of Counsel: A written opinion of counsel reasonably acceptable to
the Trustee, who may be in-house counsel for the Servicer or the Seller (except
that any opinion relating to the qualification of the Trust as a REMIC or
compliance with the REMIC Provisions must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to each Rating Agency or the
Certificate Insurer, is reasonably acceptable to it.
Optional Termination Date: The Distribution Date following the Due Period
at the end of which the Pool Balance is less than 10% of the sum of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-Off Date and the
amount deposited in the Pre-Funding Account on the Closing Date.
Original Allocated Pre-Funded Amount: As to (i) Certificate Group F and
the Subordinate Certificates and (ii) Certificate Group A, $13,586,235.33 and
$4,269,844.30, respectively.
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Original Capitalized Interest Deposit: $89,508.54 of which $84,532.39
relates to Certificate Group F and $4,976.15 relates to Certificate Group A.
Original Class Principal Balance: As to the Class P Certificates, $100. As
to the Class BIO Certificates and the Residual Certificates, $0. As to any Class
of Offered Certificates, the respective amount set forth below opposite such
Class:
Original Class
Class Principal Balance
----- -----------------
Class A-1F $53,300,000
Class A-2F $22,700,000
Class A-3F $30,300,000
Class A-4F $15,300,000
Class A-5F $14,900,000
Class A-6F $10,000,000
Class IOF (1)
Class A-1A $65,000,000
Class M-1 $16,500,000
Class M-2 $11,375,000
Class B $10,625,000
Total $250,000,000
- ----------
(1) This Class has no Class Principal Balance, but will accrue interest on its
Notional Amount.
Original Loan Group Balance: As to either Loan Group, the sum of (i) the
aggregate Cut-Off Date Principal Balance of the Mortgage Loans in such Loan
Group as of the Closing Date and (ii) the aggregate unpaid principal balances as
of the related Subsequent Cut-Off Date of the Subsequent Mortgage Loans added to
such Loan Group after the Closing Date.
Original Pool Balance: The sum of the Original Loan Group Balances.
Outstanding Class Interest Carryover Shortfall: As to any Class of
Certificates and any Distribution Date, the amount of Class Interest Carryover
Shortfall for such Distribution Date.
Overcollateralization Amount: As to any Distribution Date, the excess, if
any, of (i) the sum of (x) the Pool Balance as of the end of the related Due
Period and (y) the aggregate Pre-Funded Amount as of the end of the related Due
Period over (ii) the aggregate Class Principal Balance of the Certificates after
giving effect to the distribution of the Principal Distribution Amount on such
Distribution Date.
Overfunded Amount: As to any Subsequent Transfer Date, the excess, if any,
of (x) the sum of (i) the amount on deposit on the Initial Interest Coverage
Account on such date and, (ii)
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investment earnings on such amount at the rate of 2.5% per annum from such
Subsequent Transfer Date to the next Pre-Funding Distribution Date over (y) the
Capitalized Interest Requirement for each remaining Pre-Funding Distribution
Date.
Ownership Interest: As to any Certificate or security interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
Percentage Interest: With respect to any Offered Certificate, the
percentage obtained by dividing the denomination of such Certificate by the
aggregate of the denominations of all Certificates of the same Class. With
respect to a Residual Certificate, the portion of the Class evidenced thereby as
stated on the face thereof, which shall be either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%. With respect to a Class P or Class BIO Certificate, the
percentage set forth on the face thereof.
Periodic Rate Cap: With respect to each Mortgage Loan in Loan Group A with
respect to which the related Mortgage Note provides for a periodic rate cap, the
maximum percentage increase or decrease in the Loan Rate permitted for such
Mortgage Loan over the Loan Rate in effect as of an Interest Rate Adjustment
Date, as set forth on the Mortgage Loan Schedule.
Permitted Transferee: Any Person other than (i) the United States or any
State or any political subdivision thereof or any agency or instrumentality of
any of the foregoing; (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing; (iii) an organization
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) (except
certain farmers' cooperatives described in Code section 521) on any excess
inclusions (as defined in Section 860E(c)(1)) with respect to any Residual
Certificate; (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(C); (v) a Person that is not (a) a citizen or resident of the
United States, (b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, (c) an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or (d) a trust if a court within the United States is able to
exercise primary supervision of the administration of the trust and one or more
United States fiduciaries have the authority to control all substantial
decisions of the trust; or (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the Freddie Mac, a
majority of its board of directors is not selected by such governmental unit.
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Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: With respect to any date, the aggregate of the Principal
Balances of all Mortgage Loans as of such date.
Pre-Funded Amount: As of the Closing Date, the sum of the Original
Allocated Pre-Funded Amount for Loan Group F and Loan Group A. As of any date
thereafter, the amount on deposit in the Pre-Funding Account, excluding any
Pre-Funding Earnings included therein.
Pre-Funding Account: The Pre-Funding Account established pursuant to
Section 4.02.
Pre-Funding Distribution Date: Each Distribution Date during the Funding
Period and the Distribution Date in the month following the end of the Funding
Period.
Pre-Funding Earnings: As of any date of determination, the amount of
investment earnings or income, net of any losses from such investments, on
deposit in the Pre-Funding Account.
Premium Amount: As to any Distribution Date and Certificate Group, the
product of the Premium Percentage divided by 12 and the Certificate Group
Balance of such Certificate Group as of the first day of the calendar month in
which such Distribution Date occurs.
Premium Letter: The letter, dated March 30, 2000, from the Certificate
Insurer to the Seller setting forth the Premium Amount and other amounts.
Premium Percentage: The per annum rate at which the premium due to the
Certificate Insurer accrues, as set forth in the Premium Letter.
Prepayment Assumption: With respect to Loan Group F, a conditional rate of
prepayment equal to 4.0% per annum in the first month of the life of the
mortgage loans in Loan Group F and an additional amount of approximately
1.454545% (precisely 16/11 percent per annum) in each month thereafter until the
twelfth month; beginning in the twelfth month and in each month thereafter
during the life of the mortgage loans, a conditional prepayment rate of 20% per
annum each month is assumed. With respect to Loan Group A, a conditional rate of
prepayment equal to 4.0% per annum in the first month of the life of the
mortgage loans in Loan Group A and an additional amount of approximately
1.068966% (precisely 31/29 percent per annum) in each month thereafter until the
30th month; beginning in the 30th month and in each month thereafter during the
life of the mortgage loans, a conditional prepayment rate of 35% per annum each
month is assumed.
Prepayment Charge: As to a Mortgage Loan, any charge paid by a Mortgagor
in connection with certain partial prepayments and all prepayments in full made
within the related Prepayment Charge Period, the Prepayment Charges with respect
to each applicable Mortgage Loan so held by
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the Trust being identified in the Prepayment Charge Schedule (other than any
Servicer Prepayment Charge Payment Amount).
Prepayment Charge Period: As to any Mortgage Loan, the period of time, if
any, during which a Prepayment Charge may be imposed.
Prepayment Charge Schedule: As of any date, the list of Prepayment Charges
included in the Trust on such date, attached hereto as Exhibit R (including the
prepayment charge summary attached thereto). The Prepayment Charge Schedule
shall set forth the following information with respect to each Prepayment
Charge:
(i) the Mortgage Loan account number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination in which the related Mortgaged Property is
located;
(iv) the first date on which a Monthly Payment is or was due under the
related Mortgage Note;
(v) the term of the Prepayment Charge;
(vi) the original principal amount of the related Mortgage Loan; and
(vii) the Cut-off Date Principal Balance of the related Mortgage Loan.
The Prepayment Charge Schedule shall be amended from time to time by the
Servicer in accordance with the provisions of this Agreement.
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject during the related Due Period of a
voluntary Principal Prepayment in full an amount equal to the excess, if any, of
(i) 30 days' interest on the Principal Balance of such Mortgage Loan at the Loan
Rate (or at such lower rate as may be in effect for such Mortgage Loan pursuant
to application of the Civil Relief Act), net of the Servicing Fee Rate (which
shall constitute payment of the Servicing Fee with respect to such Mortgage
Loan), over (ii) the amount of interest actually remitted by the Mortgagor in
connection with such Principal Prepayment.
Principal Balance: As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus all
collections credited against the Principal Balance of any such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan immediately prior to the final recovery of related Liquidation Proceeds and
a Principal Balance of zero thereafter.
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Principal Distribution Amount: As to any Distribution Date, the lesser of
(a) the aggregate Class Principal Balances of the Offered Certificates
immediately preceding such Distribution Date and (b) sum of (i) the Aggregate
Principal Amount minus the Excess Overcollateralization Amount and (ii) the
Subordination Increase Amount.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full (without regard to any Prepayment Charge that may have been
collected by the Servicer in connection with such payment of principal).
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The base prospectus of the Seller dated March 27, 2000.
Prospectus Supplement: The prospectus supplement dated March 27, 2000,
relating to the offering of the Offered Certificates.
Purchase Price: As to any Mortgage Loan repurchased on any date pursuant
to Section 2.02, 2.04 or 3.16, an amount equal to the sum of (i) the unpaid
Principal Balance thereof, (ii) the greater of (a) all unpaid accrued interest
thereon to the end of the Due Period preceding the Distribution Date on which
such Purchase Price is included in Available Funds and (b) 30 days' interest
thereon, computed at the applicable Loan Rate; provided, however, that if at the
time of repurchase the Seller is the Servicer, the amount described in clause
(ii) shall be computed at the Loan Rate net of the Servicing Fee Rate (which
shall constitute payment of the Servicing Fee with respect to such Mortgage
Loan), (iii) if the Servicer is not the Seller, (x) any unreimbursed Servicing
Advances with respect to such Mortgage Loan (which, if the Servicer is the
Seller, shall constitute reimbursement of such Servicing Advance) and (y)
expenses reasonably incurred or to be incurred by the Servicer, the Trust or the
Trustee in respect of the breach or defect giving rise to the purchase
obligation and (iv) the amount of any penalties, fines, forfeitures, legal fees
and related costs, judgments and any other costs, fees and expenses incurred by
or imposed on the Trustee or the Trust or with respect to which any of them are
liable arising from a breach by the Seller of its representations and warranties
in Section 2.04.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Offered Certificates at the request of the Seller at the time of
the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Seller, notice of which
designation shall be given to the Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean "A-1" or
better in the case of S&P, "P-1" or better in the case of Moody's and "F-1" or
better in the case of Fitch. References herein to the highest long-term rating
category of a Rating Agency shall mean "AAA" in the case of S&P and Fitch and
"Aaa" in the case of Moody's.
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Recognition Agreement: With respect to any Cooperative Loan, an agreement
between the Cooperative Corporation and the originator of such Mortgage Loan,
which establishes the rights of such originator in the Cooperative Property.
Record Date: With respect to (i) the Fixed Rate Certificates, the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs and (ii) the Adjustable Rate Certificates, the Business
Day immediately preceding such Distribution Date; provided, however, that if any
Adjustable Rate Certificate becomes a Definitive Certificate, the record date
for such Adjustable Rate Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
Reference Bank Rate: As to any Interest Period relating to the Adjustable
Rate Certificates as follows: the arithmetic mean (rounded upwards, if
necessary, to the nearest one sixteenth of a percent) of the offered rates for
United States dollar deposits for one month which are offered by the Reference
Banks as of 11:00 A.M., London time, on the second LIBOR Business Day prior to
the first day of such Interest Period to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the aggregate
Class Principal Balance of the Adjustable Rate Certificates; provided that at
least two such Reference Banks provide such rate. If fewer than two offered
rates appear, the Reference Bank Rate will be the arithmetic mean of the rates
quoted by one or more major banks in New York City, selected by the Trustee
after consultation with the Servicer, as of 11:00 A.M., New York City time, on
such date for loans in U.S. Dollars to leading European Banks for a period of
one month in amounts approximately equal to the aggregate Class Principal
Balance of the Adjustable Rate Certificates. If no such quotations can be
obtained, the Reference Bank Rate shall be the Reference Bank Rate applicable to
the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Seller after consultation with the Trustee.
Regular Certificates: The Offered Certificates and the Class P and Class
BIO Certificates.
Reimbursement Amount: As to any Distribution Date, the amount, if any,
owing to the Certificate Insurer under the Insurance Agreement.
Related Documents: As defined in Section 2.01.
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law and mortgage servicing standards
the Servicer would use in servicing mortgage loans for its own account and this
Agreement.
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REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC I: The segregated pool of assets consisting of the assets of the
Trust other than the REMIC I Interests, the REMIC II Interests, the Initial
Interest Coverage Account, the Pre-Funding Account, the LIBOR Carryover Fund and
the Net Rate Cap Fund.
REMIC I Certificates: As defined in Section 2.07.
REMIC I Regular Interest: As defined in Section 2.07.
REMIC II: The segregated pool of assets consisting of the REMIC I Regular
Interests (other than the Class P Certificates).
REMIC II Certificates: As defined in Section 2.07.
REMIC II Regular Interest: As defined in Section 2.07.
REMIC III: The segregated pool of assets consisting of the REMIC II
Regular Interests.
REMIC III Certificates: As defined in Section 2.07.
REMIC Certificate Maturity Date: The "latest possible maturity date" as
that term is defined in Section 2.09.
REMIC Change of Law: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to any REMIC and the REMIC Provisions issued after the Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Property: A Mortgaged Property that is acquired by the Servicer on
behalf of the Trust in foreclosure or by deed in lieu of foreclosure.
Required Overcollateralization Amount: As to the first Distribution Date,
$0.00. As to any other Distribution Date (a) prior to the Stepdown Date, the
product of (i) 1.85% and (ii) the aggregate Original Class Principal Balance of
the Offered Certificates; and (b) on and after the Stepdown Date, the greater of
(i) the lesser of (x) the product of 1.85% and the aggregate Original Class
Principal Balance of the Offered Certificates and (y) the product of 3.70% and
the Pool Balance as of the end of the related Due Period and (ii) the OC Floor;
provided, however, that on each Distribution Date during the continuance of (a)
a Cumulative Loss Event, the Required Overcollateralization Amount will equal
1.85% of the aggregate Original Class Principal Balance
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of the Offered Certificates or (b) a Delinquency Event (and a Cumulative Loss
Event is not then continuing), the Required Overcollateralization Amount will
equal the Required Overcollateralization Amount in effect as of the Distribution
Date immediately preceding the date on which such Delinquency Event first
occurred.
Residential Dwelling: A one- to five-family dwelling, a five- to
eight-family dwelling, a mixed use property, a unit in a planned unit
development, a unit in a condominium development, a townhouse, a unit in a
Cooperative or a mobile home treated as real property under local law.
Residual Certificates: The Class R-1, Class R-2 and Class R-3 Certificates
collectively.
Responsible Officer: When used with respect to the Trustee, any officer
assigned to the corporate trust group (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. When used with respect to the Seller or Servicer, the President or
any Vice President, Assistant Vice President or any Secretary or Assistant
Secretary.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note, which defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Seller: Delta Funding Corporation, a New York corporation, or any
successor thereto.
Senior Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A and designated as a
Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class
IOF or Class A-1A Certificate pursuant to Section 6.01.
Senior Certificateholder: The Holder of a Senior Certificate.
Senior Enhancement Percentage: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the sum of (i) the aggregate
Class Principal Balances of the Subordinate Certificates and (ii) the
Overcollateralization Amount (in each case, prior to taking into account the
distribution of the Principal Distribution Amount on such Distribution Date) and
the denominator of which is the Pool Balance as of the last day of the related
Due Period.
Senior Portion: As to any Distribution Date and (x) Certificate Group F,
the percentage equivalent of a fraction the numerator of which is the related
Certificate Group Balance and the
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denominator of which is the sum of such Certificate Group Balance and the
aggregate Class Principal Balance of the Subordinate Certificates and (y)
Certificate Group A, 100%.
Senior Principal Distribution Amount: As to (a) any Distribution Date
prior to the Stepdown Date or during the continuance of a Trigger Event, the
lesser of (i) 100% of the Principal Distribution Amount and (ii) the aggregate
Class Principal Balances of the Senior Certificates, and (b) any other
Distribution Date, an amount equal to the excess, if any, of (i) the aggregate
Class Principal Balance of the Senior Certificates immediately prior to such
Distribution Date over (ii) the lesser of (x) the product of 65.50% and the Pool
Balance as of the last day of the related Due Period and (y) the Pool Balance as
of the last day of the related Due Period minus the OC Floor.
Servicer: Delta Funding Corporation, a New York corporation, or any
successor thereto or any successor hereunder.
Servicer Prepayment Charge Payment Amount: The amounts payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.20.
Servicer Termination Test: The Servicer Termination Test is failed if
either (x) Cumulative Net Losses for the Mortgage Loans exceed 5.10% of the
aggregate Original Class Principal Balance of the Offered Certificates or (y)
the most recent Three Month 90-Day Delinquency Rate exceeds 30%.
Servicing Advances: All reasonable and customary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.04, 3.06 or 3.19 and (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.17, all of which reasonable
and customary out-of-pocket costs and expenses are reimbursable to the Servicer
to the extent provided in Sections 3.03(ii) and (vi), and 3.06.
Servicing Certificate: A certificate completed and executed by a Servicing
Officer on behalf of the Servicer.
Servicing Compensation: The Servicing Fee and other amounts to which the
Servicer is entitled pursuant to Section 3.08.
Servicing Fee: As to each Distribution Date and each Mortgage Loan, the
monthly fee payable to the Servicer, which is calculated as an amount equal to
the product of one-twelfth of the Servicing Fee Rate and the Principal Balance
thereof at the beginning of the related Due Period.
Servicing Fee Rate: 0.50% per annum.
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Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Trustee by the Servicer, as such list may be amended from time to time.
Servicing Transfer Costs: All reasonable costs and expenses incurred by
the Successor Servicer in connection with the transfer of servicing from a
predecessor servicer, including, without limitation, any reasonable 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 Successor Servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Successor Servicer to service the
Mortgage Loans properly and effectively.
Sixty Day Delinquency Rate: As to any Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 60 or more days delinquent as of the
last day of such Due Period or (b) REO Property and Mortgage Loans in
foreclosure or in bankruptcy and the denominator of which is the sum of the Loan
Group Balances as of the last day of such Due Period.
S&P: Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc.
Startup Day: The day designated as such pursuant to Section 2.08.
Stepdown Date: The later to occur of (x) the earlier to occur of (i) the
Distribution Date in April 2003 and (ii) the Distribution Date on which the
aggregate Class Principal Balance of the Senior Certificates is reduced to zero,
and (y) the first Distribution Date on which the Senior Enhancement Percentage
(assuming 100% of the Principal Distribution Amount is distributed on the
Offered Certificates) is at least equal to 34.50%.
Subordinate Certificates: Any Certificate executed and authenticated by
the Trustee substantially in the form set forth in Exhibit A and designated as a
Class M-1, Class M-2 or Class B Certificate pursuant to Section 6.01.
Subordinate Percentage: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Class
Principal Balance of the Subordinate Certificates after giving effect to the
distribution of the related Principal Distribution Amount on such Distribution
Date, and the denominator of which is the Pool Balance as of the last day of the
related Due Period.
Subordinate Portion: As to Subordinate Certificates and any Distribution
Date, 100% minus the Senior Portion for Certificate Group F.
Subordination Deficiency: As to the first Distribution Date, $0.00. As to
any other Distribution Date, the excess, if any, of (i) the Required
Overcollateralization Amount for such Distribution Date over (ii) the
Overcollateralization Amount for such Distribution Date after giving effect to
the distribution of the Aggregate Principal Amount on such Distribution Date.
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Subordination Deficit: For any Distribution Date, the amount, if any, by
which the aggregate Class Principal Balance of the Senior Certificates exceeds
the sum of (i) the Pool Balance as of the last day of the related Due Period and
(ii) the Pre-Funded Amount as of the last day of the related Due Period, in each
case, after giving effect to all distributions of principal and allocations of
Liquidated Loan Losses on such Distribution Date.
Subordination Increase Amount: As to any Distribution Date, the lesser of
(i) the Subordination Deficiency and (ii) the Excess Interest.
Subsequent Mortgage Loan Schedule: As of any date of determination, the
schedule that is identified as the schedule of Subsequent Mortgage Loans and is
attached to the Subsequent Transfer Agreement.
Subsequent Mortgage Loans: The Mortgage Loans identified on the Subsequent
Mortgage Loan Schedule.
Subsequent Transfer Agreement: The Subsequent Transfer Agreement entered
into between the Seller and the Trustee, substantially in the form attached as
Exhibit D.
Subsequent Transfer Date: Each date during the Funding Period on which
Subsequent Mortgage Loans are sold to the Trust.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i) the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
on such excess through the Due Period relating to the Distribution Date for
which such Substitution Adjustment will be included as part of Available Funds
and (y) 30 days' interest on such excess calculated on a 360-day year in each
case at the Loan Rate (or the Loan Rate net of the Servicing Fee Rate if the
Seller is the Servicer, which shall constitute payment of the Servicing Fee with
respect to such Mortgage Loan) and (c) if the Servicer is not the Seller, the
amount of any unreimbursed Servicing Advances made by the Servicer with respect
to such Defective Mortgage Loan (which, if the Servicer is the Seller, shall
constitute reimbursement for such Servicing Advance) and (d) the amount referred
to in clause (iv) of the definition of Purchase Price in respect of such
Defective Mortgage Loan.
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Successor Servicer: As defined in Section 8.02.
Tax Matters Person: As defined in Section 2.11.
Tax Matters Person Residual Interest: A 0.000001% interest in each of the
Class R-1, Class R-2 and Class R-3 Certificates, which shall be issued to and
held by the Tax Matters Person.
Three Month Delinquency Rate: As to any Determination Date the arithmetic
average of the Sixty Day Delinquency Rates for the three Due Periods preceding
such Determination Date.
Three Month 90-Day Delinquency Rate: As to any Determination Date the
arithmetic average of the Ninety Day Delinquency Rates for the three Due Periods
preceding such Determination Date.
Trigger Event: The existence of either a Cumulative Loss Event or a
Delinquency Event.
Trust: The trust created by this Agreement, the corpus of which consists
of the Mortgage Loans, such assets as shall from time to time be deposited in
the Collection Account, the Initial Interest Coverage Account, the Pre-Funding
Account and the Distribution Account in accordance with this Agreement, property
that secured a Mortgage Loan and that has become REO Property, certain hazard
insurance policies maintained by the Mortgagors or the Servicer in respect of
the Mortgage Loans and all proceeds of each of the foregoing.
Trustee: Norwest Bank Minnesota, National Association, or any successor
Trustee appointed in accordance with this Agreement that has accepted such
appointment in accordance with this Agreement.
Trustee Fee: As to any Distribution Date, an amount equal to the product
of (i) one-twelfth of the Trustee Fee Rate and (ii) the sum of (x) the Pool
Balance as of the beginning of the related Due Period and (y) the aggregate
Pre-Funded Amount as of the beginning of the related Due Period.
Trustee Fee Rate: 0.025% per annum.
Voting Rights: The right to vote evidenced by a Certificate as follows:
the Class BIO Certificates, in the aggregate, shall evidence Voting Rights equal
to the percentage equivalent of a fraction, the numerator of which is the
Required Overcollateralization Amount and the denominator of which is the Pool
Balance; the Certificates, other than the Class BIO Certificates, shall evidence
Voting Rights equal to 100% minus the Voting Rights evidenced by the Class BIO
Certificates. The Voting Rights allocated to the Certificates, other than the
Class BIO Certificates, shall be allocated 1% to the Notional Amount
Certificates and 1% to the Residual Certificates, in the aggregate and the
remainder among the other Classes of Offered Certificates in proportion to their
respective Class Principal Balances. Voting Rights allocated to a Class of
Certificates shall be allocated among the Certificates of such Class in
proportion to their respective Percentage Interests.
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Section 1.02. Interest Calculations. All calculations of interest that are
made in respect of the Principal Balance of the Mortgage Loans shall be made on
the basis of a 360-day year consisting of twelve 30-day months. The Certificate
Rate for the Adjustable Rate Certificates shall be calculated on the basis of a
360-day year and the actual number of days elapsed except that if an Available
Funds Cap is used to calculate the Certificate Rate for any Class of
Certificates, interest thereon shall be calculated on the basis of a 360-day
year consisting of twelve 30 day months. The Certificate Rate for the Fixed Rate
Certificates shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months. The calculation of the Servicing Fee and the Trustee Fee
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
All dollar amounts calculated hereunder shall be rounded to the nearest penny
with one-half of one penny being rounded down.
ARTICLE II
Conveyance of Initial
Mortgage Loans; Original
Issuance of Certificates
Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans. (a) The Seller,
concurrently with the execution and delivery of this Agreement, does hereby
transfer, assign, set over and otherwise convey to the Trust without recourse
(subject to Sections 2.02 and 2.04) (i) all of its right, title and interest in
and to each Initial Mortgage Loan, including the Cut-Off Date Principal Balance
and all collections in respect of interest and principal received after the
Cut-Off Date (other than payments in respect of accrued interest due on or
before March 1, 2000); (ii) property which secured such Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
interest in any insurance policies in respect of the Initial Mortgage Loans;
(iv) such amounts as may be deposited into and held by the Trustee in the
Pre-Funding Account and the Initial Interest Coverage Account, together with all
investment earnings on such amounts; (v) the Initial Interest Deposit; (vi) the
Class P Deposit which the Trustee shall deposit in the Distribution Account; and
(vii) all proceeds of any of the foregoing. In addition, on or prior to the
Closing Date, the Seller shall cause the Certificate Insurer to deliver the
Certificate Insurance Policy to the Trustee.
In connection with such transfer, assignment and conveyance the Seller
shall deliver to, and deposit with, the Trustee or the Custodian on behalf of
the Trustee, on or before the Closing Date, the following documents or
instruments with respect to each Initial Mortgage Loan (the "Related Documents")
and the related Mortgage Loan Schedule in computer readable format and the
Seller, in connection with the Subsequent Transfer, shall deliver to, and
deposit with, the Trustee or the Custodian on behalf of the Trustee, on or
before the Closing Date, the Related Documents and the related Mortgage Loan
Schedule in computer readable format with respect to each Subsequent Mortgage
Loan:
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the originator
of the Mortgage Loan to the
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Person so endorsing the Mortgage Loan to the Trustee, endorsed by such
Person "Pay to the order of Norwest Bank Minnesota, National Association,
as Trustee for Delta Funding Home Equity Loan Trust 2000-1 without
recourse" and signed, by facsimile or manual signature, in the name of the
Seller by a Responsible Officer;
(ii) Any of: (1) the original Mortgage and related power of
attorney, if any, with evidence of recording thereon, (2) a copy of the
Mortgage and related power of attorney, if any, certified as a true copy
of the original Mortgage or power of attorney by a Responsible Officer of
the Seller by facsimile or manual signature or by the closing attorney or
by an officer of the title insurer or agent of the title insurer that
issued the related title insurance policy, in each case, if the original
has been transmitted for recording until such time as the original is
returned by the public recording office or (3) a copy of the original
recorded Mortgage and related power of attorney, if any, certified by the
public recording office;
(iii) The original Assignment of Mortgage in recordable form,
from the Seller in blank, or to "Norwest Bank Minnesota, National
Association, as Trustee for Delta Funding Home Equity Loan Trust
2000-1";
(iv) The original lender's policy of title insurance or a true copy
thereof or, if such original lender's title insurance policy has been
lost, a copy thereof certified by the appropriate title insurer to be true
and complete or, if such lender's title insurance policy has not been
issued as of the Closing Date, a marked up commitment (binder) to issue
such policy;
(v) All intervening assignments, if any, showing a complete chain of
assignments from the originator to the Seller, including any recorded
warehousing assignments, with evidence of recording thereon, or a copy
thereof certified by a Responsible Officer of the Seller by facsimile or
manual signature, or by the closing attorney or by an officer of the title
insurer or agent of the title insurer that issued the related title
insurance policy, as a true copy of the original of such intervening
assignments if the original has been transmitted for recording until such
time as the original is returned by the public recording office or a copy
of the original recorded intervening assignments certified by the public
recording office;
(vi) Originals of all assumption, written assurance,
substitution and modification agreements, if any; and
(vii) In the case of a Cooperative Loan, the originals of the
following documents or instruments:
(a) The Cooperative Shares, together with a stock power in
blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
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(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statements with evidence of
recording thereon which have been filed in all places required
to perfect the Seller's interest in the Cooperative Shares and
the Proprietary Lease; and
(g) Executed UCC-3 financing statements or other appropriate UCC
financing statements required by state law, evidencing a
complete and unbroken line from the mortgagee to the Trustee
with evidence of recording thereon (or in a form suitable for
recordation).
In instances where the original recorded Mortgage is not delivered as
provided above, and in instances where intervening assignments called for by
clause (v) above are unavailable, the Seller will deliver or cause to be
delivered the original recorded Mortgage and intervening assignments to the
Trustee or the Custodian on behalf of the Trustee promptly upon receipt thereof
but in no event later than one year after the Closing Date.
The Seller hereby confirms to the Trustee that it has caused the portions
of the Electronic Ledger relating to the Mortgage Loans to be clearly and
unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trustee and constitute part of the Trust in accordance with the terms of
the trust created hereunder.
(b) The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Trust of all the Seller's right, title and interest in
and to the Mortgage Loans and other property described above. In the event the
transaction set forth herein is deemed not to be a sale, the Seller hereby
grants to the Trust a security interest in all of the Seller's right, title and
interest in, to and under the Mortgage Loans and other property described above;
and this Agreement shall constitute a security agreement under applicable law.
The Seller, the Servicer and the Trustee shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement.
Except as may otherwise expressly be provided herein, neither the Seller,
the Servicer nor the Trustee shall (and the Servicer shall ensure that no
Subservicer shall) assign, sell, dispose of or transfer any interest in the
Trust or any portion thereof, or permit the Trust or any portion thereof to be
subject to any lien, claim, mortgage, security interest, pledge or other
encumbrance of, any other Person.
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In the event that the parties hereto have failed to transfer the entire
legal ownership in and to each Mortgage Loan to the Trust, the parties hereto
intend that this document operate to transfer the entire equitable ownership
interest in and to each Mortgage Loan to the Trust.
(c) Within 30 days of the Closing Date, the Seller, at its own expense,
shall prepare and send for recording the Assignments of Mortgage in favor of the
Trustee in the appropriate real property or other records; provided, however,
that the Seller shall not be required to record Assignments of Mortgage if the
related Mortgaged Property is located in a jurisdiction in which the recording
thereof is not necessary to protect the interests of the Trustee or
Certificateholders in the related Mortgage as evidenced by an Opinion of
Counsel, in form and substance satisfactory to the Rating Agencies, delivered to
the Trustee and the Rating Agencies. With respect to any Assignment of Mortgage
as to which the related recording information is unavailable within 30 days
following the Closing Date, such Assignment of Mortgage shall be submitted for
recording within 30 days after receipt of such information but in no event later
than one year after the Closing Date. The Trustee or the Custodian on behalf of
the Trustee shall be required to retain a copy of each Assignment of Mortgage
submitted for recording. In the event that any such Assignment of Mortgage is
lost or returned unrecorded because of a defect therein, the Seller shall
promptly prepare a substitute Assignment of Mortgage or cure such defect, as the
case may be, and thereafter the Seller shall be required to submit each such
Assignment of Mortgage for recording. Any failure of the Seller to comply with
this Section 2.01(c) shall result in the obligation of the Seller to purchase or
substitute for the related Mortgage Loans pursuant to the provisions of Section
2.02.
(d) Neither the Trustee nor the Custodian on behalf of the Trustee shall
have any responsibility for reviewing any Mortgage File except as expressly
provided in Section 2.02. Without limiting the effect of the preceding sentence,
in reviewing any Mortgage File pursuant to such subsection, neither the Trustee
nor the Custodian shall have any responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form (except, if applicable, to determine if the
Trustee is the assignee or endorsee), 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, but shall not be required to determine whether any Person executing
any document is authorized to do so or whether any signature thereon is genuine.
(e) Notwithstanding the delivery of the Opinion of Counsel referred to in
Section 2.01(c), Assignments of Mortgage shall be submitted by the Seller for
recording within five Business Days after the earlier to occur of (i) a transfer
of the servicing of the Mortgage Loans and (ii) an Event of Default.
Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges the
sale and assignment of the Mortgage Loans, and, subject to the review provided
for in this Section 2.02 and the period for delivery provided for in Section
2.01, its receipt or that of the Custodian on behalf of the Trustee of the
Mortgage Files, and declares that the Trustee or the Custodian on behalf of the
Trustee holds and will hold such documents and all amounts received by it
thereunder and
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hereunder in trust, upon the terms herein set forth, for the use and benefit of
all present and future Certificateholders and the Certificate Insurer. If the
Seller is given notice under this Section 2.02 that a Mortgage File is defective
or incomplete and if the Seller does not correct or cure such omission or defect
within the 90-day period specified in this Section 2.02, the Seller shall
purchase such Mortgage Loan from the Trustee (i) on the Determination Date in
the month following the month in which such 90-day period expired at the
Purchase Price of such Mortgage Loan or (ii) upon the expiration of such 90-day
period if the omission or defect would result in the related Mortgage Loan not
being a Qualified Mortgage Loan for purposes of Section 860G(a)(3) of the Code.
The Purchase Price for the purchased Mortgage Loan shall be deposited in the
Collection Account no later than the applicable Determination Date or the
Business Day preceding the expiration of such 90-day period, as the case may be;
and, upon receipt by the Trustee or the Custodian on behalf of the Trustee of
written notification of such deposit signed by a Responsible Officer of the
Seller, the Trustee or the Custodian on behalf of the Trustee shall release to
the Seller the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
shall be necessary to vest in the Seller or its designee any Mortgage Loan
released pursuant hereto. It is understood and agreed that the obligation of the
Seller to purchase any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
against the Seller respecting such defect or omission available to the
Certificateholders, or the Trustee on behalf of Certificateholders. An Opinion
of Counsel to the effect set forth in Section 2.05(d) shall be delivered to the
Trustee in connection with any such repurchase.
The Servicer, promptly following the transfer of (i) a Defective Mortgage
Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust pursuant to
this Section 2.02 or Section 2.05, as the case may be, shall amend the Mortgage
Loan Schedule, appropriately mark the Electronic Ledger and make appropriate
entries in its general account records to reflect such transfer and the addition
of any Eligible Substitute Mortgage Loan, if applicable.
No later than the 45th day following the Closing Date, the Trustee or the
Custodian on behalf of the Trustee shall certify to the Seller and the Servicer
(and the Trustee if the Custodian is so certifying) that it has reviewed each
Mortgage File and that, as to each Mortgage Loan listed in the related Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the certification in the form annexed hereto as
Exhibit O as not covered by such certification), (i) all documents constituting
part of such Mortgage File required to be delivered to it pursuant to paragraphs
(i) - (v) and (vii) of Section 2.01(a) are in its possession, (ii) such
documents have been reviewed by it and appear regular on their face and relate
to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule which
corresponds to items (ii), (iii), (v) and (vii) of the definition of "Mortgage
Loan Schedule" accurately reflects information set forth in the Mortgage File.
If within such 45-day period the Trustee or the Custodian on behalf of the
Trustee finds any document constituting a part of a Mortgage File not to have
been executed or received or to be unrelated to the Mortgage Loans identified in
said Mortgage Loan Schedule or, if in the course of its review, the Trustee or
the Custodian on behalf of the Trustee determines that such Mortgage File is
otherwise defective in any material respect, the Trustee or the Custodian on
behalf of the Trustee shall
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promptly upon the conclusion of its review notify in the form of an exception
report and the Seller shall have a period of 90 days after such notice within
which to correct or cure any such defect.
On the 360th day following the Closing Date, the Trustee or the Custodian
on behalf of the Trustee shall deliver to the Seller and the Servicer an updated
exception report showing the documents outstanding pursuant to Section 2.01(a)
along with a final certification annexed hereto as Exhibit P from the previous
certification issued in the form of Exhibit O. The Trustee or the Custodian on
behalf of the Trustee shall also maintain records adequate to determine the date
on which any document required to be delivered to it after such 360th day
following the Closing Date must be delivered to it, and on each such date, the
Trustee or the Custodian on behalf of the Trustee shall review the related
Mortgage File to determine whether such document has, in fact, been delivered.
After the delivery of the final certification, a form of which is attached
hereto as Exhibit P, (i) the Trustee or the Custodian on behalf of the Trustee
shall provide to the Servicer and the Seller (and to the Trustee if delivered by
the Custodian), no less frequently than monthly, updated exception reports
showing the documents outstanding pursuant to Section 2.01(a) until all such
exceptions have been eliminated and (ii) the Seller shall provide to the Trustee
or the Custodian on behalf of the Trustee and the Servicer, no less frequently
than monthly, updated certifications indicating the then current status of
exceptions until all such exceptions have been eliminated; provided that the
delivery of the final certification shall not act as a waiver of any of the
rights the Certificateholders may have with respect to such exceptions, and all
rights are reserved with respect thereto.
Neither the Trustee nor the Custodian makes any representations as to and
shall not be responsible to verify (i) the validity, sufficiency, legality, due
authorization, recordation or genuineness of any document or (ii) the
collectability, insurability or effectiveness of any of the Mortgage Loans.
Section 2.03. Representations and Warranties Regarding the Seller and the
Servicer. Each of the Seller and the Servicer represents and warrants as to
itself that, as of the Closing Date:
(i) Each of the Seller and the Servicer is a corporation licensed as
a mortgage banker duly organized, validly existing and in good standing
under the laws of the state of its incorporation and has, and had at all
relevant times, full corporate power to originate the Mortgage Loans, to
own its property, to carry on its business as presently conducted and to
enter into and perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement by the Seller and
the Servicer and the performance by each of them of and compliance with
the terms of this Agreement will not violate the Seller's or 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 or acceleration of, any material
contract, agreement or other instrument to which the Seller or the
Servicer is a party or which may be applicable to the Seller or the
Servicer or any of their respective assets;
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(iii) Each of the Seller and the Servicer has the full power and
authority to enter into and consummate all transactions contemplated by
this Agreement to be consummated by it, has duly authorized the execution,
delivery and performance of this Agreement, and has duly executed and
delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a valid,
legal and binding obligation of the Seller and the Servicer, enforceable
against it in accordance with the terms hereof, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(iv) Neither the Seller nor the Servicer is in violation of, and the
execution and delivery of this Agreement by the Seller and the Servicer
and the performance by each of them and compliance with the terms of this
Agreement will not constitute a violation with respect to, any order or
decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or the Servicer or any of their
respective properties or materially and adversely affect the performance
of any of their respective duties hereunder;
(v) There are no actions or proceedings against, or investigations
of, the Seller or the Servicer pending or, to the knowledge of the Seller
or the Servicer, threatened, before any court, administrative agency or
other tribunal (A) that, if determined adversely, would prohibit its
entering into this Agreement, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (C) that, if
determined adversely, would prohibit or materially and adversely affect
the performance by the Seller or the Servicer of any of their respective
obligations under, or the validity or enforceability of, this Agreement;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller or the Servicer
with, this Agreement, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(vii) The Seller did not sell the Mortgage Loans to the Trust with
any intent to hinder, delay or defraud any of its creditors; and the
Seller will not be rendered insolvent as a result of the sale of the
Mortgage Loans to the Trust;
(viii) The Seller acquired title to the Mortgage Loans in good
faith, without notice of any adverse claim;
(ix) The collection practices used by the Seller and the Servicer
with respect to the Mortgage Loans have been, in all material respects,
legal, proper, prudent and customary in the non-conforming mortgage
servicing business;
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(x) No Officer's Certificate, statement, report or other document
prepared by the Seller or the Servicer and furnished or to be furnished by
it pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of material fact;
(xi) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to this Agreement are not subject
to the bulk transfer laws or any similar statutory provisions in effect in
any applicable jurisdiction;
(xii) The Servicer believes that the Servicing Fee Rate provides a
reasonable level of base compensation to the Servicer for servicing the
Mortgage Loans on the terms set forth herein;
(xii) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer; and
(xiv) The Servicer has caused or hereby agrees to 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 the
Mortgage Loans, 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.
The representations and warranties set forth in this Section 2.03 shall survive
the sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders or the Certificate Insurer, the
Person discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of such
breach, or, with the prior written consent of a Responsible Officer of the
Trustee, such longer period specified in such consent, the Seller or the
Servicer, as the case may be, shall cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Seller Regarding the
Mortgage Loans. (a) The Seller represents and warrants to the Trustee on behalf
of the Certificateholders as follows as of the Closing Date:
1. The information set forth on the Mortgage Loan Schedule is
complete, true and correct as of the dates as of which the information
therein is given;
2. The Mortgage Notes and the Mortgages have not been assigned or
pledged by the Seller to any Person other than warehouse lenders, and
immediately prior to the transactions herein contemplated, the Seller had
good and marketable title thereto, and was the sole owner and holder of
the Mortgage Loans free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature (collectively, a "Lien"), other than any
such Lien released simultaneously with the
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sale contemplated herein, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to sell
and assign the same pursuant to this Agreement, and immediately upon the
transfer and assignment of each Mortgage Loan as contemplated by this
Agreement, the Trust will be the sole beneficial owner of, each Mortgage
Loan free and clear of any lien, claim, participation interest, mortgage,
security interest, pledge, charge or other encumbrance or other interest
of any nature;
3. With respect to any Mortgage Loan that is not a Cooperative Loan,
each Mortgage is a valid and existing lien on the property therein
described, and each Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage,
except (i) liens for real estate taxes and special assessments not yet due
and payable, (ii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording
such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal made in connection with the origination of the related Mortgage
Loan, (iii) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage, (iv) in the case of a Mortgaged
Property that is a condominium or an individual unit in a planned unit
development, liens for common charges permitted by statute and (v) in the
case of a Mortgage Loan secured by a second lien on the related Mortgaged
Property, the related First Lien. Any security agreement, chattel mortgage
or equivalent document related to the Mortgage and delivered to the
Trustee or the Custodian on behalf of the Trustee establishes in the
Seller a valid and subsisting lien on the property described therein, and
the Seller has full right to sell and assign the same to the Trust;
4. The terms of each Mortgage Note and Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the interests
of the Trust, and which has been delivered to the Trustee or the Custodian
on behalf of the Trustee. The substance of any such alteration or
modification is reflected on the Mortgage Loan Schedule;
5. No instrument of release or waiver has been executed in
connection with any Mortgage 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 or the Custodian on behalf of the
Trustee;
6. Except with respect to delinquencies described in clause (12)
hereof, no Mortgagor is in default in complying with the terms of its
Mortgage Note or Mortgage, and the Seller has not waived any default,
breach, violation or event of acceleration except that the Seller may have
accepted late payments, and all taxes, governmental assessments, insurance
premiums or water, sewer and municipal charges which previously became due
and owing have been paid, or an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable. The Seller has not
advanced funds or induced, solicited or
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knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required
by the Mortgage, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage proceeds, whichever
is more recent, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
7. There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or otherwise, so
as to affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
8. There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting any Mortgaged Property
which are, or may be, liens prior or equal to, or coordinate with, the
lien of the Mortgage except those that are stated in the title insurance
policy and for which related losses are affirmatively insured against by
such policy;
9. All of the improvements that were included for the purpose of
determining the Appraised Value of each Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property, and
no improvements on adjoining properties encroach upon the Mortgaged
Property except those that are stated in the title insurance policy and
for which related losses are affirmatively insured against by such policy;
10. No improvement located on or being part of any Mortgaged
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 the Mortgaged Property and, with
respect to the use and occupancy of the same, including, but not limited
to, certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities and the Mortgaged
Property is lawfully occupied under applicable law;
11. All parties that have had any interest in any Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in
compliance with any and all licensing requirements of the United States
and of the laws of the state wherein the Mortgaged Property is located
that are applicable to such parties and (2)(A) organized under the laws of
such state or (B) qualified to do business in such state or exempt from
such qualification in a manner so as not to affect adversely the
enforceability of such Mortgage Loan or (C) federal savings and loan
associations or national banks having principal offices in such state or
(D) not doing business in such state;
12. With respect to the Initial Mortgage Loans, as of the Cut-Off
Date, (i) all payments required to be made on each Initial Mortgage Loan
under the terms of the related Mortgage Note have been made except for
approximately 1.28% and 1.51% of the Initial
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Mortgage Loans in Loan Group F and Loan Group A respectively (by Cut-Off
Date Principal Balance) are up to 59 days delinquent and (ii) no payment
required to be made on any Initial Mortgage Loan has been more than 59
days delinquent more than once during the twelve month period immediately
preceding the Cut-Off Date;
13. Each of the documents and instruments included in a Mortgage
File is duly executed and in due and proper form and each such document or
instrument is in a form generally acceptable to prudent institutional
mortgage lenders that regularly originate or purchase mortgage loans;
14. The Mortgage Notes and the related Mortgages are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law). All parties to the Mortgage Note and the Mortgage had legal capacity
to execute the Mortgage Note and the Mortgage, and each Mortgage Note and
Mortgage have been duly and properly executed by such parties. The
Mortgagor is a natural person who is a party to the Mortgage Note and the
Mortgage in an individual capacity, and not in the capacity of a trustee
or otherwise;
15. Any and all requirements of any federal, state or local law,
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws, applicable to the origination and
servicing of the Mortgage Loans or otherwise applicable to the Mortgage
Loans have been complied with, and the Seller has and shall maintain in
its possession, available for the Trustee's and the Certificate Insurer's
inspection, and shall deliver to the Trustee or the Certificate Insurer,
as applicable, upon demand, evidence of compliance with all such
requirements;
16. Except for Escrow Repair Loans, the proceeds of the Mortgage
Loans have been fully disbursed, there is no requirement for future
advances thereunder and 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, closing or recording the Mortgage Loan have been paid;
17. Each Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other form of policy acceptable to Fannie Mae or
Freddie Mac, issued by and constituting the valid and binding obligation
of a title insurer generally acceptable to prudent mortgage lenders that
regularly originate or purchase mortgage loans comparable to the Mortgage
Loans for sale to prudent investors in the secondary market that invest in
mortgage loans such as the Mortgage Loans and qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring the
Seller, its successors and assigns, as to the first priority lien of the
Mortgage in the case of a Mortgage Loan secured by a First Lien on the
related Mortgaged Property and the second priority lien of the Mortgage in
the
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case of a Mortgage Loan secured by a second lien on the related Mortgaged
Property, in the original principal amount of the Mortgage Loan. The
Seller is the sole named insured of such mortgage title insurance policy,
the assignment to the Purchaser or the Trustee as assignee of the
Purchaser of the Seller's interest in such mortgage title insurance policy
does not require the consent of or notification to the insurer or the same
has been obtained, and such mortgage title insurance policy is in full
force and effect and will be in full force and effect and inure to the
benefit of the Trustee upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
mortgage title insurance policy and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
that would impair the coverage of such mortgage title insurance policy;
18. All improvements upon the Mortgaged Properties are insured by a
generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the
Mortgaged Property is located pursuant to insurance policies conforming to
the requirements of this Agreement. If a Mortgaged Property was, at the
time of origination of the related Mortgage Loan, in an area identified on
a Flood Hazard Boundary Map or Flood Hazard Rate Map issued by the Federal
Emergency Management Agency as having special flood hazards (and if the
flood insurance policy referenced herein has been made available), a flood
insurance policy is in effect with respect to such Mortgaged Property with
a generally acceptable carrier in an amount representing coverage
described in this Agreement. All individual insurance policies
(collectively, the "hazard insurance policy") are the valid and binding
obligation of the insurer and contain a standard mortgagee clause naming
the Seller, its successors and assigns, as mortgagee. All premiums thereon
have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and upon
the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor;
19. No Mortgage Loan is subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of any Mortgage Note or the related
Mortgage, or the exercise of any right thereunder in accordance with the
terms thereof, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and no
such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
20. Each Mortgage Loan was originated or purchased and
reunderwritten by the Seller;
21. Except with respect to any Balloon Loan, each Mortgage Loan is
payable in equal monthly installments of principal and interest which
would be sufficient, in the absence of late payments, to fully amortize
such loan within the term thereof, beginning no later than 60 days after
disbursement of the proceeds of the Mortgage Loan. Each Mortgage
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Loan in Loan Group F bears a fixed interest rate for the term of the
Mortgage Loan. Each Balloon Loan has an original term of not less than
fifteen (15) years and provides for level monthly payments based on a
thirty (30) year amortization schedule and a final Monthly Payment
substantially greater than the preceding Monthly Payments. Each Mortgage
Loan in Loan Group A bears an adjustable interest rate based on the
related Loan Index;
22. Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related Mortgaged Property is sold without
the prior consent of the holder thereunder;
23. No Mortgage Loan is a construction loan;
24. The Mortgage Notes are not and have not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in clause 3 above;
25. Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for
the realization against the Mortgaged Property of the benefits of the
security, including (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (ii) otherwise by judicial or nonjudicial
foreclosure. There is no homestead or other exemption available to the
Mortgagor that would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage;
26. 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 Trustee or the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor, which
fees and expenses shall constitute Servicing Advances;
27. Each Mortgaged Property is located in the state identified in
the Mortgage Loan Schedule. No residence or dwelling is a manufactured
dwelling. No Mortgaged Properties are held under a ground lease;
28. The Mortgage Loans were underwritten in accordance with the
Seller's underwriting guidelines described in the Prospectus under the
heading "The Seller and the Servicer--Underwriting";
29. There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments
of other charges or payments due the Seller have been capitalized under
any Mortgage or the related Mortgage Note;
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30. No Mortgage Loan was originated under a buy-down plan;
31. Other than as provided by this Agreement, there is no obligation
on the part of the Seller or any other party to make payments in addition
to those made by the Mortgagors;
32. With respect to each Mortgage Loan, the Seller is in possession
of a complete Mortgage File, except those documents delivered to the
Trustee or Custodian on behalf of the Trustee, and there are no custodial
agreements in effect adversely affecting the right or ability of the
Seller to make the document deliveries required hereby;
33. No Mortgage Loan was selected for inclusion under this Agreement
on any basis which was intended to have a material adverse effect on the
Certificateholders;
34. No Mortgage Loan has a shared appreciation or other contingent
interest feature;
35. With respect to each Mortgage Loan secured by a second lien on
the related Mortgaged Property:
(a) if the Combined Loan-to-Value Ratio is higher than
80%, either the related First Lien does not provide for a balloon
payment or, if the related First Lien does provide for a balloon
payment, the maturity date of the second lien is prior to the
maturity date of the First Lien;
(b) the related First Lien does not provide for
negative amortization;
(c) either no consent for the Mortgage Loan secured by a
second lien on the related Mortgaged Property is required by the
holder of the related First Lien or such consent has been obtained
and is contained in the Mortgage File; and
(d) except with respect to no more than 9.58% of the
Initial Mortgage Loans in Loan Group F which are Mortgage Loans
secured by a second lien on the related Mortgaged Property, measured
by outstanding Principal Balances as of the Cut-Off Date, the
related First Lien is not held by an individual;
36. Each Mortgage Loan conforms, and all the Mortgage Loans in the
aggregate conform, in all material respects to the description thereof set
forth in the Prospectus Supplement;
37. A full appraisal on forms approved by Fannie Mae or Freddie Mac
was performed in connection with the origination of each Mortgage Loan.
Each appraisal meets guidelines that would be generally acceptable to
prudent mortgage lenders that regularly
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originate or purchase mortgage loans comparable to the Mortgage Loans for
sale to prudent investors in the secondary market that invest in mortgage
loans such as the Mortgage Loans;
38. To the best of the Seller's knowledge, no Mortgaged Property
was, as of the related Cut-Off Date, located within a one-mile radius of
any site listed in the National Priorities List as defined under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or on any similar state list of hazardous waste sites
which are known to contain any hazardous substance or hazardous waste;
39. None of the Mortgage Loans are subject to a bankruptcy
proceeding;
40. No more than 9.66% of the aggregate Principal Balance of all the
Initial Mortgage Loans as of the Cut-Off Date relates to Mortgage Loans
originated or purchased under the Seller's limited documentation program
or no-documentation program;
41. Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code;
42. Each Cooperative Loan is secured by a valid, subsisting and
enforceable perfected first lien and security interest in the related
Mortgaged Property, subject only to (i) the rights of the Cooperative
Corporation to collect Maintenance and assessments from the Mortgagor,
(ii) the lien of the Blanket Mortgage, if any, on the Cooperative Property
and of real property taxes, water and sewer charges, rents and assessments
on the Cooperative Property not yet due and payable, and (iii) other
matters to which like Cooperative Units are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by the Security Agreement or the use, enjoyment, value or
marketability of the Cooperative Unit. Each original UCC financing
statement, continuation statement or other governmental filing or
recordation necessary to create or preserve the perfection and priority of
the first priority lien and security interest in the Cooperative Shares
and Proprietary Lease has been timely and properly made. Any security
agreement, chattel mortgage or equivalent document related to the
Cooperative Loan and delivered to the Seller or its designee establishes
in the Seller a valid and subsisting perfected first lien on and security
interest in the property described therein, and the Seller has full right
to sell and assign the same;
43. Each Cooperative Corporation qualifies as a "cooperative housing
corporation" as defined in Section 216 of the Code;
44. Each Mortgage Loan in Loan Group A is secured by a first lien;
45. Each Mortgage Loan will comply with the undertakings in, and no
Mortgage Loan will be subject to the requirement for retrospective relief
pursuant to, either (a) the Stipulated Order on Consent, dated as of
September 17, 1999, among Delta Funding Corporation, Delta Financial
Corporation and the Office of the Attorney General of the
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State of New York or (b) the Remediation Agreement, dated as of September
17, 1999, between Delta Funding Corporation and the Banking Department of
the State of New York.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian on behalf of the Trustee and the
termination of the rights and obligations of the Servicer pursuant to Section
7.04 or 8.01. Upon discovery by the Seller, the Servicer or a Responsible
Officer of the Trustee of a breach of any of the foregoing representations and
warranties, which materially and adversely affects the value of, or the
interests of the Trust, the Certificateholders or the Certificate Insurer in,
the related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties. Within 60 days of its discovery or its
receipt of notice of breach, the Seller shall use all reasonable efforts to cure
such breach in all material respects or shall purchase such Mortgage Loan from
the Trust or substitute an Eligible Substitute Mortgage Loan as provided in
Section 2.05 for such Mortgage Loan. Any such purchase by the Seller shall be at
the Purchase Price, and in each case shall be accomplished in the manner set
forth in Section 2.02. It is understood and agreed that the obligation of the
Seller to cure, substitute or purchase any Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy against
the Seller respecting such breach available to Certificateholders or the Trustee
on behalf of Certificateholders. An Officer's Certificate and Opinion of Counsel
to the effect set forth in Section 2.05(d) shall be delivered to the Trustee in
connection with any such repurchase.
Section 2.05. Substitution of Mortgage Loans. (a) On a Determination Date
within two years following the Closing Date and which is on or before the date
on which the Seller would otherwise be required to repurchase a Mortgage Loan
under Section 2.02 or 2.04, the Seller may deliver to the Trustee or the
Custodian on behalf of the Trustee one or more Eligible Substitute Mortgage
Loans in substitution for any one or more of the Defective Mortgage Loans which
the Seller would otherwise be required to repurchase pursuant to Section 2.02 or
2.04.
(b) The Seller shall notify the Servicer and the Trustee in writing not
less than five Business Days before the related Determination Date which is on
or before the date on which the Seller would otherwise be required to repurchase
such Mortgage Loan pursuant to Section 2.02 or 2.04 of its intention to effect a
substitution under this Section 2.05. On such Determination Date (the
"Substitution Date"), the Seller shall deliver to the Trustee or the Custodian
on behalf of the Trustee (1) the Eligible Substitute Mortgage Loans to be
substituted for the Defective Mortgage Loans, (2) a list of the Defective
Mortgage Loans to be substituted for by such Eligible Substitute Mortgage Loans,
(3) an Officer's Certificate (A) stating that no failure by the Servicer
described in Section 8.01 shall have occurred and be continuing, (B) stating
that the aggregate Principal Balance of all Eligible Substitute Mortgage Loans
(determined with respect to each Eligible Substitute Mortgage Loan as of the
Determination Date on which it was substituted) including the principal balance
of Eligible Substitute Mortgage Loans being substituted on such Determination
Date does not exceed an amount equal to 5% of the aggregate Original Class
Principal Balance as of the Closing Date, (C) stating that all conditions
precedent to such substitution specified in subsection (a) have been satisfied
and attaching as an exhibit a supplemental Mortgage Loan schedule (the
"Supplemental Mortgage Loan Schedule") setting forth the same type of
information as appears on the Mortgage Loan Schedule and representing as to the
accuracy thereof and (D) confirming that
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the representations and warranties contained in Section 2.04 are true and
correct in all material respects with respect to the Substitute Mortgage Loans
on and as of such Determination Date, provided that remedies for the inaccuracy
of such representations are limited as set forth in Sections 2.02, 2.04 and this
Section 2.05, (4) an Opinion of Counsel to the effect set forth below and (5) a
certificate stating that cash in the amount of the related Substitution
Adjustment, if any, has been deposited to the Collection Account. Upon receipt
of the foregoing, the Trustee or the Custodian on behalf of the Trustee shall
release such Defective Mortgage Loans to the Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) and (b) above and the transfer of such Eligible Substitute
Mortgage Loans to the Trustee pursuant to Section 2.05(a), Exhibit C to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related Substitution Date, as the case may be,
as to such Eligible Substitute Mortgage Loans.
(d) In connection with any Mortgage Loan that the Seller is required to
purchase or replace, the Seller shall deliver to the Trustee an Opinion of
Counsel to the effect that such purchase or substitution will not cause (x) any
federal tax to be imposed on the Trust, including, without limitation, any
Federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the start-up day" under Section 860G(d)(1) of
the Code or (y) any portion of any REMIC to fail to qualify as a REMIC at any
time that any Certificate is outstanding. In the event that such opinion
indicates that a repurchase or substitution will result in the imposition of a
prohibited transaction tax, give rise to net taxable income or be deemed a
contribution to a REMIC after its Startup Day, the Seller shall not be required
to repurchase or replace any such Mortgage Loan unless and until the Servicer
has determined there is an actual or imminent default with respect thereto or
that such defect or breach adversely affects the enforceability of such Mortgage
Loan.
Section 2.06. Execution and Authentication of Certificates. The Trustee on
behalf of the Trust shall cause to be executed, authenticated and delivered on
the Closing Date to or upon the order of the Seller, in exchange for the
Mortgage Loans, concurrently with the sale, assignment and conveyance to the
Trustee of the Mortgage Loans, each Class of Certificates in authorized
denominations or Percentage Interests, together evidencing the ownership of the
entire Trust.
Section 2.07. Designation of Interests in REMICs.
(a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC
III (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 I shall
include the Mortgage Loans, the Accounts (other than the Pre-Funding Account,
LIBOR Carryover Fund, the Net Rate Cap Fund and the Initial Interest Coverage
Account), any REO Property, and any proceeds of the foregoing. The REMIC I
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Regular Interests (as defined below) shall constitute the assets of REMIC II.
The REMIC II Regular Interests shall constitute the assets of REMIC III.
(b) REMIC I will be evidenced by (x) the Class IA, Class IB, Class
IC, Class ID, Class IE, Class IF, Class IG, Class IH, Class II, Class IJ, Class
IK, Class IL, Class IM and Class IN Interests and the Class P Certificates
(together, the "REMIC I Regular Interests"), which (i) (except in the case of
Class P) will be uncertificated and non-transferable, and (ii) are hereby
designated as the "regular interests" in REMIC I and (y) the Class R-1
Certificates, which are hereby designated as the single "residual interest" in
REMIC I (the REMIC I Regular Interests, together with the Class R-1
Certificates, the "REMIC I Certificates"). The REMIC I Regular Interests shall
be recorded on the records of REMIC I as being issued to and held by the Trustee
on behalf of REMIC II.
The REMIC I Certificates will have the following designations,
initial principal balances and pass-through rates:
Pass-
REMIC I Initial Through
Certificates Balance Rate
------------ ------- ----
P $ 100 0% (3)
IA $ 15,000,000 (1)
IB $ 3,000,000 (1)
IC $ 3,000,000 (1)
ID $ 3,000,000 (1)
IE $ 4,000,000 (1)
IF $ 4,500,000 (1)
IG $ 4,500,000 (1)
IH $ 5,500,000 (1)
II $ 5,500,000 (1)
IJ $ 6,500,000 (1)
IK $ 3,500,000 (1)
IL $ 3,000,000 (1)
IM $124,000,000 (1)
IN $ 65,000,000 (2)
R-1 $ 0 0%
(1) The Pass-Through Rate on these REMIC I Regular Interests shall at any
time of determination equal the weighted average of the Net Loan Rates of
the Mortgage Loans in Loan Group F.
(2) The Pass-Through Rate on this class of REMIC I Regular Interests shall at
any time of determination equal the weighted average of the Net Loan
Rates of the Mortgage Loans in Loan Group A.
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(3) The Class P Certificates shall be entitled to receive all Prepayment
Charges collected with respect to the Mortgage Loans in each Loan Group.
Such Prepayment Charges shall not be available for distribution with
respect to any other Class of REMIC I Certificates. The Prepayment
Charges received by the Class P Certificates shall not be applied to the
principal balance of those Certificates.
On each Distribution Date, principal collections and realized losses
on the Mortgage Loans in Loan Group F and, on the first Distribution Date, the
Class P Deposit shall be allocated sequentially, in reverse order to which they
are listed above, to the REMIC I Regular Interests (other than the Class IN
Interests), until the principal balance of each such class is reduced to zero.
All principal collections and realized losses on the Mortgage Loans in Loan
Group A shall be allocated to the Class IN Interest. Notwithstanding the above,
the Class P Certificates shall not be entitled to any principal collections so
long as the Class IN Interests remain outstanding. Any principal collections
otherwise payable to the Class P Certificates will then instead be payable to
the Class IN Interests, until the principal balance of the Class IN Interests
has been reduced to zero, and any remaining principal collections on the
Mortgage Loans shall be payable to the Class P Certificates to the extent of
their Class Principal Balance. The Class R-1 Certificates shall have no
principal balance and no pass-through rate and shall be entitled to only those
distributable assets, if any, remaining in REMIC I on each Distribution Date
after all amounts required to be distributed to the REMIC I Regular Interests
and applicable Trust expenses have been paid. It is expected that there will not
be any distributions on the Class R-1 Certificate.
(c) REMIC II will be evidenced by (x) the Class II-A-1F, Class
II-A-2F, Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F, Class
II-A-1A, Class II-M-1, Class II-M-2, Class II-B, the 12 components of Class
II-A-IO described in note (4) below, Class II-M, Class II-M-F and Class II-M-A
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-II 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 III.
Interest from the Mortgage Loans that is allocable to payments of
principal on the Certificates under sections 5.01(a)C.7 and 5.01(b) (the "Turbo
Amount") will not be paid directly as principal to the REMIC II Regular
Interests, but instead a portion of the interest payable with respect to the
Class II-M Interest which equals 1% of the Turbo Amount (and, to the extent 1%
of the Turbo Amount exceeds the interest payable on the Class II-M Interest, a
pro rata portion of the interest payable on the Class II-M-F and Class II-M-A
Interests equal to such excess) will be payable as a reduction of the principal
balances of the Class II-A-1F, Class II-A-2F, Class II-A-3F, Class II-A-4F,
Class II-A-5F, Class II-A-6F, Class II-B, Class II-A-1A, Class II-M-1 and Class
II-M-2 Interests in the same manner in which the Turbo Amount is allocated among
the Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F,
Class B, Class A-1A, Class M-1 and Class M-2 Certificates, respectively (and
will be accrued and added to principal on the Class II-M, Class II-M-F and Class
II-M-A Interests in the same proportion as interest payable on such Interests is
used to reduce principal on other Interests as just described).
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Principal payments on the Mortgage Loans shall be allocated 99% to the Class
II-M, Class II-M-F and Class II-M-A Interests, and 1% to the Class II-A-1F,
Class II-A-2F, Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F, ,
Class II-B, Class II-A-1A, Class II-M-1 and Class II-M-2 Interests, until paid
in full. The aggregate amount of principal allocated to the Class II-A-1F, Class
II-A-2F, Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F, , Class
II-B, Class II-A-1A, Class II-M-1 and Class II-M-2 Interests shall be
apportioned among such classes in the same manner as principal is payable with
respect to the Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class
A-6F, Class B, Class A-1A, Class M-1 and Class M-2 Certificates, respectively.
The aggregate amount of principal allocated to the Class II-M, Class II-M-F and
Class II-M-A Interests shall be allocated and apportioned among such Interests
first, to the Class II-M-F and Class II-M-A Interests the least amount of
principal necessary which can be applied to such Interests so that the ratio of
the principal balance of the Class II-M-F Interests to the principal balance of
the Class II-M-A Interests equals the ratio of the Loan Group F Balance to the
Loan Group A Balance (the "Balance Ratio"), and second, to the Class II-M
Interests. Notwithstanding the above, principal payments on Mortgage Loans that
are attributable to the Excess Overcollateralization Amount shall be allocated
to the Class II-M, Class II-M-F and Class II-M-A Interests (allocated first to
the Class II-M Interests until paid in full, and second to the Class II-M-F and
Class II-M-A Interests, apportioned among such Interests such that the Balance
Ratio is maintained, until paid in full). 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-1F, Class II-A-2F, Class II-A-3F, Class
II-A-4F, Class II-A-5F, Class II-A-6F, , Class II-B, Class II-A-1A, Class II-M-1
and Class II-M-2 Interests are each 1% of the principal balances of the Class
A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class B, Class
A-1A, Class M-1 and Class M-2 Certificates, respectively; and (ii) the aggregate
principal balance of the Class II-M, Class II-M-F and Class II-M-A Interests is
equal to the sum of the Loan Group F Balance and Loan Group A Balance, less an
amount equal 1% of the aggregate Class Principal Balances of the Certificates.
Losses allocated to the Class II-M, Class II-M-F and Class II-M-A Interests
shall be applied first, to the Class II-M-F and Class II-M-A Interests the least
amount of realized losses necessary which can be applied to such Interests so
that the Balance Ratio is maintained, and second, to the Class II-M Interests.
The REMIC II Certificates will have the following designations and pass-through
rates, and distributions of principal and interest thereon shall be allocated to
the Certificates in the following manner:
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
------------ ------- ---- --------- --------
II-A-1F $ 533,000 (1) (5) (6),(7)
II-A-2F $ 227,000 (1) (5) (6),(7)
II-A-3F $ 303,000 (1) (5) (6),(7)
II-A-4F $ 153,000 (1) (5) (6),(7)
II-A-5F $ 149,000 (1) (5) (6),(7)
II-A-6F $ 100,000 (1) (5) (6),(7)
II-B $ 106,250 (1) (5) (6),(7)
II-A-1A $ 650,000 (1) (5) (6),(7)
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Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
------------ ------- ---- --------- --------
II-M-1 $ 165,000 (1) (5) (6),(7)
II-M-2 $ 113,750 (1) (5) (6),(7)
II-M $245,000,000 (1) (5) (6),(7)
II-M-F $ 1,850,000 (2) (5) (6),(7)
II-M-A $ 650,000 (3) (5) (6),(7)
II-A-IO $ 0 (4) N/A Class IOF
R-2 $ 0 0% N/A N/A(8)
- ---------------
(1) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average of the Pass-Through Rates
of the REMIC I Regular Interests (other than the Class P Certificates),
after first subtracting 6.4% from the Pass-Through Rates of each of such
regular interests (other than the Class IM and Class IN Interests) for the
Distribution Dates indicated below for each of such regular interests.
6.4% Subtraction 6.4% Subtraction
REMIC I Distribution REMIC I Distribution
Certificates Dates Certificates Dates
IA 1 - 36 IG 1 - 18
IB 1 - 33 IH 1 - 15
IC 1 - 30 II 1 - 12
ID 1 - 27 IJ 1 - 9
IE 1 - 24 IK 1 - 6
IF 1 - 21 IL 1 - 3
(2) The Pass-Through Rate on this REMIC II Regular Interest shall at any time
of determination equal the weighted average of the Pass-Through Rates of
the REMIC I Regular Interests (other than the Class P Certificates and the
Class IN Interest), after first subtracting 6.4% from the Pass-Through
Rates of each of such regular interests (other than the Class IM
Interests) for the Distribution Dates indicated in the table in note (1).
(3) The Pass-Through Rate on this REMIC II Regular Interest shall at any time
of determination equal the Pass-Through Rate on the Class IN Interest
issued by REMIC I.
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(4) Interest on the Class II-A-IO will equal the sum of 12 strips of interest,
with each strip being a strip off the principal balance of a REMIC I
Regular Interest (other than the Class IM and Class IN Interests and the
Class P Certificates) at 6.4% per annum for the Distribution Dates
indicated in the table in note (1) for such regular interest, and 0.0%
thereafter. Each of the 12 interest strips comprising the interest on the
Class II-A-IO shall constitute 12 separate components of the Class
II-A-IO, each of which shall be designated as a separate REMIC II Regular
Interest.
(5) Principal will be allocated to and apportioned among the Class A-1F, Class
A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class B, Class A-1A,
Class M-1, and Class M-2 Certificates, in the same proportion as principal
is payable with respect to such Certificates, except that a portion of
such principal in an amount up to the Excess Overcollateralization Amount
shall first be allocated as a payment of interest to the Class BIO
Certificates, and all principal will be allocated as a payment of interest
to the Class BIO Certificates after the principal balances of the Group F
and Group A Certificates have been reduced to zero.
(6) Except as provided in note (7), interest will be allocated among the Class
A-1F, Class A-2F, Class A-3F, Class A-4F, A-5F, Class A-6F, Class B, Class
A-1A, Class M-1 and Class M-2 Certificates in the same proportion as
interest is payable on such Certificates.
(7) Any interest with respect to this REMIC II Regular Interest in excess of
the product of (i) 100 times the weighted average coupon of the Class
II-A-1F, Class II-A-2F, Class II-A-3F, Class II-A-4F, II-A-5F, Class
II-A-6F, Class II-B, Class II-A-1A, Class II-M-1, Class II-M-2, Class
II-M, Class II-M-F, and Class II-M-A Interests, where each of such
classes, other than the Class II-M, Class II-M-F, and Class II-M-A
Interests is first subject to a cap and floor equal to the Class A-1F,
Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class B, Class
A-1A, Class M-1 and Class M-2 Pass-Through Rates, respectively, and the
Class II-M, Class II-M-F, and Class II-M-A Interest are each subject to a
cap equal to 0%, and (ii) the principal balance of this REMIC II Regular
Interest, shall not be allocated to the Group F or Group A Certificates
but will be allocated to the Class BIO Certificates. However, the Class
BIO Certificates shall be subordinated to the extent provided in Section
5.01.
(8) On each Distribution Date, available funds, if any, remaining in REMIC II
after payments of interest and principal, as designated above, will be
distributed to the Class R-2 Certificate. It is expected that there will
not be any distributions on the Class R-2 Certificates.
(d) The Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F,
Class A-6F, Class B, Class A-1A, Class M-1, Class M-2, Class IOF and Class BIO
Certificates are hereby designated as "regular interests" with respect to REMIC
III (the "REMIC III Regular Interests") and the Class R-3 Certificate is hereby
designated as the single "residual interest" with respect to REMIC III. On each
Distribution Date, Available Funds, if any, remaining in REMIC III after
payments of interest and principal as designated herein shall be distributed to
the Class
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R-3 Certificates. It is expected that there will not be any distributions on the
Class R-3 Certificates.
Section 2.08. Designation of Startup Day of REMIC. The Closing Date is
hereby designated as the "start-up day" of each REMIC within the meaning of
Section 860G(a)(9) of the Code.
Section 2.09. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the regular interests in each REMIC is the
Distribution Date in March 2034.
Section 2.10. Tax Returns and Reports to Certificateholders. (a) For
federal income tax purposes, the REMICs comprising the Trust shall have a
calendar year and shall maintain its books on the accrual method of accounting.
(b) The Tax Matters Person shall prepare, or cause to be prepared, execute
and deliver to the Servicer or Certificateholders, as applicable, any income tax
information returns for each taxable year with respect to the Trust containing
such information at the times and in the manner as may be required by the Code
or state or local tax laws, regulations or rules, and shall furnish or cause to
be furnished to the Trust and the Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby.
Within thirty (30) days of the Closing Date, the Tax Matters Person shall
furnish or cause to be furnished to the Internal Revenue Service, on Form 8811
or as otherwise required by the Code, the name, title, address and telephone
number of the person that Holders of the Certificates may contact for tax
information relating thereto, together with such additional information at the
time or times and in the manner required by the Code. Such federal, state or
local income tax or information returns shall be signed by the Trustee or such
other Person as may be required to sign such returns by the Code or state or
local tax laws, regulations or rules.
(c) In the first federal income tax return of the Trust for its short
taxable year ending December 31, 2000, a REMIC election shall be made with
respect to each of REMIC I, REMIC II and REMIC III for such taxable year and all
succeeding taxable years.
(d) The Tax Matters Person will maintain or cause to be maintained such
records relating to the Trust, including, but not limited to, the income,
expenses, assets and liabilities of the Trust, and the fair market value and
adjusted basis of the Trust property and assets determined at such intervals as
may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information.
(e) The Servicer, upon request, shall promptly furnish the Tax Matters
Person with all such information as may be required in connection with the Tax
Matters Person's REMIC reporting obligations pursuant to this Agreement.
Section 2.11. Tax Matters Person. The tax matters person with respect to
each REMIC (the "Tax Matters Person") shall be the holder of the Tax Matters
Person Residual Interest which
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initially is the Seller. The Tax Matters Person shall at all times hold the Tax
Matters Person Residual Interest and shall have the same duties with respect to
the Trust as those of a "tax matters partner" under Subchapter C of Chapter 63
of Subtitle F of the Code. Each holder of a Residual Certificate shall be deemed
to have agreed, by acceptance thereof, to be bound by this Section 2.11.
Section 2.12. REMIC Related Covenants. It is intended that each REMIC
formed hereunder shall constitute, and that the affairs of each REMIC shall be
conducted so as to qualify it as, a REMIC as defined in and in accordance with
the REMIC Provisions. For as long as the Trust shall exist, the Trustee, the
Servicer and the Tax Matters Person shall act in accordance herewith to assure
continuing treatment of each REMIC as a REMIC and avoid the imposition of tax on
the Trust. In particular:
(a) The Trustee shall not create, or knowingly permit the creation of, any
"interests" in any REMIC within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates, the REMIC I Regular
Interests, the REMIC II Regular Interests and the Residual Certificates.
(b) Except as otherwise provided in the Code, the Seller shall not grant
and the Trustee shall not accept property unless (i) substantially all of the
property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the Trust after the
Startup Day unless such grant would not subject any REMIC to the 100% tax on
contributions to a REMIC after its Startup Day imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust any fee or other
compensation for services (other than as otherwise provided herein) and shall
not accept on behalf of the Trust any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any portion of
the Mortgage Loans (other than in accordance with Section 2.02, 2.04 or 3.16),
unless such sale is pursuant to a "qualified liquidation" as defined in Code
Section 860F(a)(4)(A) and in accordance with Article VIII.
(e) The Trustee and the Tax Matters Person shall maintain books with
respect to each REMIC on a calendar year and on an accrual basis.
(f) Upon filing with the Internal Revenue Service, the Tax Matters Person
shall furnish to the Holders of the Residual Certificates the Form 1066 and each
Form 1066Q for the applicable REMIC and shall respond promptly to written
requests made not more frequently than quarterly by any Holder of Residual
Certificates with respect to the following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each class of regular and residual interests created
hereunder and on the Mortgage Loans, based on 115% of the Prepayment
Assumption in the case of Loan Group F and 100% of the Prepayment
Assumption in the case of Loan Group A;
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(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each class of regular and
residual interests created hereunder and the Mortgage Loans, based on 115%
of the Prepayment Assumption in the case of Loan Group F and 100% of the
Prepayment Assumption in the case of Loan Group A;
(iii) The applicable percentage of the Prepayment Assumption and any
interest rate assumptions used in determining the projected principal and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each class of regular or residual
interests created hereunder and with respect to the Mortgage Loans,
together with each constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of each REMIC with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of each
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on each
REMIC, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or
local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of the
Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of a REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section
24874 and 23153 of the California Revenue and Taxation Code) is imposed, such
tax shall be paid by (i) the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Agreement, (ii) the
Tax Matters Person, if such tax arises out of or results from a breach by the
Tax Matters Person of any of the obligations under this Agreement, (iii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement or (iv) otherwise the Holders of the
applicable Residual Certificates in proportion to their Percentage Interests. To
the extent any tax is chargeable against the Holders of the Residual
Certificates, notwithstanding anything to the contrary contained herein, the
Trustee is hereby authorized to retain from amounts otherwise distributable to
the Holders of the applicable Residual Certificates on any Distribution Date
sufficient funds to reimburse the Trustee for the payment of such tax (to the
extent that the Trustee has not been previously reimbursed or indemnified
therefor).
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The Trustee shall not engage in a "prohibited transaction" (as defined in
Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller , the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify any REMIC from treatment as
a REMIC; and provided that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the rating of the Offered Certificates.
(g) Except as provided below, the Tax Matters Person shall pay out of its
own funds, without any right of reimbursement, any and all tax related expenses
of the Trust (including, but not limited to, tax return preparation and filing
expenses and any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to the Trust that involve
the Internal Revenue Service or state tax authorities), other than the expense
of obtaining any Opinion of Counsel required pursuant to Sections 2.05, 3.06 and
10.02 and other than taxes except as specified herein. The Trustee and the Tax
Matters Person shall be entitled to be reimbursed for any professional fees or
expenses related to audits or any administrative or judicial proceedings that do
not result from any breach of their respective duties hereunder.
(h) On behalf of each REMIC, the Trustee, Servicer or Tax Matters Person,
as applicable, shall do the following:
(i) the Tax Matters Person shall prepare, sign and file, or cause to
be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066) and any other Tax Return
required to be filed by each REMIC, using a calendar year as the taxable
year for each REMIC;
(ii) the Tax Matters Person shall make, or cause to be made, an
election, on behalf of each REMIC, to be treated as a REMIC on the federal
tax return of each REMIC for its first taxable year;
(iii) the Tax Matters Person shall prepare and forward, or cause to
be prepared and forwarded, to the Servicer, the Seller, the Trustee
(which, subject to receipt thereof shall forward to the
Certificateholders) and to the Internal Revenue Service and any other
relevant governmental taxing authority all information returns or reports
as and when required to be provided to them in accordance with the REMIC
Provisions;
(iv) the Trustee and the Servicer shall to the extent that the
affairs of any REMIC are within its control, conduct such affairs of each
REMIC at all times that any Certificates are outstanding so as to maintain
the status of each REMIC as a REMIC under the REMIC Provisions and any
other applicable federal, state and local laws, including, without
limitation, information reports relating to "original issue discount," as
defined in the Code, based upon 115% of the Prepayment Assumption with
respect to Loan Group F and 100%
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of the Prepayment Assumption with respect to Loan Group A, respectively
and calculated by using the issue price of the Certificates;
(v) the Trustee, the Servicer and Tax Matters Person shall not
knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any REMIC;
(vi) the Trustee shall pay the amount of any and all federal, state
and local taxes upon the Trustee or the Certificateholders in connection
with the Trust or the Mortgage Loans, prohibited transaction taxes as
defined in Section 860F of the Code, other than any amount due as a result
of a transfer or attempted or purported transfer in violation of Section
6.02, imposed on the Trust when and as the same shall be due and payable
(but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings
and shall not prevent the Trustee from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The Trustee
shall be entitled to reimbursement for all such amounts in accordance with
Section 2.12;
(vii) the Trustee and the Tax Matters Person shall ensure that any
such returns or reports filed on behalf of the Trust are properly executed
by the appropriate person;
(viii) the Tax Matters Person shall represent the Trust in any
administrative or judicial proceedings relating to an examination or audit
by any governmental taxing authority, request an administrative adjustment
as to any taxable year of the Trust, enter into settlement agreements with
any government taxing agency, extend any statute of limitations relating
to any item of the Trust and otherwise act on behalf of the Trust in
relation to any tax matter involving the Trust;
(ix) the Trustee and the Tax Matters Person shall as provided in
Section 6.02, make available information necessary for the computation of
any tax imposed (1) on transferors of residual interests to transferees
that are not Permitted Transferees or (2) on pass-through entities, any
interest in which is held by an entity which is not a Permitted
Transferee;
(x) the Trustee and the Tax Matters Person shall make available to
the Internal Revenue Service and those Persons specified by the REMIC
Provisions all information necessary to compute any tax imposed (A) as a
result of the Transfer of an Ownership Interest in a Residual Certificate
to any Person who is not a Permitted Transferee, including the information
described in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5) with respect to the "excess inclusions" of such Residual
Certificate and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Residual Certificate having as among its record holders at
any time any Person that is not a Permitted Transferee. Reasonable
compensation for providing such information may be accepted by the
Trustee; and
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(xi) the Trustee, the Servicer and the Tax Matters Person shall
cooperate with each other in connection with the foregoing obligations,
including signing any Tax Returns to the extent required by law.
Section 2.13. Subsequent Transfers. (a) Subject to the satisfaction of the
conditions set forth in paragraph (b) below and pursuant to the terms of each
Subsequent Transfer Agreement, in consideration of the Trustee's delivery, on
behalf of the Trust, on the related Subsequent Transfer Date to or upon the
order of the Seller of the purchase price therefor, the Seller shall on any
Subsequent Transfer Date sell, transfer, assign, set over and otherwise convey
without recourse to the Trustee, all right, title and interest of the Seller in
and to each Subsequent Mortgage Loan listed on the related Subsequent Mortgage
Loan Schedule delivered by the Seller on such Subsequent Transfer Date,
including (i) the related Principal Balance as of the related Subsequent Cut-Off
Date; (ii) all collections in respect of interest and principal received after
the related Subsequent Cut-Off Date; (iii) property which secured such
Subsequent Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure; (iv) its interest in any insurance policies in respect of
such Subsequent Mortgage Loan; and (v) all proceeds of any of the foregoing. The
transfer by the Seller of the Subsequent Mortgage Loans set forth on the
Subsequent Mortgage Loan Schedule to the Trustee shall be absolute and shall be
intended by the Seller and all parties hereto to be treated as a sale by the
Seller to the Trust. If the assignment and transfer of the Mortgage Loans and
the other property specified in this Section 2.13 from the Seller to the Trustee
pursuant to this Agreement is held or deemed not to be a sale or is held or
deemed to be a pledge of security for a loan, the Seller intends that the rights
and obligations of the parties shall be established pursuant to the terms of
this Agreement and that, in such event, (i) the Seller shall be deemed to have
granted and does hereby grant to the Trustee as of such Subsequent Transfer Date
a first priority security interest in the entire right, title and interest of
the Seller in and to the Subsequent Mortgage Loans and all other property
conveyed to the Trustee pursuant to this Section 2.13 and all proceeds thereof
and (ii) this Agreement shall constitute a security agreement under applicable
law. The purchase price shall be one hundred percent (100%) of the Principal
Balances of the Subsequent Mortgage Loans as of the related Subsequent Cut-Off
Date.
(b) The Seller shall transfer and deliver to the Trustee or the Custodian
on behalf of the Trustee the Subsequent Mortgage Loans and the other property
and rights related thereto described in paragraph (a) above only upon the
satisfaction of each of the following conditions on or prior to the applicable
Subsequent Transfer Date:
(i) The Seller shall have provided the Trustee and the Rating
Agencies with an Addition Notice, which notice shall be given not less
than two Business Days prior to the applicable Subsequent Transfer Date
and shall designate the Subsequent Mortgage Loans to be sold to the Trust
and the aggregate Principal Balance of such Mortgage Loans and the Rating
Agencies shall not have informed the Seller or the Trustee prior to the
applicable Subsequent Transfer that the inclusion of such Subsequent
Mortgage Loans would result in the downgrade or withdrawal of the ratings
assigned to the Offered Certificates without regard to the Certificate
Insurance Policy;
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(ii) The Seller shall have delivered to the Trustee a duly executed
Subsequent Transfer Agreement in substantially the form of Exhibit D;
(iii) The Seller shall have deposited in the Collection Account all
principal collected and interest collected to the extent accrued on or
after the related Subsequent Cut-Off Date;
(iv) As of each Subsequent Transfer Date, the Seller was not
insolvent nor will the Seller be made insolvent by such transfer nor is
the Seller aware of any pending insolvency;
(v) Such addition will not result in a material adverse tax
consequence to any REMIC or the Holders of the Certificates;
(vi) The Funding Period shall not have terminated;
(vii) The Seller shall have provided the Trustee, the Certificate
Insurer and the Rating Agencies with an Opinion of Counsel relating to the
sale (i.e., "True Sale Opinion") of the Subsequent Mortgage Loans to the
Trustee, the enforceability of the Subsequent Transfer Agreement and to
the effect that the transfer of such Subsequent Mortgage Loans will not
adversely affect the status of any REMIC as a REMIC which matters may be
covered in the opinions delivered on the Closing Date;
(viii) Each Loan Group satisfies the parameters set forth in Exhibit
Q hereto; and
(ix) On the last Subsequent Transfer Date, the Trustee shall have
received an accountant's letter confirming that the characteristics of the
Mortgage Loans (including the Subsequent Mortgage Loans) in Loan Group F
or Loan Group A, as applicable, satisfy the conditions set forth in
Exhibit Q hereto.
(c) The Seller, the Custodian and the Trustee shall comply with their
respective obligations set forth in Section 2.01, 2.02, 2.04 and 2.05 with
respect to the Subsequent Mortgage Loans delivered on each Subsequent Transfer
Date. References in such Sections to the Initial Mortgage Loans or Mortgage
Loans shall be deemed to refer to the Subsequent Mortgage Loans and references
to the Closing Date shall be deemed to refer to the applicable Subsequent
Transfer Date except that references to 360 days after the Closing Date shall
remain unchanged as shall representations made with specific reference to the
Initial Mortgage Loans.
Section 2.14. The Custodian. Notwithstanding anything to the contrary in
this Agreement, the parties hereto acknowledge that the functions of the Trustee
with respect to the acceptance, inspection, custody and release of the Mortgage
Files pursuant to Sections 2.01, 2.02, 2.05 and 2.13 shall be performed by the
Custodian pursuant to the Custodial Agreement. The fees and expenses of the
Custodian will be paid by Delta. The Trustee will not be liable for any acts or
omissions of the Custodian.
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ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Servicer. (a) It is intended that the Trust formed
hereunder shall constitute, and that the affairs of the Trust shall be conducted
so as to qualify each REMIC as, a "real estate mortgage investment conduit"
("REMIC") as defined in and in accordance with the REMIC Provisions. In
furtherance of such intentions, the Servicer covenants and agrees that it shall
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any REMIC.
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which (i) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (ii)
(x) is an Approved Servicer or (y) is an affiliate of the Servicer. The Servicer
shall give notice to the Trustee of the appointment of any Subservicer. Any such
Subservicing Agreement shall be consistent with and not violate the provisions
of this Agreement. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and either itself directly service the related Mortgage Loans or enter
into a Subservicing Agreement with a successor subservicer which qualifies
hereunder.
(c) Notwithstanding any Subservicing Agreement or any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when the Subservicer has received such payments. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section
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3.01(e). The Servicer shall be solely liable for all fees owed by it to any
Subservicer irrespective of whether the Servicer's compensation pursuant to this
Agreement is sufficient to pay such fees.
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Successor Servicer or
its designee approved by the Trustee shall thereupon assume all of the rights
and obligations of the Servicer under each Subservicing Agreement that the
Servicer may have entered into, unless the Successor Servicer or designee
approved by the Trustee elects to terminate any Subservicing Agreement. Any fee
payable in connection with such a termination will be payable by the outgoing
Servicer. If the Successor Servicer does not terminate the Subservicing
Agreements, the Successor Servicer, its designee or the successor servicer for
the Successor Servicer shall be deemed to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if the Subservicing Agreements had
been assigned to the assuming party, except that the Servicer shall not thereby
be relieved of any liability or obligations under the Subservicing Agreements
with regard to events that occurred prior to the date the Servicer ceased to be
the Servicer hereunder. The Servicer, at its expense and without right of
reimbursement therefor, shall, upon the request of the Successor Servicer,
deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's good faith determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Certificateholders, provided, however, that (unless (x) the
Mortgagor is in default with respect to the Mortgage Loan, or such default is,
in the judgment of the Servicer, imminent and (y) such waiver, modification,
postponement or indulgence would not cause any REMIC to be disqualified or
otherwise cause a tax to be imposed on any REMIC) the Servicer may not permit
any modification with respect to any Mortgage Loan that would change the Loan
Rate, defer or forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan) or extend the
final maturity date on the Mortgage Loan. No costs incurred by the Servicer or
any Subservicer in respect of Servicing Advances shall, for the purposes of
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of the Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. If reasonably required by the Servicer, the Trustee
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the Servicer,
in servicing and administering the Mortgage Loans, shall employ or cause to be
employed procedures (including
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collection, foreclosure and REO Property management procedures) and exercise the
same care that it customarily employs and exercises in servicing and
administering mortgage loans for its own account, in accordance with accepted
mortgage servicing practices of prudent lending institutions servicing mortgage
loans similar to the Mortgage Loans and giving due consideration to the
Certificateholders' reliance on the Servicer.
(g) Within ninety (90) days after such time as the Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 7.04, after receipt by the Trustee of the Opinion of Counsel required
pursuant to Section 7.04, the Successor Servicer shall assume all of the rights
and obligations of the Servicer, subject to Section 8.02; provided that if the
Servicer is removed pursuant to Section 8.02, the Successor Servicer shall
immediately be obligated to make Monthly Advances and Servicing Advances as
required in this Agreement. The Servicer shall, upon request of the Successor
Servicer but at the expense of the Servicer, deliver to the Successor Servicer
all documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Servicer and otherwise use its best efforts to
effect the orderly and efficient transfer of servicing rights and obligations to
the assuming party and shall be entitled to reimbursement by the Servicer (or,
to the extent not paid by the Servicer, by the Trust pursuant to Section
5.01(a)C.16) for Servicing Transfer Costs.
(h) The Servicer shall deliver a list of Servicing Officers to the Trustee
on or before the Closing Date.
(i) Consistent with the terms of this Agreement, the Servicer may consent
to the placing of a lien senior to that of the Mortgage on the related Mortgaged
Property; provided that such senior lien secures a mortgage loan that refinances
a First Lien and the combined loan-to-value ratio of the related Mortgage Loan
immediately following the refinancing (based on the outstanding principal
balance of the Mortgage Loan and the original principal balance of such
refinanced mortgage loan) is not greater than the Combined Loan-to-Value Ratio
of such Mortgage Loan as of the related Cut-Off Date.
Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans and shall, to the extent such
procedures shall be consistent with this Agreement, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Servicer may in its
discretion (i) waive any late payment charge or any assumption fees or other
fees which may be collected in the ordinary course of servicing such Mortgage
Loan and (ii) arrange with a Mortgagor a schedule for the payment of interest
due and unpaid; provided that such arrangement is consistent with the Servicer's
policies with respect to the mortgage loans it owns or services; provided,
further, that notwithstanding such arrangement such Mortgage Loans will be
included in the monthly information delivered by the Servicer to the Trustee
pursuant to Section 5.03.
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(b) The Servicer shall establish and maintain a separate trust account
(the "Collection Account") titled "Norwest Bank Minnesota, National Association,
as Trustee, in trust for the registered holders of Delta Funding Home Equity
Loan Asset-Backed Certificates, Series 2000-1." The Collection Account shall be
an Eligible Account. The Servicer shall on the Closing Date deposit any amounts
representing payments on and any collections in respect of the Mortgage Loans
received after the related Cut-Off Date (other than interest accrued and due on
or prior to March 1, 2000) and prior to the Closing Date, and thereafter shall
use its best efforts to deposit within one Business Day, and shall in any event
deposit within two Business Days, following receipt thereof the following
payments and collections received or made by it (without duplication):
(i) all payments received after the related Cut-Off Date on account
of principal on the Mortgage Loans and all Principal Prepayments and
Curtailments collected after the related Cut-Off Date;
(ii) all payments received after the related Cut-Off Date on account
of interest on the Mortgage Loans (exclusive of payments in respect of
interest on the Mortgage Loans which have accrued and were due on or prior
to March 1, 2000);
(iii) all Net Liquidation Proceeds net of Foreclosure Profits;
(iv) all Insurance Proceeds other than any portion thereof
constituting Net Liquidation Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.02, 2.04, 2.06 and 3.16;
(vii) any amount required to be deposited in the Collection Account
pursuant to Sections 3.05, 3.06, 3.07, 5.02 or 5.05; and
(viii) any Prepayment Charges;
provided, however, that, with respect to each Due Period, the Servicer shall be
permitted to retain (x) from payments in respect of interest on a Mortgage Loan,
the Servicing Fee for such Mortgage Loan and (y) from payments from Mortgagors,
Liquidation Proceeds, Insurance Proceeds and Released Mortgaged Property
Proceeds, any unreimbursed Servicing Advances and Monthly Advances related
thereto. The foregoing requirements respecting deposits to the Collection
Account are exclusive, it being understood that, without limiting the generality
of the foregoing, the Servicer need not deposit in the Collection Account
amounts representing Servicing Compensation or amounts received by the Servicer
for the accounts of Mortgagors for application toward the payment of taxes,
insurance premiums, assessments and similar items.
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The Servicer may cause the institution maintaining the Collection Account
to invest any funds in the Collection Account in Eligible Investments (including
obligations of the Servicer or any of its Affiliates, if such obligations
otherwise qualify as Eligible Investments) pursuant to Section 5.05.
Section 3.03. Withdrawals from the Collection Account. The Servicer shall
withdraw or cause to be withdrawn funds from the Collection Account for the
following purposes:
(i) before 11:00 a.m. (New York City time) on (x) the third Business
Day preceding each Distribution Date, to withdraw the lesser of the
Available Funds then in the Collection Account and an amount equal to the
Guaranteed Distributions for such Distribution Date and (y) on the related
Deposit Date to withdraw the remaining Available Funds and Prepayment
Charges and, in each case, remit such funds to the Trustee for deposit to
the Distribution Account;
(ii) to reimburse the Servicer for any accrued unpaid Servicing
Compensation which the Servicer would not have been required to deposit in
the Collection Account and for unreimbursed Monthly Advances and Servicing
Advances. The Servicer's right to reimbursement for unpaid Servicing Fees
and unreimbursed Servicing Advances shall be limited to late collections
on the related Mortgage Loan, including Liquidation Proceeds, Released
Mortgaged Property Proceeds, Insurance Proceeds and such other amounts as
may be collected by the Servicer from the related Mortgagor or otherwise
relating to the Mortgage Loan in respect of which such reimbursed amounts
are owed. The Servicer's right to reimbursement for unreimbursed Monthly
Advances shall be limited to late collections on any Mortgage Loan and to
Liquidation Proceeds, Released Mortgaged Property Proceeds and Insurance
Proceeds on related Mortgage Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction;
(iv) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein (such as Servicing Compensation)
or were deposited therein in error and to pay such funds to the
appropriate Person;
(v) to withdraw funds necessary for the conservation and disposition
of REO Property pursuant to Section 3.06 to the extent not advanced by the
Servicer;
(vi) to reimburse the Servicer for Nonrecoverable Advances;
(vii) to pay to the Seller collections received in respect of
accrued interest on the Mortgage Loans due on or before March 1, 2000;
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(viii) to pay to the Servicer or the Trustee the portion of any
Purchase Price in respect of clause (iv) of the definition thereof or of
any Substitution Adjustment in respect of clause (d) of the definition
thereof to the extent paid in respect of amounts incurred by or imposed on
the Servicer or the Trustee, as the case may be; and
(ix) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein to
the applicable Class R Certificateholders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance naming the Servicer as loss payee thereunder providing
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements securing such Mortgage Loan from
time to time, (ii) the combined principal balance owing on such Mortgage Loan
and any mortgage loan senior to such Mortgage Loan and (iii) the minimum amount
required to compensate for damage or loss on a replacement cost basis. The
Servicer shall also maintain on property acquired upon foreclosure or by deed in
lieu of foreclosure hazard insurance with extended coverage in an amount which
is at least equal to the lesser of (i) the maximum insurable value from time to
time of the improvements which are a part of such property, (ii) the combined
principal balance owing on such Mortgage Loan and any mortgage loan senior to
such Mortgage Loan and (iii) the minimum amount required to compensate for
damage or loss on a replacement cost basis at the time of such foreclosure, fire
and or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Servicing Advances to be incurred in
connection therewith. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account to the extent called for by Section
3.02. In cases in which any Mortgaged Property is located in a federally
designated flood area, the hazard insurance to be maintained for the related
Mortgage Loan shall include flood insurance to the extent such flood insurance
is available and the Servicer has determined such insurance to be necessary in
accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Mortgage Loans. All such flood insurance shall be in amounts
equal to the least of (A) the amount in clause (i) above, (B) the amount in
clause (ii) above and (C) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. The Servicer shall be under no
obligation to require that any Mortgagor maintain earthquake or other additional
insurance and shall be under no obligation itself to maintain any such
additional insurance on property acquired in respect of a Mortgage Loan, other
than pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy. In the
event that the Servicer shall obtain and maintain a blanket policy with an
insurer having a General Policy rating of A:VIII or better in Best's Key Rating
Guide, then, to the extent such policy names the Servicer as loss payee and
provides coverage in an amount equal to the aggregate unpaid principal balance
on the Mortgage Loans without co-insurance, and otherwise complies with the
requirements of Section 3.04, the Servicer shall be deemed conclusively to have
satisfied its obligations with respect to fire and hazard insurance coverage
under Section 3.04, it being understood and agreed that such blanket policy may
contain a deductible clause, in which case the
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Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 3.04, and there shall
have been a loss which would have been covered by such policy, deposit in the
Collection Account the difference, if any, between the amount that would have
been payable under a policy complying with Section 3.04 and the amount paid
under such blanket policy. Upon the request of the Trustee, the Servicer shall
cause to be delivered to the Trustee, a certified true copy of such policy. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee, and the Certificateholders, claims under any such policy in a timely
fashion in accordance with the terms of such policy.
Section 3.06. Management and Realization Upon Defaulted Mortgage Loans.
The Servicer shall manage, conserve, protect and operate each REO Property for
the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale. The Servicer shall, either itself or through an agent
selected by the Servicer, manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interest of the
Certificateholders.
The Servicer shall cause to be deposited, no later than two Business Days
after the receipt thereof, in the Collection Account, all revenues received with
respect to the related REO Property and shall retain, or cause the Trustee to
withdraw therefrom, funds necessary for the proper operation, management and
maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer for
cash at such price, and upon such terms and conditions, as the Servicer deems to
be in the best interest of the Certificateholders and, as soon as practicable
thereafter, the expenses of such sale shall be paid. The cash proceeds of sale
of the REO Property shall be promptly deposited in the Collection Account, net
of Foreclosure Profits and of any related unreimbursed Servicing Advances,
accrued and unpaid Servicing Fees and unreimbursed Monthly Advances payable to
the Servicer in accordance with Section 3.03, for distribution to the
Certificateholders in accordance with Section 5.01.
The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come into
and continue in default either when no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.02 subject to the
provisions contained in the last paragraph of this Section 3.06.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or to its nominee on behalf of
Certificateholders.
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In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the
Servicer shall (i) dispose of such Mortgaged Property within three years after
the close of the taxable year in which the Mortgaged Property was acquired (the
"grace period") or (ii) prior to the expiration of any extension to such grace
period which is requested on behalf of the Trust by the Servicer (at the expense
of the Trust) more than 60 days prior to the end of the grace period and granted
by the Internal Revenue Service, unless the Servicer shall have received an
Opinion of Counsel to the effect that the holding of such Mortgaged Property
subsequent to expiration of the grace period will not result in the imposition
of taxes on "prohibited transactions" as defined in Section 860F of the Code or
cause any REMIC to fail to qualify as a REMIC at any time that any Regular
Certificates are outstanding. Notwithstanding any other provision of this
Agreement, (i) no Mortgaged Property acquired by the Servicer pursuant to this
Section 3.06 shall be rented (or allowed to continue to be rented) or otherwise
used for the production of income by or on behalf of the Trust and (ii) no
construction shall take place on such Mortgaged Property in such a manner or
pursuant to any terms, in either case, that would cause such Mortgaged Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by the Trust of any "net income
from foreclosure property" which is subject to taxation within the meaning of
Sections 860G(c) and 857(b)(4)(B) of the Code. If a period greater than the
grace period is permitted under this Agreement and is necessary to sell any REO
Property, the Servicer shall give appropriate notice to the Trustee and shall
report monthly to the Trustee as to the progress being made in selling such REO
Property.
If the Servicer has actual knowledge that a Mortgaged Property which the
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Servicer, the Servicer will notify the
Trustee prior to acquiring the Mortgaged Property. Nothing in this Section 3.06
shall affect the Servicer's right to deem certain advances proposed to be made
Nonrecoverable Advances. For the purpose of this Section 3.06, actual knowledge
of the Servicer means actual knowledge of a Responsible Officer of the Servicer
involved in the servicing of the relevant Mortgage Loan. Actual knowledge of the
Servicer does not include knowledge imputable by virtue of the availability of
or accessibility to information relating to environmental or hazardous waste
sites or the locations thereof.
Section 3.07. Trustee to Cooperate. Upon any Principal Prepayment, the
Servicer is authorized to execute, pursuant to the authorization contained in
Section 3.01(f), if the related Assignment of Mortgage has been recorded as
required hereunder, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Servicer if
required by applicable law and be delivered to the Person entitled thereto. It
is understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursed from amounts
deposited in the Collection Account. If the Trustee or Custodian is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee or Custodian shall, upon request
of the Servicer and delivery to the Custodian two copies of a Request for
Release, one of which will be returned to the Servicer with the Mortgage File,
in the form annexed hereto as Exhibit I, signed by a Servicing Officer or in a
mutually agreeable electronic format which originates from a Servicing Officer,
release the related
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Mortgage File to the Servicer, and the Trustee or Custodian shall execute such
documents, in the forms provided by the Servicer, as shall be necessary for the
prosecution of any such proceedings or the taking of other servicing actions.
Such Request for Release shall obligate the Servicer to return the Mortgage File
to the Trustee or the Custodian, as the case may be, when the need therefor by
the Servicer no longer exists unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certificate of a Servicing Officer similar to that
hereinabove specified, the Mortgage File shall be released by the Trustee or
Custodian to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Servicer, execute an appropriate assignment in the
form provided to the Trustee by the Servicer to assign such Mortgage Loan for
the purpose of collection to the Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only) and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Mortgage Loan and deposit or credit the Net Liquidation Proceeds, exclusive
of Foreclosure Profits, received with respect thereto in the Collection Account.
In the event that all delinquent payments due under any such Mortgage Loan are
paid by the Mortgagor and any other defaults are cured then the assignee for
collection shall promptly reassign such Mortgage Loan to the Trustee and return
it to the place where the related Mortgage File was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. Subject to Section 5.02, the Servicer shall be entitled to retain the
Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Mortgage Loans. Moreover, additional servicing
compensation in the form of late payment charges or other receipts not required
to be deposited in the Collection Account, including, without limitation,
Foreclosure Profits and, subject to Section 5.05, investment income on the
Collection Account and the Distribution Account shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees
and expenses not expressly stated hereunder to be for the account of the Trust
or the Certificateholders) and shall not be entitled to reimbursement therefor
except as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Certificate Insurer and the Rating Agencies, on or
before the last Business Day of the fifth month following the end of the
Servicer's fiscal year (December 31), beginning with the fiscal year ending in
2000, an Officer's Certificate stating that (i) a review of the activities of
the Servicer during the preceding fiscal year and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its material obligations under this Agreement throughout such fiscal year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Servicer shall promptly notify the Trustee and each Rating Agency
upon any change in the basis on which its fiscal year is determined.
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(b) The Servicer shall deliver to the Trustee, the Certificate Insurer and
each of 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 or both, would become an Event of Default.
Section 3.10. Annual Servicing Review. Not later than the last Business
Day of the fifth month following the end of the Servicer's fiscal year (December
31), beginning with the fiscal year ending in 2000, the Servicer, at its
expense, shall cause a firm of independent public accountants which is a member
of the American Institute of Certified Public Accountants to furnish a letter or
letters to the Trustee, the Certificate Insurer and each Rating Agency to the
effect that such firm has, with respect to the Servicer's overall servicing
operations, examined such operations in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall provide to the Trustee, the Custodian,
the Certificate Insurer, Certificateholders which are federally insured savings
and loan associations, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of the Office of Thrift Supervision access to
the documentation regarding the Mortgage Loans required by applicable
regulations of the Office of Thrift Supervision and the FDIC (acting as operator
of the SAIF or the BIF), such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.11 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 3.11 as a result of such obligation shall not
constitute a breach of this Section 3.11.
Section 3.12. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or policies and
bond shall, together, comply with the requirements from time to time of Fannie
Mae for persons performing servicing for mortgage loans purchased by Fannie Mae.
Section 3.13. Reports to the Securities and Exchange Commission. Within 15
days after each Distribution Date, the Trustee shall, on behalf of the Trust,
cause to be filed with the Securities and Exchange Commission via the Electronic
Data Gathering and Retrieval System (EDGAR), a Form 8-K with a copy of the
Remittance Report for such Distribution Date as an exhibit thereto. Prior to
January 30, 2001, the Trustee shall file a Form 15 Suspension Notification with
respect to the Trust, if applicable. Prior to March 30, 2001, the Trustee shall
file a Form 10-K, in substance conforming to industry standards, with respect to
the Trust. The Seller hereby grants to the Trustee a limited power of attorney
to execute and file each such document on behalf of the Seller. Such power of
attorney shall continue until either the earlier of (i) receipt by the Trustee
from the Seller of written termination of such power of attorney and (ii) the
termination of the Trust. The Seller agrees to promptly furnish to the Trustee,
from time to
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time upon request, such further information, reports, and financial statements
within its control related to this Agreement and the Mortgage Loans as the
Trustee reasonably deems appropriate to prepare and file all necessary reports
with the Securities and Exchange Commission
Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall make
reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in 2000. The Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Servicer (i) on behalf
of the Trust acquires an interest in any Mortgaged Property through foreclosure
or other comparable conversion in full or partial satisfaction of a Mortgage
Loan or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Servicer shall be in form and substance
sufficient to meet the reporting requirements imposed by Sections 6050J, 6050H
and 6050P of the Code.
Section 3.15. Advances by the Servicer. (a) Not later than 10:00 a.m. New
York time on the Deposit Date related to each Distribution Date, the Servicer
shall remit to the Trustee for deposit in the Distribution Account an amount to
be distributed on the related Distribution Date pursuant to Section 5.01, equal
to the Monthly Payment due on each Mortgage Loan during the related Due Period,
but not received as of the related Determination Date (net of the Servicing Fee)
such amount being defined herein as the "Monthly Advance"; provided, however
that if the amount of Available Funds withdrawn from the Collection Account on
the third Business Day before such Distribution Date is less than the Guaranteed
Distributions for such Distribution Date, on such third Business Day the
Servicer shall remit to the Trustee for deposit in the Distribution Account such
portion of the aggregate Monthly Advance for the Distribution Date as shall be
necessary to eliminate the shortfall. With respect to any Balloon Loan that is
delinquent on its maturity date, the Servicer will continue to make Monthly
Advances with respect to such Balloon Loan in an amount equal to one month's
interest on the unpaid principal balance at the applicable Loan Rate (net of the
Servicing Fee) according to the original amortization schedule for such Mortgage
Loan. The obligation to make Monthly Advances with respect to each Mortgage Loan
shall continue until such Mortgage Loan becomes a Liquidated Mortgage Loan.
(b) Notwithstanding anything herein to the contrary, no Servicing Advance
or Monthly Advance shall be required to be made hereunder if the Servicer
determines that such Servicing Advance or Monthly Advance would, if made,
constitute a Nonrecoverable Advance.
(c) All Monthly Advances and Servicing Advances, including any
Nonrecoverable Advances shall be reimbursed on a first in, first out basis.
Section 3.16. Optional Purchase of Defaulted Mortgage Loans. The Servicer,
in its sole discretion, shall have the right to elect (by written notice sent to
the Trustee) to purchase for its own account from the Trust any Mortgage Loan
which is 90 days or more delinquent in the manner and at the price specified in
Section 2.02. The Purchase Price for any Mortgage Loan purchased hereunder shall
be deposited in the Collection Account and the Trustee, upon receipt of such
deposit, shall release or cause to be released to the purchaser of such Mortgage
Loan the related
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Mortgage File and shall execute and deliver such instruments of transfer or
assignment prepared by the purchaser of such Mortgage Loan, in each case without
recourse, as shall be necessary to vest in the purchaser of such Mortgage Loan
any Mortgage Loan released pursuant hereto and the purchaser of such Mortgage
Loan shall succeed to all the Trustee's right, title and interest in and to such
Mortgage Loan and all security and documents related thereto. Such assignment
shall be an assignment outright and not for security. The purchaser of such
Mortgage Loan shall thereupon own such Mortgage Loan, and all security and
documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
Section 3.17. Superior Liens. The Servicer shall file (or cause to be
filed) a request for notice of any action by a superior lienholder under a First
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 secured by the First Lien, 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
Certificateholders and/or to preserve the security of the related Mortgage Loan,
subject to the application of the REMIC Provisions in accordance with the terms
of this Agreement. The Servicer shall immediately notify the Trustee of any such
action or circumstances. The Servicer shall advance the necessary funds to cure
the default or reinstate the superior lien, if such advance is in the best
interests of the Certificateholders in accordance with the servicing standards
in Section 3.01. The Servicer shall not make such an advance except to the
extent that it determines in its reasonable good faith judgment that the advance
would be recoverable from Liquidation Proceeds on the related Mortgage Loan and
in no event in an amount that is greater than the Principal Balance of the
related Mortgage Loan. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
Section 3.18. Assumption Agreements. When a Mortgaged Property has been or
is about to be conveyed by the Mortgagor, the Servicer shall, to the extent it
has knowledge of such conveyance or prospective conveyance, exercise its right
to accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage 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. 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 shall become liable under the Mortgage
Note and, unless prohibited by applicable law, the Mortgagor shall remain liable
thereon. The Servicer, in accordance with accepted mortgage loan servicing
standards for mortgage loans similar to the Mortgage Loans, is also authorized
to enter into a substitution of liability whereby such person is substituted as
mortgagor and becomes liable under the Mortgage Note. The Servicer shall notify
the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original of such substitution or
assumption agreement which original shall be added by the Trustee to the related
Mortgage File and
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shall, for all purposes, be considered a part of such Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. In
connection with any assumption or substitution agreement entered into pursuant
to this Section 3.18, the Servicer shall not change the Loan Rate or the Monthly
Payment, defer or forgive the payment of principal or interest, reduce the
outstanding principal amount or extend the final maturity date on such Mortgage
Loan.
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
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.19. Payment of Taxes, Insurance and Other Charges. With respect
to each Mortgage Loan, the Servicer shall maintain accurate records reflecting
fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges which
are or may become a lien upon the Mortgaged Property and the status of primary
mortgage guaranty insurance premiums, if any, and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Servicer shall, if it has received notice of a default or
deficiency, monitor such payments to determine if they are made by the
Mortgagor. The Servicer shall maintain a third-party tax monitoring service.
Section 3.20. Covenants and Representations of the Servicer Regarding
Prepayment Charges. (a) The Servicer will not waive any Prepayment Charge or
part of a Prepayment Charge unless such waiver would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and related
Mortgage Loan and doing so is standard and customary in servicing similar
Mortgage Loans (including any waiver of a Prepayment Charge in connection with a
refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default) and in no event will it waive a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default.
(b) The information set forth in the Prepayment Charge Schedule (including
the prepayment charge summary attached thereto) is complete, true and correct in
all material respects at the date or dates respecting which such information is
furnished and each Prepayment Charge is permissible and enforceable in
accordance with its terms (except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally) under applicable state
law.
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(c) Upon discovery by the Seller or a Responsible Officer of the Trustee
of a breach of the foregoing, which materially and adversely affects the Holders
of the Class P Certificates to any Prepayment Charge, the party discovering such
breach shall give prompt written notice to the other parties. Within 60 days of
the earlier of discovery by the Servicer or receipt of notice by the Servicer of
breach, the Servicer shall cure such breach in all material respects. If the
covenant made by the Servicer in clause (a) above is breached the Servicer must
pay into the Collection Account the amount of the waived Prepayment Charge. If
the representation made by the Servicer in clause (b) above is breached, the
Servicer must pay into the Collection Account the amount of the scheduled
Prepayment Charge, less any amount previously collected and paid by the Servicer
into the Collection Account.
ARTICLE IV
Certificate Insurance Policy, Initial Interest Coverage Account and
Pre-Funding Account
Section 4.01. Certificate Insurance Policy. As soon as possible, and in no
event later than 11:00 a.m., New York time, on the second Business Day
immediately preceding each Distribution Date, the Trustee shall determine the
amount of the Available Funds for each Loan Group for such Distribution Date
minus the amount of any Premium Amount and any Trustee Fee to be paid on such
Distribution Date.
If for any Distribution Date a Deficiency Amount exists, the Trustee shall
complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the Fiscal Agent
no later than 12:00 noon, New York time, on the second Business Day preceding
such Distribution Date. The Notice shall constitute a claim for an Insured
Payment pursuant to the Certificate Insurance Policy. Upon receipt of the
Insured Payment, at or prior to the latest time payments of the Insured Payment
are to be made by the Certificate Insurer pursuant to the Certificate Insurance
Policy, on behalf of the Senior Certificateholders, the Trustee shall deposit
such Insured Payments in the Distribution Account and shall distribute such
Insured Payments only in accordance with Section 5.01(a)A.2 or B.2, as
applicable, and 5.01(a)C.3, if applicable.
The Trustee shall receive, as attorney-in-fact of each Holder of a Senior
Certificate, any Insured Payment from the Certificate Insurer and disburse the
same to each Holder of a Senior Certificate in accordance with the provisions of
Article V. Insured Payments disbursed by the Trustee 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
Senior Certificate, and the Certificate Insurer shall become the owner of such
unpaid amounts due from the Trust in respect of such Insured Payments as the
deemed assignee of such Holder and shall be entitled to receive the
Reimbursement Amount pursuant to Section 5.01(a)C.4. The Trustee hereby agrees
on behalf of each Holder of a Senior Certificate for the benefit of the
Certificate Insurer that it and they recognize that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee), to the Senior Certificateholders, the Certificate
Insurer will be entitled to receive the Reimbursement Amount pursuant to Section
5.01(a)C.4.
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It is understood and agreed that the intention of the parties is that the
Certificate Insurer shall not be entitled to reimbursement on any Distribution
Date for amounts previously paid by it unless on such Distribution Date the
Senior Certificateholders shall also have received the full amount of the
Guaranteed Distributions for such Distribution Date.
Section 4.02. Initial Interest Coverage Account and Pre-Funding Account.
(a) The Trustee has heretofore established or caused to be established and shall
hereafter maintain or cause to be maintained a separate account denominated a
Initial Interest Coverage Account, which is and shall continue to be an Eligible
Account in the name of the Trustee and shall be designated "Norwest Bank
Minnesota, National Association, as Trustee of the Delta Funding Home Equity
Loan Trust Series 2000-1 Initial Interest Coverage Account". The Initial
Interest Coverage Account shall be treated as an "outside reserve fund" under
applicable Treasury regulations and will not be part of any REMIC. Any
investment earnings on the Initial Interest Coverage Account will be treated as
owned by the Seller and will be taxable to the Seller. The amount on deposit in
the Initial Interest Coverage Account shall be invested in Eligible Investments
in accordance with the provisions of Section 5.05.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained a separate account
denominated a Pre-Funding Account, which is and shall continue to be an Eligible
Account in the name of the Trustee and shall be designated "Norwest Bank
Minnesota, National Association, as Trustee of the Delta Funding Home Equity
Loan Trust Series 2000-1 Pre-Funding Account." The Pre-Funding Account shall be
treated as an "outside reserve fund" under applicable Treasury regulations and
will not be part of any REMIC. Any Pre-Funding Earnings will be deposited into
the Initial Interest Coverage Account on each Pre-Funding Distribution Date;
provided, however, that if the final Subsequent Transfer Date occurs after the
Distribution Date in a month, on such Subsequent Transfer Date, the Trustee
shall (i) transfer the Excess Funding Amount(s) from the Pre-Funding Account to
the Distribution Account, (ii) transfer Pre-Funding Earnings to the Initial
Interest Coverage Account and (iii) close the Pre-Funding Account. The amount on
deposit in the Pre-Funding Account shall be invested in Eligible Investments in
accordance with the provisions of Section 5.05. All investment earnings on funds
on deposit in the Initial Interest Coverage Account and the Pre-Funding Account
will be treated as owned by, and will be taxable to, the Seller.
(b) On the Closing Date, the Seller will cause to be deposited the Initial
Interest Deposit in the Distribution Account and the Original Capitalized
Interest Deposit into the Initial Interest Coverage Account from the sale of the
Offered Certificates. On the Closing Date, the Seller will cause to be deposited
the Pre-Funded Amount in the Pre-Funding Account from the sale of the Offered
Certificates.
(c) On each Pre-Funding Distribution Date, the Trustee shall transfer from
the Initial Interest Coverage Account to the Distribution Account the
Capitalized Interest Requirement, if any, for such Distribution Date; provided,
however, that on the final Subsequent Transfer Date the Trustee shall (i)
transfer the Capitalized Interest Requirement, if any, for the following
Distribution Date from the Initial Interest Coverage Account to the Distribution
Account, (ii) remit the balance
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of the funds on deposit in the Initial Interest Coverage Account to the Seller
and (iii) close the Initial Interest Coverage Account.
(d) On each Subsequent Transfer Date, (i) the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans sold to the Trust
on such Subsequent Transfer Date, (ii) the Trustee shall withdraw the Overfunded
Amount, if any, from the Initial Interest Coverage Account and (iii) the Trustee
shall pay such amounts to or upon the order of the Seller with respect to such
transfer.
(e) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw such
amounts from the Pre-Funding Account on the immediately following Distribution
Date and deposit such amounts in the Distribution Account.
(f) Unless sooner closed as provided above, the Initial Interest Coverage
Account and Pre-Funding Account shall be closed on the Distribution Date
immediately following the end of the Funding Period. All amounts, if any,
remaining in the Initial Interest Coverage Account on such day shall be paid to
the Seller.
Section 4.03. Claims Upon the Certificate Insurance Policy. (a) The
Trustee shall comply with the provisions of the Certificate Insurance Policy
with respect to claims upon the Certificate Insurance Policy.
(b) At the time of the execution and delivery of this Agreement, the
Trustee shall establish a separate special purpose trust account for the benefit
of Holders of the Senior Certificates referred to herein as the "Policy Payments
Account" and over which the Trustee shall have exclusive control and sole right
of withdrawal. The Trustee shall deposit any Insured Payment made under the
Certificate Insurance Policy in the Policy Payments Account and thereafter into
the Distribution Account for distribution of such amount only for purposes of
payment to Holders of the Senior Certificates of Guaranteed Distributions for
the Senior Certificates for which a claim was made and such amount may not be
applied to satisfy any costs, expenses or liabilities of the Trustee or the
Trust. Insured Payments made under the Certificate Insurance Policy shall be
disbursed by the Trustee to Senior Certificateholders in the same manner as
distributions on the Senior Certificates are made under Section 5.01. It shall
not be necessary for such distributions to be made by checks or wire transfers
separate from the check or write transfer used to pay Guaranteed Distributions
with other funds available to make such distributions. However, the amount of
any Insured Payments made on the Senior Certificates to be paid from funds
transferred from the Policy Payments Account shall be noted in the Certificate
Register and in the statements to be furnished to Holders of the Certificates
pursuant to Section 5.03 hereof. 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 any Insured Payment received by
the Trustee as a result of any claim under the Certificate Insurance Policy and
which is required to make distributions on the
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Senior Certificates equal to Guaranteed Distributions on the Senior Certificates
on such Distribution Date, shall be withdrawn from the Policy Payments, Account,
deposited into the Distribution Account and applied directly by the Trustee,
together with all other funds to be withdrawn from the Distribution Account, to
the payment in full of Guaranteed Distributions on the Senior Certificates. Any
funds remaining in the Policy Payments Account on the first Business Day
following a Distribution Date shall be remitted in immediately available funds
to the Certificate Insurer, pursuant to the instructions of the Certificate
Insurer, by the end of such Business Day. The Trustee shall keep a complete and
accurate record of the amount of interest and principal paid in respect of any
Senior 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 reasonable prior written
notice to the Trustee.
(c) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under the Bankruptcy Code (a "Preference Claim") of any distribution
made with respect to the Senior Certificates. Each Certificateholder of Senior
Certificates, by its purchase of Senior Certificates, 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.
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions. (a) On each Distribution Date, the Trustee
shall withdraw from (x) the Policy Payments Account, any amounts on deposit
therein and apply them to make the Guaranteed Distributions and (y) the
Distribution Account the Available Funds for each Loan Group and, on the first
Distribution Date, the Class P Deposit, and apply such amounts in the following
order of priority, in each case, to the extent of the funds remaining therefor:
A. Loan Group F:
1. concurrently, to the Trustee and the Certificate Insurer,
respectively, the Trustee Fee for such Loan Group and the
Premium Amount for the related Senior Certificates and
Distribution Date;
2. concurrently, to the Classes of Senior Certificates in
Certificate Group F, the related Class Interest Distribution
for such Distribution Date;
3. the remainder pursuant to clause C. below.
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B. Loan Group A:
1. concurrently, to the Trustee and the Certificate Insurer,
respectively, the Trustee Fee for such Loan Group and the
Premium Amount for the related Senior Certificates and
Distribution Date;
2. to the Class A-1A Certificates, the related Class Interest
Distribution for such Distribution Date;
3. the remainder pursuant to clause C. below.
C. Remaining Amounts:
1. Concurrently, to the Senior Certificates in both Certificate
Groups, the related Class Interest Distribution to the extent
not paid pursuant to clauses A. and B. above on such
Distribution Date;
2. Sequentially, to the Class M-1, Class M-2 and Class B
Certificates, in that order, the related Class Monthly
Interest Amounts for such Distribution Date;
3. To the Senior Certificates, (x) the Senior Principal
Distribution Amount for such Distribution Date, excluding any
Subordination Increase Amount included therein, allocated
pursuant to Section 5.01(b) below and (y) the principal
portion of any Insured Payments for such Distribution Date,
allocated between Certificate Group F and Certificate Group A
in proportion to the respective portions of the Senior
Principal Distribution Amount to which each such Certificate
Group is otherwise entitled and applied, in the case of
Certificate Group F, in the order set forth in Section
5.01(b)(A)(i) below;
4. To the Certificate Insurer, any amount owing to it under the
Insurance Agreement;
5. To the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount for such Distribution Date, excluding any
Subordination Increase Amount included therein;
6. To the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount for such Distribution Date, excluding any
Subordination Increase Amount included therein;
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7. To the Class B Certificates, the Class B Principal
Distribution Amount for such Distribution Date, excluding any
Subordination Increase Amount included therein;
8. To the Offered Certificates, the Subordination Increase Amount
for such Distribution Date, allocated pursuant to Section
5.01(b) below;
9. To the Class M-1 Certificates, any related (a) Class Interest
Carryover Shortfall and then (b) Class Principal Carryover
Shortfall;
10. To the Class M-2 Certificates, any related (a) Class Interest
Carryover Shortfall and then (b) Class Principal Carryover
Shortfall;
11. To the Class B Certificates, any related (a) Class Interest
Carryover Shortfall and then (b) Class Principal Carryover
Shortfall;
12. To the Class BIO Certificates for concurrent deposit in the
LIBOR Carryover Fund and the Net Rate Cap Fund, the sum of the
LIBOR Carryover Fund Deposit and the Net Rate Cap Fund
Deposit;
13. To the Class A-1A Certificates, the lesser of the LIBOR
Carryover and the Available LIBOR Carryover Amount, to be
treated as paid from and to the extent of funds on deposit in
the LIBOR Carryover Fund;
14. Sequentially, (a) concurrently, to the Class A-1F, Class A-2F,
Class A-3F, Class A-4F, Class A-5F and Class A-6F
Certificates, pro rata, and (b) sequentially, to the, Class
M-1, Class M-2 and Class B Certificates, in that order, the
related Net Rate Cap Carryover, to be treated as paid from and
to the extent of funds on deposit in the Net Rate Cap Fund;
15. To the Class BIO Certificates, the Class BIO Distribution
Amount, less amounts distributed pursuant to Section 5.01(a)
C. 12 on the Distribution Date;
16. To the Successor Servicer, any Servicing Transfer Costs and
other amounts payable to the Successor Servicer pursuant to
Sections 3.01(g), 8.01 and 9.05, to the extent not otherwise
paid by the Servicer;
17 On the Class P Distribution Date or any Distribution Date
thereafter to the Class P Certificates, until the Class
Principal Balance thereof has been reduced to zero; and
18. To the Class R-1 Certificateholders, Class R-2
Certificateholders and Class R-3 Certificateholders, the
remainder in REMIC I, REMIC II and REMIC III, respectively.
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On each Distribution Date, the Class Interest Distribution for each Class
of Senior Certificates in a Certificate Group will be distributed on an equal
priority within such Certificate Group and any shortfall in the amount required
to be distributed as interest thereon to each such Class will be allocated
between such Classes pro rata based on the amount that would have been
distributed on each such Class in the absence of such shortfall.
(b) On each Distribution Date, the Trustee shall apply the amount, if any,
included in the Principal Distribution Amount, including any Subordination
Increase Amount pursuant to Section 5.01(a)C.8 hereof in the following order of
priority, in each case, to the extent of the funds remaining therefor:
(A) up to the Senior Principal Distribution Amount, concurrently, as
follows:
(i) to the Senior Certificates in Certificate Group F, the
Adjusted Senior Principal Distribution Amount allocated in the
following order of priority:
(a) to the Class A-6F Certificates, the Class A-6F Principal
Distribution, until the Class Principal Balance thereof
has been reduced to zero; and
(b) sequentially, to the Class A-1F, Class A-2F, Class A-3F,
Class A-4F, Class A-5F and Class A-6F Certificates, in
that order, until the respective Class Principal
Balances thereof are reduced to zero; and
(ii) to the Class A-1A Certificates, the Group A Principal
Distribution Amount until the Class Principal Balance thereof
has been reduced to zero:
(B) to the Subordinate Certificates, as follows:
(i) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount until the Class Principal Balance thereof
has been reduced to zero;
(ii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount until the Class Principal Balance thereof
has been reduced to zero; and
(iii) to the Class B Certificates, the Class B Principal
Distribution Amount until the Class Principal Balance thereof has been
reduced to zero; and
(C) to the Residual Certificates, any remaining principal.
Notwithstanding the priority set forth in clause (A) (i) and (ii) above,
if a Certificate Insurer Default has occurred and is continuing and the
aggregate Class Principal Balance of the Subordinate Certificates has been
reduced to zero, the Senior Principal Distribution Amount will
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be distributed concurrently to each Class of Senior Certificates on a pro rata
basis in accordance with their respective Class Principal Balances.
(c) Distributions of Prepayment Charges. On each Distribution Date on or
prior to the Class P Principal Distribution Date, the Trustee shall make
distributions to the Holders of the Class P Certificates of all Prepayment
Charges on deposit in the Distribution Account with respect to the Mortgage
Loans in each Loan Group during the related Due Period. Such Prepayment Charges
will not be available for distributions to the Holders of the other Classes of
Certificates and shall not reduce the Principal Balance of the Class P
Certificates.
(d) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Holders of Offered Certificates, by check or
money order mailed to such Certificateholder at the address appearing in the
Certificate Register, or, upon written request by a Holder of an Offered
Certificate delivered to the Trustee at least five Business Days prior to such
Record Date, by wire transfer (but only if such Certificateholder is the
Depository or such Certificateholder owns of record one or more Offered
Certificates aggregating at least $1,000,000 Original Class Principal Balance),
and, in the case of Holders of Notional Amount Certificates, Class P or Class
BIO Certificates or Residual Certificates, by wire transfer. Distributions among
Certificateholders of a Class shall be made in proportion to the Percentage
Interests evidenced by the Certificates of such Class held by such
Certificateholders.
(e) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Servicer, the Certificate Insurer or the Seller shall have
any responsibility therefor except as otherwise provided by applicable law.
Section 5.02. Compensating Interest. Not later than the Determination
Date, the Servicer shall deposit to the Collection Account an amount equal to
the lesser of (A) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting from Principal Prepayments during the
related Due Period and (B) its aggregate Servicing Fee received in the related
Due Period. The Servicer shall not have the right to reimbursement for any
amounts deposited to the Collection Account pursuant to this Section 5.02.
Section 5.03. Statements. (a) Not later than 11:00 a.m., New York time, on
the fifth Business Day prior to each Distribution Date, the Servicer shall
deliver to the Trustee by electronic means and to the Certificate Insurer via
e-mail at [email protected], a computer file containing the loan level
information called for by the applicable clauses (i) through (xxvii) below as of
the end of
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the preceding Due Period and such other information as the Trustee shall
reasonably require. Not later than 4:00 p.m., New York time, three Business Days
prior to each Distribution Date, the Trustee shall deliver to the Servicer, ,
the Certificate Insurer and the Seller by telecopy, with a hard copy thereof to
be delivered on the succeeding Distribution Date, a confirmation of the items in
clause (i) below. Not later than each Distribution Date the Trustee shall
prepare a statement (the "Remittance Report") containing the information set
forth below with respect to such Distribution Date, which information shall be
based upon the loan level information furnished by the Servicer upon which the
Trustee shall conclusively rely without independent verification or calculation
thereof:
(i) the Available Funds for each Certificate Group and each Class'
Certificate Rate for the related Distribution Date;
(ii) the aggregate amount of the distribution to each Class of
Certificates on such Distribution Date;
(iii) the amount of the distribution set forth in paragraph (i)
above in respect of interest and the amount thereof in respect of any
Class Interest Carryover Shortfall, and the amount of any Class Interest
Carryover Shortfall remaining;
(iv) the amount of the distribution set forth in paragraph (i) above
in respect of principal and the amount thereof in respect of the Class
Principal Carryover Shortfall, and any remaining Class Principal Carryover
Shortfall;
(v) the amount of Excess Interest for each Loan Group paid as
principal;
(vi) the Servicing Fee, the Premium Amount and the Reimbursement
Amount;
(vii) the Loan Group Balance of each Loan Group and the Pool
Balance, in each case as of the close of business on the last day of the
preceding Due Period;
(viii) the Class Principal Balance of each Class of Certificates
after giving effect to payments allocated to principal above;
(ix) the Overcollateralization Amount and the Required
Overcollateralization Amount as of the close of business on the
Distribution Date, after giving effect to distributions of principal on
such Distribution Date;
(x) whether a Cumulative Loss Event or a Delinquency Event has
occurred and is continuing and the calculation thereof;
(xi) the number and Principal Balances of all Mortgage Loans in each
Loan Group that were the subject of Principal Prepayments during the Due
Period;
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(xii) the amount of all Curtailments in each Loan Group that were
received during the Due Period;
(xiii) the principal portion of all Monthly Payments in each Loan
Group received during the Due Period;
(xiv) the interest portion of all Monthly Payments in each Loan
Group received on the Mortgage Loans during the Due Period;
(xv) for each Certificate Group, the amount of the Monthly Advances
and the Compensating Interest payment to be made on the Determination
Date;
(xvi) the amount to be distributed to the Class P, Class BIO and
Class R Certificateholders, respectively for the Distribution Date;
(xvii) the weighted average remaining term to maturity of the
Mortgage Loans in each Loan Group and the weighted average Loan Rate as of
the first day of the month prior to the Distribution Date;
(xviii) the amount of all payments or reimbursements to the Servicer
pursuant to Sections 3.03(ii) and (vi);
(xix) the number of Mortgage Loans in each Loan Group outstanding at
the beginning and at the end of the related Due Period;
(xx) the amount of Liquidation Loan Losses experienced during the
preceding Due Period and the Cumulative Net Losses as a percentage of the
Cut-Off Date Pool Balance;
(xxi) for each Loan Group, as of the end of the preceding calendar
month, the number and Principal Balance of Mortgage Loans which are 30-59
days delinquent; the number and Principal Balance of Mortgage Loans which
are 60-89 days delinquent; the number and Principal Balance of Mortgage
Loans which are 90 or more days delinquent (including the number and
Principal Balance of Mortgage Loans which are in foreclosure; the number
and Principal Balance of Mortgage Loans in bankruptcy; and the number and
Principal Balance of Mortgage Loans which are REO Property, each
separately set forth);
(xxii) any LIBOR Carryover distributed and any remaining LIBOR
Carryover;
(xxiii) for each Loan Group, the number and aggregate Principal
Balance of Mortgage Loans, other than Mortgage Loans in default or
imminent default, that were modified by the Servicer during the related
Due Period;
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(xxiv) the amount of Net Rate Cap Carryover distributed to each
Class in Certificate Group F, other than the Class IOF Certificates, and
each Class of Subordinate Certificates and the amount of Net Rate Cap
Carryover remaining for each such Class;
(xxv) for each Pre-Funding Distribution Date, the amount remaining
in the Initial Coverage Account;
(xxvi) for each Pre-Funding Distribution Date, the remaining
Allocated Pre-Funded Amount; and
(xxvii) the amount of the Insured Payments, if any, to be made on
such Distribution Date.
The Trustee shall forward such report to the Servicer, the Seller, the
Certificate Insurer, the Certificateholders, the Rating Agencies, Bloomberg (at
499 Park Avenue, New York, New York 10022, Attention: Mike Geller) and Intex
Solutions (at 35 Highland Circle, Needham, Massachusetts 02144, Attention:
Harold Brennman) on the Distribution Date; provided, however, that the Trustee
shall remove from the report the Premium Amount to be paid to the Certificate
Insurer prior to the submission to Bloomberg and Intex Solutions. The Trustee
may fully rely upon and shall have no liability with respect to information
provided by the Servicer.
To the extent that there are inconsistencies between the telecopy of the
Remittance Report and the hard copy thereof, the Servicer may rely upon the
latter.
In the case of information furnished pursuant to subclauses (ii), (iii),
(iv) and (vi) above, the amounts shall be expressed in a separate section of the
report as a dollar amount for each Class for each $1,000 original dollar amount
as of the related Cut-Off Date.
The Trustee will make the Remittance Report (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, and the parties to this Agreement
via the Trustee's internet website and its fax-on-demand service. The Trustee's
fax-on-demand service may be accessed by calling (301) 815-6610. The Trustee's
internet website shall initially be located at "www.ctslink.com". Assistance in
using the website or the fax-on-demand service can be obtained by calling the
Trustee's customer service desk at (301) 815-6600. Parties that are unable to
use the above distribution options are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk and indicating
such. The Trustee shall have the right to change the way Remittance Reports are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trustee shall provide timely and
adequate notification to all above parties regarding any such changes.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Regular Certificate, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (iii) and
(iv)
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above, aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be prepared and furnished by the Trustee to Certificateholders
pursuant to any requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Holders of the Regular
Certificates in respect of such Distribution Date and a statement setting forth
the amounts actually distributed to the Class R Certificateholders on such
Distribution Date together with such other information as the Trustee deems
necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared by the Trustee or and furnished to
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.
(e) The Servicer and the Trustee shall furnish to the Certificate Insurer
and each Certificateholder (if requested in writing), during the term of this
Agreement, such periodic, special or other reports or information, whether or
not provided for herein, as shall be necessary, reasonable or appropriate with
respect to the Certificateholder or otherwise with respect to the purposes of
this Agreement, all such reports or information to be provided by and in
accordance with such applicable instructions and directions (if requested in
writing) as the Certificateholder may reasonably require; provided that the
Servicer and the Trustee shall be entitled to be reimbursed by such
Certificateholder for their respective fees and actual expenses associated with
providing such reports, if such reports are not generally produced in the
ordinary course of their respective businesses or readily obtainable.
(f) Reports and computer diskettes or files furnished by the Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent required by
law or to the Rating Agencies. No Person entitled to receive copies of such
reports or diskettes or files or lists of Certificateholders shall use the
information therein for the purpose of soliciting the customers of the Seller or
for any other purpose except as set forth in this Agreement.
Section 5.04. Distribution Account. The Trustee shall establish with
itself, a separate account (the "Distribution Account") titled "Norwest Bank
Minnesota, National Association, as Trustee, in trust for the registered holders
of Delta Funding Home Equity Loan Asset-Backed Certificates, Series 2000-1." The
Distribution Account shall be an Eligible Account. The Trustee shall deposit any
amounts representing payments on and any collections in respect of the Mortgage
Loans received by it immediately following receipt thereof, including, without
limitation, all
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amounts withdrawn by the Servicer from the Collection Account pursuant to
Section 3.03 for deposit to the Distribution Account. Amounts on deposit in the
Distribution Account may be invested in Eligible Investments pursuant to Section
5.05.
Section 5.05. Investment of Accounts. (a) So long as no Event of Default
shall have occurred and be continuing, and consistent with any requirements of
the Code, all or a portion of any Account held by the Trustee shall be invested
and reinvested by the Trustee, as directed in writing by the Servicer, in one or
more Eligible Investments bearing interest or sold at a discount. If an Event of
Default shall have occurred and be continuing or if the Servicer does not
provide investment directions, the Trustee shall invest all Accounts in Eligible
Investments described in paragraph (vi) of the definition of Eligible
Investments. No such investment in any Account shall mature later than the
Business Day immediately preceding the next Distribution Date (except that (i)
if such Eligible Investment is an obligation of the Trustee or a money market
fund for which the Trustee or any Affiliate is the manager or the advisor, then
such Eligible Investment shall mature not later than such Distribution Date and
(ii) any other date may be approved by the Rating Agencies).
(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
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 5.05 is the cause
of such loss or charge.
(c) Subject to Section 9.01, the Trustee shall not in any way be held
liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 5.05).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, to the fullest extent practicable, in such manner as the Servicer
shall from time to time direct as set forth in Section 5.05(a), but only in one
or more Eligible Investments.
(e) So long as no Event of Default shall have occurred and be continuing,
all net income and gain realized from investment of, and all earnings on, funds
deposited in the Collection Account shall be for the benefit of the Servicer as
servicing compensation (in addition to the Servicing Fee), and shall be subject
to withdrawal on or before the first Business Day of the month following the
month in which such income or gain is received. The Servicer shall deposit in
the Collection Account or the Initial Interest Coverage Account, as the case may
be, the amount of any loss incurred in respect of any Eligible Investment held
therein which is in excess of the income and gain thereon immediately upon
realization of such loss, without any right to reimbursement therefore from its
own funds.
(f) All net income and gain realized from investment of, and all earnings
on, funds deposited in the Distribution Account shall be for the benefit of (x)
the Servicer for the period from the
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date of deposit to the Deposit Date, as compensation in addition to the
Servicing Fee and (y) the Trustee for the period from the Deposit Date to the
Distribution Date, as compensation (in addition to the Trustee Fee). Any such
income shall be subject to withdrawal on or before the first Business Day of the
month in which such income or gain is received. The Servicer or the Trustee, as
applicable, shall deposit in the Distribution Account the amount of any loss
incurred in respect of any Eligible Investment held therein which is in excess
of the income and gain thereon payable to the Servicer or the Trustee, as the
case may be, immediately upon the realization of such loss, without any right to
reimbursement therefore from its own funds.
Section 5.06. Allocation of Losses. On each Distribution Date, the
Servicer shall determine the total of the Applied Realized Loss Amounts for such
Distribution Date. The Applied Realized Loss Amount for any Distribution Date
shall be applied by reducing the Class Principal Balance of each Class of
Subordinate Certificates beginning with the Class of Subordinate Certificates
then outstanding with the lowest relative payment priority, in each case until
the respective Class Principal Balance thereof is reduced to zero. Any Applied
Realized Loss Amount allocated to a Class of Subordinate Certificates shall be
allocated among the Subordinate Certificates of such Class in proportion to
their respective Percentage Interests.
Section 5.07 LIBOR Carryover Fund. (a) On the Closing Date, the Trustee
shall establish and maintain in its name, in trust for the benefit of the Class
A-1A Certificateholders, the LIBOR Carryover Fund and deposit therein the amount
of $5,000 paid to the Trustee by the Seller therefor. The LIBOR Carryover Fund
shall be an Eligible Account, and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including without limitation, other moneys held by the Trustee pursuant to this
Agreement. The LIBOR Carryover Fund shall be treated as an "outside reserve
fund" under applicable Treasury regulations and will not be part of any REMIC.
Any investment earnings on the LIBOR Carryover Fund will be treated as owned by
the Class BIO Certificateholder and will be taxable to the Class BIO
Certificateholder. Distributions made to any outside reserve fund under this
document shall be treated as made to the owner of such fund.
(b) On each Distribution Date, the Trustee shall deposit amounts from the
Distribution Account to the LIBOR Carryover Fund pursuant to Section 5.01(a) C.
12. The amount required to be deposited into the LIBOR Carryover Fund on any
Distribution Date (the "LIBOR Carryover Fund Deposit") will equal the lesser of
(i) the Available LIBOR Carryover Amount and (ii) any LIBOR Carryover for such
Distribution Date or, if no LIBOR Carryover is payable on such Distribution
Date, an amount such that when added to other amounts already on deposit in the
LIBOR Carryover Fund, the aggregate amount on deposit therein will be equal to
$10,000. The Trustee shall make withdrawals from the LIBOR Carryover Fund to
make distributions pursuant to Section 5.01(a) C. 13. hereof.
(c) Funds in the LIBOR Carryover Fund may be invested in Eligible
Investments. Any earnings on such amounts shall be payable to the Class BIO
Certificates. The Class BIO Certificates shall evidence ownership of the LIBOR
Carryover Fund for federal tax purposes and shall direct the Trustee in writing
as to the investment of amounts therein.
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(d) Upon termination of the Trust, any amounts remaining in the LIBOR
Carryover Fund shall be distributed to the Certificateholders of the Class BIO
Certificates in the same manner as if distributed pursuant to Section 5.01(a) C.
15. hereof.
Section 5.08 Net Rate Cap Fund. (a) On the Closing Date, the Trustee shall
establish and maintain in its name, in trust for the benefit of Certificate
Group F, other than the Class IOF Certificates, and each Class of Subordinate
Certificates, the Net Rate Cap Fund and deposit therein the amount of $5,000
paid to the Trustee by the Seller therefor. The Net Rate Cap Fund shall be an
Eligible Account, and funds on deposit therein shall be held separate and apart
from, and shall not be commingled with, any other moneys, including without
limitation, other moneys held by the Trustee pursuant to this Agreement. The Net
Rate Cap Fund shall be treated as an "outside reserve fund" under applicable
Treasury regulations and will not be part of any REMIC. Any investment earnings
on the Net Rate Cap Fund will be treated as owned by the Class BIO
Certificateholder and will be taxable to the Class BIO Certificateholder.
Distributions made or deemed deposited to any outside reserve fund under this
document shall be treated as made to the owner of such fund.
(b) On each Distribution Date, the Trustee shall deposit amounts from the
Distribution Account to the Net Rate Cap Fund pursuant to Section 5.01(a) C. 12.
The amount required to be deposited into the Net Rate Cap Fund on any
Distribution Date (the "Net Rate Cap Fund Deposit") will equal the lesser of
(i)(a) the amounts remaining after distributions pursuant to clauses C.1 through
C.11. of Section 5.01(a) minus (b) the LIBOR Carryover Fund Deposit for such
Distribution Date and (ii) any Net Rate Cap Carryover for such Distribution Date
or, if no Net Rate Cap Carryover is payable on such Distribution Date, an amount
such that when added to other amounts already on deposit in the Net Rate Cap
Fund, the aggregate amount on deposit therein will be equal to $10,000. The
Trustee shall make withdrawals from the Net Rate Cap Fund to make distributions
pursuant to Section 5.01(a) C. 14. hereof.
(c) Funds in the Net Rate Cap Fund may be invested in Eligible
Investments. Any earnings on such amounts shall be payable to the Class BIO
Certificates. The Class BIO Certificates shall evidence ownership of the Net
Rate Cap Fund for federal tax purposes and shall direct the Trustee in writing
as to the investment of amounts therein.
(d) Upon termination of the Trust, any amounts remaining in the Net
Rate Cap Fund shall be distributed to the Certificateholders of the Class BIO
Certificates in the same manner as if distributed pursuant to Section 5.01(a)
C. 15. hereof.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Offered Certificates, the
Class BIO Certificates, the Class P Certificates and the Residual Certificates
shall be substantially in the forms set forth in Exhibits A and B respectively,
and shall, on original issue, be executed, authenticated and delivered by the
Trustee to or upon the order of the Seller concurrently with the sale and
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assignment to the Trustee of the Trust. Each Class of Offered Certificates shall
be initially evidenced by one or more certificates representing a fraction of
the applicable Original Class Principal Balance or Notional Amount, as
applicable, and shall be held in minimum dollar denominations of $25,000 and
integral multiples of $1,000 in excess thereof, except that one of each Class of
the Offered Certificate may be in a different denomination so that the sum of
the denominations of all outstanding Offered Certificates shall equal the
aggregate Original Class Principal Balance or Notional Amount, as applicable.
The Residual Certificates, Class P and Class BIO Certificates shall be held in
minimum Percentage Interests of 20%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Trustee substantially in the form provided for herein, and such authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
6.02(c), the Offered Certificates shall be Book-Entry Certificates. The Residual
Certificates shall not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates. (a)
The Certificate Registrar shall cause to be kept at the Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
The Trustee shall initially serve as Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as herein
provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates in authorized denominations and the same aggregate Percentage
Interests, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute and authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
his attorney duly authorized in writing.
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(b) Except as provided in paragraph (c) below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository as representative of the Certificate Owners of the Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and Persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i)(x) the Depository or the Seller advises the Trustee in writing
that the Depository is no longer willing or able to discharge properly its
responsibilities as Depository and (y) the Trustee or the Seller is unable to
locate a qualified successor, (ii) the Seller, at its sole option elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, the Certificate Owners of each Class of
Offered Certificates representing Percentage Interests aggregating not less than
51% advises the Trustee and Depository through the Financial Intermediaries and
the Depository 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 Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of each Class of Offered Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall at the Seller's expense, execute and authenticate the
Definitive Certificates. Neither the Seller nor the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee, the Certificate Registrar, the Servicer,
any Paying Agent, the Certificate Insurer and the Seller shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
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(d) Except with respect to the initial transfer of the Class BIO, the
Class P and Residual Certificates by the Seller, no transfer, sale, pledge or
other disposition of any Class BIO, the Class P or Residual Certificate shall be
made unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, other than the transfer of the Tax Matters Person
Residual Interest to the Trustee in reliance upon Rule 144A under the 1933 Act,
the Trustee and the Seller shall require either (i) a written Opinion of Counsel
(which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Trustee and the Seller that such transfer may be
made pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller or (ii)
the Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit N-1 or N-2) acceptable to and in form and substance reasonably
satisfactory to the Seller and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class BIO, Class P
or Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Seller 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.
No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an
expense of either the Trustee or the Trust, addressed to the Trustee, to the
effect that the purchase or holding of such ERISA Restricted Certificate will
not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. Notwithstanding anything else
to the contrary herein, (i) the representation required by clause (i) or (ii)
above with respect to any ERISA-Restricted Certificate that is a Book-Entry
Certificate shall be deemed to have been made by the Certificate Owner by virtue
of such
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Certificate Owner's acquisition of such Certificate and (ii) any purported
transfer of an ERISA Restricted Certificate to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the delivery to the Trustee
of an Opinion of Counsel satisfactory to the Trustee as described above shall be
void and of no effect.
Each Person who has or who acquires any Ownership Interest in a Residual
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Seller or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from the proposed
transferee to the effect that such transferee is a Permitted
Transferee and that it is not acquiring its Ownership Interest in
the Residual Certificate that is the subject of the proposed
transfer as a nominee, trustee or agent for any Person who is not a
Permitted Transferee; and
(B) a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this Section
6.02 shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of
the provisions of this Section 6.02, become a Holder of a Residual
Certificate, then the prior Holder of such Residual Certificate that is a
Permitted Transferee shall, upon discovery that the registration of
transfer of such Residual Certificate was not in fact permitted by this
Section 6.02, be restored to all rights as Holder thereof retroactive to
the date of registration of transfer of such Residual Certificate. The
Trustee shall be under no liability to any Person for any registration of
transfer of a Residual Certificate that is in fact not permitted by this
Section 6.02 or for making any distributions due on such Residual
Certificate to the Holder thereof or taking any other action with respect
to such Holder
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under the provisions of the Agreement so long as the Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was in fact not a
Permitted Transferee at the time such distributions were made all
distributions made on such Residual Certificate. Any such distributions so
recovered by the Trustee shall be distributed and delivered by the Trustee
to the prior Holder of such Residual Certificate that is a Permitted
Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the right
but not the obligation, without notice to the Holder of such Residual
Certificate or any other Person having an Ownership Interest therein, to
notify the Seller to arrange for the sale of such Residual Certificate.
The proceeds of such sale, net of commissions (which may include
commissions payable to the Seller or its Affiliates in connection with
such sale), expenses and taxes due, if any, will be remitted by the
Trustee to the previous Holder of such Residual Certificate that is a
Permitted Transferee, except that in the event that the Trustee determines
that the Holder of such Residual Certificate may be liable for any amount
due under this Section 6.02 or any other provisions of this Agreement, the
Trustee may withhold a corresponding amount from such remittance as
security for such claim. The terms and conditions of any sale under this
clause (v) shall be determined in the sole discretion of the Trustee, and
it shall not be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on information
provided to the Trustee by the Seller will provide to the Internal Revenue
Service, and to the persons specified in Sections 860E(e)(3) and (6) of
the Code, information needed to compute the tax imposed under Section
860E(e)(5) of the Code on transfers of residual interests to disqualified
organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC to fail to
qualify as a REMIC.
Each Tax Matters Person Residual Interest shall at all times be registered
in the name of the Tax Matters Person.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
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All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate and (ii) there is delivered to the Trustee, the
Seller and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Certificate Registrar, the Certificate Insurer, any Paying Agent and any
agent of any of them may treat the Person, including a Depository, in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 5.01 and for all other purposes
whatsoever, and none of the Servicer, the Seller, the Trustee, the Certificate
Insurer, the Certificate Registrar nor any agent of any of them shall be
affected by notice to the contrary.
Section 6.05. Appointment of Paying Agent. (a) The Paying Agent shall make
distributions to Certificateholders from the Distribution Account pursuant to
Section 5.01 and shall report the amounts of such distributions to the Trustee.
The duties of the Paying Agent may include the obligation (i) to withdraw funds
from the Collection Account pursuant to Section 3.03 and for the purpose of
making the distributions referred to above and (ii) to distribute statements and
provide information to Certificateholders as required hereunder. The Paying
Agent hereunder shall at all times be a corporation duly incorporated and
validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authorities. The
Paying Agent shall initially be the Trustee. The Trustee may appoint a successor
to act as Paying Agent, which appointment shall be reasonably satisfactory to
the Seller.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if any,
held by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree that it shall comply with all requirements of
the Code regarding the withholding of payments in respect of Federal income
taxes due from Certificate Owners and otherwise comply with the provisions of
this Agreement applicable to it.
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ARTICLE VII
The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer. The Seller and the
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Seller or Servicer,
as the case may be, herein.
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Seller or the Servicer. Any corporation into which the Seller or the
Servicer may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Seller or the Servicer shall be
a party, or any corporation succeeding to the business of the Seller or the
Servicer, shall be the successor of the Seller or the Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor Servicer shall satisfy
all the requirements of Section 8.02 with respect to the qualifications of a
successor Servicer.
Section 7.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders for
any action taken or for refraining from the taking of any action by the Servicer
in good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such Person
against any liability which would otherwise be imposed by reason of its willful
misfeasance, bad faith or negligence in the performance of duties of the
Servicer or by reason of its reckless disregard of its obligations and duties of
the Servicer hereunder; provided, further, that this provision shall not be
construed to entitle the Servicer to indemnity in the event that amounts
advanced by the Servicer to retire any senior lien exceed Net Liquidation
Proceeds realized with respect to the related Mortgage Loan. The preceding
sentence shall not limit the obligations of the Servicer pursuant to Section
9.05. The Servicer and any director or officer or employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer and any director or officer or employee or agent of the Servicer
shall be indemnified by the Trust and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Agreement or the Certificates, other than any loss, liability or expense related
to any specific Mortgage Loan or Mortgage Loans (except as any such loss,
liability or expense shall be otherwise reimbursable pursuant to this Agreement)
and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. The
Servicer may undertake any such action which it may deem necessary or desirable
in respect of this Agreement, and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust. The Servicer's
right to indemnity or reimbursement pursuant to this Section 7.03 shall
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survive any resignation or termination of the Servicer pursuant to Section 7.04
or 8.01 with respect to any losses, expenses, costs or liabilities arising prior
to such resignation or termination (or arising from events that occurred prior
to such resignation or termination). This paragraph shall apply to the Servicer
solely in its capacity as Servicer hereunder and in no other capacities.
Section 7.04. Servicer Not to Resign. Subject to the provisions of Section
7.02, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or 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 or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of each of the following conditions: (a) the
Servicer has proposed an Approved Servicer to the Trustee in writing and such
proposed Approved Servicer is reasonably acceptable to the Trustee; and (b) each
Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the Approved Servicer stating that the proposed appointment of
such Approved Servicer as Servicer hereunder will not result in the reduction or
withdrawal of the then current ratings of the Offered Certificates; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Successor Servicer
shall have assumed the Servicer's responsibilities and obligations hereunder or
the Trustee shall have designated a successor servicer in accordance with
Section 8.02. Any such resignation shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 8.01 and 8.02 as
obligations that survive the resignation or termination of the Servicer. Any
such determination permitting the resignation of the Servicer pursuant to clause
(i) above shall be evidenced by an Opinion of Counsel to such effect delivered
to the Trustee and the Certificate Insurer.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 7.04. The Servicer shall provide the Trustee with written notice
prior to the delegation of any of its duties to any Person other than any of the
Servicer's Affiliates or their respective successors and assigns.
Section 7.06. Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust and the Trustee from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
the Servicer's willful misfeasance, bad faith or negligence in the performance
of its activities in servicing or administering the Mortgage Loans pursuant to
this Agreement, including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim related
to the Servicer's misfeasance, bad faith or negligence. Any such indemnification
shall not be payable from the assets of the Trust. The provisions of this
Section 7.06 shall survive the termination of this Agreement.
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ARTICLE VIII
Default
Section 8.01. Events of Default. (a) If any one of the following events
("Events of Default") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Monthly Advance; or
(B) any other failure by the Servicer to deposit in the Collection Account
or the Distribution Account any deposit required to be made under the
terms of this Agreement which (x) results in a claim on the Certificate
Insurance Policy or (y) continues unremedied for a period of two Business
Days after the date upon which payment was required to have been made;
(ii) The failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or the
failure by the Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Servicer as
set forth in this Agreement, which failure continues unremedied for a
period of 30 days, after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer
by the Trustee or to the Servicer and the Trustee, by any Holder with
Certificates evidencing Voting Interests of at least 25% ;
(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 30 consecutive
days;
(iv) The Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar
person in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property, or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or
similar person in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 30 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations; or
(v) the Servicer Termination Test is failed;
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(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, (x) with respect solely to clause (a)(i)(A) above,
if such Monthly Advance is not made by 12:00 noon, New York time, on the second
Business Day preceding the applicable Distribution Date, the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and the Trustee shall terminate all of the rights and obligations
of the Servicer under this Agreement and the Successor Servicer appointed in
accordance with Section 8.02, shall immediately make such Monthly Advance and
assume, pursuant to Section 8.02, the duties of a successor Servicer and (y) in
the case of clause (a)(i)(B), (ii), (iii), (iv), and (v) above, the Trustee
shall, at the direction of the Holders of each Class of Offered Certificates
evidencing Voting Rights aggregating not less than 51% by notice then given in
writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency and the Seller. On or after receipt by the Servicer
of such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested in the Successor Servicer pursuant to and
under this Section 8.01; and, without limitation, the Successor Servicer is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Servicer agrees to cooperate with the Successor
Servicer and the Trustee in effecting the termination of the responsibilities
and rights of the Servicer hereunder, including, without limitation, the
transfer to the Successor Servicer for the administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer and to be
deposited by it in the Collection Account, or that have been deposited by the
predecessor Servicer in the Collection Account or thereafter received by the
predecessor Servicer with respect to the Mortgage Loans. All Servicing Transfer
Costs and other reasonable out-of-pocket costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the Successor Servicer and amending this Agreement to reflect such succession as
Servicer pursuant to this Section 8.01 shall be paid by the predecessor Servicer
or, to the extent not paid by the predecessor Servicer, by the Trust pursuant to
Section 5.01(a)C.16 (or, if the predecessor Servicer is the Trustee, by the
initial Servicer), upon presentation of reasonable documentation of such costs
and expenses.
(c) Upon the occurrence of an Event of Default, the Servicer shall act as
Servicer under this Agreement, subject to the right of removal set forth in
subsection (b) hereof, for an initial period commencing on the date on which
such Event of Default occurred and ending on the last day of the calendar
quarter in which such Event of Default occurred, which period shall be extended
by the Trustee (an "Extension Notice") for a succeeding quarterly period ending
on December 31, March 31, June 30 and September 30 of each year (each such
quarterly period for which the Servicer shall be designated to act as Servicer
hereunder, a "Term of Service") until such time as the Trustee receives written
direction from the Holders of Certificates evidencing at least 51% of the Voting
Rights not to deliver an Extension Notice, in which event the Trustee shall
follow such direction; provided that nothing in this clause (c) shall prohibit
the Trustee from removing (or prohibit Certificateholders from directing the
Trustee to remove) the Servicer pursuant to clause (b)
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above. In the event the Trustee fails to deliver an Extension Notice prior to
the end of any Term of Service, the Servicer shall be automatically terminated.
(d) If the Successor Servicer or another Person succeeds to the
obligations of Servicer hereunder, the term of the Successor Servicer or such
Person shall not be limited unless and until an Event of Default thereafter
occurs with respect to such Successor Servicer or other Person. At such time,
the provisions of Section 8.01 (c) and (d) shall become applicable to the
then-acting Servicer and the Person then-obligated to succeed such then-acting
Servicer.
Section 8.02. Appointment of Successor. (a) The Seller and the Trustee
hereby appoint, and Norwest Bank Minnesota, National Association, hereby accepts
appointment, on behalf of itself or an affiliate, upon receipt by the Servicer
of a notice of termination pursuant to Section 8.01 or upon resignation of the
Servicer pursuant to Section 7.04(i), to be the successor (the "Successor
Servicer") in all respects to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof arising on and after
its succession; provided, however, that, without affecting the immediate
termination of the rights of the Servicer hereunder, it is understood and
acknowledged by the parties hereto that there will be a period of transition not
to exceed 90 days (the "Transition Period") before the servicing transfer is
fully effected..
During the Transition Period, neither the Successor Servicer nor the
Trustee shall be responsible for the lack of information and documents that it
cannot reasonably obtain on a practicable basis under the circumstances.
As compensation therefor, the Successor Servicer shall be entitled to such
compensation as the Servicer would have been entitled to hereunder if no such
notice of termination had been given. Notwithstanding the above, if the
Successor Servicer is unwilling or legally unable to act as successor servicer,
the Trustee may appoint or petition a court of competent jurisdiction to
appoint, any established housing and home finance institution, bank or other
mortgage loan or home equity loan servicer having a net worth of not less than
$25,000,000 and that is an Approved Servicer 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; provided that the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Offered Certificates by the Rating
Agencies. Pending appointment of a successor to the Servicer hereunder, unless
the Successor Servicer is prohibited by law from so acting, the Successor
Servicer shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the successor shall be entitled to receive
compensation out of payments on the Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.08 (or such lesser compensation as the Trustee and such successor
shall agree). 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 to pay any deductible under an insurance
policy pursuant to Section 3.05 or to indemnify the Trustee pursuant to Section
7.06), 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
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representations or warranties contained herein or in any related document or
agreement. The Trustee or a successor Servicer shall have no responsibility or
obligation (i) to repurchase or substitute for any of the Mortgage Loans or (ii)
for any acts or omissions of a predecessor Servicer during the Transition
Period. The Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Successor Servicer, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of Certificateholders
and (ii) maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
Section 8.03. Waiver of Defaults. The Majority Certificateholders may, on
behalf of all Certificateholders, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VIII, provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 8.04. Notification to Certificateholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register, the Certificate Insurer and to each Rating Agency.
Section 8.05. Rights of the Certificate Insurer. By accepting its Senior
Certificate, each holder of a Senior Certificate agrees that unless a
Certificate Insurer Default exists, the Certificate Insurer shall be deemed to
be the holder of the Senior Certificates for all purposes (other than with
respect to payment on the Senior Certificates) and shall have the right to
exercise all rights of the Certificateholders of the Senior Certificates under
this Agreement and under each Class of Senior Certificates without any further
consent of the Certificateholders. In addition, each Certificateholder of a
Senior Certificate agrees that unless a Certificate Insurer Default exists, the
rights specifically enumerated in this Agreement may be exercised by the
Certificateholders of a Senior Certificate only with the prior written consent
of the Certificate Insurer.
The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Section 8.05 or any requirement for the
Certificate Insurer's consent for any period of time.
Section 8.06. Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions of
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this Article VIII and all other provisions of this Agreement which (a) permit
the Certificate Insurer to exercise rights of the Certificateholders of the
Senior Certificates, (b) restrict the ability of the Certificateholders of the
Senior Certificates, to act without the consent or approval of the Certificate
Insurer, (c) provide that a particular act or thing must be acceptable to the
Certificate Insurer, (d) permit the Certificate Insurer to direct (or otherwise
to require) the actions of the Trustee, the Servicer or the Certificateholders,
(e) provide that any action or omission taken with the consent, approval or
authorization of the Certificate Insurer shall be authorized hereunder or shall
not subject the party taking or omitting to take such action to any liability
hereunder or (f) which have a similar effect, shall be of no further force and
effect and the Trustee shall administer the Trust and perform its obligations
hereunder solely for the benefit of the Holders of the Certificates; provided,
however, that the Certificate Insurer's rights to consent to amendments, to
payments pursuant to Section 5.01(a) C.4. and to receive reports and notices
shall not be affected by a Certificate Insurer Default and all other rights
shall be immediately reinstated following the cure of such Certificate Insurer
Default. Nothing in the foregoing sentence, nor any action taken pursuant
thereto or in compliance therewith, shall be deemed to have released the
Certificate Insurer from any obligation or liability it may have to any party or
to the Certificateholders of the Senior Certificates hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default has occurred
(which has not been cured) of which a Responsible Officer has knowledge, 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 man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to be in the form specified in this Agreement, on its face, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Servicer, provide notice thereof to the
Certificateholders and will, at the expense of the Servicer, which expense shall
be reasonable given the scope and nature of the required action, take such
further action as directed by the Majority Certificateholders.
The Trustee may, in accordance with its duties hereunder, do all things
necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar
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requirements, including, but not limited to, consenting to jurisdiction, and the
appointment of agents for service of process, in jurisdictions in which the
Mortgaged Properties are located.
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 misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred,
the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or direction of the Holders of Offered
Certificates evidencing Percentage Interests aggregating not less than 51%
relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising or omitting to exercise
any trust or power conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to
in clauses (a)(i) and (ii) of Section 8.01 unless a Responsible Officer of
the Trustee at the Corporate Trust Office obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from the
Servicer or the Holders of Offered Certificates evidencing Percentage
Interests aggregating not less than 51%. This paragraph shall not be
construed to limit the effect of the first paragraph of this Section 9.01.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
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Section 9.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such advice
or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders pursuant to
the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
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 any such act; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of an Event of
Default (which has not been cured) of which a Responsible Officer has
knowledge, to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise
as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
documents, unless requested in writing to do so by the Holders of
Certificates evidencing Percentage Interests aggregating not less than
51%; 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 to such proceeding.
The reasonable expense of every such
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examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand. Nothing in this clause
(v) shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of the
Servicer until such time as the Trustee may act as Servicer pursuant to
Section 8.02;
(vii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian; and
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the authentication
of the Trustee on the Certificates) shall be taken as the statements of the
Seller, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
this Agreement, the Insurance Agreement, the Certificate Insurance Policy or of
the Certificates (other than the signature and authentication of the Trustee on
the Certificates) or of any Mortgage Loan or related document. The Trustee shall
not be accountable for the use or application by the Servicer or for the use or
application of any funds paid to the Servicer in respect of the Mortgage Loans
or deposited in or withdrawn from the Collection Account by the Servicer. The
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of any Mortgage or any
Mortgage Loan, or the perfection and priority of any Mortgage or the maintenance
of any such perfection and priority, or for or with respect to the sufficiency
of the Trust or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence and
enforceability of any hazard insurance thereon (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 8.02); the validity of the
assignment of any Mortgage Loan to the Trustee or of any intervening assignment;
the completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan (other than if the Trustee shall assume the duties of the Servicer
pursuant to Section 8.02); the compliance by the Seller or the Servicer with any
warranty or representation made under this Agreement or in any related document
or the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any non-compliance therewith or any
breach thereof; any investment of monies by or at the direction of the Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 8.02), any
Subservicer or any Mortgagor; any action of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 8.02) or any
Subservicer taken in the name of the Trustee; the failure of the Servicer or any
Subservicer to act or perform any duties required of it as agent of the Trustee
hereunder; or any
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action by the Trustee taken at the instruction of the Servicer (other than if
the Trustee shall assume the duties of the Servicer pursuant to Section 8.02);
provided, however, that the foregoing shall not relieve the Trustee of its
obligation to perform its duties under this Agreement, including, without
limitation, the Trustee's duty to review the Mortgage Files pursuant to Section
2.02. Until such time as the Trustee shall have become the Successor Servicer,
the Trustee shall have no responsibility to perfect or maintain the perfection
of any security interest or lien granted to it hereunder.
Section 9.04. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee and may transact any banking
and trust business with the Seller or the Servicer.
Section 9.05. Trustee Fees and Expenses. The Trustee will be paid the
Trustee Fee pursuant to Section 5.01 and such other amounts as agreed with the
Seller. The Seller will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement or the Insurance
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith or which is the responsibility of Certificateholders
hereunder. In addition, the Seller covenants and agrees to indemnify the Trustee
and its officers, directors, employees and agents from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with or relating to this Agreement, the Insurance Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence of the Trustee in the performance
of its duties hereunder or by reason of the Trustee's reckless disregard of
obligations and duties hereunder. To the extent that amounts payable to the
Trustee under this Section 9.05, other than the Trustee Fee, are not paid by the
Seller, such amounts shall be payable to the Trustee by the Trust pursuant to
Section 5.01(a) C. 16. This Section 9.05 shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation duly incorporated and validly existing under
the laws of the United States of America or any state thereof, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and a minimum long-term debt rating of "Baa3",
and subject to supervision or examination by federal or state authority. If such
corporation 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 9.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time such
Trustee is appointed Trustee to the effect that the Trust will not be a taxable
entity under the laws of such state. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 9.06, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 9.07.
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Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Seller, the Servicer and each Rating Agency. Upon
receiving such notice of resignation, the Seller shall promptly appoint a
successor Trustee (approved in writing by the Servicer, so long as such approval
shall not unreasonably be withheld) by written instrument, in duplicate, copies
of which instrument shall be delivered to the resigning Trustee and the
Successor Trustee; provided, however, that any such successor Trustee shall be
subject to the prior written approval of the Servicer. If no successor Trustee
shall have been so appointed and having 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.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Seller or if at any time the Trustee shall be legally unable to
act, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Seller or the Servicer may
remove the Trustee. If the Seller or the Servicer removes the Trustee under the
authority of the immediately preceding sentence, the Seller shall promptly
appoint a successor Trustee by written instrument, in duplicate, copies of which
instrument shall be delivered to the Trustee so removed and to the successor
Trustee.
The Holders of Certificates evidencing Voting Rights aggregating over 50%
of all Voting Rights may, at any time remove the Trustee by written instrument
or instruments delivered to the Servicer, the Seller and the Trustee; and the
Seller shall thereupon use its best efforts to appoint a successor trustee in
accordance with this Section 9.07.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Seller,
the Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The Seller, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this Section
9.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.06.
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If a successor Trustee is to become the Successor Servicer hereunder, it
shall be an Approved Servicer. If a successor Trustee is not to become the
Successor Servicer hereunder, the entity then acting as Successor Servicer
hereunder shall continue to act in such capacity until such time as an Approved
Servicer has agreed to assume the role of Successor Servicer hereunder.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 9.08, the Servicer shall mail notice of the succession of such Trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to the Certificate Insurer and each Rating Agency. If
the Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any corporation into
which the Trustee 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 Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be eligible under the provisions
of Section 9.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
Section 9.10. 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 or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section 9.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. 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 an Event of Default shall have occurred and be continuing, the Trustee
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 9.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 9.08. The Servicer shall be responsible for the fees of any co-trustee
or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, 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
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to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of an Event of Default, the Trustee
may accept the resignation 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 Article IX. 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
Seller and the Servicer.
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 9.11. Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection. (a) All rights of action and claims under this
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its
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agents and counsel, be for the ratable benefit of the Certificateholders or in
respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Servicer and each
Certificateholder upon reasonable notice during normal business hours, access to
all records maintained by the Trustee in respect of its duties hereunder and
access to officers of the Trustee responsible for performing such duties. Upon
request, the Trustee shall furnish the Seller, the Servicer and any requesting
Certificateholder with its most recent financial statements. The Trustee shall
cooperate fully with the Seller, the Servicer and such Certificateholder and
shall make available to the Seller, the Servicer and such Certificateholder for
review and copying such books, documents or records as may be requested with
respect to the Trustee's duties hereunder. The Seller, the Servicer and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 9.13. Suits for Enforcement. In case an Event of Default or other
default by the Servicer or the Seller hereunder shall occur and be continuing,
the Trustee may proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee and the
Certificateholders.
ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Seller, the Servicer, the Custodian and the Trustee
created hereby (other than the obligation of the Trustee to make certain
payments to Certificateholders after the final Distribution Date and the
obligation of the Servicer to send certain notices as hereinafter set forth)
shall terminate upon notice to the Trustee of the later of (x) the distribution
to Certificateholders of the final payment or collection with respect to the
last Mortgage Loan (or Monthly Advances of same by the Servicer) and (y) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due under the Agreement and the payment of all amounts
due and payable to the Certificate Insurer and the Trustee. Notwithstanding the
foregoing, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last surviving descendant of Joseph
P. Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof.
The Servicer may, at its option, terminate this Agreement on any
Distribution Date on or after the Optional Termination Date, by purchasing, on
such Distribution Date, all of the outstanding Mortgage Loans and REO Properties
at a price equal to the sum of (w) 100% of the aggregate Principal Balance of
the Mortgage Loans plus (x) the lesser of (A) the appraised value of
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any REO Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the Servicer and at the Servicer's expense
and (B) the Principal Balance of the Mortgage Loan related to such REO Property
plus (y) in each case, the greater of (i) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related Due Period and (ii) 30
days' accrued interest thereon at a rate equal to the Loan Rate, in each case
net of the Servicing Fee plus (z) any amounts due to the Certificate Insurer
under the Insurance Agreement (the "Termination Price").
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Distribution Account all amounts then on
deposit in the Collection Account (less amounts permitted to be withdrawn by the
Servicer pursuant to Section 3.03), which deposit shall be deemed to have
occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the Distribution
Account on the Determination Date before such Distribution Date of the
Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders and the Certificate Insurer mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Distribution
Date upon which final distribution of the Certificates will be made upon
presentation and surrender of Certificates at the office or agency of the
Trustee therein designated, (ii) the amount of any such final distribution and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) On the final Distribution Date, the Trustee will withdraw from the
Distribution Account and remit to the Certificate Insurer the lesser of (x) the
amount available for distribution on such final Distribution Date, net of any
portion thereof necessary to pay Certificateholders pursuant to Sections 5.01
and (y) the unpaid amounts due and owing to the Certificate Insurer pursuant to
Section 5.01. Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the holders of Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Certificates and to the extent that funds are available for
such purpose, an amount equal to the amount required to be distributed to
Certificateholders pursuant to Section 5.01 for such Distribution Date.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders to
surrender
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their Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Offered
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.
Section 10.02. Additional Termination Requirements. (a) In the event that
the Servicer exercises its purchase option as provided in Section 10.01, the
Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee shall have been furnished with an Opinion of
Counsel to the effect that the failure of the Trust to comply with the
requirements of this Section 10.02 will not (1) result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code or (2) cause any REMIC to fail to qualify as a REMIC at any time that
any Regular Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Servicer shall adopt and the Trustee shall sign a plan of complete
liquidation for each REMIC meeting the requirements of a "Qualified
Liquidation" under Section 860F of the Code and any regulations
thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Trustee, as holder of the REMIC I
Regular Interests and REMIC II Regular Interests, the unpaid principal
balance thereof plus accrued interest thereon, (B) to each Class of
Certificates the amounts payable pursuant to Section 5.01, (C) to the
Certificate Insurer, all amounts owing to the Certificate Insurer under
this Agreement and the Insurance Agreement and (D) to the Class R-1
Certificateholders, Class R-2 Certificateholders and Class R-3
Certificateholders, all cash on hand in REMIC I, REMIC II and REMIC III,
respectively, after such payments.
(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
as their attorney in fact to sign such plan) as appropriate and (ii) to take
such other action in connection therewith as may be reasonably required to carry
out such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. (a) This Agreement may be amended from time to
time by the Seller, the Servicer, and the Trustee subject, in the case of any
amendment or modification which
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affects any right, benefit, duty or obligation of the Certificate Insurer or the
Custodian, to the consent of the Certificate Insurer or the Custodian, as
applicable, in each case without the consent of any of the Certificateholders,
(i) to cure any ambiguity, (ii) to correct any defective provisions or to
correct or supplement any provisions herein that may be inconsistent with any
other provisions herein or the expectations of Certificateholders, (iii) to add
to the duties of the Servicer, (iv) to add any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, (v) to add or amend any
provisions of this Agreement as required by any Rating Agency or any other
nationally recognized statistical rating agency in order to maintain or improve
any rating of each Class of Offered Certificates (it being understood that,
after obtaining the ratings in effect on the Closing Date, none of the
Certificate Insurer, the Trustee, the Seller, or the Servicer is obligated to
obtain, maintain or improve any such rating) or (vi) to add or amend any
provisions of this Agreement to such extent as shall be necessary to maintain
the qualification of any REMIC as a REMIC; provided, however, that (x) as
evidenced by an Opinion of Counsel (at the expense of the requesting party) in
each case such action shall not adversely affect in any material respect the
interest of any Certificateholder, without regard to the existence of the
Certificate Insurance Policy, (y) in each case, such action is necessary or
desirable to maintain the qualification of any REMIC as a REMIC or shall not
adversely affect such qualification and (z) if the opinion called for in clause
(x) cannot be delivered with regard to an amendment pursuant to clause (vi)
above, such amendment is necessary to maintain the qualification of any REMIC as
a REMIC; and provided, further, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
and no Opinion of Counsel to that effect shall be required if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Offered Certificates, without regard to
the existence of the Certificate Insurance Policy.
(b) This Agreement also may be amended from time to time by the Seller,
the Servicer, and the Trustee, subject, in the case of any amendment or
modification which affects any right, benefit, duty or obligation of the
Certificate Insurer or the Custodian, to the consent of the Certificate Insurer
or the Custodian, as applicable, with the consent of the Holders of each Class
of Certificates which is affected by such amendment, evidencing Voting Rights
aggregating not less than 51% of such Class (or in the case of an amendment
which affects all classes, not less than 51% of all of the Voting Rights in the
Trust), for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments on the Certificates which are required to be made on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding.
(c) Without limiting the provisions of Sections 11.01(a) or 11.01(b) the
amendment to any of the following provisions shall be deemed to affect the
rights, benefits, duties or obligations of the Certificate Insurer and therefore
require the consent of the Certificate Insurer: (i) the amount and timing of any
amounts payable to the Certificate Insurer hereunder; (ii) the definitions of
Class Interest Distribution, Cumulative Loss Event, Delinquency Event,
Guaranteed Distributions,
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Required Overcollateralization Amount, Senior Principal Distribution Amount,
Servicing Termination Test; (iii) any other definition to the extent that the
amendment of such definition would increase or decrease the amounts or limits
calculated or specified pursuant to any of the definitions listed in clause (ii)
above or otherwise affect the intended use of any of the definitions listed in
clause (ii) above; and (iv) Section 4.01, 4.03, 8.05, 11.01, 11.09, 11.12,
11.13, and 11.14 of this Agreement. In addition, if the Trustee is acting as
Servicer hereunder, any proposed amendment shall require the consent of the
Certificate Insurer.
(d) Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of any REMIC as a REMIC and notice of
the conclusion expressed in such Opinion of Counsel shall be included with any
such solicitation. An amendment made with the consent of all Certificateholders
and executed in accordance with this Section 11.01 shall be permitted or
authorized by this Agreement notwithstanding that such Opinion of Counsel may
conclude that such amendment would adversely affect the qualification of any
REMIC as a REMIC.
(e) Prior to the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
the Certificate Insurer.
(f) It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
(g) Notwithstanding the permissive language in Section 11.01(a) and
11.01(b), upon satisfaction of the conditions in Section 11.01(a) or 11.01(b) as
applicable, the Trustee shall execute and deliver the applicable amendment;
provided, however, that the Trustee shall not be required to execute any
amendment which, based on an Opinion of Counsel, materially and adversely
affects the rights, duties or immunities of the Trustee hereunder.
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Certificateholders, accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Certificateholders. The Certificateholders
requesting such recordation shall bear all costs and expenses of such
recordation. The Trustee shall have no obligation to ascertain whether such
recordation so affects the interests of the Certificateholders.
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Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided in
Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Offered Certificates evidencing Voting Rights aggregating not less
than 51% of all the Voting Interests shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee,
hereunder and shall have offered to the Trustee, such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder, the Trustee that no one or more Holders of Certificates shall
have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 11.03, each and every
Certificateholder, the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING PROVISIONS
REGARDING CONFLICTS OF LAWS) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices. (a) All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) Delta Financial Corporation, 1000 Woodbury Road, Suite 200 Woodbury, NY
11797, (b) in the case of the Trustee, Norwest Bank Minnesota, National
Association, at the Corporate Trust Office, Attention Delta 2000-1; (c) in the
case of S&P, 55
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Water Street, 41st Floor, New York, New York 10041, Attention: Residential
Mortgage Group, (d) in the case of Fitch, One State Street Plaza, New York, New
York 10004 (e) in the case of Moody's, 99 Church Street, 4th Fl., New York, New
York 10004, (f) in the case of the Certificate Insurer, Financial Security
Assurance, Inc., 350 Park Avenue, New York, New York 10022, Attention:
Surveillance Department Re:, (Home Equity Loan Asset-Backed Certificates, Series
2000-1, Telecopy No. (212) 339-3518 or 3529 Confirmation: (212) 826-0100 (in
each case in which notice or other communication to the Certificate Insurer
refers to an Event of Default, 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 of such notice
or other communication shall be marked to indicate "URGENT MATERIAL ENCLOSED"),
or (g) as to each party, at such other address as shall be designated by such
party in a written notice to each other party. Any notice required or permitted
to be mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. Any notice or other document required to
be delivered or mailed by the Trustee to any Rating Agency shall be given on a
best efforts basis and only as a matter of courtesy and accommodation and the
Trustee shall have no liability for failure to delivery such notice or document
to any Rating Agency.
(b) Notice to Rating Agencies. The Trustee and the Servicer shall each be
obligated to use its best efforts promptly to provide notice, at the expense of
the Servicer, to each Rating Agency with respect to each of the following of
which a Responsible Officer of the Trustee or Servicer, as the case may be, has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured
or waived;
(iii) The resignation or termination of the Servicer or the Trustee;
(iv) The final payment to Holders of the Certificates of any Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the Trustee to
make advances regarding delinquent Mortgage Loans.
(c) In addition, (i) the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders described in
Section 5.03; and
(B) Each statement to Certificateholders described in Section
5.03; and
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(ii) The Servicer shall promptly furnish to each Rating Agency
copies of the following:
(A) Each annual statement as to compliance described in
Section 3.09;
(B) Each annual independent public accountants' servicing
report described in Section 3.10; and
(C) Each notice delivered pursuant to Section 8.01(b) which
relates to the fact that the Servicer has not made a Monthly Advance.
Any such notice pursuant to this Section 11.05 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to the
addresses specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01),
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Holders of the Certificates evidencing Percentage
Interests aggregating not less than 66%. The Servicer may assign the right to
reimbursement for Servicing Advances and Monthly Advances without the consent of
any Person but with prior notice thereof to the Trustee.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.02 are
and shall be deemed fully paid.
Section 11.09. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Certificateholders, the
Certificate Owners, the Certificate Insurer and their respective successors and
permitted assigns. The Certificate Insurer shall be a third-party beneficiary of
this Agreement, entitled to enforce the provisions hereof as if a party hereto.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
Section 11.10. Counterparts. This Agreement 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.
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Section 11.11. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.12. Mortgage Loans and Accounts Held for Benefit of the
Certificate Insurer. The Trustee shall hold the Mortgage Loans for the benefit
of the Certificateholders and the Certificate Insurer and all references in this
Agreement and in the Certificates to the benefit of Holders 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 Senior Certificates. The Servicer hereby
acknowledges and agrees that it shall service the Mortgage Loans for the benefit
of the Certificateholders and for the benefit of the Certificate Insurer, and
all references in this Agreement to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer.
Section 11.13. Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Senior Certificates which is made with moneys
received pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the Senior 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 the Senior Certificates within the meaning of Section 5.01. The
Seller, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Seller, the Servicer, the Trustee or
the Certificate Registrar, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on the Senior
Certificates to the Holders of such Senior Certificates, (i) the Certificate
Insurer will be fully subrogated to the rights of such Holders to receive such
principal and interest from the Trust and (ii) 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 Seller 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 Holders as otherwise set
forth herein.
Section 11.14. 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 the Certificateholders or the Rating
Agencies shall also be sent to the Certificate Insurer.
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers all as of
the day and year first above written.
DELTA FUNDING CORPORATION,
as Seller and Servicer
By /s/ Dawn Ceccarini
---------------------------
Name: Dawn Ceccarini
Title: Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By /s/ Peter A. Gobell
---------------------------
Name: Peter A. Gobell
Title: Assistant Vice President
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<PAGE>
State of New York )
) ss.:
County of New York )
On the 30th day of March, 2000 before me, a notary public in and for
the State of New York, personally appeared Dawn Ceccarini known to me who, being
by me duly sworn, did depose and say that she is the Vice President of Delta
Funding Corporation, a New York corporation, one of the parties that executed
the foregoing instrument; that she knows the seal of said company; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said company; and that she signed her name
thereto by like order.
-----------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the 30th day of March 2000, 1999 before me, a notary public in
and for the State of New York, Peter A. Gobell personally appeared, known to me
who, being by me duly did depose and say that she is an Authorized Officer of
Norwest Bank Minnesota, National Association., a national banking association,
one of the parties that executed the foregoing instrument; and that she signed
her name thereto by order of the Board of Directors of said association.
----------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
A-1-1
<PAGE>
EXHIBIT A-1
FORM OF CLASS F CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : February 29, 2000
First Distribution Date : April 15, 2000
Final Scheduled Distribution Date: : May 15, 2030
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : A-_F
A-1-2
<PAGE>
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates, Series 2000-1
Class A-_F
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate home equity loans
(the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Certificate
at any time may be less than the Initial Certificate Principal Balance set forth
on the face hereof, as described herein. This Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the Class Principal Balance) in certain monthly
distributions with respect to the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer") and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
A-1-3
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 2000
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------------
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
A-1-4
<PAGE>
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates,
Series 2000-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 2000-1, Home Equity Loan
Asset-Backed Certificates, Series 2000-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the Holders of the requisite
percentage of the Voting Rights of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the
A-1-5
<PAGE>
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which the
Pool Balance is less than 10% of the sum of the aggregate Principal Balance of
the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-1-6
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ _____________________________________.
Dated: _____________
----------------------------------------
Signature by or on behalf of assignor
A-1-7
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
A-1-8
<PAGE>
EXHIBIT A-2
FORM OF CLASS IO_ CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CLASS IOF CERTIFICATE HAS NO PRINCIPAL BALANCE.
Certificate No. :
Cut-Off Date : February 29, 2000
First Distribution Date : April 15, 2000
Final Scheduled Distribution Date : March 15, 2003
Initial Notional Amount
("Denomination") :
Initial Class Principal
Balance : None
Certificate Rate :
CUSIP :
Class : IO_
Percentage Interest
Evidenced by this Certificate :
A-2-1
<PAGE>
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates, Series 2000-1
Class IO_
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate home equity loans
(the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Certificate
at any time may be less than the Initial Certificate Principal Balance set forth
on the face hereof, as described herein. This Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the Class Principal Balance) in certain monthly
distributions with respect to the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer") and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
A-2-2
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 2000
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------------
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
A-2-3
<PAGE>
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates,
Series 2000-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 2000-1, Home Equity Loan
Asset-Backed Certificates, Series 2000-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the Holders of the requisite
percentage of the Voting Rights of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
A-2-4
<PAGE>
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which the
Pool Balance is less than 10% of the sum of the aggregate Principal Balance of
the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-2-5
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ _____________________________________.
Dated: _____________
----------------------------------------
Signature by or on behalf of assignor
A-2-6
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to _______________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : February 29, 2000
First Distribution Date : April 15, 2000
Final Scheduled Distribution Date : March 15, 2030
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate : Adjustable
CUSIP :
Class : A-_A
A-3-1
<PAGE>
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates, Series 2000-1
Class A-_A
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end adjustable rate home equity
loans (the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Certificate
at any time may be less than the Initial Certificate Principal Balance set forth
on the face hereof, as described herein. This Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the Class Principal Balance) in certain monthly
distributions with respect to the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer") and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
A-3-2
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 2000
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------------
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
A-3-3
<PAGE>
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates,
Series 2000-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 2000-1, Home Equity Loan
Asset-Backed Certificates, Series 2000-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the Holders of the requisite
percentage of the Voting Rights of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
A-3-4
<PAGE>
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which the
Pool Balance is less than 10% of the sum of the aggregate Principal Balance of
the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-3-5
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ _____________________________________.
Dated: _____________
----------------------------------------
Signature by or on behalf of assignor
A-3-6
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF SUBORDINATE [CLASS M-1, CLASS M-2 OR CLASS B] CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
A-4-1
<PAGE>
Certificate No. :
Cut-Off Date : February 29, 2000
First Distribution Date : April 15, 2000
Final Scheduled Distribution Date : May 15, 2030
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : [M-1, M-2 or B]
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates, Series 2000-1
[Class M-1, M-2 or Class B]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and adjustable
rate home equity loans (the "Mortgage Loans")
A-4-2
<PAGE>
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Certificate
at any time may be less than the Initial Certificate Principal Balance set forth
on the face hereof, as described herein. This Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the Class Principal Balance) in certain monthly
distributions with respect to the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer") and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Nothwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
A-4-3
<PAGE>
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
A-4-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 2000
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------------
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
A-4-5
<PAGE>
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates,
Series 2000-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 2000-1, Home Equity Loan
Asset-Backed Certificates, Series 2000-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller and the Trustee
with the consent of the Holders of the requisite percentage of the Voting Rights
of each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The
A-4-6
<PAGE>
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which the
Pool Balance is less than 10% of the sum of the aggregate Principal Balance of
the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-4-7
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ _____________________________________.
Dated: _____________
----------------------------------------
Signature by or on behalf of assignor
A-4-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
A-4-9
<PAGE>
EXHIBIT B
FORM OF CLASS BIO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (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 ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS BIO CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
B-1
<PAGE>
Certificate No. :
Percentage Interest
evidenced by this
Certificate :
Class : BIO
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates, Series 2000-1
Class BIO
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and variable rate
home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that DF Special Holdings Corporation is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in the Trust. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of February 29, 2000 (the "Agreement") among
the Delta Funding Corporation, as seller and servicer (in such capacities, the
"Seller" and the "Servicer") and Norwest Bank Minnesota, National Association,
as trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring
B-2
<PAGE>
to effect such transfer and such Certificateholder's prospective transferee
shall each certify to the Trustee in writing the facts surrounding the transfer.
In the event that such a transfer is to be made within three years from the date
of the initial issuance of Certificates pursuant to the Agreement, there shall
also be delivered (except in the case of a transfer pursuant to Rule 144A of the
Securities Act) to the Trustee an Opinion of Counsel that such transfer may be
made pursuant to an exemption from the Securities Act, which Opinion of Counsel
shall not be obtained at the expense of the Trustee or the Seller. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee 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.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
B-3
<PAGE>
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
* * *
B-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 2000
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------------
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
B-5
<PAGE>
[Reverse of Class BIO Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates,
Series 2000-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 2000-1, Home Equity Loan
Asset-Backed Certificates, Series 2000-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in April, 2000, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified in the Agreement. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this
B-6
<PAGE>
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which the
Pool Balance is less than 10% of the sum of the aggregate Principal Balance of
the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
B-7
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_____________ _________________________ .
Dated: _____________
------------------------------
Signature by or on behalf of assignor
B-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
B-9
<PAGE>
EXHIBIT B-1
FORM OF CLASS R CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]
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 ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-_ CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR
B-1-1
<PAGE>
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT
THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE
VOID AND OF NO EFFECT.
Certificate No. :
Percentage Interest
evidenced by this
Certificate : [99.999999%] [0.000001%]
Class : R-_
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates, Series 2000-1
Class R-_
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and variable rate
home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that [DF Special Holdings Corporation] [Delta Funding
Corporation] is the registered owner of the Percentage Interest evidenced by
this Certificate specified above in the interest represented by all Certificates
of the Class to which this Certificate belongs in the Trust. The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of February 29,
2000 (the "Agreement") among the Delta Funding Corporation, as seller and
servicer (in such capacities, the "Seller" and the "Servicer") and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.
B-1-2
<PAGE>
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except in
the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee or the Seller. The Holder hereof desiring
to effect such transfer shall, and does hereby agree to, indemnify the Trustee
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.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest
B-1-3
<PAGE>
in this Certificate if it has actual knowledge that the proposed transferee is
not a Permitted Transferee and (v) any attempted or purported transfer of any
Ownership Interest in this Certificate in violation of such restrictions will be
absolutely null and void and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
B-1-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 2000
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------------
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
B-1-5
<PAGE>
[Reverse of Class R Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST
2000-1 Home Equity Loan Asset-Backed Certificates,
Series 2000-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 2000-1, Home Equity Loan
Asset-Backed Certificates, Series 2000-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in April, 2000, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified in the Agreement. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange therefor or in lieu
B-1-6
<PAGE>
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which the
Pool Balance is less than 10% of the sum of the aggregate Principal Balance of
the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the Offered
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
B-1-7
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_____________ _________________________ .
Dated: _____________
------------------------------
Signature by or on behalf of assignor
B-1-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ____________________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
B-1-9
<PAGE>
EXHIBIT B-2
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (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 ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS P CERTIFICATE DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY
DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
B-2-1
<PAGE>
Certificate No. :
Percentage Interest
evidenced by this
Certificate :
Class : P
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates, Series 2000-1
Class P
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and variable rate
home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that DF Special Holdings Corporation is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in the Trust. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of February 29, 2000 (the "Agreement") among
the Delta Funding Corporation, as seller and servicer (in such capacities, the
"Seller" and the "Servicer") and Norwest Bank Minnesota, National Association,
as trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
This Certificate does not have a pass-through rate and will be entitled to
distributions only to the extent set forth in the Agreement. In addition, any
distribution of the proceeds of any remaining assets of the Trust will be made
only upon presentment and surrender of this Certificate at the Corporate Trust
Office or the office or agency maintained by the Trustee in Minneapolis,
Minnesota.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made
B-2-2
<PAGE>
within three years from the date of the initial issuance of Certificates
pursuant to the Agreement, there shall also be delivered (except in the case of
a transfer pursuant to Rule 144A of the Securities Act) to the Trustee an
Opinion of Counsel that such transfer may be made pursuant to an exemption from
the Securities Act, which Opinion of Counsel shall not be obtained at the
expense of the Trustee or the Seller. The Holder hereof desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee 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.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
B-2-3
<PAGE>
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
* * *
B-2-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 2000
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------------
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
B-2-5
<PAGE>
[Reverse of Class P Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Asset-Backed Certificates,
Series 2000-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 2000-1, Home Equity Loan
Asset-Backed Certificates, Series 2000-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in April, to the Person in whose name this Certificate is registered
at the close of business on the applicable Record Date in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee and the Securities Administrator with the consent of
the Holders of the requisite percentage of the Percentage Interests of each
Class of Certificates affected by such amendment, as specified in the Agreement.
Any such consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and upon all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in
B-2-6
<PAGE>
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller, the Trustee or any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which the
Pool Balance is less than 10% of the sum of the aggregate Principal Balance of
the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
B-2-7
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_____________ _________________________ .
Dated: _____________
------------------------------
Signature by or on behalf of assignor
B-2-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ________________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
B-2-9
<PAGE>
EXHIBIT C
MORTGAGE LOAN SCHEDULE
[DELIVERED TO TRUSTEE AT CLOSING]
C-1
<PAGE>
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of ________,
2000 by and among Delta Funding Corporation (the "Seller") and Delta Funding
Home Equity Loan Trust 2000-1 (the "Trust") pursuant to the Pooling and
Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of February 29, 2000, between the Seller, as
seller and servicer, and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee"), the Seller wishes to convey the Subsequent Mortgage
Loans (as defined below) to the Trust, and the Trust wishes to acquire the same
for the consideration set forth in Section IV below; and
WHEREAS, the Seller shall timely deliver to the Trustee an Addition Notice
related to such conveyance as required by Section 2.13 of the Pooling and
Servicing Agreement;
NOW THEREFORE, the Trust and the Seller hereby agree as follows:
Section I. Capitalized terms used herein shall have the meanings ascribed
to them in the Pooling and Servicing Agreement unless otherwise defined.
"Subsequent Mortgage Loans" shall mean, for purposes of this
Agreement, the Subsequent Mortgage Loans listed in the Subsequent Mortgage
Loan Schedule attached hereto as Schedule I.
"Subsequent Transfer Date" shall mean, with respect to the
Subsequent Mortgage Loans transferred hereby, the date hereof.
Section II. Subsequent Mortgage Loan Schedule. The Subsequent Mortgage
Loan Schedule attached hereto as Schedule I is a supplement to the Initial
Mortgage Loan Schedule attached as Exhibit C to the Pooling and Servicing
Agreement. The Mortgage Loans listed in the Subsequent Mortgage Loan Schedule
constitute the Subsequent Mortgage Loans to be transferred pursuant to this
Agreement on the Closing Date.
Section III. Transfer of Subsequent Mortgage Loans. As of the related
Cut-off Date, subject to and upon the terms and conditions set forth in Sections
2.01, 2.04 and 2.13 of the Pooling and Servicing Agreement and set forth in this
Agreement, the Seller hereby irrevocably sells, transfers, assigns, sets over
and otherwise conveys to the Trust without recourse other than as expressly
provided herein and in the Pooling and Servicing Agreement, all the right, title
and
D-1
<PAGE>
interest of the Seller in and to the (i) Subsequent Mortgage Loans including the
related Principal Balance as of the related Cut-off Date, all interest accruing
thereon after the related Cut-off Date, and all collections in respect of
principal received after the related Cut-Off Date; (ii) property which secured a
Subsequent Mortgage Loan and which is acquired by foreclosure or in lieu of
foreclosure; (iii) interest of the Seller in any insurance policies in respect
of the Subsequent Mortgage Loans; and (iv) all proceeds of any of the foregoing.
Section IV. Representations and Warranties of the Seller. (a) The Seller
hereby represents and warrants to the Trust for the benefit of the
Certificateholders that the representations and warranties of the Seller set
forth in Sections 2.03 and 2.04(a) of the Pooling and Servicing Agreement are
true and correct with respect to the Seller and the Subsequent Mortgage Loans as
of the Closing Date.
(b) The Seller hereby represents and warrants that (i) the aggregate of
the Principal Balances of the Subsequent Mortgage Loans listed on the Subsequent
Mortgage Loan Schedule and conveyed to the Trust pursuant to this Agreement as
of the related Cut-off Date is $__________ for Loan Group F, and $__________ for
Loan Group A, and (ii) the conditions precedent for the transfer of Subsequent
Mortgage Loans set forth in Section 2.13 of the Pooling and Servicing Agreement
have been satisfied as of the Closing Date.
(c) The Seller hereby represents and warrants that the Seller is not (i)
insolvent and will not be rendered insolvent by the transfer of Subsequent
Mortgage Loans pursuant to this Agreement or (ii) aware of any pending
insolvency of the Seller.
Section V. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
Section VI. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
D-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto authorized as of the date first
written above.
DELTA FUNDING CORPORATION
as Seller
By:
---------------------------------
Name:
Title:
DELTA FUNDING HOME EQUITY LOAN
TRUST 2000-1
By: NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
as Trustee
By:
---------------------------------
Name:
Title:
D-3
<PAGE>
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the ____ day of _________, 200_ before me, a Notary Public in and for
said State, personally appeared ______________, known to me to be a Vice
President of DELTA FUNDING CORPORATION, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
- -----------------------------
Notary Public
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the ____ day of ________, 200_ before me, a Notary Public in and for
said State, personally appeared _______________, known to me to be an
_______________________ of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, the
company that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
- -----------------------------
Notary Public
D-4
<PAGE>
EXHIBIT E
FORM OF MORTGAGE NOTE
[NOT INCLUDED HEREIN]
E-1
<PAGE>
EXHIBIT F
FORM OF MORTGAGE
[NOT INCLUDED HEREIN]
F-1
<PAGE>
EXHIBIT G
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 6.02(d)
DELTA FUNDING HOME EQUITY LOAN TRUST 2000-1
Home Equity Loan Pass-Through Certificates,
Series 2000-1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of , the proposed Transferee of an
Ownership Interest in a Residual Certificate (the "Certificate") issued pursuant
to the Pooling and Servicing Agreement, (the "Agreement"), relating to the
above-referenced Series, by and between Delta Funding Corporation, as seller and
servicer (in such capacities, the "Seller" and the "Servicer") and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"). Capitalized terms
used, but not defined herein or in Exhibit 1 hereto, shall have the meanings
ascribed to such terms in the Agreement. The Transferee has authorized the
undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date
of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
G-1
<PAGE>
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 6.02(d) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
Subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 6.02(d) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person
to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit M to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is ________________.
9. The Transferee is a U.S. Person as defined in Code Section 7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
G-2
<PAGE>
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor are we acting
on behalf of such a plan.
* * *
G-3
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this day of ________________, __ .
[NAME OF TRANSFEREE]
By:
--------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named , known or proved to me to
be the same person who executed the foregoing instrument and to be the of the
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.
Subscribed and sworn before me this __ day of __________, 20__.
------------------------------------
NOTARY PUBLIC
My Commission expires the ____ day
of ___________________, ____.
G-4
<PAGE>
EXHIBIT 1 to EXHIBIT G
Certain Definitions
-------------------
"Ownership Interest": As to any Certificate or security interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
"Permitted Transferee": Any Person other than (i) the United States or any
State or any political subdivision thereof or any agency or instrumentality of
any of the foregoing; (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing; (iii) an organization
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) (except
certain farmers' cooperatives described in Code section 521) on any excess
inclusions (as defined in Section 860E(c)(1)) with respect to any Residual
Certificate; (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(C); (v) a Person that is not (a) a citizen or resident of the
United States, (b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, (c) an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or (d) a trust if a court within the United States is able to
exercise primary supervision of the administration of the trust and one or more
United States fiduciaries have the authority to control all substantial
decisions of the trust; or (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the Freddie Mac, a
majority of its board of directors is not selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust unincorporated organization or
government or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
G-1-1
<PAGE>
EXHIBIT 2 to EXHIBIT G
Section 6.02(d) of the Agreement
--------------------------------
(d) Except with respect to the initial transfer of the Class BIO, the
Class P and Residual Certificates by the Seller, no transfer, sale, pledge or
other disposition of any Class BIO, Class P or Residual Certificate shall be
made unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, other than the transfer of the Tax Matters Person
Residual Interest to the Trustee in reliance upon Rule 144A under the 1933 Act,
the Trustee and the Seller shall require either (i) a written Opinion of Counsel
(which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Trustee and the Seller that such transfer may be
made pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller or (ii)
the Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit N-1 or N-2) acceptable to and in form and substance reasonably
satisfactory to the Seller and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class P, Class BIO
or Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Seller 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.
No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an
expense of either the Trustee
G-2-1
<PAGE>
or the Trust, addressed to the Trustee, to the effect that the purchase or
holding of such ERISA Restricted Certificate will not result in the assets of
the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those expressly undertaken in this Agreement or to
any liability. Notwithstanding anything else to the contrary herein, (i) the
representation required by clause (i) or (ii) above with respect to any
ERISA-Restricted Certificate that is a Book-Entry Certificate shall be deemed to
have been made by the Certificate Owner by virtue of such Certificate Owner's
acquisition of such Certificate and (ii) any purported transfer of an ERISA
Restricted Certificate to or on behalf of an employee benefit plan subject to
ERISA or to the Code without the delivery to the Trustee of an Opinion of
Counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Each Person who has or who acquires any Ownership Interest in a Residual
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Seller or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in the Residual Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the effect
that the proposed transferee agrees to be bound by and to abide by
the transfer restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this Section
6.02 shall be absolutely null and
G-2-2
<PAGE>
void and shall vest no rights in the purported transferee. If any
purported transferee shall, in violation of the provisions of this Section
6.02, become a Holder of a Residual Certificate, then the prior Holder of
such Residual Certificate that is a Permitted Transferee shall, upon
discovery that the registration of transfer of such Residual Certificate
was not in fact permitted by this Section 6.02, be restored to all rights
as Holder thereof retroactive to the date of registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to any
Person for any registration of transfer of a Residual Certificate that is
in fact not permitted by this Section 6.02 or for making any distributions
due on such Residual Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of the Agreement
so long as the Trustee received the documents specified in clause (iii).
The Trustee shall be entitled to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time such
distributions were made all distributions made on such Residual
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such
Residual Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the right
but not the obligation, without notice to the Holder of such Residual
Certificate or any other Person having an Ownership Interest therein, to
notify the Seller to arrange for the sale of such Residual Certificate.
The proceeds of such sale, net of commissions (which may include
commissions payable to the Seller or its Affiliates in connection with
such sale), expenses and taxes due, if any, will be remitted by the
Trustee to the previous Holder of such Residual Certificate that is a
Permitted Transferee, except that in the event that the Trustee determines
that the Holder of such Residual Certificate may be liable for any amount
due under this Section 6.02 or any other provisions of this Agreement, the
Trustee may withhold a corresponding amount from such remittance as
security for such claim. The terms and conditions of any sale under this
clause (v) shall be determined in the sole discretion of the Trustee, and
it shall not be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on information
provided to the Trustee by the Seller will provide to the Internal Revenue
Service, and to the persons specified in Sections 860E(e)(3) and (6) of
the Code, information needed to compute the tax imposed under Section
860E(e)(5) of the Code on transfers of residual interests to disqualified
organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency
G-2-3
<PAGE>
to downgrade its rating of the Certificates and (ii) an Opinion of Counsel to
the effect that such removal will not cause any REMIC to fail to qualify as a
REMIC.
Each Tax Matters Person Residual Interest shall at all times be registered
in the name of the Seller.
G-2-4
<PAGE>
EXHIBIT H
LETTER OF REPRESENTATIONS
[Not included in 8-K filing]
H-1
<PAGE>
EXHIBIT I
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
Bank One Trust Company, N.A.
2220 Chemsearch Blvd., Ste. 150
Irving, Texas 75062
Re: Custodial Agreement dated as of February 29, 2000 among Delta
Funding Corporation, Norwest Bank Minnesota, National
Association, as Trustee, and Bank One Trust Company, N.A., as
Custodian for Delta Funding Home Equity Loan Trust 2000-1, Home
Equity Loan Pass-Through Certificates, Series 2000-1.
In connection with the administration of the Mortgage Loans held by you,
as Custodian, pursuant to the above-captioned Custodial Agreement, we request
the release, and hereby acknowledge receipt, of the Mortgage File for the
Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
- --------------------
Mortgagor Name, Address & Zip Code:
- -----------------------------------
Reason for Requesting Documents (check one):
- --------------------------------
_____ 1. Mortgage Paid in Full
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation
_____ 5. Nonliquidation Reason:______________________
By:
--------------------------
(authorized signer)
Issuer:
----------------------
Address:
---------------------
I-1
<PAGE>
Date:
------------------------
Custodian
- ---------
Bank One Trust Company, N.A.,
Please acknowledge the execution of the above request by your signature and date
below:
- -------------------------- ----------------------
Signature Date
Documents returned to Custodian:
- -------------------------- ---------------------
Custodian Date
I-2
<PAGE>
EXHIBIT J
[RESERVED]
<PAGE>
EXHIBIT K
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the
"Custodial Agreement"), dated as of February 29, 2000, by and among Norwest Bank
Minnesota, National Association, not individually, but solely as trustee (the
"Trustee"), Delta Funding Corporation ("Delta") and Bank One Trust Company, N.A.
(together with any successor in interest or any successor appointed hereunder,
the "Custodian").
W I T N E S S E T H T H A T
WHEREAS, Delta, in its capacity as seller (the "Seller") and as servicer (the
"Servicer") and the Trustee, have entered into a Pooling and Servicing Agreement
dated as of February 29, 2000, relating to the issuance of Delta's Home Equity
Loan Asset-Backed Certificates, Series 2000-1 (as amended and supplemented from
time to time, the "Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by Delta under the Agreement, all upon the terms and conditions and
subject to the limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Trustee and the Custodian hereby agree as
follows:
ARTICLE I Definitions
Capitalized terms used in this Custodial Agreement and not defined herein
shall have the meanings assigned in the Agreement, unless otherwise required by
the context herein.
ARTICLE II Custody of Mortgage Documents
Section 2.1. Custodian to Act as Agent; Acceptance of Mortgage Files.
The parties hereto acknowledge that, on the Closing Date, Bank One Trust
Company, N.A. ("Bank One") has possession of the Mortgage Files. On the Closing
Date, Bank One will issue a trust receipt to the Trustee, with copies to each of
the Seller and the Servicer, certifying that it possesses the Mortgage Note
relating to each Mortgage Loan.
The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges that it will hold the Mortgage Notes, the Related
Documents, the assignments and other documents required to be delivered by the
Seller to the Custodian pursuant to Section 2.01(a) of the Agreement and
relating to the Mortgage Loans identified on Schedule I hereto and declares that
it will hold such Mortgage Notes, Related Documents, assignments and other
K-1
<PAGE>
documents and any similar documents received by the Trustee subsequent to the
date hereof (the "Mortgage Files") as agent for the Trustee, in trust, for the
benefit of all present and future Certificateholders. The Custodian agrees to
execute the Initial Certification and the Final Certification described in
Section 2.02 and set forth on Exhibits O and P of the Agreement. The Custodian,
at the request of the Trustee, shall furnish to the Trustee an electronic file
describing all outstanding exceptions to the items to be delivered to the
Seller.
Section 2.2. Recordation of Assignments.
If any Mortgage File includes one or more assignments to the Trustee of
Related Documents that have not been recorded, within 30 days of the Closing
Date, Delta, at no expense to the Custodian, shall cause to be recorded in the
appropriate public office for real property records each such assignment and,
upon receipt thereof from such public office, shall return each such assignment
to the Custodian; provided, however, that Delta shall not be required to cause
to be recorded such assignments if the related Mortgage Property is located in a
jurisdiction in which the recording thereof is not necessary to protect the
interests of the Trustee or the Certificateholders in the related Mortgage, as
set forth in Section 2.01(c) of the Agreement. The Custodian also agrees to
perform its other obligations under the Agreement, including, but not limited
to, its obligations under Sections 2.01, 2.02, 2.05, 2.13, 2.14 and 3.07
thereof.
Section 2.3. Review of Mortgage Files.
The Custodian agrees, for the benefit of the Seller and the
Certificateholders, to review, in accordance with the provisions of Section 2.02
of the Agreement, each Mortgage File. If in performing the reviews required by
this Section 2.3, the Custodian finds any document or documents constituting a
part of a Mortgage File to be unexecuted or missing or, based on the criteria
set forth in Section 2.02 of the Agreement, to be unrelated to the applicable
Mortgage Loan, the Custodian shall promptly so notify Delta and the Trustee.
In connection with such review, the Custodian makes no representations as
to, and shall not be responsible to verify (A) the validity, legality,
enforceability, due authorization, recordability, sufficiency, or genuiness of
any of the documents contained in any Mortgage File or (B) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
Section 2.4. Notification of Breaches of Representations and Warranties.
Upon discovery by the Custodian of a breach of any representation or
warranty made by Delta as set forth in Section 2.03 of the Agreement, the
Custodian shall give prompt written notice to Delta and to the Trustee.
Section 2.5. Custodian to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall promptly notify the Custodian by
delivering to the Custodian two copies of a
K-2
<PAGE>
Request for Release (Exhibit I to the Agreement), one of which will be returned
to the Servicer with the Mortgage File, executed by a Servicing Officer or in a
mutually agreeable electronic format that originates from a Servicing Officer
and shall request delivery to it of the Mortgage File. The Custodian agrees,
upon receipt of such certification and request, promptly to release the related
Mortgage File to the Servicer.
From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, the Servicer shall deliver to the Custodian two copies of a
Request for Release requesting that possession of all of the Mortgage File be
released to the Servicer and certifying as to the reason for such release. With
such Request for Release, the Servicer shall deliver to the Custodian a receipt
signed by a Servicing Officer of the Servicer on behalf of the Servicer (or in a
mutually agreeable electronic format that originates from a Servicing Officer),
and upon receipt of the foregoing, the Custodian shall deliver the Mortgage File
or such document to the Servicer and the Servicer shall hold the Mortgage File
or such document in trust for the benefit of the Seller and the
Certificateholders. The Servicer shall cause each Mortgage File to be returned
to the Custodian when the need therefor by the Servicer no longer exists, unless
(i) the Mortgage Loan has been liquidated and the Liquidation Proceeds relating
to the Mortgage Loan have been deposited in the Collection Account to the extent
required by the Agreement or (ii) the Mortgage File has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered to the Custodian a certificate of a Servicing Officer
of the Servicer certifying as to the name and address of the Person to which
such Mortgage File was delivered and the purpose or purposes of such delivery.
In the event of the liquidation of a Mortgage Loan, the Custodian shall deliver
such receipt with respect thereto to the Servicer upon deposit of the related
Liquidation Proceeds in the Distribution Account to the extent required by the
Agreement.
Section 2.6. Assumption Agreements.
In the event that any assumption agreement or substitution of liability
agreement is entered into with respect to any Mortgage Loan subject to this
Custodial Agreement in accordance with the terms and provisions of the
Agreement, the Servicer shall notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which document shall be
added to the related Mortgage File and, for all purposes, shall be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting parts thereof.
ARTICLE III Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Trustee.
With respect to each Mortgage Note, Related Document and other documents
constituting each Mortgage File which are delivered to the Custodian, the
Custodian is exclusively the bailee and agent of the Trustee, holds such
documents for the benefit of the Trust and the
K-3
<PAGE>
Certificateholders and undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.5 of this Custodial Agreement, no Mortgage Note, Related
Document or other document constituting a part of a Mortgage File shall be
delivered by the Custodian to the Servicer or otherwise released from the
possession of the Custodian.
Section 3.2. Indemnification.
Delta hereby agrees to indemnify and hold the Custodian harmless from and
against all claims, liabilities, losses, actions, suits or proceedings at law or
in equity, or any other expenses, fees or charges of any character or nature,
which the Custodian may incur or with which the Custodian may be threatened by
reason of its acting as custodian under this Custodial Agreement, including
indemnification of the Custodian against any and all expenses, including
attorney's fees if counsel for the Custodian has been approved by the Seller,
which approval shall not be unreasonably withheld, and the cost of defending any
action, suit or proceedings or resisting any claim. Notwithstanding the
foregoing, it is specifically understood and agreed that in the event any such
claim, liability, loss, action, suit or proceeding or other expense, fees, or
charge shall have been caused by reason of any negligent act, negligent failure
to act, or willful misconduct on the part of the Custodian, or which shall
constitute a willful breach of its duties hereunder, the indemnification
provisions of this Custodial Agreement shall not apply. The indemnification
provided by this Section 3.2 shall survive the termination or assignment of this
Custodial Agreement or the resignation or removal of the Custodian hereunder.
Section 3.3. Custodian May Own Certificates.
The Custodian in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights it would have if it were not
Custodian.
Section 3.4. Custodian's Fees and Expenses.
Delta will pay all fees payable to the Custodian hereunder for all
services rendered by it in the exercise and performance of any of the powers and
duties hereunder of the Custodian, as set forth in a separate letter agreement.
Delta will pay or reimburse the Custodian upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Custodian in
accordance with any of the provisions of this Custodial Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ), except any such expense, disbursement
or advance as may arise from its negligence or bad faith.
Section 3.5. Custodian May Resign; Trustee May Remove Custodian.
The Custodian may resign from the obligations and duties hereby imposed
upon it as such obligations and duties relate to its acting as Custodian of the
Mortgage Loans upon giving 60 days written notice to the Trustee. Upon receiving
such notice of resignation, the Trustee shall either take custody of the
Mortgage Files itself and give prompt notice thereof to Delta and the
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Custodian or promptly appoint a successor Custodian which is able to satisfy the
requirements of Section 3.7 (i) of this Custodial Agreement by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Custodian and one copy to the successor Custodian. If the Trustee
shall not have taken custody of the Mortgage Files and no successor Custodian
shall have been so appointed and have accepted resignation, the resigning
Custodian may petition any court of competent jurisdiction for the appointment
of a successor Custodian. All fees and expenses of any successor Custodian shall
be the responsibility of Delta.
The Trustee may remove the Custodian at any time for cause, or otherwise
the Trustee may remove the Custodian at any time upon giving 60 days written
notice. In such event, the Trustee shall take custody of the Mortgage Files
itself, or shall appoint, or petition a court of competent jurisdiction to
appoint, a successor Custodian hereunder. Any successor Custodian shall be a
depository institution subject to supervision or examination by federal or state
authority and shall be able to satisfy the other requirements contained in
Section 3.7 (i) of this Custodial Agreement.
Any resignation or removal of the Custodian and appointment of a successor
Custodian pursuant to any of the provisions of this Section 3.5 shall become
effective only upon acceptance of appointment by the successor Custodian and
subject to the prior approval of Delta. The Trustee shall give prompt notice to
Delta and the Custodian of the appointment of any successor Custodian.
Section 3.6. Merger or Consolidation of Custodian.
Any Person into which the Custodian may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
Person succeeding to the business of the Custodian, shall be the successor of
the Custodian hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 3.7. Representations of the Custodian.
The Custodian hereby represents and warrants as follows:
(i) It is a national banking association subject to supervision or
examination by a federal authority, has a combined capital and surplus of
at least $50,000,000 and is qualified to do business in the jurisdiction
in which it will hold any Mortgage File;
(ii) It has full power, authority and legal right to execute and
deliver this Custodial Agreement and to perform its obligations hereunder
and has taken all necessary action to authorize the execution, delivery
and performance by it of this Custodial Agreement;
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(iii) To the best of its knowledge, after reasonable investigation,
the execution and delivery by it of this Custodial Agreement and the
performance by it of its obligations hereunder will not violate any
provision of its Charter or By-Laws or any law or regulation governing it
or any order, writ, judgment or decree of any court, arbitrator or
governmental authority or agency applicable to it or any of its assets. To
the best of its knowledge, after reasonable investigation, such execution,
delivery and performance will not require the authorization, consent or
approval of, the giving of notice to, the filing or registration with, or
the taking of any other action with respect to, any governmental authority
or agency regulating its activities. To the best of its knowledge, after
reasonable investigation, such execution, delivery and performance will
not conflict with, or result in a breach or violation of, any material
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which it is a party or by which it or its properties are bound; and
(iv) This Custodial Agreement has been duly executed and delivered
by it. This Custodial Agreement, when executed and delivered by the other
parties hereto, will constitute its valid, legal and binding obligation,
enforceable against it in accordance with its terms, except as the
enforcement thereof may be limited by applicable debtor relief laws and
that certain equitable remedies may not be available regardless of whether
enforcement is sought in equity or at law.
Section 3.8. Limitations on the Responsibilities of the Custodian.
(a) Neither the Custodian nor any of its Affiliates, directors,
officers, agents, counsel, attorneys-in-fact, and employees shall be liable for
any action or omission to act hereunder except for its own or such person's
gross negligence or willful misconduct. Notwithstanding the foregoing sentence,
in no event shall the Custodian or its Affiliates, directors, officers, agents,
counsel, attorneys-in-fact, and employees be held liable for any special,
indirect, punitive or consequential damages resulting from any action taken or
omitted to be taken by it or them hereunder or in connection herewith even if
advised of the possibility of such damages. The provisions of this Section 3.8
shall survive the resignation or removal of the Custodian and the termination of
this Agreement.
(b) The Custodian shall not be responsible for preparing or filing any
reports or returns relating to federal, state or local income taxes with respect
to this Agreement, other than for the Custodian's compensation or for
reimbursement of expenses.
(c) The Custodian shall not be responsible or liable for, and makes no
representation or warranty with respect to, the validity, adequacy or perfection
of any lien upon or security interest in any Mortgage File.
(d) The Custodian shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall include, but
not be limited to, acts of God, strikes, lockouts, riots, acts or war or
terrorism, epidemics, nationalization, expropriation,
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currency restrictions, governmental regulations superimposed after the fact,
fire, communication line failures, computer viruses, power failures, earthquakes
or other disasters.
(e) The duties and obligations of the Custodian shall only be such as
are expressly set forth in this Agreement or as set forth in a written amendment
to this Agreement executed by the parties hereto or their successors and
assigns. In the event that any provision of this Agreement implies or requires
that action or forbearance be taken by a party, but is silent as to which party
has the duty to act or refrain from acting, the parties agree that the Custodian
shall not be the party required to take the action or refrain from acting. In no
event shall the Custodian have any responsibility to ascertain or take action
except as expressly provided herein.
(f) Nothing in this Agreement shall be deemed to impose on the Custodian
any duty to qualify to do business in any jurisdiction, other than (i) any
jurisdiction where any Mortgage File is or may be held by the Custodian from
time to time hereunder, and (ii) any jurisdiction where its ownership of
property or conduct of business requires such qualification and where failure to
qualify could have a material adverse effect on the Custodian or its property or
business or on the ability of the Custodian to perform it duties hereunder.
(h) The Trustee and Delta agree that the Custodian may delegate any of
its duties under this Agreement to any of its agents, attorneys-in-fact, or
Affiliates. Any such agent, attorney-in-fact, or Affiliate (and such Affiliate's
directors, officers, agents and employees) which performs duties in connection
with this Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which the Custodian
is entitled under this Agreement.
(i) The Custodian shall have no duty to ascertain whether or not any
cash amount or payment has been received by the Seller and Servicer or any third
person.
ARTICLE IV Miscellaneous Provisions
Section 4.1. Notices.
All notices, requests, consents and demands and other communications
required under this Custodial Agreement or pursuant to any other instrument or
document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified below (unless changed by the particular party whose address
is stated herein by similar notice in writing), in which case the notice will be
deemed delivered when received:
The Trustee: Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
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<PAGE>
Attention: Corporate Trust Services, Delta
Funding Home Equity Loan Asset-Backed
Certificates,
Series 2000-1
Telecopy: (410) 884-2363
Confirmation: Peter Gobell (410) 884-2136
The Custodian: Bank One Trust Company, N.A.
2220 Chemsearch Blvd., Ste. 150
Irving, Texas 75062
Attention: Gloria Sadler
Telecopy: (972) 785-5342
Confirmation: (972) 785-5215
Delta: Delta Funding Corporation
1000 Woodbury Road, Suite 200
Woodbury, New York 11797
Attention: Executive Department
Telecopy No.: (516) 364-9450
Confirmation: (516) 364-8500
Section 4.2. Amendments.
No modification or amendment of or supplement to this Custodial Agreement
shall be valid or effective unless the same is in writing and signed by all
parties hereto, and the Trustee shall not enter into any amendment hereof except
as permitted by the Agreement. The Trustee shall give prompt notice to the
Custodian of any amendment or supplement to the Agreement and furnish the
Custodian with written copies thereof. Delta and the Trustee agree to obtain the
Custodian's written consent prior to entering into any amendment or modification
of the Agreement which affects any right, benefit, duty, or obligation of the
Custodian thereunder.
Section 4.3. Governing Law.
This Custodial Agreement shall be deemed a contract made under the laws of
the State of New York and shall be construed and enforced in accordance with and
governed by the laws of the State of New York (without regard to its conflicts
of laws provisions)
Section 4.4. Recordation of Agreement.
To the extent permitted by applicable law, this Custodial Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties subject to the Mortgage Loans are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by Delta and at its expense on direction by the Trustee, but only
upon
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direction accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders; provided however, that the Trustee shall be under no
obligation to determine the necessity of the recordation of this Agreement.
For the purpose of facilitating the recordation of this Custodial
Agreement as herein provided and for other purposes, this Custodial Agreement
may be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Custodial Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Custodial
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Custodial Agreement or of the Certificates or the rights of
the Holders thereof.
Section 4.6. Waiver of Trial By Jury.
Each party hereto waives the right to trial by jury in any action, suit,
proceeding, or counterclaim of any kind arising out of or related to this
Custodial Agreement. In the event of litigation, this Custodial Agreement may be
filed as a written consent to a trial by the court.
Section 4.7. 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 4.8. Reliance of Custodian.
In the absence of bad faith, negligence or willful misconduct on the part
of the Custodian, the Custodian may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or the document furnished to the
Custodian, reasonably believed by the Custodian to be genuine and to have been
signed or presented by the proper party or parties and conforming to the
requirements of this Custodial Agreement; but in the case of any Related
Document or other request, instruction, document or certificate which by any
provision hereof is specifically required to be furnished to the Custodian, the
Custodian shall be under a duty to examine the same to determine whether or not
it conforms to the requirements of this Custodial Agreement.
The Custodian may rely upon the validity of documents delivered to it,
without investigation as to their authenticity or legal effectiveness and Delta
will hold the Custodian harmless from any claims that may arise or be asserted
against the Custodian because of the
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<PAGE>
invalidity of any such documents. Except as provided herein, no provision of
this Custodial Agreement shall require the Custodian to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, if it should have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. The Custodian may consult with competent counsel
with regard to legal questions arising out of or in connection with this
Custodial Agreement and the informed advice or opinion of such counsel shall be
full and complete authorization and protection in respect of any action taken,
omitted or suffered by the Custodian in good faith in accordance herewith.
Section 4.9. Transmission of Mortgage Files.
Written instructions as to the method of shipment and shipper(s) the
Custodian is directed to utilize in connection with the transmission of Mortgage
Files and Related Documents in the performance of the Custodian's duties
hereunder shall be delivered by the Servicer to the Custodian prior to any
shipment of any Mortgage Files and Related Documents hereunder. The Servicer
will arrange for the provision of such services at its sole cost and expense
(or, at the Custodian's option, reimburse the Custodian for all costs and
expenses incurred by the Custodian consistent with such instructions) and will
maintain such insurance against loss or damage to Mortgage Files and Related
Documents as the Servicer deems appropriate. Without limiting the generality of
the provisions of Section 3.2 above, it is expressly agreed that in no event
shall the Custodian have any liability for any losses or damages to any person,
including without limitation, the Servicer, arising out of actions of the
Custodian consistent with instructions of the Servicer. If the Custodian does
not receive written direction, the Custodian is hereby authorized and
indemnified to utilize a nationally recognized courier service.
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<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BANK ONE TRUST COMPANY, N.A.
as Custodian
By:
----------------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:
----------------------------
Name:
Title:
DELTA FUNDING CORPORATION
By:
-----------------------------
Name: Dawn Ceccarini
Title: Vice President
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<PAGE>
Schedule I
to Custodial Agreement
List of Mortgage Loans
K-I
<PAGE>
EXHIBIT L
DELINQUENCY AND LOSS INFORMATION
[NOT INCLUDED HEREIN]
L-1
<PAGE>
EXHIBIT M
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Re: Delta Funding Home Equity Loan Asset-Backed
Certificates, Series 2000-1, [Class P], [Class BIO], [Class R-1],
[Class R-2] and [Class R-3]
-----------------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) with respect to our disposition of the Class [P], Class [BIO], Class [R-1],
Class [R-2] or Class [R-3] Certificates, we have no knowledge that the
transferee is not a Permitted Transferee.
Very truly yours,
------------------------
By:
--------------------------------
Authorized Officer
M-1
<PAGE>
EXHIBIT N-1
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Seller]
[Seller Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 2000-1
Home Equity Loan Pass-Through Certificates,
Series 2000-1, Class [ ]
------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Seller concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not
N-1-1
<PAGE>
sell, transfer or otherwise dispose of any Certificates unless (1) such sale,
transfer or other disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-----------------------------
Authorized Officer
N-1-2
<PAGE>
EXHIBIT N-2
FORM OF RULE 144A LETTER
[DATE]
[Seller]
[Seller Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 2000-1
Home Equity Loan Pass-Through Certificates,
Series 2000-1, Class [ ]
-------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have had
the opportunity to ask questions of and receive answers from the Seller
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) either (i) we are not an employee benefit plan that is subject
to the Employee Retirement Income Security Act of 1974, as amended, or a plan
that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan or (ii) the purchaser is
an insurance company which is purchasing such Certificates with funds obtained
in an "insurance company general account" (as such term is defined in Section
V(e)of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60, (d) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Act or that would render the disposition of the Certificates a violation of
Section 5 of the Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to
N-2-1
<PAGE>
act, in such manner with respect to the Certificates, (e) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Act and have
completed either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. We are aware that the sale to us is being made in reliance
on Rule 144A. We are acquiring the Certificates for our own account or for
resale pursuant to Rule 144A and further, understand that such Certificates may
be resold, pledged or transferred only (i) to a person reasonably believed to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-------------------------
Authorized Officer
N-2-2
<PAGE>
ANNEX 1 TO EXHIBIT N-2
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ 1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan
- ------------------------
1 Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least $10,000,000
in securities.
N-2-1-1
<PAGE>
association or equivalent institution and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940.
(c) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
(d) For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market.
N-2-1-2
<PAGE>
Further, in determining such aggregate amount, the Buyer may have included
securities owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such securities
were not included if the Buyer is a majority-owned, consolidated subsidiary of
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
(e) The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
Print Name of Buyer
By:
----------------------------
Name:
Title:
Date:
N-2-1-3
<PAGE>
ANNEX 2 TO EXHIBIT N-2
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
(b) In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
N-2-2-1
<PAGE>
___ The Buyer owned $__________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $____________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
(c) The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
(d) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
(e) The Buyer is familiar with Rule 144A and under-stands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
N-2-2-2
<PAGE>
(f) Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
Print Name of Buyer or Adviser
By:
---------------------------
Name:
Title:
IF AN ADVISER:
------------------------------
Print Name of Buyer
Date:
N-2-2-3
<PAGE>
EXHIBIT O
FORM OF
INITIAL CERTIFICATION
[DATE]
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Delta Funding Corporation
1000 Woodbury Road
Woodbury, New York 11797
Re: Pooling and Servicing Agreement, dated as of February 29, 2000
between Delta Funding Corporation, as Seller and Servicer and
Norwest Bank Minnesota, National Association, as Trustee, Home
Equity Loan Asset-Backed Certificates, Series 2000-1
Ladies and Gentlemen:
In accordance with the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Custodian,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified on the attachment hereto), it has reviewed the documents
delivered to it pursuant to Section 2.02 of the Pooling and Servicing Agreement
and has determined that (i) all documents required to be delivered to it
pursuant to the above-referenced Pooling and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on
their face and have not been mutilated, damaged, torn or otherwise physically
altered and relate to such Mortgage Loans, (iii) based on its examination and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule as to the information set forth in clauses (ii), (iii), (v) and
(vii) of the definition "Mortgage Loan Schedule" set forth in the Pooling and
Servicing Agreement accurately reflects the information set forth in the
Trustee's Mortgage File and (iv) each Mortgage Note has been endorsed as
provided in Section 2.01 of the Pooling and Servicing Agreement. The Custodian
has made no independent examination of such documents beyond the review
specifically required in the above-referenced Pooling and Servicing Agreement.
The Custodian makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan
O-1
<PAGE>
Schedule, or (ii) the collectibility, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANK ONE TRUST COMPANY, N.A.,
as Custodian
By:
---------------------------------
Name:
Title:
O-2
<PAGE>
EXHIBIT P
FORM OF FINAL CERTIFICATION
_________, ____
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Delta Funding Corporation
1000 Woodbury Road
Suite 200
Woodbury, New York 11797-9003
Re: Pooling and Servicing Agreement, dated as of February 29, 2000
relating to Delta Funding Home Equity
Loan Trust 2000-1
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) the Custodian has reviewed the documents delivered to it
pursuant to Section 2.01 (other than items listed in Section 2.01(a)(vii) and
(viii)) of the Pooling and Servicing Agreement and has determined that (i) all
such documents are in its possession, (ii) such documents have been reviewed by
it and have not been mutilated, damaged, torn or otherwise physically altered
and relate to such Mortgage Loan, (iii) based on its examination, and only as to
the foregoing documents, the information set forth in the Mortgage Loan Schedule
respecting such Mortgage Loan is correct and (iv) each Mortgage Note has been
endorsed as provided in Section 2.01 of the Pooling and Servicing Agreement.
The Custodian has made no independent examination of such documents beyond
the review specifically required in the above-referenced Pooling and Servicing
Agreement. The Custodian makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any such documents contained in each
or any of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii)
the collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
P-1
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANK ONE TRUST COMPANY, N.A.,
as Custodian
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
P-2
<PAGE>
EXHIBIT Q
SUBSEQUENT FUNDING PARAMETERS
A. Subsequent Loan Criteria - Loan Group F. Following the addition of the
Subsequent Mortgage Loans, the Loan Group F Mortgage Loans must be in
compliance with the following characteristics:
(a) The weighted average original CLTV ratio shall be no greater than
73%;
(b) The weighted average coupon shall not be less than 10.920%;
(c) The weighted average remaining term to stated maturity shall be
at least 305 months;
(d) Single zip code concentrations for Loan Group F shall not exceed
2% of the Original Loan Group Balance;
(e) Single state concentration in Loan Group F shall not exceed 45%
of the Original Loan Group Balance;
(f) Mortgage Loans secured by second liens shall not exceed 12% of
the Original Loan Group Balance;
(g) Non-owner occupied properties shall not exceed 17% of the
Original Loan Group Balance;
(h) The weighted average credit score (FICO) shall be at least 598;
(i) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Cut-off Date;
(j) Each Subsequent Mortgage Loan will not have a coupon less than
7.5%; and
(k) All Mortgage Loans will be secured by a first or second lien.
B. Subsequent Loan Criteria - Loan Group A. Following the addition of
Subsequent Mortgage Loans, the Loan Group A Mortgage Loans must be in
compliance with the following characteristics:
(a) The weighted average original LTV ratio shall be no greater than
79%;
(b) The weighted average coupon shall not be less than 10.650%;
(c) The weighted average remaining term to stated maturity shall be
at least 350 months;
(d) Each Loan Group A Mortgage Loan must have an outstanding Principal
Balance of not more than $350,000;
Q-1
<PAGE>
(e) Each Loan Group A Mortgage Loan must be a first lien fully
amortizing loan with level payments over a maximum of 30 years;
(f) Single zip code concentrations for Loan Group A shall not exceed
2% of the Original Loan Group Balance;
(g) Single state concentration in Loan Group A shall not exceed 30%
of the Original Loan Group Balance;
(h) All Mortgage Loans will be secured by first liens.
(i) Non-owner occupied properties shall not exceed 12% of the
Original Loan Group Balance;
(j) The weighted average credit score (FICO) shall be at least 580;
(k) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Cut-off Date; and
(l) Each Subsequent Loan will not have a coupon less than 7.69%.
Q-2
<PAGE>
EXHIBIT R
PREPAYMENT CHARGE SCHEDULE
[not included in 8-K filing]
R-1
