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EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
CENTEX HOME EQUITY LOAN TRUST 2000-C
Among
CHEC FUNDING, LLC,
as Depositor,
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION,
as Seller,
CHEC CONDUIT FUNDING, LLC,
as Conduit Seller,
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION,
as Servicer,
and
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
Dated as of September 1, 2000
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.02. Use of Words and Phrases . . . . . . . . . . . . . . . . . . . . . 30
Section 1.03. Captions; Table of Contents. . . . . . . . . . . . . . . . . . . . 30
Section 1.04. Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. Establishment of the Trust . . . . . . . . . . . . . . . . . . . . 31
Section 2.02. Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.03. Purposes and Powers. . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.04. Appointment of the Trustee; Declaration of Trust . . . . . . . . . 31
Section 2.05. Expenses of the Trust. . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.06. Ownership of the Trust . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.07. Situs of the Trust . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.08. Designation of Interests in REMICS . . . . . . . . . . . . . . . . 32
Section 2.09. Miscellaneous REMIC Provisions . . . . . . . . . . . . . . . . . . 35
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE
SERVICER AND THE SELLER; COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01. Representations and Warranties of the Depositor. . . . . . . . . . 37
Section 3.02. Representations and Warranties of the Servicer . . . . . . . . . . 39
Section 3.03. Representations and Warranties of the Sellers. . . . . . . . . . . 41
Section 3.04. Covenants of Sellers to Take Certain Actions with Respect to
the Home Equity Loans in Certain Situations. . . . . . . . . . . . 44
Section 3.05. Sale Treatment of the Home Equity Loans and Qualified
Replacement Mortgages. . . . . . . . . . . . . . . . . . . . . . . 54
Section 3.06. Acceptance by Trustee; Certain Substitutions of Home Equity
Loans; Certification by Trustee. . . . . . . . . . . . . . . . . . 58
Section 3.07. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 3.08. Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 3.09. Cooperation Procedures . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . 62
Section 4.02. Sale of Certificates . . . . . . . . . . . . . . . . . . . . . . . 62
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ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.02. Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.03. Execution, Authentication and Delivery . . . . . . . . . . . . . . 63
Section 5.04. Registration and Transfer of Certificates. . . . . . . . . . . . . 64
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates. . . . . . . . . 66
Section 5.06. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . 67
Section 5.07. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 5.08. Limitation on Transfer of Ownership Rights . . . . . . . . . . . . 67
Section 5.09. Assignment of Rights . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VI COVENANTS
Section 6.01. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 6.02. Money for Distributions to be Held in Trust; Withholding . . . . . 70
Section 6.03. Protection of Trust Estate . . . . . . . . . . . . . . . . . . . . 71
Section 6.04. Performance of Obligations . . . . . . . . . . . . . . . . . . . . 72
Section 6.05. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.06. No Other Powers. . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.07. Limitation of Suits. . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.08. Unconditional Rights of Owners to Receive Distributions. . . . . . 74
Section 6.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . 74
Section 6.10. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . 74
Section 6.11. Control by Owners. . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.12. Indemnification by CHEC. . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. Collection of Money. . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.02. Establishment of Accounts. . . . . . . . . . . . . . . . . . . . . 76
Section 7.03. Flow of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.04. Supplemental Interest Reserve Fund . . . . . . . . . . . . . . . . 80
Section 7.05. Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . 81
Section 7.06. Payment of Trust Expenses. . . . . . . . . . . . . . . . . . . . . 82
Section 7.07. Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.08. Accounting and Directions by Trustee . . . . . . . . . . . . . . . 84
Section 7.09. Reports by Trustee to Owners and Certificate Insurer . . . . . . . 85
Section 7.10. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. Servicer and Sub-Servicers . . . . . . . . . . . . . . . . . . . . 89
Section 8.02. Collection of Certain Home Equity Loan Payments. . . . . . . . . . 90
Section 8.03. Sub-Servicing Agreements Between Servicer and Sub-Servicers. . . . 90
Section 8.04. Successor Sub-Servicers. . . . . . . . . . . . . . . . . . . . . . 91
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Section 8.05. Liability of Servicer; Indemnification . . . . . . . . . . . . . . 91
Section 8.06. No Contractual Relationship Between Sub-Servicer, Trustee or
the Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 8.07. Assumption or Termination of Sub-Servicing Agreement by Trustee. . 92
Section 8.08. Principal and Interest Account . . . . . . . . . . . . . . . . . . 92
Section 8.09. Delinquency Advances and Servicing Advances. . . . . . . . . . . . 94
Section 8.10. Compensating Interest; Repurchase of Home Equity Loans . . . . . . 95
Section 8.11. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . 96
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution Agreements. . . . 97
Section 8.13. Realization Upon Defaulted Home Equity Loans; Workout of Home
Equity Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 8.14. Trustee to Cooperate; Release of Files . . . . . . . . . . . . . .100
Section 8.15. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . .101
Section 8.16. Annual Statement as to Compliance. . . . . . . . . . . . . . . . .101
Section 8.17. Annual Independent Certified Public Accountants' Reports . . . . .102
Section 8.18. Access to Certain Documentation and Information Regarding the
Home Equity Loans. . . . . . . . . . . . . . . . . . . . . . . . .102
Section 8.19. Assignment of Agreement. . . . . . . . . . . . . . . . . . . . . .102
Section 8.20. Removal of Servicer; Retention of Servicer; Resignation of
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Section 8.21. Inspections by Certificate Insurer; Errors and Omissions
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
Section 8.22. Additional Servicing Responsibilities for Second Mortgage
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
Section 8.23. The Group II Home Equity Loans . . . . . . . . . . . . . . . . . .108
Section 8.24. Merger, Conversion, Consolidation or Succession to Business of
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109
Section 8.25. Notices of Material Events . . . . . . . . . . . . . . . . . . . .109
Section 8.26. Indemnification by the Servicer. . . . . . . . . . . . . . . . . .110
Section 8.27. Reports on Foreclosure and Abandonment of Properties . . . . . . .110
ARTICLE IX TERMINATION OF TRUST
Section 9.01. Termination of Trust . . . . . . . . . . . . . . . . . . . . . . .111
Section 9.02. Termination Upon Option of the OWNER OF THE CLASS X-IO
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . .111
Section 9.03. Termination Upon Loss of REMIC Status. . . . . . . . . . . . . . .113
Section 9.04. Disposition of Proceeds. . . . . . . . . . . . . . . . . . . . . .115
Section 9.05. Netting of Amounts . . . . . . . . . . . . . . . . . . . . . . . .115
ARTICLE X THE TRUSTEE
Section 10.01. Certain Duties and Responsibilities. . . . . . . . . . . . . . . .116
Section 10.02. Removal of Trustee for Cause . . . . . . . . . . . . . . . . . . .118
Section 10.03. Certain Rights of the Trustee. . . . . . . . . . . . . . . . . . .120
Section 10.04. Not Responsible for Recitals or Issuance of Certificates . . . . .121
Section 10.05. May Hold Certificates. . . . . . . . . . . . . . . . . . . . . . .122
Section 10.06. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . .122
Section 10.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . .122
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Section 10.08. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . .123
Section 10.09. Resignation and Removal; Appointment of Successor. . . . . . . . .123
Section 10.10. Acceptance of Appointment by Successor Trustee . . . . . . . . . .125
Section 10.11. Merger, Conversion, Consolidation or Succession to Business of
the Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . .125
Section 10.12. Reporting; Withholding . . . . . . . . . . . . . . . . . . . . . .126
Section 10.13. Liability of the Trustee . . . . . . . . . . . . . . . . . . . . .126
Section 10.14. Appointment of Co-Trustee or Separate Trustee. . . . . . . . . . .127
Section 10.15. Appointment of Custodians. . . . . . . . . . . . . . . . . . . . .128
ARTICLE XI MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions . . . . . . . . . . . . . . .129
Section 11.02. Form of Documents Delivered to the Trustee . . . . . . . . . . . .129
Section 11.03. Acts of Owners . . . . . . . . . . . . . . . . . . . . . . . . . .130
Section 11.04. Notices, etc. to Trustee. . . . . . . . . . . . . . . . . . . . .131
Section 11.05. Notices and Reports to Owners; Waiver of Notices . . . . . . . . .131
Section 11.06. Rules by Trustee . . . . . . . . . . . . . . . . . . . . . . . . .132
Section 11.07. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . .132
Section 11.08. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .132
Section 11.09. Benefits of Agreement. . . . . . . . . . . . . . . . . . . . . . .132
Section 11.10. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . .132
Section 11.11. Governing Law; Submission to Jurisdiction. . . . . . . . . . . . .132
Section 11.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .133
Section 11.13. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133
Section 11.14. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .134
Section 11.15. Paying Agent; Appointment and Acceptance of Duties . . . . . . . .135
Section 11.16. REMIC Status . . . . . . . . . . . . . . . . . . . . . . . . . . .135
Section 11.17. Additional Limitation on Action and Imposition of Tax. . . . . . .137
Section 11.18. Appointment of Tax Matters Person. . . . . . . . . . . . . . . . .138
Section 11.19. The Certificate Insurer. . . . . . . . . . . . . . . . . . . . . .138
Section 11.20. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138
Section 11.21. Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . .139
Section 11.22. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139
Section 11.23. Rule 144A Information. . . . . . . . . . . . . . . . . . . . . . .141
ARTICLE XII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. Trust Estate and Accounts Held for Benefit of the Certificate
Insurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143
Section 12.02. Claims Upon the Policies; Policy Payments Account. . . . . . . . .143
Section 12.03. Effect of Payments by the Certificate Insurer; Subrogation . . . .144
Section 12.04. Notices to the Certificate Insurer . . . . . . . . . . . . . . . .145
Section 12.05. Third-Party Beneficiary. . . . . . . . . . . . . . . . . . . . . .145
Section 12.06. Rights to the Certificate Insurer To Exercise Rights of Owners . .145
Section 12.07. Trustee to Hold the Certificate Insurance Policies.. . . . . . . .145
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Section 12.08. Trustee to Act Solely with Consent of the Certificate Insurer. . .146
SCHEDULE I-A SCHEDULE OF THE GROUP I HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF THE GROUP II HOME EQUITY LOANS
SCHEDULE I-C SELLER SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-D CONDUIT SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-E INVESTMENT INSTRUCTIONS TO TRUSTEE
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT B FORM OF CLASS X-IO CERTIFICATE
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D [INTENTIONALLY OMITTED]
EXHIBIT E-1 FORM OF TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT E-2 FORM OF CUSTODIAN'S ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT I-1 FORM OF CERTIFICATE REGARDING TRANSFER (ACCREDITED INVESTOR)
EXHIBIT I-2 FORM OF CERTIFICATE OF TRANSFER (RULE 144A)
EXHIBIT J HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT K DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT L DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT M FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
EXHIBIT N FORM OF LIQUIDATION REPORT
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POOLING AND SERVICING AGREEMENT, relating to CENTEX HOME EQUITY LOAN
TRUST 2000-C, dated as of September 1, 2000 by and among CHEC FUNDING, LLC, a
Delaware limited liability company, in its capacity as the depositor (the
"Depositor"), CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION, a
Nevada corporation ("CHEC") in its capacities as the seller (in such capacity,
the "Seller") and as the servicer (in such capacity, the "Servicer"), CHEC
CONDUIT FUNDING, LLC, a Delaware limited liability company (the "Conduit
Seller"; together with the Seller, the "Sellers") and BANK ONE, NATIONAL
ASSOCIATION, a national banking association, in its capacity as the trustee (the
"Trustee").
WHEREAS, the Seller wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Seller and the Conduit Seller wish to sell to the Depositor,
the Depositor wishes to purchase from the Seller and the Conduit Seller and to
sell to the Trustee, and the Trustee wishes to purchase, the Home Equity Loans;
WHEREAS, the Servicer has agreed to service the Home Equity Loans, which
constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed and
authenticated by the Trustee, valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, Bank One, National Association is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Sellers, the Servicer, and the
Trustee hereby agree as follows:
CONVEYANCE
The Seller with respect to the Seller Home Equity Loans, and the Conduit
Seller with respect to the Conduit Home Equity Loans, each hereby bargains,
sells, conveys, assigns and transfers to the Depositor, in trust, without
recourse and for the exclusive benefit of the Owners of the Certificates and the
Certificate Insurer, all of its right, title and interest in and to (a) all
principal collected and interest due on the Home Equity Loans on and after the
Cut-Off Date and any and all other benefits accruing from the Home Equity Loans
which the Depositor is causing to be delivered to the Custodian on behalf of the
Trustee herewith, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments
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thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; and (b) proceeds of all the foregoing (including, but not by way
of limitation, all proceeds of any mortgage insurance, flood insurance,
hazard insurance and title insurance policy relating to the Home Equity
Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of
any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of
the foregoing) to pay the Certificates as specified herein (the "Home Equity
Loan Assets").
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the benefit of the Owners of the Certificates and the Certificate Insurer,
without recourse, all the right, title and interest of the Depositor in and to
the Trust Estate.
In addition to the foregoing, the Depositor shall cause the Certificate
Insurer to deliver two Certificate Insurance Policies to the Trustee for the
benefit of the Owners of the Class A Certificates.
The Trustee acknowledges such sale, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform the duties herein in
accordance with the provisions of the Operative Documents.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"ACCOUNT": Any account established in accordance with Section 7.02, 8.08
or 12.02 hereof.
"ADJUSTED CERTIFICATE RATE": As of any date of determination thereof, a
rate equal to the sum of (a) the Weighted Average Certificate Rate and (b) any
portion of the Premium Amount (calculated as a percentage of the then
outstanding principal amount of the Class A Certificates) and the Trustee Fee
(calculated as a percentage of the outstanding Loan Balances as of the first day
of the related Remittance Period) in each case then accrued and outstanding.
"AFFILIATE": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the
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ownership of voting securities, by contract or otherwise and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AGREEMENT": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"ANNUAL LOSS PERCENTAGE (ROLLING TWELVE MONTH)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the calendar
month of each Remittance Period for the twelve immediately preceding Remittance
Periods and the denominator of which is the aggregate of the Loan Balances as of
the Cut-Off Date.
"APPRAISED VALUE": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity Loan which is a purchase money mortgage or with
respect to which the Property was sold within 12 months preceding the time of
origination, the sales price of the Property, if such sales price is less than
such appraised value.
"AUTHORIZED OFFICER": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, Assistant Secretary or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and having direct responsibility for the
administration of this Agreement or any other officers of the Trustee to whom a
matter arising under this Agreement may be referred.
"AVAILABLE FUNDS": As to each Home Equity Loan Group and Distribution
Date, the amount on deposit in the Certificate Account with respect to such Home
Equity Loan Group on the Distribution Date, disregarding the amounts of any
Insured Payments to be made on the Distribution Date.
"AVAILABLE FUNDS SHORTFALL": As to each Home Equity Loan Group and
Distribution Date, an amount equal to the excess, if any, of (x) the aggregate
of the amounts required to be distributed pursuant to clauses (ii) and (iii) of
Section 7.03(b) over (y) the Available Funds for such payments for such Home
Equity Loan Group and Distribution Date.
"BUSINESS DAY": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in New York, New York, Dallas, Texas, the city
in which the Corporate Trust Office is located or the city in which the
Certificate Insurer is located or, with respect to the obligations of the
Custodian hereunder, the State of California, are authorized or obligated by law
or executive order to be closed.
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"CARRY-FORWARD AMOUNT": With respect to any Class of Class A
Certificates and any Distribution Date, an amount equal to the sum of (1) the
amount, if any, by which (x) the Current Interest for such Class for the
immediately preceding Distribution Date exceeded (y) the amount of the actual
distribution made to Owners of such Class with respect to interest on such Class
on the immediately preceding Distribution Date and (2) interest on such excess
for the related Interest Period at the related Certificate Rate for the Class of
Class A Certificates.
"CERTIFICATE": Any one of the Class A Certificates, the Class X-IO
Certificates or the Class R Certificates, each representing the interests and
the rights described in this Agreement.
"CERTIFICATE ACCOUNT": The segregated certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "Bank One, National Association, as Trustee on behalf of the
Owners of the Centex Home Equity Loan Trust 2000-C, Centex Home Equity Loan
Asset-Backed Certificates." The Certificate Account shall be an Eligible
Account.
"CERTIFICATE INSURANCE POLICIES": The Certificate Guaranty Insurance
Policies (numbers: 330990 and 331000) dated September 15, 2000 with respect to
the Class A Certificates and all endorsements thereto, issued by the Certificate
Insurer for the benefit of the Owners of the Class A Certificates.
"CERTIFICATE INSURER": MBIA Insurance Corporation, a stock insurance
company organized under the laws of the State of New York and any successor
thereto.
"CERTIFICATE INSURER DEFAULT": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required
under either of the Certificate Insurance Policies in accordance with their
terms; or
(b) the Certificate Insurer shall have (i) filed a petition
or commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance law or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority shall have
entered a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for the Certificate Insurer or for all or
any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent, or receiver of the Certificate
Insurer or of all or any material portion of its property.
"CERTIFICATE PRINCIPAL BALANCE": As of the Startup Day as to each of the
following Classes of Class A Certificates, the principal balances thereof, as
follows:
4
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<TABLE>
<S> <C>
Class A-l Certificates - $97,000,000
Class A-2 Certificates - $47,000,000
Class A-3 Certificates - $46,000,000
Class A-4 Certificates - $63,000,000
Class A-5 Certificates - $23,840,000
Class A-6 Certificates - $31,000,000
Class A-7 Certificates - $92,160,000
</TABLE>
As of any time of determination after the Startup Day, with respect to a
Class of Class A Certificates, the Certificate Principal Balance of such Class
as of the Startup Day less the aggregate of all amounts actually distributed to
such Class in reduction of such Class' Certificate Principal Balance pursuant to
Section 7.03 hereof on all prior Distribution Dates; PROVIDED, HOWEVER, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Certificate Principal Balance of a Class shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
The Class X-IO Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"CERTIFICATE RATE": Any of the Class A-1 Certificate Rate, the Class A-2
Certificate Rate, the Class A-3 Certificate Rate, the Class A-4 Certificate
Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate Rate or the
Class A-7 Certificate Rate.
"CHEC": Centex Credit Corporation d/b/a Centex Home Equity Corporation.
"CIVIL RELIEF ACT INTEREST SHORTFALLS": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
Equity Loans during the most recently ended Remittance Period is less than (ii)
interest accrued thereon for such Remittance Period pursuant to the Note at the
related Coupon Rate.
"CLASS": Any class of the Class A Certificates or the Class X-IO
Certificates or the Class R Certificates.
"CLASS A CERTIFICATE": Any one of the Group I Certificates or Group II
Certificates.
"CLASS A-1 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-l Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
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<PAGE>
"CLASS A-2 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-3 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-4 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-5 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-6 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-7 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-1 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-1 Certificates, 7.62% per annum.
"CLASS A-2 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-2 Certificates, 7.40% per annum.
"CLASS A-3 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-3 Certificates, 7.46% per annum.
6
<PAGE>
"CLASS A-4 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-4 Certificates, 7.72% per annum.
"CLASS A-5 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-5 Certificates, the lesser of (A) 7.99% per annum (or 8.49% per
annum for each Interest Period occurring after the Clean-Up Call Date) and (B)
the Group I Net WAC Cap for the Distribution Date.
"CLASS A-6 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-6 Certificates, the lesser of (A) 7.54% per annum and (B) the Group
I Net WAC Cap for the Distribution Date.
"CLASS A-6 CALCULATION PERCENTAGE": For any Distribution Date will be
the fraction, expressed as a percentage, the numerator of which is the
Certificate Principal Balance of the Class A-6 Certificates, and the denominator
of which is the total of the Certificate Principal Balances of the Group I
Certificates, in each case before giving effect to any distributions in
reduction of the Certificate Principal Balances of the Group I Certificates
pursuant to Section 7.03 hereof.
"CLASS A-6 LOCKOUT DISTRIBUTION AMOUNT": For any Distribution Date will
be an amount equal to the product of (1) the applicable Class A-6 Lockout
Percentage for the Distribution Date, (2) the Class A-6 Calculation Percentage
and (3) the Class A Principal Distribution Amount with respect to the Group I
Certificates for the Distribution Date. In no event shall the Class A-6 Lockout
Distribution Amount exceed the outstanding Certificate Principal Balance of the
Class A-6 Certificates or the Class A Principal Distribution Amount applicable
to the Group I Certificates for the Distribution Date.
"CLASS A-6 LOCKOUT PERCENTAGE": For each Distribution Date will be as
follows:
<TABLE>
<CAPTION>
Distribution Date Lockout Percentage
----------------- ------------------
<S> <C>
October 2000 through September 2003 0%
October 2003 through September 2005 45%
October 2005 through September 2006 80%
October 2006 through September 2007 100%
October 2007 and thereafter 300%
</TABLE>
"CLASS A-7 AVAILABLE FUNDS CAP": With respect to any Interest Period and
the related Distribution Date will be a rate per annum equal to the fraction,
expressed as a percentage, the numerator of which is the product of (a) the
weighted average of the Net Coupon Rates (minus the Minimum Spread) on the Group
II Home Equity Loans as of the beginning of the related Remittance Period and
(b) the aggregate Loan Balance of the Group II Home Equity Loans as of the
beginning of the related Remittance Period, and the denominator of which is the
outstanding Certificate Principal Balance of the Class A-7 Certificates (before
giving effect to payments of principal on the Distribution Date) (adjusted to an
effective rate, calculated by multiplying such fraction by 30 and dividing by
the actual number of days elapsed in the related Interest Period,
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<PAGE>
reflecting accrued interest calculated on the basis of a 360-day year and the
actual number of days elapsed).
"CLASS A-7 CERTIFICATEHOLDERS' INTEREST INDEX CARRYOVER": The sum of (A)
the excess of (1) the amount of interest the Class A-7 Certificates would
otherwise be entitled to receive on the Distribution Date had the Class A-7
Certificate Rate been calculated at the Class A-7 Formula Rate for the
Distribution Date over (2) the amount of interest payable on the Class A-7
Certificates at the Class A-7 Available Funds Cap for the Distribution Date and
(B) the Class A-7 Certificateholders' Interest Index Carryover for all previous
Distribution Dates not previously paid to Class A-7 Certificateholders
(including any interest accrued thereon at the Class A-7 Formula Rate).
"CLASS A-7 CERTIFICATE RATE": With respect to any Distribution Date and
the Class A-7 Certificates, the lesser of (A) the Class A-7 Formula Rate and (B)
the Class A-7 Available Funds Cap for the Distribution Date.
"CLASS A-7 FORMULA RATE": For any Distribution Date is the sum of (1)
LIBOR and (2) 0.24% per annum (or 0.48% per annum for each Interest Period
occurring after the Clean-Up Call Date).
"CLASS A DISTRIBUTION AMOUNT": For each Home Equity Loan Group and
Distribution Date shall be the sum of (x) Current Interest for the Class A
Certificates related to the Home Equity Loan Group and (y) the Class A Principal
Distribution Amount for the Home Equity Loan Group and all other amounts
distributed in reduction of the Certificate Principal Balances of the related
Class A Certificates pursuant to Section 7.03(b) hereof.
"CLASS A PRINCIPAL DISTRIBUTION AMOUNT": With respect to the Class A
Certificates of each Home Equity Loan Group and Distribution Date shall be the
lesser of:
(a) the related Available Funds remaining after distributions pursuant
to clauses (i) and (ii) of Section 7.03(b); and
(b) the excess, if any, of
(1) the sum of (without duplication):
(A) the principal portion of all scheduled monthly
payments on the Home Equity Loans related to the Home Equity Loan
Group actually received by the Servicer during the related
Remittance Period and any Prepayments on the Home Equity Loans
made by the Mortgagors of Home Equity Loans in the related Home
Equity Loan Group and actually received by the Servicer during the
related Remittance Period in each case to the extent the amounts
are received by the Trustee on or prior to the Monthly Remittance
Date;
(B) the outstanding principal balance of each Home
Equity Loan in the related Home Equity Loan Group that was
repurchased by the Seller or purchased by
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<PAGE>
the Servicer on or prior to the related Monthly Remittance Date in
each case to the extent the amounts are received by the Trustee on
or prior to the Monthly Remittance Date;
(C) any Substitution Amounts relating to principal,
delivered by the Seller on the related Monthly Remittance Date in
connection with a substitution of a Home Equity Loan in the
related Home Equity Loan Group;
(D) all Net Liquidation Proceeds actually collected by
or on behalf of the Servicer with respect to the Home Equity Loans
in the related Home Equity Loan Group during the related
Remittance Period (to the extent the Net Liquidation Proceeds
relate to principal) in each case to the extent the amounts are
received by the Trustee on or prior to the Monthly Remittance
Date;
(E) the amount of any Collateralization Deficit with
respect to the related Home Equity Loan Group for the Distribution
Date; and
(F) the principal portion of the proceeds received by
the Trustee with respect to the related Home Equity Loan Group
upon termination of the Trust (to the extent the proceeds relate
to principal); over
(2) the amount of any Overcollateralization Release Amount
with respect to the related Home Equity Loan Group for the Distribution
Date;
provided, however, on the Distribution Date occurring in October 2030,
the related Class A Principal Distribution Amount payable to any
outstanding Class of Class A Certificates shall be no less than the
Certificate Principal Balance for such Class of Class A Certificates.
"CLASS R CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit C, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein. The Class R Certificate shall evidence
(i) an interest designated as the Class R-1 Certificate which is the "residual
interest" in REMIC I and (ii) an interest designated as the Class R-2
Certificate which is the "residual interest" in REMIC II for the purposes of the
REMIC Provisions. The Owner of the Class R Certificate shall be entitled to
separate such Certificate into its component Class R-1 and Class R-2 Certificate
parts, as further described in the Class R Certificate attached hereto as
Exhibit C.
"CLASS X-IO CERTIFICATE": Any one of the Certificates designated on the face
thereof as a Class X-IO Certificate, substantially in the form annexed hereto as
Exhibit B, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein, and evidencing an interest designated as a
"regular interest" in REMIC I created hereunder for the purposes of the REMIC
Provisions.
"CLASS X-IO DISTRIBUTION AMOUNT": With respect to any Distribution Date,
the lesser of (i) the aggregate Available Funds, if any, remaining after the
making of all applications, transfers
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<PAGE>
and disbursements described in Sections 7.03(b)(i) through 7.03(b)(viii) hereof
and (ii) the sum of the amounts described in footnotes (5) and (6) of Section
2.08(b) for the current and for all prior Distribution Dates less amounts
distributed to the Class X-IO Certificates on prior Distribution Dates
(including amounts described in Section 7.03(b)(ix)).
"CLEAN-UP CALL DATE": The first Distribution Date following the last day
of the related Remittance Period on which the aggregate Loan Balance of all the
Home Equity Loans has declined to less than 20% of the aggregate Loan Balance of
the Home Equity Loans as of the Cut-Off Date.
"CLOSING": As defined in Section 4.02 hereof.
"CODE": The Internal Revenue Code of 1986, as amended.
"COLLATERALIZATION DEFICIT": With respect to either Home Equity Loan
Group and any Distribution Date, the amount, if any, by which (x) the related
aggregate of the Certificate Principal Balances with respect to such Home Equity
Loan Group, after taking into account the payment of all distributions with
respect to such Home Equity Loan Group on such Distribution Date (without regard
to any Insured Payment to be made on such Distribution Date in respect of any
Collateralization Deficit and except for any distributions in respect of the
Collateralization Deficit with respect to such Home Equity Loan Group), exceeds
(y) the aggregate Loan Balances of the Home Equity Loans in such Home Equity
Loan Group as of the close of business on the last day of the related Remittance
Period.
"COMMISSION": The Securities and Exchange Commission.
"COMPENSATING INTEREST": As defined in Section 8.10(a) hereof.
"CONDUIT HOME EQUITY LOANS": The home equity loans listed on the Conduit
Schedule of Home Equity Loans.
"CONDUIT SCHEDULE OF HOME EQUITY LOANS": The Schedule of Home Equity
Loans attached as Schedule I-D hereto.
"CONDUIT SELLER": CHEC Conduit Funding, LLC, a Delaware limited
liability company.
"CONDUIT SERVICER": CHEC in its capacity as servicer with respect to the
Conduit Warehousing Facility.
"CONDUIT WAREHOUSING FACILITY": The Mortgage Loan Warehousing Facility
dated November 16, 1999 among CHEC Conduit Funding, LLC, Centex Credit
Corporation, CHARTA Corporation, Corporate Receivables Corporation, Citibank,
N.A. and Citicorp North America, Inc., as Agent.
"CORPORATE TRUST OFFICE": The principal office of the Trustee at 1 Bank
One Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, Attn: Global Corporate
Trust Services (as of the Startup Day), or at such other address as the Trustee
may designate by notice to the Depositor,
10
<PAGE>
the Seller, the Servicer, the Owners and the Certificate Insurer, or the
principal office of any successor Trustee hereunder.
"COUPON RATE": The rate of interest borne by each Note from time to
time.
"CRAM DOWN LOSS": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance of such Home Equity Loan, the amount of such
reduction. A "Cram Down Loss" shall be deemed to have occurred on the date of
issuance of such order.
"CUMULATIVE LOSS PERCENTAGE": As of any date of determination thereof,
the aggregate of all Realized Losses since the Startup Day as a percentage of
the Original Aggregate Loan Balance.
"CURRENT INTEREST": With respect to each Class of Class A Certificates
means, with respect to any Distribution Date: (1) the aggregate amount of
interest accrued during the related Interest Period at the related Certificate
Rate on the Certificate Principal Balance of the Class of Class A Certificates
plus (2) the Carry-Forward Amount, if any, with respect to the Class of Class A
Certificates; provided, however, that with respect to each Class of Class A
Certificates, the amount described in clause (1) above will be reduced by the
Class' pro rata share of any Civil Relief Act Interest Shortfalls (based on the
amount of interest otherwise due to such Class for such Interest Period)
relating to such Home Equity Loan Group during the related Remittance Period.
"CURRENT WAC EXCESS": With respect to any Distribution Date, the portion
of Current Interest being distributed with respect to the Class A-7 Certificates
equal to interest accrued thereon at a rate equal to the excess of the Class A-7
Certificate Rate over the Group II Net WAC Cap.
"CUSTODIAL AGREEMENT": The Custodial Agreement dated as of September 1,
2000 between the Custodian, the Servicer and the Trustee.
"CUSTODIAN": Bank One Trust Company, N.A., as Custodian on behalf of the
Trustee pursuant to the Custodial Agreement and any successor Custodian.
"CUT-OFF DATE": The later of (i) the opening of business on September 1,
2000 and (ii) the date of origination with respect to a Home Equity Loan, but in
no event later than the Startup Day.
"DEFICIENCY AMOUNT": Means, as of any Distribution Date, the excess, if
any, of (a) the sum of (1) the Current Interest for the related Class A
Certificates for the Distribution Date and (2) the Group I Guaranteed Principal
Amount or the Group II Guaranteed Principal Amount, as applicable, for the
Distribution Date over (b) the related Total Available Funds for such
Distribution Date (net of the Premium Amount, the Trustee Fee and Transition
Expenses, if any, of the related Home Equity Loan Group and after giving effect
to the cross-collateralization provisions of this Agreement).
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<PAGE>
"DELINQUENCY ADVANCE": As defined in Section 8.09(a) hereof.
"DELINQUENT": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"DELIVERY ORDER": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Depositor to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"DEPOSITOR": CHEC Funding, LLC, a Delaware limited liability company, or
any successor thereto.
"DEPOSITORY": The Depository Trust Company, 7 Hanover Square, New York,
New York, 10004, and any successor Depository.
"DESIGNATED DEPOSITORY INSTITUTION": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer, acting in its fiduciary capacity, having combined capital and surplus
of at least $100,000,000; PROVIDED, HOWEVER, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A" by Standard & Poor's and "A2" by Moody's
and if rated by Fitch, "A" by Fitch and (ii) the Servicer shall provide the
Trustee and the Certificate Insurer with a statement, which the Trustee will
send to the Owners, identifying the location and account information of the
Principal and Interest Account upon a change in the location of such account.
"DETERMINATION DATE": The 15th day of each month, or if such day is not
a Business Day, on the preceding Business Day, commencing in October 2000.
"DIRECT PARTICIPANT" or "DTC PARTICIPANT": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A Certificates
from time to time as a securities depository.
"DISQUALIFIED ORGANIZATION": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"DISTRIBUTION DATE": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day. The first Distribution Date will be
October 25, 2000.
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<PAGE>
"DUE DATE": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized debt obligations of which institution shall be
rated AA or higher by Standard & Poor's and, in the case of any institution
other than Bank One, National Association, Aa2 or higher by Moody's (in the case
of its long-term obligations), and if rated by Fitch, A- or F1 or higher by
Fitch, and in the highest short term rating category by each of Standard &
Poor's and Moody's and if rated by Fitch, Fitch (in the case of its short-term
obligations), and which is (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, (iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and each of the Rating Agencies or (B) a
segregated trust account or accounts maintained with the Corporate Trust Office
of the Trustee, or the trust department of a federal or state chartered
depository institution acceptable to each Rating Agency and the Certificate
Insurer, having capital and surplus of not less than $100,000,000, acting in its
fiduciary capacity.
"ELIGIBLE INVESTMENTS": Those investments so designated pursuant to
Section 7.07 hereof.
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended.
"EXTRA PRINCIPAL DISTRIBUTION AMOUNT": Means as to either the Group I or
Group II Certificates and any Distribution Date, the lesser of (1) the related
Target Deficiency and (2) the related Net Monthly Excess Cashflow.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"FILE": The documents delivered to the Custodian on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Home
Equity Loan and any additional documents required to be added to the File
pursuant to this Agreement.
"FINAL CERTIFICATION": As defined in Section 3.06(c) hereof.
"FINAL DETERMINATION": As defined in Section 9.03(a) hereof.
"FINAL RECOVERY DETERMINATION": With respect to any defaulted Home
Equity Loan or REO Property (other than a Home Equity Loan purchased by the
Seller, the Depositor or the
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Servicer), a determination made by the Servicer that all recoveries which the
Servicer, in its reasonable business judgment, expects to be finally recoverable
in respect thereof have been so recovered or that the Servicer believes in its
reasonable business judgment the cost of obtaining any additional recoveries
therefrom would exceed the amount of such recoveries. The Servicer shall
maintain records of each Final Recovery Determination.
"FINAL SCHEDULED DISTRIBUTION DATE": As set out in Section 2.08(c)
hereof with respect to each Class A Certificate.
"FIRST MORTGAGE LOAN": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"FITCH": Fitch, Inc. or any successor thereto.
"FIXED RATE CERTIFICATES": Any of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-6 Certificates.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"FNMA GUIDE": FNMA's Servicing Guide, as the same may be amended by FNMA
from time to time.
"GROUP I": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group I in Schedule I-A hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof. Group I refers, with
respect to the Conduit Home Equity Loans, to the Home Equity Loans listed in the
Conduit Schedule of Home Equity Loans that are also assigned to Group I in
Schedule I-A hereto, and with respect to the Seller Home Equity Loans, to the
Home Equity Loans listed in the Seller Schedule of Home Equity Loans that are
also assigned to Group I in Schedule I-A hereto.
"GROUP I CERTIFICATES": Any of the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the Class
A-5 Certificates and the Class A-6 Certificates.
"GROUP I GUARANTEED PRINCIPAL AMOUNT": Means (a) with respect to any
Distribution Date other than the Distribution Date in October 2030, the
Collateralization Deficit with respect to Group I for the Distribution Date and
(b) with respect to the Distribution Date in October 2030, the aggregate of the
Certificate Principal Balances of the Group I Certificates after giving effect
to distributions thereon on the Distribution Date (including Insured Payments
distributed in respect of clause (a) above but excluding any other Insured
Payment).
"GROUP I MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest received (including any
Delinquency Advances) during the
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related Remittance Period with respect to the Home Equity Loans in Group I (net
of the Group I Servicing Fee), (ii) all Compensating Interest paid by the
Servicer on such Monthly Remittance Date with respect to Group I, (iii) the
portion of the Loan Purchase Price amounts and Substitution Amounts relating to
interest on the Home Equity Loans in Group I paid by CHEC on or prior to such
Monthly Remittance Date, (iv) the interest portion of all Net Liquidation
Proceeds actually collected by the Servicer with respect to the Home Equity
Loans in Group I during the related Remittance Period, (v) the principal
actually collected by the Servicer with respect to Home Equity Loans in Group I
during the related Remittance Period, (vi) the outstanding principal balance of
each Home Equity Loan in Group I that was purchased from the Trustee on or prior
to such Monthly Remittance Date, to the extent such outstanding principal
balance was actually deposited in the Principal and Interest Account on or prior
to such Monthly Remittance Date, (vii) any Substitution Amounts relating to
principal delivered by CHEC in connection with a substitution of a Home Equity
Loan in Group I, to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on or prior to such Monthly Remittance
Date, (viii) the principal portion of all Net Liquidation Proceeds actually
collected by the Servicer with respect to Home Equity Loans in Group I during
the related Remittance Period (to the extent such Net Liquidation Proceeds
related to principal) and (ix) the amount of investment losses required to be
deposited pursuant to Section 8.08(b).
"GROUP I NET WAC CAP": With respect to any Distribution Date, a rate per
annum equal to the weighted average of the Net Coupon Rates on the Group I Home
Equity Loans as of the beginning of the related Remittance Period.
"GROUP II": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group II in Schedule I-B hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof. Group II refers, with
respect to the Conduit Home Equity Loans, to the Home Equity Loans listed in the
Conduit Schedule of Home Equity Loans that are also assigned to Group II in
Schedule I-B hereto; and with respect to the Seller Home Equity Loans, to the
Home Equity Loans listed in the Seller Schedule of Home Equity Loans that are
also assigned to Group II in Schedule I-B hereto.
"GROUP II CERTIFICATES": The Class A-7 Certificates.
"GROUP II GUARANTEED PRINCIPAL AMOUNT": Means (a) with respect to any
Distribution Date other than the Distribution Date in October 2030, the
Collateralization Deficit with respect to Group II for the Distribution Date and
(b) with respect to the Distribution Date in October 2030, the Certificate
Principal Balance of the Group II Certificates after giving effect to
distributions thereon on the Distribution Date (including Insured Payments
distributed in respect of clause (a) above but excluding any other Insured
Payment).
"GROUP II MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest received (including any
Delinquency Advances) during the related Remittance Period with respect to the
Home Equity Loans in Group II (net of the Group II Servicing Fee), (ii) all
Compensating Interest paid by the Servicer on such Monthly
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Remittance Date with respect to Group II, (iii) the portion of the Loan
Purchase Price amounts and Substitution Amounts relating to interest on the
Home Equity Loans in Group II paid by CHEC on or prior to such Monthly
Remittance Date, (iv) the interest portion of all Net Liquidation Proceeds
actually collected by the Servicer with respect to the Home Equity Loans in
Group II during the related Remittance Period, (v) the principal actually
collected by the Servicer with respect to Home Equity Loans in Group II during
the related Remittance Period, (vi) the outstanding principal balance of each
Home Equity Loan in Group II that was purchased from the Trustee on or prior to
such Monthly Remittance Date, to the extent such outstanding principal balance
was actually deposited in the Principal and Interest Account on or prior to
such Monthly Remittance Date, (vii) any Substitution Amounts relating to
principal delivered by CHEC in connection with a substitution of a Home Equity
Loan in Group II, to the extent such Substitution Amounts were actually
deposited in the Principal and Interest Account on or prior to such Monthly
Remittance Date, (viii) the principal portion of all Net Liquidation Proceeds
actually collected by the Servicer with respect to Home Equity Loans in Group
II during the related Remittance Period (to the extent such Net Liquidation
Proceeds related to principal) and (ix) the amount of investment losses
required to be deposited pursuant to Section 8.08(b).
"GROUP II NET WAC CAP": With respect to any Distribution Date will be
the rate per annum equal to the product of (i) the weighted average Net Coupon
Rates of the Group II Home Equity Loans as of the beginning of the related
Remittance Period minus the Minimum Spread and (ii) a fraction, the numerator of
which is 30, and the denominator of which is the actual number of days in the
related Interest Period.
"HIGHEST LAWFUL RATE": As defined in Section 11.13 hereof.
"HOME EQUITY LOAN ASSETS": Has the meaning set forth under the heading
"CONVEYANCE" herein.
"HOME EQUITY LOAN GROUP" or "GROUP": Group I or Group II, as the case
may be. References herein to the related Class of Class A Certificates, when
used with respect to a Home Equity Loan Group, shall mean (A) in the case of
Group I, the Group I Certificates and (B) in the case of Group II, the Group II
Certificates.
"HOME EQUITY LOANS": The Conduit Home Equity Loans and/or the Seller
Home Equity Loans, as applicable, together with any Qualified Replacement
Mortgages substituted therefor in accordance with this Agreement, as from time
to time are held as a part of the Trust Estate. Where applicable, the term
"Home Equity Loan" includes (i) the terms "First Mortgage Loan" and "Second
Mortgage Loan", and (ii) any Home Equity Loan which is Delinquent, relates to a
foreclosure or relates to a Property which is REO Property prior to such REO
Property's disposition by the Trust. Any home equity loan which, although
intended by the parties hereto to have been, and which purportedly was,
transferred and assigned to the Trust by the Depositor, in fact was not
transferred and assigned to the Trust for any reason whatsoever, including,
without limitation, the incorrectness of the statement set forth in Section
3.04(b)(x) hereof with respect to such home equity loan, shall nevertheless be
considered a "Home Equity Loan" for all purposes of this Agreement.
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"INDEMNIFICATION AGREEMENT": The Indemnification Agreement dated as of
September 7, 2000 among the Certificate Insurer, the Seller and the
Underwriters.
"INDIRECT PARTICIPANT": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"INSURANCE AGREEMENT": The Insurance Agreement dated as of September 1,
2000 among the Depositor, the Sellers, the Servicer, the Trustee and the
Certificate Insurer, as it may be amended from time to time.
"INSURANCE POLICY": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"INSURED PAYMENT": Means (a) as of any Distribution Date, any Deficiency
Amount and (b) any Preference Amount.
"INTEREST PERIOD": With respect to each Distribution Date and (i) the
Fixed Rate Certificates, the period from the first day of the calendar month
preceding the month of the Distribution Date through the last day of the
calendar month with interest accruing on the basis of a 360-day year consisting
of twelve 30-day months; and (ii) the Variable Rate Certificates, the period
from and including the preceding Distribution Date (or the Startup Day in the
case of the first Distribution Date) to and including the day preceding the
related Distribution Date with interest accruing on the basis of the actual
number of days elapsed in the related Interest Period and a year of 360 days.
"LATE PAYMENT RATE": As defined in the Insurance Agreement.
"LIBOR": With respect to any Interest Period for the Class A-7
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loans to leading European banks.
"LIBOR DETERMINATION DATE": With respect to any Interest Period for the
Class A-7 Certificates, the second London Business Day preceding the
commencement of such Interest Period (or in the case of the initial Interest
Period, September 13, 2000).
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"LIQUIDATED LOAN": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"LIQUIDATION PROCEEDS": With respect to any Liquidated Loan, all amounts
(including the proceeds of any Insurance Policy) recovered by the Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"LOAN BALANCE": With respect to each Home Equity Loan and as of any date
of determination, the actual outstanding principal balance thereof on the
Cut-Off Date or relevant Replacement Cut-Off Date with respect to a Qualified
Replacement Mortgage less any principal payments relating to such Home Equity
Loan included in previous Monthly Remittance Amounts, PROVIDED, HOWEVER, that
the Loan Balance for any Home Equity Loan that has become a Liquidated Loan
shall be zero as of the first day of the Remittance Period following the
Remittance Period in which such Home Equity Loan becomes a Liquidated Loan, and
at all times thereafter.
"LOAN PURCHASE PRICE": With respect to any Home Equity Loan purchased
from the Trust on or prior to a Monthly Remittance Date pursuant to Section
3.04, 3.06(b) or 8.10(b) hereof, an amount equal to the outstanding principal
balance of such Home Equity Loan as of the date of purchase (assuming that the
Monthly Remittance Amount remitted by the Servicer on such Monthly Remittance
Date has already been remitted), plus all accrued and unpaid interest on such
Home Equity Loan at the Coupon Rate to but not including the date of such
purchase together with (without duplication) the aggregate amounts of (i) all
unreimbursed Delinquency Advances and Servicing Advances theretofore made with
respect to such Home Equity Loan, (ii) all Delinquency Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
and (iii) all reimbursed Delinquency Advances and Servicing Advances to the
extent that reimbursement is not made from the Mortgagor.
"LOAN-TO-VALUE RATIO": As of any particular date (i) with respect to any
First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien relating to such Second Mortgage Loan as of the date
of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"LONDON BUSINESS DAY": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"MANUFACTURED HOME": A unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Mortgagor under the related
Home Equity Loan treated as real estate under applicable state law.
"MAXIMUM RATE": With respect to any Home Equity Loan in Group II, means
the maximum rate at which interest may accrue on such Home Equity Loan.
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"MINIMUM SPREAD": A percentage per annum equal to 0% for Distribution
Dates which occur prior to October 2001 and 0.50% for Distribution Dates which
occur in October 2001 or thereafter.
"MONTHLY PAYMENT": With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the Due
Date in such Remittance Period pursuant to the related Note.
"MONTHLY REMITTANCE AMOUNT": The sum of the Group I Monthly Remittance
Amount and the Group II Monthly Remittance Amount.
"MONTHLY REMITTANCE DATE": The 18th day of each month, or if the 18th
day is not a Business Day, the preceding Business Day.
"MOODY'S": Moody's Investors Service, Inc. or any successor thereto.
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"MORTGAGOR": Each obligor on a Note.
"NET COUPON RATE": With respect to any Home Equity Loan in Group I or
Group II, means a rate per annum equal to the Coupon Rate of such Home Equity
Loan minus the sum of (i) the rate at which the Servicing Fee accrues, (ii) the
rate at which the Trustee Fee accrues and (iii) the applicable Premium Amount
(expressed as a per annum percentage of the aggregate Loan Balance of the Home
Equity Loans in Group I or Group II, as applicable).
"NET LIQUIDATION PROCEEDS": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of such Home Equity Loan
and unreimbursed Delinquency Advances relating to such Home Equity Loan. In no
event shall Net Liquidation Proceeds with respect to any Liquidated Loan be less
than zero.
"NET MONTHLY EXCESS CASHFLOW": With respect to each Home Equity Loan
Group and Distribution Date, the Available Funds remaining for such Home Equity
Loan Group, if any, after the application of clauses (i) through (vi) of Section
7.03(b).
"90-DAY DELINQUENT LOAN": With respect to any Determination Date, (i)
all REO Properties and (ii) each Home Equity Loan with respect to which any
portion of a Monthly Payment is, as of the last day of the prior Remittance
Period, three months (calculated from Due Date with respect to such Home Equity
Loan to Due Date) or more past due (without giving effect to any grace period).
"90+ DELINQUENCY PERCENTAGE (ROLLING THREE MONTH)": With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the three immediately preceding Remittance Periods (or
such fewer number of
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Remittance Periods since the Cut-Off Date, in the case of the first two
Determination Dates) the numerator of each of which is equal to the sum of
(without duplication) (i) the aggregate Loan Balance of 90-Day Delinquent Loans,
and (ii) the aggregate outstanding principal balance of Home Equity Loans in
foreclosure and the denominator of which is the Loan Balance of all of the Home
Equity Loans as of the end of such Remittance Period.
"NONRECOVERABLE ADVANCE" means with respect to any Home Equity Loan for
which a Final Recovery Determination has been made, any Delinquency Advance or
Servicing Advance previously made and not reimbursed from proceeds on the
related Home Equity Loan or under Section 7.03(b)(xi) hereof which the Servicer
has determined, in good faith business judgment, as evidenced by an Officer's
Certificate delivered to the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not be ultimately
recovered.
"NOTE": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"OFFICER'S CERTIFICATE": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee and the
Certificate Insurer.
"OPERATIVE DOCUMENTS": Collectively, this Agreement, the Certificate
Insurance Policies, the Certificates, the Custodial Agreement, the
Indemnification Agreement and the Insurance Agreement.
"OPINION OF COUNSEL": A written opinion of counsel acceptable, in form
and substance, to the Trustee and the Certificate Insurer and delivered to the
Trustee, the Rating Agencies and the Certificate Insurer.
"ORIGINAL AGGREGATE LOAN BALANCE": The aggregate Loan Balances of all
Home Equity Loans as of the Cut-Off Date, which is $400,001,268.65.
"OUTSTANDING": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and
final payment of money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent in trust for the Owners of
such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
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(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to
the Trustee.
"OVERCOLLATERALIZATION AMOUNT": With respect to each Home Equity Loan
Group and Distribution Date, the excess, if any, of (x) the aggregate Loan
Balance of the Home Equity Loans in the Home Equity Loan Group as of the close
of business on the last day of the preceding Remittance Period over (y) the
aggregate outstanding Certificate Principal Balances of the related Class A
Certificates as of the Distribution Date (after taking into account the payment
of the Class A Principal Distribution Amount related to the Home Equity Loan
Group on the Distribution Date).
"OVERCOLLATERALIZATION RELEASE AMOUNT": As to either the Group I or
Group II Certificates and any Distribution Date (i) prior to the third
Distribution Date following the Clean-Up Call Date, the lesser of (1) the
related Class A Principal Distribution Amount for such Distribution Date and (2)
the excess, if any, of (A) the related Overcollateralization Amount over (B) the
related Target Overcollateralization Amount and (ii) on and after the third
Distribution Date following the Clean-Up Call Date, zero.
"OWNER" or "CERTIFICATEHOLDER": The Person in whose name a Certificate
is registered in the Register, and the Certificate Insurer, to the extent
described in Section 12.06 hereof.
"PAYING AGENT": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"PERCENTAGE INTEREST": With respect to a Class of Class A Certificates,
a fraction, expressed as a decimal, the numerator of which is the principal
balance represented by such Class A Certificate as of the Startup Day and the
denominator of which is the Certificate Principal Balance represented by all the
Class A Certificates of such Class as of the Startup Day. With respect to the
Class X-IO or Class R Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate, all of
which shall total 100% with respect to the related Class.
"PERSON": Any individual, corporation, limited partnership, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"POLICY PAYMENTS ACCOUNT": The policy payments account maintained by the
Trustee pursuant to Section 12.02(b) hereof. The Policy Payments Account shall
be an Eligible Account.
"PREMIUM AMOUNT": As defined in the Insurance Agreement.
"PREFERENCE AMOUNT": Means any amount previously distributed to an Owner
on the Class A Certificates that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended
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from time to time, in accordance with a final nonappealable order of a court
having competent jurisdiction.
"PREPAYMENT": Any payment of principal of a Home Equity Loan which is
received by the Servicer which is not a Scheduled Principal Payment and which is
not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment, the portion of Substitution Amounts representing principal,
the portion of the Loan Purchase Price of any Home Equity Loan purchased from
the Trust pursuant to Section 3.04, 3.06(b) or 8.10(b) hereof representing
principal and the proceeds of any Insurance Policy which are to be applied as a
payment of principal on the related Home Equity Loan shall be deemed to be
Prepayments for all purposes of this Agreement.
"PRESERVATION EXPENSES": Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"PRINCIPAL AND INTEREST ACCOUNT": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof. The Principal and
Interest Account shall be an Eligible Account.
"PROHIBITED TRANSACTION": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(2) of the Code (or any successor statute
thereto) and applicable to the Trust.
"PROPERTY": The underlying property securing a Home Equity Loan.
"PROSPECTUS": The Depositor's Prospectus dated September 7, 2000
constituting part of the Registration Statement.
"PROSPECTUS SUPPLEMENT": The Centex Home Equity Loan Trust 2000-C
Prospectus Supplement dated September 7, 2000 to the Prospectus.
"PURCHASE OPTION PERIOD": As defined in Section 9.03(a) hereof.
"QUALIFIED LIQUIDATION": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED MORTGAGE": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED REPLACEMENT MORTGAGE": A Home Equity Loan substituted for
another pursuant to Section 3.04 and 3.06(b) hereof, which (i) has a Coupon Rate
at least equal to the Coupon Rate of the Home Equity Loan being replaced, (ii)
is secured by Property that is of the
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same or better property type as, or is a single family dwelling and the same or
better occupancy status as, the Property securing the Home Equity Loan being
replaced or is a primary residence, (iii) shall mature no later than the latest
Final Scheduled Distribution Date with respect to the related Home Equity Loan
Group, (iv) has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no
higher than the Loan-to-Value Ratio of the replaced Home Equity Loan at such
time, (v) shall be of the same or higher credit quality classification
(determined in accordance with the Seller's credit underwriting guidelines set
forth in the Seller's underwriting manual) as the Home Equity Loan which such
Qualified Replacement Mortgage replaces, (vi) shall be a First Mortgage Loan if
the Home Equity Loan which such Qualified Replacement Mortgage replaces was a
First Mortgage Loan and shall be a First Mortgage Loan or Second Mortgage Loan
if the Home Equity Loan which such Qualified Replacement Mortgage replaces was
a Second Mortgage Loan, (vii) has an outstanding principal balance as of the
related Replacement Cut-Off Date equal to or less than the outstanding principal
balance of the replaced Home Equity Loan as of such Replacement Cut-Off Date,
(viii) shall not provide for a "balloon" payment if the related Home Equity Loan
did not provide for a "balloon" payment (and if such related Home Equity Loan
provided for a "balloon" payment, such Qualified Replacement Mortgage shall have
an original maturity of not less than the original maturity of such related Home
Equity Loan), (ix) shall be a fixed rate Home Equity Loan if the Home Equity
Loan being replaced is in Group I or an adjustable rate Home Equity Loan if the
Home Equity Loan being replaced is in Group II, (x) satisfies the criteria set
forth from time to time in the definition thereof at Section 860G(a)(4) of the
Code (or any successor statute thereto) and applicable to the Trust, (xi)
satisfies the representations and warranties set forth in Section 3.04(b)
hereof, (xii) shall not be 30 days or more Delinquent and (xiii) if such Home
Equity Loan being replaced is in Group II, shall adjust based on the same index
as, have no lower margin than, have the same interval between adjustment dates
as and have a maximum Coupon Rate no lower than, and a minimum Coupon Rate no
lower than, the Home Equity Loan being replaced. In the event that one or more
home equity loans are proposed to be substituted for one or more Home Equity
Loans, the Certificate Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Certificate
Insurer, as evidenced by a written approval delivered to the Trustee by the
Certificate Insurer, except that the requirements of clauses (i), (iii), (iv),
(ix), (x), (xi) and (xii) hereof must be satisfied as to each Qualified
Replacement Mortgage.
"RATING AGENCIES": Collectively, Moody's, Fitch and Standard & Poor's.
"REALIZED LOSS": As to any Liquidated Loan (or, in the case of a Cram
Down Loss, a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as
of the date of liquidation, (y) the amount of accrued but unpaid interest
thereon and (z) the amount of any Cram Down Loss with respect thereto is in
excess of (B) the Net Liquidation Proceeds, if any, realized thereon.
"RECORD DATE": With respect to (i) any Distribution Date and each Class
of Fixed Rate Certificates and the Class R Certificates, the last Business Day
of the calendar month immediately preceding the calendar month in which such
Distribution Date occurs and (ii) any Distribution Date and the Variable Rate
Certificates and the Class X-IO Certificates, the Business Day immediately
preceding such Distribution Date, or if definitive Variable Rate
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Certificates have been issued, the last Business Day of the calendar month
immediately preceding the calendar month in which such Distribution Date occurs.
"REFERENCE BANKS": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, PROVIDED that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by CHEC which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which are not Affiliates of the Seller, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Seller.
"REGISTER": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"REGISTRAR": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"REGISTRATION STATEMENT": The Registration Statement filed by the
Depositor with the Commission (Registration Number 333-93255), including all
amendments thereto and including the Prospectus and Prospectus Supplement
relating to the Class A Certificates.
"REIMBURSEMENT AMOUNT": With respect to each Home Equity Loan Group and
any Distribution Date, the sum of (x)(i) all Insured Payments previously paid to
the Trustee by the Certificate Insurer and not previously repaid to the
Certificate Insurer pursuant to Section 7.03(b) hereof plus (ii) interest
accrued on each such Insured Payment not previously repaid calculated at the
Late Payment Rate and (y)(i) any amounts then due and owing to the Certificate
Insurer under the Insurance Agreement (including, without limitation, any unpaid
Premium Amount relating to such Distribution Date or an earlier Distribution
Date) plus (ii) interest on such amounts at the Late Payment Rate. The
Certificate Insurer shall notify the Trustee, the Depositor and the Seller in
writing of the amount of any Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC I": The segregated group of assets consisting of the REMIC II
Regular Interests as defined in Section 2.08 hereof and constituting a REMIC
created hereunder.
"REMIC II": The segregated pool of assets consisting of all the assets
of the Trust Estate other than the Supplemental Interest Reserve Account and the
REMIC II Regular Interests and constituting a REMIC created hereunder. Expenses
and fees of the Trust shall be paid from REMIC II.
"REMIC OPINION": As defined in Section 3.04 hereof.
"REMIC PROVISIONS": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of
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Chapter 1 of the Code, and related provisions, and regulations and revenue
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
"REMITTANCE PERIOD": With respect to each Monthly Remittance Date, the
calendar month immediately preceding such Monthly Remittance Date.
"REO PROPERTY": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"REPLACEMENT CUT-OFF DATE": With respect to any Qualified Replacement
Mortgage, the opening of business of the first day of the calendar month in
which such Qualified Replacement Mortgage is conveyed to the Trust.
"REPRESENTATION LETTER": Letters to, or agreements with, the Depository
to effectuate a book-entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"RESIDUAL NET MONTHLY EXCESS CASHFLOW": With respect to any Distribution
Date, the aggregate Available Funds, if any, remaining after the making of all
applications, transfers and disbursements described in Sections 7.03(b)(i)
through 7.03(b)(xii) hereof. It is anticipated that there will not be any
Residual Net Monthly Excess Cashflow.
"SCHEDULE OF HOME EQUITY LOANS": The Conduit Schedule of Home Equity
Loans, the Seller Schedule of Home Equity Loans, Schedule I-A hereto or Schedule
I-B hereto, as the context may require.
"SCHEDULED PRINCIPAL PAYMENT": As of any date of calculation, with
respect to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
"SECOND MORTGAGE LOAN": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SELLER": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation.
"SELLER HOME EQUITY LOANS": The home equity loans listed on the Seller
Schedule of Home Equity Loans.
"SELLERS": The Seller and the Conduit Seller.
25
<PAGE>
"SELLER SCHEDULE OF HOME EQUITY LOANS": The Schedule of Home Equity
Loans attached as Schedule I-C hereto.
"SENIOR LIEN": With respect to any Second Mortgage Loan, the home equity
loan relating to the corresponding Property having a first priority lien.
"SERVICER": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, and its permitted successors and assigns.
"SERVICER LOSS TEST": The Servicer Loss Test for any period set out
below is satisfied if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below (provided, that for purposes
of the Servicer Loss Test, Realized Losses attributable solely to Cram Down
Losses shall be excluded from the calculation of Cumulative Loss Percentage):
<TABLE>
<CAPTION>
Period Cumulative Loss Percentage
------ --------------------------
<S> <C>
October 2000 - September 2001 0.75%
October 2001 - September 2002 2.00%
October 2002 - September 2003 3.00%
October 2003 - September 2004 4.00%
October 2004 - September 2005 5.00%
October 2005 and thereafter 6.00%
</TABLE>
Notwithstanding anything contained herein to the contrary, the
Certificate Insurer may, in its sole discretion, without the giving of notice to
or the receipt of the consent of the Owners modify this definition of Servicer
Loss Test for the purpose of raising the percentages set out above for any
period or periods or eliminating, in whole or in part, the definition hereof,
provided, that the Trustee and the Rating Agencies shall have been notified in
writing of such modification prior to the effective date of such modification
and such modification shall not have resulted in a downgrading of the
then-current ratings of the Class A Certificates, without regard to the
Certificate Insurance Policies.
"SERVICER TERMINATION EVENT": As defined in Section 8.20(a) hereof.
"SERVICER TERMINATION TEST": The Servicer Termination Test is satisfied
for any date of determination thereof, if (w) the Servicer's Tangible Net Worth
is at least the greater of (i) $70,000,000 and (ii) the amount required pursuant
to any credit facility of the Servicer, (x) the 90+ Delinquency Percentage
(Rolling Three Month) is less than or equal to 13.0%, (y) the Servicer Loss Test
is satisfied and (z) the Annual Loss Percentage (Rolling Twelve Month) for the
twelve month period immediately preceding the date of determination thereof is
less than 1.50%.
Notwithstanding anything contained herein to the contrary, the
Certificate Insurer may, in its sole discretion, without the giving of notice to
or the receipt of the consent of the Owners
26
<PAGE>
modify this definition of Servicer Termination Test for the purpose of
reducing the amount specified in clause (w)(i) above or raising the
percentages set out above for any period or periods or eliminating, in whole
or in part, the definition hereof, provided, that the Trustee and the Rating
Agencies shall have been notified in writing of such modification prior to
the effective date of such modification and such modification shall not have
resulted in a downgrading of the then-current ratings of the Class A
Certificates, without regard to the Certificate Insurance Policies.
"SERVICING ADVANCE": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"SERVICING FEE": With respect to any Home Equity Loan Group and a
Remittance Period, an amount retained by the Servicer as compensation for
servicing and administration duties relating to the Home Equity Loans in such
Home Equity Loan Group pursuant to Section 8.15 hereof and equal to one month's
interest at 0.50% per annum of the then aggregate outstanding Loan Balance of
such Home Equity Loans as of the first day of each Remittance Period payable on
a monthly basis; provided, however, that if a successor Servicer is appointed
pursuant to Section 8.20 hereof, the Servicing Fee shall be the amount as agreed
upon by the Trustee, the Certificate Insurer and the successor Servicer, and the
per annum rate at which the Servicing Fee is calculated shall not exceed 0.50%
per annum.
"60-DAY DELINQUENT LOAN": With respect to any Determination Date, (i)
all REO Properties and (ii) each Home Equity Loan with respect to which any
portion of a Monthly Payment is, as of the last day of the prior Remittance
Period, two months (calculated from Due Date with respect to such Home Equity
Loan to Due Date) or more past due (without giving effect to any grace period).
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or any successor thereto.
"STARTUP DAY": September 15, 2000.
"SUB-SERVICER": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"SUB-SERVICING AGREEMENT": The written contract between the Servicer and
any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"SUBSTITUTION AMOUNT": With respect to the substitution of any Qualified
Replacement Mortgage for any Home Equity Loan, as of the related Replacement
Cut-Off Date, the excess, if any, of the outstanding principal balance of such
Home Equity Loan over the outstanding principal balance of the Qualified
Replacement Mortgage, together with the aggregate amount of all unreimbursed
Delinquency Advances and unreimbursed Servicing Advances made, and all accrued
and unpaid interest, with respect to such Home Equity Loan.
27
<PAGE>
"SUPPLEMENTAL INTEREST RESERVE FUND": The Supplemental Interest Reserve
Fund established and maintained as described in Section 7.02(a).
"TANGIBLE NET WORTH": Shall mean the difference between: (A) the
tangible assets of the Seller or Servicer, as applicable, and its Affiliates
calculated in accordance with generally accepted accounting principles, as
reduced by adequate reserves in each case where a reserve is appropriate; and
(B) all indebtedness, including subordinated debt, of the Seller or Servicer, as
applicable, and its Affiliates; provided, however, that (i) intangible assets
such as patents, trademarks, trade names, copyrights, licenses, good will,
organization costs, advances or loans to, or receivables from, directors,
officers, employees or affiliates, prepaid assets, amounts relating to covenants
not to compete, pension assets, deferred charges or treasury stock of any
securities unless the same are readily marketable in the United States of
America or are entitled to be used as a credit against federal income tax
liabilities, shall not be included in the calculation of (A) above, (ii)
securities included as tangible assets shall be valued at their current market
price or cost, whichever is lower and (iii) any write-up in book value of any
assets shall not be taken into account.
"TARGET DEFICIENCY": As to either the Group I or Group II Certificates
and any Distribution Date, the excess, if any, of (1) the related Target
Overcollateralization Amount for such Distribution Date over (2) the related
Overcollateralization Amount for such Distribution Date after giving effect to
the distribution of the related Class A Principal Distribution Amount on such
Distribution Date; provided, however, that in no event will the Target
Deficiency be less than zero.
"TARGET OVERCOLLATERALIZATION AMOUNT": The required level of the
Overcollateralization Amount for each Home Equity Loan Group with respect to a
Distribution Date. The Target Overcollateralization Amount for Group I is set
forth in Exhibit L hereof. The Target Overcollateralization Amount for Group II
is set forth in Exhibit K hereof.
"TAX MATTERS PERSON": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code (or where the context
requires, the Trustee acting as agent for the Tax Matters Person).
"TELERATE PAGE 3750": The display designated as page "3750" on the
Bridge Telerate Service (or such other page as may replace page 3750 on that
report for the purpose of displaying London interbank offered rates of major
banks).
"TERMINATION NOTICE": As defined in Section 9.03(a) hereof.
"TERMINATION PRICE": Means, with respect to Sections 9.02 and 9.03
hereof, and on any date of determination thereof, an amount equal to the sum of
(w) the greater of (A) the outstanding Certificate Principal Balance for the
Class A Certificates and (B) the fair market value of the Home Equity Loans
(disregarding accrued interest), (x) one month's interest on such amount
(calculated at the Adjusted Certificate Rate), (y) all Reimbursement Amounts and
(z) the sum of the aggregate amount of any unreimbursed Delinquency Advances,
unreimbursed
28
<PAGE>
Servicing Advances, unreimbursed Compensating Interest and any Delinquency
Advances which the Servicer has theretofore failed to remit.
"TOTAL AVAILABLE FUNDS": As to each Distribution Date and a Home Equity
Loan Group, the sum of (x) the amount on deposit in the Certificate Account with
respect to the Home Equity Loan Group and (y) any amounts on deposit in the
Certificate Account with respect to the other Home Equity Loan Group to be
applied to the related Classes of Class A Certificates pursuant to Section
7.03(b)(v) hereof on the Distribution Date (disregarding the amount of any
Insured Payment to be made on the Distribution Date).
"TRANSITION EXPENSES": Expenses incurred by the Trustee in connection
with the transfer of servicing upon the termination of the Servicer for a
Servicer Termination Event; provided that the amount shall not exceed $50,000 in
any one calendar year (and no more than $100,000 in the aggregate).
"TRUST": Centex Home Equity Loan Trust 2000-C, the trust created under
this Agreement which shall be comprised of two sub-trusts; one for Group I and
any Trust assets allocable to such Group I and the other for Group II and any
Trust assets allocable to such Group II.
"TRUST ESTATE": (a) The Home Equity Loan Assets and (b) such amounts as
may be held by the Trustee in the Certificate Account, together with investment
earnings on such amounts, and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, inclusive of investment
earnings thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer).
"TRUSTEE": Bank One, National Association, a national banking
association, not in its individual capacity but solely as Trustee under this
Agreement, and any successor hereunder.
"TRUSTEE FEE": The fee payable monthly to the Trustee on each
Distribution Date in an amount equal to $1,000.00.
"TRUSTEE REIMBURSABLE EXPENSES": As of any Distribution Date, the sum of
(a) any Trustee Fee and Transition Expenses not paid pursuant to clauses (i) or
(iv) of Section 7.03(b) on such Distribution Date and (b) any amounts owed to
the Trustee pursuant to Sections 2.05, 6.12, 7.06, 8.20(o), 10.07, 10.13 and
11.16(a)(v) hereof, and, if the Trustee is acting as Custodian, any related
custodial fees (including all attorney fees and expenses).
"UNDERWRITERS": Lehman Brothers Inc., Banc of America Securities LLC and
Salomon Smith Barney Inc.
"VARIABLE RATE CERTIFICATES": The Class A-7 Certificates.
"VOTING RIGHTS": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X-IO
Certificates (such Voting Rights to be allocated among the Owners of
29
<PAGE>
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class R
Certificates in the aggregate, or if separate Class R-1 and Class R-2
Certificates are issued, 0.50% to each such Class (such Voting Rights to be
allocated among the Owners of Certificates of each such Class in accordance with
their respective Percentage Interests), and (c) the remaining Voting Rights
shall be allocated among Owners of the Classes of Class A Certificates in
proportion to the Certificate Principal Balances of their respective Class A
Certificates on such date.
"WEIGHTED AVERAGE CERTIFICATE RATE": As to the Class A Certificates and
any Distribution Date, the weighted average of the Class A-l Certificate Rate,
the Class A-2 Certificate Rate, the Class A-3 Certificate Rate, the Class A-4
Certificate Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate Rate
and the Class A-7 Certificate Rate, weighted by, respectively, the Certificate
Principal Balance of each such Class of Class A Certificates as of such
Distribution Date prior to taking into account any distributions to be made on
such Distribution Date.
Section 1.02. USE OF WORDS AND PHRASES.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
Section 1.03. CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04. OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law) and may state that no opinion is expressed on the availability
of the remedy of specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person hereunder must be
delivered by counsel upon whose opinion the addressee of such opinion may
reasonably rely, and such opinion may state that it is given in reasonable
reliance upon an opinion of another, a copy of which must be attached,
concerning the laws of a foreign jurisdiction. Any opinion delivered hereunder
shall be addressed to the Rating Agencies, the Certificate Insurer and the
Trustee.
END OF ARTICLE I
30
<PAGE>
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. ESTABLISHMENT OF THE TRUST.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "Centex Home Equity Loan Trust 2000-C" and which shall contain
two subtrusts.
Section 2.02. OFFICE.
The office of the Trust shall be in care of the Trustee, addressed to
Bank One, National Association, at its Corporate Trust Office.
Section 2.03. PURPOSES AND POWERS.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; PROVIDED, HOWEVER, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either REMIC I or REMIC II as a REMIC.
Section 2.04. APPOINTMENT OF THE TRUSTEE; DECLARATION OF TRUST.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners and the Certificate Insurer.
Section 2.05. EXPENSES OF THE TRUST.
All expenses of the Trust, including (i) the fees and reimbursable
expenses of the Trustee in connection with the performance of its duties
hereunder and (ii) to the extent not set forth herein, any other expenses of the
Trustee that have been reviewed and approved by the Seller, which review shall
not be required in connection with the enforcement of a remedy by the Trustee
resulting from a default under this Agreement, shall be paid pursuant to Section
7.03(b).
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<PAGE>
Section 2.06. OWNERSHIP OF THE TRUST.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07. SITUS OF THE TRUST.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created in the
State of New York. The Trust's only office will be at the office of the Trustee
as set forth in Section 2.02 hereof.
Section 2.08. DESIGNATION OF INTERESTS IN REMICS.
(a) The Trustee shall elect that each of REMIC I and REMIC II (which
together constitute the Trust) shall be treated as a REMIC under Section 860D of
the Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of REMIC II shall include the
Home Equity Loans, the Accounts, any REO Property and any proceeds of the
foregoing. The REMIC II Regular Interests shall constitute the assets of
REMIC I.
(b) REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class
II-M-1 and Class II-M-2 Interests (the "REMIC II Regular Interests"), which will
be uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II and (y) the Class R-2 Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class R-2 Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC I.
Any Net Monthly Excess Cashflow for either Group that is used to pay an
amount to the Class A Certificates pursuant to Section 7.03(b) (vii), (viii) and
(xii) (the "Turbo Amount") and that is payable from interest on the Home Equity
Loans will not be paid as principal to the REMIC II Regular Interests,
but instead a portion of the interest payable with respect to the Class II-M-1
Interest which equals .01% of the Turbo Amount that is applied to Group I
Certificates will be payable as a reduction of the principal balances of the
Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class
II-A-6 Interests, in the same manner in which the Turbo Amount is allocated
among the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates, respectively, and a portion of the interest payable with respect
to the Class II-M-2 Interest which equals .01% of the Turbo Amount that is
applied to the Group II Certificates will be payable as a reduction of the
principal balance of the Class II-A-7 Interests (and will be accrued and added
to principal on the Class II-M-1 and Class II-M-2 Interests in the same
proportion as interest otherwise payable on such REMIC II Regular Interests is
used to reduce principal on other REMIC II Regular Interests as just described).
Principal payments on Group I shall be allocated 99.99% to the Class II-M-1
Interest, and .01% to the Class II-A-1,
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<PAGE>
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6
Interests until paid in full. The aggregate amount of principal allocated to
the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and
Class II-A-6 Interests shall be apportioned among such REMIC II Regular
Interests in the same manner in which principal from Group I is payable with
respect to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and
Class A-6 Certificates, respectively. Notwithstanding the above, principal
payments on Group I that are attributable to the Overcollateralization
Release Amount shall be allocated 100% to the Class II-M-1 Interest.
Principal payments on Group II shall be allocated 99.99% to the Class II-M-2
Interest and .01% to the Class II-A-7 Interests until paid in full.
Notwithstanding the above, the principal payments on Group II that are
attributable to the Overcollateralization Release Amount shall be allocated
100% to the Class II-M-2 Interest. Realized losses shall be applied such that
after all distributions have been made on such Distribution Date: (i) the
principal balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class
II-A-4, Class II-A-5, Class II-A-6 and Class II-A-7 Interests are each .01%
of the principal balances of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6 and Class A-7 Certificates, respectively; (ii)
the principal balance of the Class II-M-1 Interest is equal to the aggregate
Loan Balance of Group I less the sum of the principal balances of the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6
Interests; and (iii) the principal balance of the Class II-M-2 Interest is equal
to the aggregate Loan Balance of Group II less the principal balance of the
Class II-A-7 Interests. The REMIC II Certificates will have the following
designations and Certificate Rates, and distributions of principal and interest
thereon shall be allocated to the Certificates in the following manner:
<TABLE>
<CAPTION>
REMIC II Certificate Allocation of Allocation of
Certificates Initial Balance Rate Principal Interest
------------ --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
II-A-1 $9,700 (1) (3) (4)(5)
II-A-2 $4,700 (1) (3) (4)(5)
II-A-3 $4,600 (1) (3) (4)(5)
II-A-4 $6,300 (1) (3) (4)(5)
II-A-5 $2,384 (1) (3) (4)(5)
II-A-6 $3,100 (1) (3) (4)(5)
II-A-7 $9,216 (2) (3) (4)(6)
II-M-1 $307,809,216 (1) (3) (4)(5)
33
<PAGE>
<CAPTION>
REMIC II Certificate Allocation of Allocation of
Certificates Initial Balance Rate Principal Interest
------------ --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
II-M-2 $ 92,150,784 (2) (3) (4)(6)
R-2 $0 0% N/A N/A(7)
</TABLE>
_______________
(1) The Certificate Rate on this REMIC II Regular Interest shall at
any time of determination equal the weighted average of the Net Coupon Rates of
the Home Equity Loans in Group I.
(2) The Certificate Rate on this REMIC II Regular Interest shall at
any time of determination equal the weighted average of the Net Coupon Rates of
the Home Equity Loans in Group II.
(3) Principal will be allocated to and apportioned among the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7
Certificates in the same proportion as principal from the Home Equity Loans is
payable with respect to such Certificates, except that a portion of such
principal in an amount equal to the Overcollateralization Release Amount shall
first be allocated to the Class X-IO Certificates, and all principal will be
allocated to the Class X-IO Certificates after the principal balances of the
Group I and Group II Certificates have been reduced to zero.
(4) Except as provided in footnotes (5) and (6), interest will be
allocated among the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6 and Class A-7 Certificates in the same proportion as interest is payable on
such Certificates.
(5) Any interest with respect to this REMIC II Certificate in excess
of the product of (i) 10,000 times the weighted average coupon of the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6 and
Class II-M-1 Interests where each of the Class II-A-1, Class II-A-2, Class
II-A-3, Class II-A-4, Class II-A-5, Class II-A-6 Interests is subject to a cap
and floor equal to the rate on each of Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5 and Class A-6 Certificates, respectively and the Class II-M-1
Interest is subject to a cap equal to 0% and (ii) the principal balance of this
REMIC II Certificate, shall not be allocated to the Group I or Group II
Certificates but will be allocated to the Class X-IO Certificates. However, the
Class X-IO Certificates shall be subordinated to the extent provided in Section
7.03.
(6) Any interest with respect to this REMIC II Certificate in excess
of the product of (i) 10,000 times the weighted average coupon of the Class
II-A-7 and Class II-M-2 Interests, where the Class II-A-7 Interest is subject to
a cap and floor equal to the lesser of the Certificate Rate on Class A-7
Certificate or the Group II Net WAC Cap, and the Class II-M-2 Interest is
subject to a cap equal to 0% and (ii) the principal balance of this REMIC II
Certificate, shall not be allocated to the Group I or Group II Certificates, but
will be allocated to the Class X-IO
34
<PAGE>
Certificates. However, the Class X-IO Certificates shall be subordinated to
the extent provided in Section 7.03.
(7) On each Distribution Date, available funds, if any, remaining in
REMIC II after payments of interest and principal and expenses of the Trust, as
designated above, will be distributed to the Class R-2 Certificate. It is
expected that there will not be any significant distributions on the Class R-2
Certificates.
(c) The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7 and Class X-IO Certificates are hereby designated as "regular
interests" with respect to REMIC I (the "REMIC I Regular Certificates") and the
Class R-1 Certificate is hereby designated as the single "residual interest"
with respect to REMIC I. On each Distribution Date, available funds, if any,
remaining in REMIC I after payments of interest and principal as designated
herein shall be distributed to the Class R-1 Certificates. The beneficial
ownership interest in the REMIC I created hereunder shall be evidenced by the
interests having the following characteristics and terms:
<TABLE>
<CAPTION>
Initial Certificate Final Scheduled
Class Designation Principal Balance Distribution Date
----------------- ------------------- -----------------
<S> <C> <C>
Class A-1 $97,000,000 August 25, 2015
Class A-2 $47,000,000 December 25, 2020
Class A-3 $46,000,000 September 25, 2025
Class A-4 $63,000,000 May 25, 2029
Class A-5 $23,840,000 October 25, 2030
Class A-6 $31,000,000 October 25, 2030
Class A-7 $92,160,000 October 25, 2030
Class X-IO (1)
Class R-1 (1)
</TABLE>
________________
(1) The Class X-IO and Class R-1 Certificates do not have a
Certificate Principal Balance.
(d) For federal income tax purposes, the "latest possible maturity
date" for each of the REMIC I Regular Certificates and the REMIC II Regular
Interests is October 25, 2034.
Section 2.09. MISCELLANEOUS REMIC PROVISIONS.
(a) The Startup Day is hereby designated as the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(b) The Owner of the Tax Matters Person Residual Interest in each
REMIC created hereunder is hereby designated as "tax matters person" as defined
in the REMIC Provisions with respect to the REMIC.
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<PAGE>
(c) The Trust and each REMIC created hereunder shall, for federal
income tax purposes, maintain books on a calendar year basis and report income
on an accrual basis.
(d) The Trustee shall cause each REMIC created hereunder to elect to
be treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate to each
REMIC created hereunder.
(e) For all federal tax law purposes, amounts transferred by the
Trustee to the Owners of the Class R Certificates shall be treated as
distributions by each respective REMIC created hereunder.
(f) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860E(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-l(b)(5)(ii), or any successor
regulation thereto with respect to each REMIC created hereunder. Such
information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE SERVICER AND THE
SELLERS; COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Trustee
and the Certificate Insurer that as of the Startup Day:
(a) The Depositor is a limited liability company duly formed and
validly existing under the laws governing its creation and existence, is not in
violation of the laws of any state in which any Property or the Depositor is
located or doing business which violation would materially and adversely affect
the condition (financial or other) or the operations of the Depositor or its
properties or the ability of the Trust to collect amounts due on any Home Equity
Loan and is in good standing in each jurisdiction in which the nature of its
business or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite limited liability company power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Depositor and its performance
and compliance with the terms of this Agreement and the other Operative
Documents to which it is a party have been duly authorized by all necessary
limited liability company action on the part of the Depositor and will not
violate the Depositor's certificate of formation or amended and restated limited
liability company agreement or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result
in a breach of, any material contract, agreement or other instrument to which
the Depositor is a party or by which the Depositor is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Depositor or any of its
properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default could materially and adversely
affect the condition (financial or other) or operations of
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the Depositor or its properties or the consequences of which could materially
and adversely affect its performance hereunder and under the other Operative
Documents to which the Depositor is a party.
(e) No litigation, proceeding or investigation is pending with respect
to which the Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of the Home Equity Loans or the Depositor's performance hereunder
and under the other Operative Documents to which the Depositor is a party.
(f) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributed
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
with respect to the Depositor not misleading.
(g) Immediately prior to the sale and assignment by the Depositor to
the Trustee on behalf of the Trust of each Home Equity Loan, the Depositor had
good title to each Home Equity Loan (insofar as such title was conveyed to it by
the Sellers) subject to no prior lien, claim, participation interest, mortgage,
security interest, pledge, charge or other encumbrance or other interest of any
nature (other than liens which will be simultaneously released).
(h) As of the Startup Day, the Depositor has transferred all right,
title and interest in the Home Equity Loans to the Trustee on behalf of the
Trust.
(i) The Depositor has not transferred the Home Equity Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or defraud any
of its creditors.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this
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Agreement and the other Operative Documents on the part of the Depositor and
the performance by the Depositor of its obligations under this Agreement and
such of the other Operative Documents to which it is a party.
Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly formed and validly existing
under the laws governing its creation and existence, is in compliance with the
laws of each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other
Operative Document to which it is a party by the Servicer and its performance
and compliance with the terms hereof and thereof have been duly authorized by
all necessary corporate action on the part of the Servicer and will not violate
the Servicer's articles of incorporation or by-laws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract, agreement or
other instrument to which the Servicer is a party or by which the Servicer is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Servicer is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default could materially and adversely affect the
condition (financial or otherwise) or operations of the Servicer or its
properties or the consequences of which could materially and adversely affect
its performance hereunder or under the other Operative Documents to which the
Servicer is a party.
(e) No litigation, proceeding or investigation is pending with respect
to which the Servicer has received service of process or, to the best of the
Servicer's knowledge, threatened against the Servicer which litigation,
proceeding or investigation might have consequences that
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would prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and adversely
affect the condition (financial or otherwise) or operations of the Servicer
or its properties or might have consequences that would materially and
adversely affect the validity or the enforceability of the Home Equity Loans
or the Servicer's performance hereunder and under the other Operative
Documents to which the Servicer is a party.
(f) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Documents or which are attributed
to the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer not misleading.
(g) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
Affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(i) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the home equity mortgage servicing business.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
(k) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation, in any such case which
could materially adversely impact the
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financial condition or operations of the Servicer or adversely impact the
Servicer's performance of its obligations under the Operative Documents.
(l) There are no Sub-Servicers as of the Startup Day.
(m) The Servicer will terminate any Sub-Servicer within ninety (90)
days after being directed by the Certificate Insurer to do so.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Certificate Insurer or by the
Trustee with the written consent of the Certificate Insurer pursuant to Section
8.20 hereof; PROVIDED, HOWEVER, that if the Servicer can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
Section 3.03. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
Each of the Seller and the Conduit Seller, as applicable, hereby
severally and not jointly represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) In the case of the Seller, that it is a corporation, and in the
case of the Conduit Seller, that it is a limited liability company, duly formed
and validly existing under the laws governing its creation and existence,
neither the Seller nor the Conduit Seller is in violation of the laws of any
state in which any Property or either of the Seller or Conduit Seller, as
applicable, is located or doing business which violation would materially and
adversely affect the condition (financial or otherwise) or operations of either
of the Seller or Conduit Seller, as applicable, or its properties or the ability
of the Trust to collect any amounts on any Home Equity Loan and each of the
Seller and the Conduit Seller is in good standing in each jurisdiction in which
the nature of its business or the properties owned or leased by it make such
qualification necessary. The Seller or the Conduit Seller, as applicable, has
all requisite corporate or limited liability company, as applicable, power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
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(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Seller or the Conduit Seller, as applicable, is
a party and its performance and compliance with the terms of this Agreement and
the other Operative Documents to which it is a party have been duly authorized
by all necessary corporate action and will not violate its articles of
incorporation or by-laws, in the case of the Seller, or by all necessary limited
liability company action and will not violate its amended and restated limited
liability company agreement or certificate of formation, in the case of the
Conduit Seller, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or result in a breach of,
any material contract, agreement or other instrument to which it is a party or
by which it is bound or violate any statute or any order, rule or regulation of
any court, governmental agency or body or other tribunal having jurisdiction
over it or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Seller or the Conduit Seller, as applicable, is a party, assuming due
authorization, execution and delivery by the other parties hereto and thereto,
each constitutes a valid, legal and binding obligation of the Seller or the
Conduit Seller, as applicable, enforceable hereof and thereof against it in
accordance with the terms hereof and thereof, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) Neither the Seller nor the Conduit Seller, as applicable, is in
default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or governmental agency,
which default could materially and adversely affect the condition (financial or
other) or operations of the Seller or the Conduit Seller, as applicable, or its
properties or the consequences of which could materially and adversely affect
its performance hereunder and under the other Operative Documents to which it is
a party.
(e) No litigation, proceeding or investigation is pending with respect
to which the Seller or the Conduit Seller, as applicable, has received service
of process or, to the best of its knowledge, threatened against it which
litigation, proceeding or investigation might have consequences that would
prohibit its entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect the condition
(financial or otherwise) or operations of the Seller or the Conduit Seller, as
applicable, or its properties or might have consequences that would materially
and adversely affect the validity or enforceability of the Home Equity Loans or
its performance hereunder and under the other Operative Documents to which it is
a party.
(f) The statements contained in the Registration Statement which
describe the Seller or the Conduit Seller, as applicable, or matters or
activities for which it is responsible in accordance with the Operative
Documents or which are attributed to it therein are true and correct in all
material respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Seller or the Conduit Seller,
as applicable, or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein with respect to the
Seller or the Conduit Seller, as applicable, not misleading.
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(g) Reserved.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller or the Conduit Seller, as applicable, makes no
such representation or warranty), that are necessary or advisable in connection
with the purchase and sale of the Certificates and the execution and delivery by
the Seller or the Conduit Seller, as applicable, of the Operative Documents to
which it is a party, have been duly taken, given or obtained, as the case may
be, are in full force and effect on the date hereof, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Seller or the Conduit Seller, as applicable, and the performance
by the Seller or the Conduit Seller, as applicable, of its obligations under
this Agreement and such of the other Operative Documents to which it is a party.
(i) The origination practices used by the Seller with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the home equity lending business. All of the Home Equity Loans
were originated by the Seller, an Affiliate of the Seller or a broker for
simultaneous assignment to the Seller or were acquired by the Seller from
correspondent lenders and reunderwritten to comply with the Seller's
underwriting standards.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Seller or the Conduit Seller, as applicable.
(k) The Trustee, the Seller and the Conduit Seller have no obligation
to register the Trust and the Trust has no obligation to register as an
investment company under the Investment Company Act of 1940, as amended.
(l) The Seller or the Conduit Seller, as applicable, is not insolvent,
nor will it be made insolvent by the transfer of the Home Equity Loans, nor is
the Seller or the Conduit Seller, as applicable, aware of any pending
insolvency.
(m) The Seller or the Conduit Seller, as applicable, received fair
consideration and reasonably equivalent value in exchange for the sale of the
interests in the Home Equity Loans transferred by it.
(n) The Seller or the Conduit Seller, as applicable, did not sell any
interest in any Home Equity Loan with any intent to hinder, delay or defraud any
of its creditors.
(o) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
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(p) The Seller or the Conduit Seller, as applicable, is not in default
under any agreement involving financial obligations or on any outstanding
obligation, in any such case which would materially adversely impact the
financial condition or operations of the Seller or the Conduit Seller, as
applicable, or its obligations under the Operative Documents.
(q) To the best knowledge of the Seller or the Conduit Seller, as
applicable, there has been no material adverse change in any information
submitted by the Seller or the Conduit Seller, as applicable, in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing to
the Certificate Insurer).
(r) The sale, transfer, assignment and conveyance of Home Equity Loans
by the Seller or the Conduit Seller, as applicable, pursuant to this Agreement
is not subject to and will not result in any tax, fee or governmental charge
payable by the Seller or the Conduit Seller, as applicable, the Depositor or the
Trustee to any federal, state or local government ("Transfer Taxes") other than
Transfer Taxes which have been or will be paid as due by the Seller or the
Conduit Seller, as applicable. The Seller or the Conduit Seller, as applicable,
shall pay, and otherwise indemnify and hold the Certificate Insurer harmless, on
an after-tax basis, from and against any and all such Transfer Taxes (it being
understood that the Certificate Insurer shall have no obligation to pay such
Transfer Taxes).
(s) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller or the Conduit
Seller, as applicable, contains any untrue statement of a material fact or omits
to state any material fact necessary to make the certificate, statement or
report not misleading.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Section 3.04. COVENANTS OF SELLERS TO TAKE CERTAIN ACTIONS WITH
RESPECT TO THE HOME EQUITY LOANS IN CERTAIN SITUATIONS.
(a) Upon the discovery by the Depositor, the Seller, the Conduit
Seller, the Servicer, the Certificate Insurer, any Sub-Servicer, any Owner, the
Custodian or the Trustee (each, for purposes of this paragraph, a party) that
the representations and warranties set forth in clause (b) below were untrue in
any material respect, without regard to any limitation set forth therein
concerning the knowledge of the Seller or the Servicer as to the facts stated
therein, as of the Startup Day (or in the case of a Qualified Replacement
Mortgage, as of the respective Replacement Cut-Off Date), with the result that
the interests of the Owners or of the Certificate Insurer in the related Home
Equity Loan are, or may be, materially and adversely affected, the party
discovering such breach shall give prompt written notice to the other parties.
Upon the earliest to occur of CHEC's discovery, its receipt of notice of breach
from any one of the other parties or such time as a situation resulting from an
existing statement which is untrue materially and adversely affects the
interests of the Owners or of the Certificate Insurer, without regard to any
limitation set forth therein concerning the knowledge of CHEC as to the facts
stated therein, CHEC hereby covenants and warrants that it shall promptly cure
such breach in all material
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respects or that it shall on or before the second Monthly Remittance Date
next succeeding such discovery, receipt of notice or such time (i) substitute
in lieu of each Home Equity Loan which has given rise to the requirement for
action by CHEC a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account or
(ii) purchase such Home Equity Loan from the Trust at a purchase price equal
to the Loan Purchase Price thereof, which purchase price shall be delivered
to the Servicer for deposit in the Principal and Interest Account; PROVIDED,
HOWEVER, that if CHEC can establish to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action, the
period of time in which CHEC must substitute a Qualified Replacement Mortgage
or purchase such Home Equity Loan may be extended with the written approval
of the Certificate Insurer. It is understood and agreed that the obligation
of CHEC so to substitute or purchase any Home Equity Loan as to which such a
statement set forth below in this Section 3.04 is untrue in any material
respect and has not been remedied shall constitute the sole remedy respecting
a discovery of any such statement which is untrue in any material respect
available to the Owners, the Trustee on behalf of the Owners and the
Certificate Insurer. Notwithstanding any provision of this Agreement to the
contrary, with respect to any Home Equity Loan which is not in default or as
to which no default is imminent, no repurchase or substitution pursuant to
Section 3.04 or 3.06 shall be made unless CHEC obtains for the Trustee and
the Certificate Insurer at its expense an Opinion of Counsel experienced in
federal income tax matters to the effect that such a repurchase or
substitution would not constitute a Prohibited Transaction for the Trust or
either REMIC created hereunder or otherwise subject the Trust or either REMIC
created hereunder to tax and would not jeopardize the status of either REMIC
created hereunder as a REMIC (a "REMIC Opinion") addressed to the Trustee and
the Certificate Insurer and acceptable to the Certificate Insurer and the
Trustee. CHEC shall also deliver an Officer's Certificate to the Trustee and
the Certificate Insurer concurrently with the delivery of a Qualified
Replacement Mortgage pursuant to Sections 3.04 and 3.06(b) stating that such
Home Equity Loan meets the requirements of the definition of a Qualified
Replacement Mortgage and that all other conditions to the substitution
thereof have been satisfied. Any Home Equity Loan as to which repurchase or
substitution was delayed pursuat to this Section shall be repurchased or
substituted for (subject to compliance with Section 3.04 or 3.06(b), as the
case may be) upon the earlier of (a) the occurrence of a default or imminent
default with respect to such Home Equity Loan and (b) receipt by the Trustee
and the Certificate Insurer of a REMIC Opinion.
(b) The Seller, with respect to the Seller Home Equity Loans, and the
Servicer, in consideration of its appointment hereunder, with respect to the
Conduit Home Equity Loans and with respect to the Home Equity Loans taken as a
whole or by Group, hereby represent, warrant and covenant to the Trustee, the
Depositor, the Servicer, the Certificate Insurer and the Owners that as of the
Startup Day (or the Replacement Cut-Off Date, with respect to a Qualified
Replacement Mortgage):
(i) The information with respect to each Home Equity Loan
set forth in the related Schedule of Home Equity Loans is true and
correct in all material respects as of the Cut-Off Date;
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(ii) Each of the Seller and the Conduit Seller has
transferred good and marketable title (without any implication of a ready
market for the sale thereof) to the Home Equity Loans (including the
related Notes) and other items of the Trust Estate, and upon receipt of
each Home Equity Loan and other items of the Trust Estate by the Trustee
(including the related Note), the Trust will have good and marketable
title (without any implication of a ready market for the sale thereof) to
such Home Equity Loan (including the related Note) and such items of the
Trust Estate, free and clear of any lien, charge, mortgage, encumbrance
or rights of others, except as permitted under Section 3.04(b)(ix) and
except for liens that will be simultaneously released. All the original
or certified documentation set forth in Section 3.05 (including all
material documents related thereto) with respect to each Home Equity Loan
has been delivered to the Custodian on behalf of the Trustee on the
Startup Day or as otherwise provided in Section 3.05. To the Seller's or
the Servicer's best knowledge, no such documentation contains any untrue
statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading;
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage and is a Mortgage;
(iv) Each Property is a fee simple estate in a single parcel
of real property improved by a single family residential dwelling (except
558 Properties that are condominiums, townhouses, manufactured housing,
two-to-four family residential dwellings or PUDs), and no more than 1.21%
and 0.79%, respectively, of the aggregate Loan Balance of the Home Equity
Loans in Group I and Group II as of the Cut-Off Date are secured by
Properties that are Manufactured Homes, each of which is considered to be
real property under the applicable local law;
(v) As of the Cut-Off Date or Replacement Cut-Off Date, as
applicable, no Home Equity Loan has a Loan-to-Value Ratio in excess of
100%;
(vi) Each Home Equity Loan is being serviced by the Servicer
in accordance with the terms of this Agreement;
(vii) The Note related to each Home Equity Loan in Group I
bears a current Coupon Rate of at least 6.80% per annum and the Note
related to each Home Equity Loan in Group II bears a current Coupon Rate
of at least 7.25% per annum;
(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal Monthly Payments
(or periodic rate adjustments in the case of the Home Equity Loans in
Group II), which are sufficient to amortize fully the principal balance
of such Note on or before its maturity date, except for 448 Home Equity
Loans, representing approximately 10.34% of the aggregate Loan Balance of
the Home Equity Loans in Group I as of the Cut-Off Date, which may
provide for a "balloon" payment due at the end of the 15th year, and no
Home Equity Loan is a graduated payment loan;
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(ix) As of the Startup Day, each Mortgage is a valid and
enforceable first or second lien of record (or is in the process of being
recorded) on the Property subject in the case of any Second Mortgage Loan
only to a Senior Lien on such Property and subject in all cases to the
exceptions to title set forth in the title insurance policy or attorney's
opinion of title, with respect to the related Home Equity Loan, which
exceptions are generally acceptable to banking institutions in connection
with their regular mortgage lending activities, and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the Seller or the Conduit Seller, as applicable, to
the Depositor and by the Depositor to the Trustee herein contemplated,
the Seller, the Conduit Seller and the Depositor, as the case may be,
each held good and marketable title (without any implication of a ready
market for the sale thereof) to, and was the sole owner of, each Home
Equity Loan (including the related Note) conveyed by the Seller (or the
Conduit Seller, as applicable) subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in clause (ix) or
other liens which will be released simultaneously with such transfer and
assignment; and immediately upon the transfer and assignment herein
contemplated, the Trustee will hold good and marketable title (without
any implication of a ready market for the sale thereof) to, and be the
sole owner of, each Home Equity Loan subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
paragraph (ix) or other liens which will be released simultaneously with
such transfer and assignment;
(xi) As of the Cut-Off Date, none of the Home Equity Loans is
more than 48 days Delinquent;
(xii) To the best knowledge of the Seller or the Servicer, as
applicable, there is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in good
repair (ordinary wear and tear excepted);
(xiii) To the best knowledge of the Seller or the Servicer, as
applicable, there is no valid and enforceable right of offset, claim,
defense or counterclaim to any Note or Mortgage, including the obligation
of the related Mortgagor to pay the unpaid principal of or interest on
such Note, nor has any such claim, defense, offset or counterclaim been
asserted;
(xiv) To the best knowledge of the Seller or the Servicer, as
applicable, there is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Home Equity Loan at the time it was made complied
in all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act (as amended by the Riegle Community
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Development and Regulatory Improvement Act of 1994) and other consumer
protection, usury, equal credit opportunity, disclosure and recording
laws;
(xvi) With respect to each Home Equity Loan either (a) if a
title insurance policy is not available in the applicable state, an
attorney's opinion of title has been obtained but no title policy has
been obtained, or (b) a lender's title insurance policy, issued in
standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the related
Property is situated, in an amount at least equal to the original balance
of such Home Equity Loan together, in the case of a Second Mortgage Loan,
with the then-original principal amount of the mortgage note relating to
the Senior Lien, insuring the mortgagee's interest under the related Home
Equity Loan as the holder of a valid first or second mortgage lien of
record on the real Property described in the related Mortgage, as the
case may be, subject only to exceptions of the character referred to in
paragraph (ix) above, was effective on the date of the origination of
such Home Equity Loan, and, as of the Startup Day, such policy is valid
and thereafter such policy shall continue in full force and effect;
(xvii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Servicer that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the case
of a Second Mortgage Loan, with the outstanding principal balance of the
Senior Lien), (B) the minimum amount required to compensate for damage or
loss on a replacement cost basis or (C) the full insurable value of the
Property;
(xviii) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a carrier
generally acceptable to the Servicer in an amount representing coverage
not less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien), (B) the
minimum amount required to compensate for damage or loss on a replacement
cost basis or (C) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973;
(xix) Each Mortgage and Note are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance with
their terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law), and all parties to each Home Equity Loan had full
legal capacity to execute all documents relating to such Home Equity Loan
and convey the estate therein purported to be conveyed;
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(xx) The Seller or the Servicer, as applicable, has caused
and will cause to be performed any and all acts required to be performed
to preserve the rights and remedies of the Trustee in any Insurance
Policies applicable to any Home Equity Loans delivered by the Seller or
the Conduit Seller including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein,
and establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Trustee;
(xxi) As of the Cut-Off Date, no more than 0.20% of the
aggregate Loan Balance of the Home Equity Loans in either Home Equity
Loan Group is secured by Properties located within any single zip code
area;
(xxii) Each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been delivered for recordation or have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from the
Seller or the Conduit Seller (or, subject to Section 3.05 hereof, are in
the process of being recorded); each Mortgage and assignment of Mortgage
is in recordable form and is acceptable for recording under the laws of
the jurisdiction in which the Property securing such Mortgage is located;
(xxiii) The terms of each Note and each Mortgage have not been
impaired, waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the Owners and the Certificate Insurer and which has been delivered to
the Trustee. The substance of any such waiver, alteration or
modification is reflected on the related Schedule of Home Equity Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing or recording such
Home Equity Loans were paid and the Mortgagor is not entitled to any
refund of any amounts paid or due under the related Note or Mortgage;
(xxv) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature or
other contingent interest feature;
(xxvii) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
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(xxviii) Each Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the related Home Equity
Loan in the event the related Property is sold without the prior consent
of the mortgagee thereunder;
(xxix) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage,
and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the respective
Schedule of Home Equity Loans. The consolidated principal amount does
not exceed the original principal amount of the related Home Equity Loan.
No Note permits or obligates the Servicer to make future advances to the
related Mortgagor at the option of the Mortgagor;
(xxx) To the best knowledge of the Seller or the Servicer, as
applicable, there is no proceeding pending or threatened for the total or
partial condemnation of any Property, nor is such a proceeding currently
occurring, and each Property is undamaged by waste, fire, water, flood,
earthquake, earth movement or other casualty;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such Property,
and are stated in the title insurance policy and affirmatively insured;
(xxxii) To the best knowledge of the Seller or the Servicer,
as applicable, (A) no improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation and
(B) all inspections, licenses and certificates required by applicable law
to be made or issued with respect to all occupied portions of each
Property and with respect to the use and occupancy of the same, including
but not limited to certificates of occupancy and fire underwriting
certificates, have been made by or obtained from the appropriate
authorities and such Property is lawfully occupied under the applicable
law;
(xxxiii) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Owners or the Trust to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the related Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the benefits
of the security, including (A) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (B) otherwise by judicial
foreclosure. There is no homestead or other exemption other than any
applicable Mortgagor redemption rights available to the related Mortgagor
which would materially
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interfere with the right to sell the related Property at a trustee's sale
or the right to foreclose the related Mortgage;
(xxxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and none of the Servicer, the Seller, the Conduit
Seller nor the Conduit Servicer, as applicable, has waived any default,
breach, violation or event of acceleration or advanced funds, directly or
indirectly, for the payment of any amount required under any Home Equity
Loan;
(xxxvi) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if any,
and which has been delivered to the Trustee;
(xxxvii) Reserved;
(xxxviii) Each Home Equity Loan was underwritten in accordance
with or reunderwritten to comply with the credit underwriting guidelines
of the Seller as set forth in the Seller's Policies and Procedures
Manual, as in effect on the date hereof, and such Manual conforms in all
material respects to the description thereof set forth in the
Registration Statement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject Property;
(xl) The Home Equity Loans were not selected for inclusion in
the Trust on any basis intended to adversely affect the Trust or the
Certificate Insurer;
(xli) No more than 3.36% and 1.82% of the aggregate Loan
Balance of the Home Equity Loans in Group I and Group II, respectively,
as of the Cut-Off Date, are secured by Properties that are non-owner
occupied Properties (I.E., investor-owned and vacation);
(xlii) The Seller or the Servicer, as applicable, has no actual
knowledge that there exist any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on any Property, and no violations of any
local, state or federal environmental law, rule or regulation exist with
respect to any Property;
(xliii) The Seller (and, as applicable, the originator, if not
the Seller) was properly licensed or otherwise authorized, to the extent
required by applicable law, to originate or purchase each Home Equity
Loan; and the consummation of the transactions herein contemplated,
including, without limitation, the receipt of interest by the Owners
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and the ownership of the Home Equity Loans by the Trustee as trustee of
the Trust will not involve the violation of such laws;
(xliv) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Home Equity Loan;
(iii) the ground lease has been duly executed and recorded; (iv) the
amount of the ground rent and any increases therein are clearly
identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item in determining the
qualification of the borrower for such Home Equity Loan; (vi) the Trust
has the right to cure defaults on the ground lease; and (vii) the terms
and conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the Loan Balance
of the Home Equity Loans with related Properties subject to ground leases
does not exceed 2.0% of the Original Aggregate Loan Balance;
(xlv) As of the Startup Day, with respect to any Second
Mortgage Loan, none of the Seller, the Servicer, the Conduit Seller nor
the Conduit Servicer, as applicable, has received a notice of default of
any Senior Lien secured by any Property which has not been cured by a
party other than the Seller;
(xlvi) No Home Equity Loan is subject to a rate reduction
pursuant to a buydown program;
(xlvii) Reserved;
(xlviii) The Coupon Rate on each Home Equity Loan is calculated
on the basis of a year of 360 days with twelve 30-day months;
(xlix) Each Home Equity Loan was originated by the Seller, an
Affiliate of the Seller or a broker for simultaneous assignment to the
Seller or was acquired by the Seller from correspondent lenders and
reunderwritten to comply with the Seller's underwriting standards;
(l) Neither the operation of any of the terms of each Note
and each Mortgage nor the exercise of any right thereunder will render
either the Note or the Mortgage unenforceable, in whole or in part, nor
subject it to any right of rescission, claim, set-off, counterclaim or
defense, including, without limitation, the defense of usury;
(li) Any adjustment to the Coupon Rate on a Home Equity Loan
in Group II has been legal, proper and in accordance with the terms of
the related Note;
(lii) No Home Equity Loan in Group II is subject to negative
amortization;
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(liii) As of the Cut-Off Date, the FTC holder regulation
provided in 16 C.F.R. Part 433 applies to none of the Home Equity Loans;
(liv) As of the Cut-Off Date, a portion of the Home Equity
Loans are "mortgages" as defined in 15 U.S.C. 1602(aa), and with respect
to each such Home Equity Loan, no Mortgagor has or will have a claim or
defense under such Home Equity Loan;
(lv) Reserved;
(lvi) The rights with respect to each Home Equity Loan are
assignable by the Seller or the Conduit Seller, as applicable, without
the consent of any Person other than consents which will have been
obtained on or before the Startup Day;
(lvii) The Seller or the Conduit Seller, as applicable, has
duly fulfilled all obligations to be fulfilled on the lender's part under
or in connection with the origination, acquisition and assignment of the
Home Equity Loans and the related Mortgage and Note, and has done nothing
to impair the rights of the Trustee, the Certificate Insurer or the
Owners in payments with respect thereto;
(lviii) To the Seller's or the Servicer's, as applicable,
knowledge, the documents, instruments and agreements submitted by each
Mortgagor for loan underwriting were not falsified and contain no untrue
statement of a material fact and do not omit to state a material fact
required to be stated therein or necessary to make the information and
statements contained therein not misleading.
(lix) No Home Equity Loan matures later than September 4,
2030.
(lx) The first date on which the applicable Mortgagor must
make a payment on each Home Equity Loan is no later than October 1, 2000,
except with respect to two Home Equity Loans, which represents 0.03% of
the Original Aggregate Loan Balance, that provides for a first payment
after October 1, 2000; and
(lxi) With respect to each Home Equity Loan that is a Second
Mortgage Loan:
(a) The related Senior Lien does not provide for
negative amortization.
(b) None of the Servicer, the Seller, the Conduit
Seller or the Conduit Servicer, as applicable, has received, or is
aware of, a notice of default of any Senior Lien which has not
been cured.
(c) To the best knowledge of the Seller or the
Servicer, as applicable, no funds provided to the Mortgagor from a
Second Mortgage Loan were concurrently used as a down payment for
the Senior Lien.
(c) In the event that any such repurchase pursuant to this Section
results in a prohibited transaction tax as specified in the REMIC Opinion
delivered pursuant to Section
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3.04(a), the Trustee shall immediately notify the Seller in writing thereof
and the Seller will, within 10 days of receiving notice thereof from the
Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately
available funds. In the event that any Qualified Replacement Mortgage is
delivered by the Seller to the Trust pursuant to Section 3.04 or Section 3.06
hereof, the Seller shall be obligated to take the actions described in
Section 3.04(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Depositor, the Owners, the Seller, the Conduit
Seller, the Servicer, the Certificate Insurer, any Sub-Servicer, the
Custodian or the Trustee that the statements set forth in subsection (b)
above are untrue in any material respect, without regard to any limitation
set forth therein concerning the knowledge of the Seller or the Servicer as
to facts stated therein, on the date such Qualified Replacement Mortgage is
conveyed to the Trust, such that the interests of the Owners or the
Certificate Insurer in the related Qualified Replacement Mortgage are, or may
be, materially and adversely affected; PROVIDED, HOWEVER, that for the
purposes of this subsection (c) the statements in subsection (b) above
referring to items "as of the Cut-Off Date" or "as of the Startup Day" shall
be deemed to refer to such items as of the Replacement Cut-Off Date or as of
the date such Qualified Replacement Mortgage is conveyed to the Trust,
respectively. Notwithstanding the fact that a representation contained in
subsection (b) above may be limited to the Seller's or the Servicer's
knowledge, such limitation shall not relieve CHEC of its substitution or
repurchase obligation under this Section and Section 3.06 hereof.
(d) It is understood and agreed that the representations, warranties
and covenants set forth in this Section 3.04 shall survive delivery of the
respective Home Equity Loans (including Qualified Replacement Mortgages) to the
Trustee or the Custodian, on behalf of the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05. SALE TREATMENT OF THE HOME EQUITY LOANS AND QUALIFIED
REPLACEMENT MORTGAGES.
(a) The transfer by the Seller and the Conduit Seller to the Depositor
and by the Depositor to the Trustee of the Home Equity Loans set forth on the
applicable Schedule of Home Equity Loans is absolute and is intended by the
Owners and all parties hereto to be treated as a sale by the Seller, the Conduit
Seller and the Depositor.
In the event that any such conveyance is deemed to be a loan, the parties
intend that each of the Seller and the Conduit Seller shall be deemed to have
granted to the Depositor and the Depositor shall be deemed to have granted to
the Trustee a security interest in the Trust Estate, and that this Agreement
shall constitute a security agreement under applicable law.
(b) In connection with the transfer and assignment of the Home Equity
Loans, CHEC agrees to:
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(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Home Equity Loan,
(A) the original Note endorsed in blank or to the order of the Trustee
("Pay to the order of Bank One, National Association, as Trustee for
Centex Home Equity Loan Trust 2000-C, without recourse") and signed by
manual signature of the Seller or the Conduit Seller, as applicable, (B)
(1) if the original title insurance policy is not available, the original
title insurance commitment or a copy thereof certified as a true copy by
the closing agent or CHEC, and when available, the original title
insurance policy or a copy certified by the issuer of the title insurance
policy or (2) if title insurance is not available in the applicable
state, the attorney's opinion of title, (C) originals or copies of all
intervening assignments certified as true copies by the closing agent or
CHEC, showing a complete chain of title from origination to the Seller or
the Conduit Seller, if any, including warehousing assignments, if
recorded, (D) originals of all assumption and modification agreements, if
any, (E) either: (1) the original Mortgage, with evidence of recording
thereon (if such original Mortgage has been returned to the Seller or the
Conduit Seller, as applicable, from the applicable recording office), or
a copy of the Mortgage certified as a true copy by the closing agent or
an Authorized Officer of CHEC, or (2) a copy of the Mortgage certified by
the public recording office in those instances where the original
recorded Mortgage has been lost and (F) the original assignments of
Mortgages (as described in clause (b)(ii)) in recordable form and
acceptable for recording in the state or other jurisdiction where the
Property is located;
(ii) cause, within 60 days following the Startup Day with
respect to the Home Equity Loans, assignments of the Mortgages from the
Seller or the Conduit Seller, as applicable, to "Bank One, National
Association, as Trustee of Centex Home Equity Loan Trust 2000-C under the
Pooling and Servicing Agreement dated as of September 1, 2000" to be
submitted for recording in the appropriate jurisdictions; PROVIDED,
FURTHER, that CHEC shall not be required to record an assignment of a
Mortgage if CHEC furnishes to the Trustee and the Certificate Insurer, on
or before the Startup Day, at CHEC's expense, an Opinion of Counsel with
respect to the relevant jurisdiction that such recording is not necessary
to perfect the Trustee's interest in the related Home Equity Loans (in
form and substance reasonably satisfactory to the Trustee, the
Certificate Insurer and the Rating Agencies); PROVIDED FURTHER, HOWEVER,
notwithstanding the delivery of any legal opinions, each assignment of
Mortgage shall be recorded by the Custodian on behalf of the Trustee at
the expense of CHEC upon the earliest to occur of: (i) reasonable
direction by the Certificate Insurer, (ii) the occurrence of a Servicer
Termination Event, (iii) if the Seller is not the Servicer and with
respect to any one assignment of Mortgage, the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Mortgagor under the
related Mortgage, or (iv) the occurrence of a bankruptcy or insolvency
relating to the Seller or the Conduit Seller, as applicable;
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments
(other than unrecorded warehouse assignments), to the Custodian, on
behalf of the Trustee, within 15 days of receipt thereof by CHEC, but in
any event,
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with respect to any Mortgage as to which original recording information
has been made available to the Seller or Conduit Seller, within one year
after the Startup Day; and
(iv) furnish to the Trustee, the Certificate Insurer and the
Rating Agencies, at CHEC's expense, an Opinion of Counsel with respect to
the sale and perfection of the Home Equity Loans delivered to the Trust
in form and substance satisfactory to the Certificate Insurer.
In instances where the original recorded Mortgage cannot be delivered by
CHEC to the Custodian on behalf of the Trustee prior to or concurrently with the
execution and delivery of this Agreement due to a delay in connection with
recording, CHEC may in lieu of delivering such original recorded Mortgage,
deliver to the Custodian on behalf of the Trustee a copy thereof, provided that
CHEC certifies that the original Mortgage has been delivered to a title
insurance company for recordation after receipt of its policy of title insurance
or binder therefor. In all such instances, CHEC will deliver or cause to be
delivered the original recorded Mortgage to the Custodian on behalf of the
Trustee promptly upon receipt of the original recorded Mortgage but in no event
later than one year after the Startup Day.
CHEC hereby confirms to the Trustee that it has made the appropriate
entries in its general records to indicate that such Home Equity Loans have been
transferred to the Trustee and constitute part of the Trust Estate in accordance
with the terms of the trust created hereunder.
Notwithstanding anything to the contrary contained in this Section 3.05,
in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor and each of the Sellers shall
be deemed to have satisfied their obligations hereunder upon delivery to the
Custodian, on behalf of the Trustee, of a copy of such Mortgage, such assignment
or assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (b)(ii) above, CHEC shall deliver to the Custodian on behalf of the
Trustee, with a copy to the Trustee, a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by CHEC, which list
shall state the reason why CHEC has not yet submitted such Mortgage assignments
for recording. With respect to any Mortgage assignment disclosed on such list
as not yet submitted for recording for a reason other than a lack of original
recording information, the Custodian, on behalf of the Trustee, shall make an
immediate demand on CHEC to prepare such Mortgage assignments, and shall inform
the Certificate Insurer, in writing, of its failure to prepare such Mortgage
assignments. Thereafter, the Custodian, on behalf of the Trustee, shall
cooperate in executing any documents submitted to the Custodian, on behalf of
the Trustee in connection with this provision. Following the expiration of the
60-day period referred to in clause (b)(ii) above, CHEC shall promptly prepare a
Mortgage assignment for any Mortgage for which original recording information is
subsequently received by CHEC, and shall promptly deliver a copy of such
Mortgage assignment to the Custodian, on behalf of the Trustee. CHEC agrees
that it will follow its normal servicing procedures and attempt to obtain the
original
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recording information necessary to complete a Mortgage assignment. In the event
that CHEC is unable to obtain such recording information with respect to any
Mortgage prior to the end of the 18th calendar month following the Startup Day
and has not provided to the Custodian, on behalf of the Trustee a Mortgage
assignment with evidence of recording thereon relating to the assignment of such
Mortgage to the Trustee, the Custodian, on behalf of the Trustee shall notify
CHEC of its obligation to provide a completed assignment (with evidence of
recording thereon) on or before the end of the 20th calendar month following the
Startup Day. A copy of such notice shall be sent by the Custodian, on behalf of
the Trustee to the Certificate Insurer and the Trustee. If no such completed
assignment (with evidence of recording thereon) is provided before the end of
such 20th calendar month, the related Home Equity Loan shall be deemed to have
breached the representation contained in clause (xxii) of Section 3.04(b)
hereof; PROVIDED, HOWEVER, that if as of the end of such 20th calendar month
CHEC demonstrates to the satisfaction of the Certificate Insurer that it is
exercising its best efforts to obtain such completed assignment and, during each
month thereafter until such completed assignment is delivered to the Custodian,
on behalf of the Trustee, CHEC continues to demonstrate to the satisfaction of
the Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment, the related Home Equity Loan will not be deemed to have
breached such representation. The requirement to deliver a completed assignment
with evidence of recording thereon will be deemed satisfied upon delivery of a
copy of the completed assignment certified by the applicable public recording
office.
Copies of all Mortgage assignments received by the Custodian on behalf of
the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of CHEC.
(c) In the case of Home Equity Loans which have been prepaid in full
on or after the Cut-Off Date and prior to the Startup Day, CHEC, in lieu of the
foregoing, will deliver within six (6) days after the Startup Day to the Trustee
a certification of an Authorized Officer in the form set forth in Exhibit D.
(d) CHEC shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of CHEC in and to
any Qualified Replacement Mortgage delivered to the Custodian, on behalf of the
Trustee on behalf of the Trust by CHEC pursuant to Section 3.04 or 3.06 hereof
and all its right, title and interest to principal and interest due on such
Qualified Replacement Mortgage on and after the applicable Replacement Cut-Off
Date; PROVIDED, HOWEVER, that CHEC shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with a repurchase thereof or the conveyance of a Qualified Replacement Mortgage
therefor, the Trustee will transfer, assign, set over and otherwise convey
without recourse or representation, on CHEC's order, all of its right, title and
interest in and to such released Home Equity Loan and all the Trust's right,
title and interest to principal and interest due on such released Home Equity
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Loan after the applicable repurchase date or Replacement Cut-Off Date, as the
case may be; PROVIDED, HOWEVER, that the Trust shall reserve and or and retain
all right, title and interest in and to payments of principal and interest due
on such released Home Equity Loan prior to such repurchase date or Replacement
Cut-Off Date, as the case may be.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, CHEC agrees to (i)
deliver or cause to be delivered without recourse to the Custodian, on behalf of
the Trustee on the date of delivery of such Qualified Replacement Mortgage the
original Note relating thereto, endorsed in blank or to the order of the
Trustee, (ii) cause promptly to be recorded an assignment in the appropriate
jurisdictions, (iii) deliver or cause to be delivered the original Qualified
Replacement Mortgage and such recorded assignment, together with original or
duly certified copies of any and all prior assignments, to the Custodian, on
behalf of the Trustee within 15 days of receipt thereof by CHEC (but in any
event within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with a repurchase or the conveyance of a Qualified Replacement Mortgage, the
Custodian, on behalf of the Trustee shall deliver on the date of such repurchase
or conveyance of such Qualified Replacement Mortgage and on the order of CHEC
(i) the original Note relating thereto, endorsed, without recourse or
representation, in blank or to the order of CHEC, (ii) the original Mortgage so
released and all assignments relating thereto and (iii) such other documents as
constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
CHEC shall prepare or cause to be prepared a substitute assignment or cure such
defect, as the case may be, and thereafter cause each such assignment to be duly
recorded.
Section 3.06. ACCEPTANCE BY TRUSTEE; CERTAIN SUBSTITUTIONS OF HOME
EQUITY LOANS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver and the Trustee agrees
to cause the Custodian to execute and deliver on behalf of the Trustee on the
Startup Day an acknowledgment of receipt of the items delivered by CHEC in the
forms attached as Exhibits E-1 and E-2 hereto, respectively, and declares
through the Custodian that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Custodian, on behalf of the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners and the Certificate Insurer. The Trustee agrees,
for the benefit of the Owners and the Certificate Insurer, to cause the
Custodian to review such items within 45 days after the Startup Day (or, with
respect to any document delivered after the Startup Day, within 45 days of
receipt and with respect to any Qualified Replacement Mortgage, within 45 days
after the assignment thereof) and to deliver
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to the Depositor, the Seller, the Conduit Seller, the Servicer, the Trustee
and the Certificate Insurer a certification in the form attached hereto as
Exhibit F (a "Pool Certification") to the effect that, as to each Home Equity
Loan listed in the Schedule of Home Equity Loans (other than any Home Equity
Loan paid in full or any Home Equity Loan specifically identified in such
Pool Certification as not covered by such Pool Certification), (i) all
documents required to be delivered to it pursuant to Section 3.05(b)(i) of
this Agreement have been executed and are in its possession and that the
Notes have been endorsed as set forth in Section 3.05(b)(i) hereof, (ii) such
documents have been reviewed by it and have not been mutilated, damaged or
torn and relate to such Home Equity Loan and (iii) based on its examination
and only as to the foregoing documents, the information set forth on the
Schedule of Home Equity Loans accurately reflects the information set forth
in the File, except as may be indicated in an exception report in the form
attached hereto as Exhibit J ("Exception Report"), such Exception Report to
be provided electronically concurrently with the delivery of the Pool
Certification. The Custodian, on behalf of the Trustee, shall have no
rsponsibility for reviewing any File except as expressly provided in this
subsection 3.06(a). Without limiting the effect of the preceding sentence,
in reviewing any File, the Custodian, on behalf of the Trustee, shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment is in proper form (except to determine if
the Trustee is the assignee), whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction or whether a
blanket assignment is permitted in any applicable jurisdiction, but shall
only be required to determine whether a document has been executed, that it
appears to be what it purports to be, and, where applicable, that it purports
to be recorded. The Custodian, on behalf of the Trustee, shall be under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are
other than what they purport to be on their face, nor shall the Custodian, on
behalf of the Trustee, be under any duty to determine independently whether
there are any intervening assignments or assumption or modification
agreements with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Trustee during such 45-day
period finds any document constituting a part of a File which is not executed,
has not been received, or is unrelated to the Home Equity Loans identified in
the Schedule of Home Equity Loans, or that any Home Equity Loan does not conform
to the description thereof as set forth in the Schedule of Home Equity Loans,
the Custodian, on behalf of the Trustee shall promptly so notify the Depositor,
CHEC, the Owners and the Certificate Insurer. In performing any such review,
the Custodian, on behalf of the Trustee may conclusively rely on CHEC as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the review of the items delivered by CHEC pursuant
to Section 3.05(b)(i) is limited solely to confirming that the documents listed
in Section 3.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Home Equity Loans and conform to the description
thereof in the Schedule of Home Equity Loans. CHEC agrees to use reasonable
efforts to remedy a material defect in a document constituting part of a File of
which it is so notified by the Custodian, on behalf of the Trustee. If,
however, within 90 days after such notice to it respecting such defect CHEC has
not remedied the defect and the defect materially and adversely affects the
interest in the related Home Equity Loan of the Owners or the Certificate
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Insurer, CHEC will (or will cause an Affiliate to) on the next succeeding
Monthly Remittance Date (i) substitute in lieu of such Home Equity Loan a
Qualified Replacement Mortgage and deliver the Substitution Amount to the
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Home Equity Loan at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be delivered to the Servicer for deposit in the
Principal and Interest Account. In connection with any proposed purchase or
substitution of a Home Equity Loan, CHEC shall cause at its expense to be
delivered to the Trustee and to the Certificate Insurer an Opinion of Counsel
experienced in federal income tax matters stating whether or not such a proposed
purchase or substitution would constitute a Prohibited Transaction for the Trust
or would jeopardize the status of either REMIC I or REMIC II as a REMIC, and
CHEC shall only be required to take either such action to the extent such action
would not constitute a Prohibited Transaction for the Trust and would not
jeopardize the status of either REMIC I or REMIC II as a REMIC. Any required
purchase or substitution, if delayed by the absence of such opinion, shall
nonetheless occur upon the earlier of (i) the occurrence of a default or
imminent default with respect to the Home Equity Loan or (ii) the delivery of
such opinion.
(c) In addition to the foregoing, the Custodian, on behalf of the
Trustee also agrees to make a review during the 12th month after the Startup Day
indicating the current status of the exceptions previously indicated on the
Exception Report delivered electronically concurrently with the Pool
Certification (the "Final Certification") and, by the end of the 12th month
after the Startup Day, deliver electronically to the Depositor, the Seller, the
Conduit Seller, the Servicer, the Trustee and the Certificate Insurer such Final
Certification. After delivery of the Final Certification, the Custodian, on
behalf of the Trustee and the Servicer shall provide electronically to the
Certificate Insurer and the Trustee no less frequently than monthly updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07. Reserved.
Section 3.08. CUSTODIAN.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, and 8.14 and the related Pool Certification and Final Certification
shall be performed by the Custodian on the Trustee's behalf pursuant to the
Custodial Agreement; provided, however, the Trustee shall remain primarily
liable for such obligations. The fees and expenses of the Custodian will be
paid by the Servicer.
If, pursuant to Section 4.12 of the Custodial Agreement, the Custodian
shall request written instructions from the Trustee, the Trustee hereby agrees
to promptly provide such instructions.
Section 3.09. COOPERATION PROCEDURES. CHEC shall, in connection with
the delivery of each Qualified Replacement Mortgage to the Custodian, on behalf
of the Trustee, provide the Trustee with information set forth in the Schedule
of Home Equity Loans with respect to such Qualified Replacement Mortgage.
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(a) The Seller, the Conduit Seller, the Depositor, the Servicer and
the Trustee covenant to provide each other with all data and information
required to be provided by them hereunder at the times required hereunder, and
additionally covenant reasonably to cooperate with each other in providing any
additional information required to be obtained by any of them in connection with
their respective duties hereunder.
(b) The Servicer shall maintain such accurate and complete accounts,
records and computer systems pertaining to each File as shall enable it and the
Trustee to comply with this Agreement. In performing its recordkeeping duties
the Servicer shall act in accordance with the servicing standards set forth in
this Agreement. The Servicer shall conduct, or cause to be conducted, periodic
audits of its accounts, records and computer systems as set forth in Sections
8.16 and 8.17 hereof. The Servicer shall promptly report in writing to the
Trustee any failure on its part to maintain its accounts, records and computer
systems herein provided and promptly take appropriate action to remedy any such
failure.
(c) CHEC further confirms to the Trustee that it has caused the
portions of the electronic ledger relating to the Home Equity Loans to be
clearly and unambiguously marked to indicate that such Home Equity Loans have
been sold, transferred, assigned and conveyed through the Depositor to the
Trustee and constitute part of the Trust Estate in accordance with the terms of
the trust created hereunder.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. ISSUANCE OF CERTIFICATES.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02. SALE OF CERTIFICATES.
At 11:00 a.m. New York City time on the Startup Day, at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038 (or at
such other location acceptable to the Seller), the Seller and the Conduit Seller
will sell and convey the Home Equity Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will convey the Home
Equity Loans and the money, instruments and other property related thereto to
the Trustee, and the Depositor will cause the Certificate Insurance Policies to
be delivered to the Trustee and the Trustee will deliver (i) to the Underwriters
(as designee of the Depositor), the Class A Certificates with an aggregate
Percentage Interest in each Class equal to 100% registered in the name of Cede &
Co. or in such other names as the Underwriters shall direct, against payment to
the Depositor of the purchase price thereof by wire transfer of immediately
available funds to the Trustee as designee of the Depositor and (ii) to the
respective registered owners thereof (as designees of the Depositor, the Seller
and the Conduit Seller), Class R Certificates registered in the name of CHEC
Residual Corporation, a Nevada corporation, and the Class X-IO Certificates,
registered in the name of CHEC Residual Corporation, a Nevada corporation (all
such events shall be referred to herein as the "Closing").
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. TERMS.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" thereof, no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and the terms of the related
Note and except for the rights of the Trustee on behalf of the Owners of the
Class A Certificates with respect to the Certificate Insurance Policies). The
Class A Certificates are payable solely from payments received on or with
respect to the Home Equity Loans (net of the Servicing Fees, Trustee Fees, and
Premium Amounts), from moneys in the Principal and Interest Account, except as
otherwise provided herein, from earnings on moneys and the proceeds of property
held as a part of the Trust Estate and, upon the occurrence of certain events,
from Insured Payments. Each Certificate entitles the Owner thereof to receive
monthly on each Distribution Date, in order of priority of distributions with
respect to such Class of Certificates as set forth in Section 7.03, a specified
portion of such payments with respect to the Home Equity Loans, and certain
related Insured Payments, PRO RATA in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee, any Certificate prior to the Trustee making the final distribution due
thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed canceled and shall no longer be Outstanding
for any purpose of this Agreement.
Section 5.02. FORMS.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class X-IO Certificates and
the Class R Certificates shall be in substantially the forms set forth in
Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, B and C hereof, respectively.
Section 5.03. EXECUTION, AUTHENTICATION AND DELIVERY.
Each Certificate shall be executed on behalf of the Trust, by the manual
signature of one of the Trustee's Authorized Officers at the written direction
of the Servicer. In addition, each Certificate shall be authenticated by the
manual signature of one of the Trustee's Authorized Officers at the written
direction of the Servicer.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Trustee shall, upon proper authentication by the
Trustee, bind the Trust, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the execution and delivery of such
Certificates or did not hold such offices at the date of authentication of such
Certificates.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04. REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Depositor, the Owners and the
Trustee shall have the right to inspect the Register upon reasonable notice
during the Trustee's normal hours and to obtain copies thereof, and the Trustee
shall have the right to rely upon a certificate executed on behalf of the
Registrar by an Authorized Officer thereof as to the names and addresses of the
Owners of the Certificates and the principal amounts and numbers of such
Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Voting Rights represented by the
Certificates then Outstanding with the consent of the Certificate Insurer, such
Owners shall give the Trustee, the Certificate Insurer and the Owners prompt
written notice of the appointment of such Registrar and of the location, and any
change in the location, of the Register. In connection with any such
appointment the reasonable fees of the Registrar shall be paid, as expenses of
the Trust, pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
outstanding principal amount or Percentage Interest of the Certificate so
surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate outstanding principal amount or Percentage Interest
and bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
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(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration
of transfer or exchange of Certificates, but the Registrar or Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as
to participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6 and Class A-7 Certificates shall be issued in denominations of
$1,000 and integral multiples of $1 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository in the form provided to
the Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
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(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and either of CHEC or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository or (iii) after the occurrence of a
Servicer Termination Event, the beneficial owners of each Class of Class A
Certificates representing Percentage Interests aggregating not less than 51% of
such Class advises the Trustee and Depository through the Direct or Indirect
Participants in writing that the continuation of a book-entry system through the
Depository to the exclusion of definitive, fully registered certificates (the
"Definitive Certificates") to Owners is no longer in the best interests of the
Owners, the Class A Certificates shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee)
as nominee of the Depository. In the case of (i) and (ii) above, CHEC may
determine that the Class A Certificates shall be registered in the name of and
deposited with a successor depository operating a global book-entry system, as
may be acceptable to the CHEC and at the expense of CHEC, or such depository's
agent or designee but, if CHEC does not select such alternative global
book-entry system and in the case of (iii) above, the Class A Certificates may
be registered in whatever name or names registered Owners of Class A
Certificates transferring Class A Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless (PROVIDED, THAT with
respect to an Owner which is an institutional investor, a letter of indemnity
furnished by it shall be sufficient for this purpose), then, in the absence of
written notice to the Trustee or the Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute on behalf of the
Trust and the Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and aggregate principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment from the transferor or transferee
of the related Certificate of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other expenses
in connection with such issuance shall be an expense of the Trust.
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Every new Certificate issued pursuant to this Section in exchange for or
in lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any Certificate,
the Certificate Insurer, the Trustee and any agent of the Trustee may treat the
Person in whose name any Certificate is registered as the Owner of such
Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
Section 5.07. CANCELLATION.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy in effect from time to time.
Section 5.08. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit H.
Each holder of a Class R Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
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(b) No other sale or other transfer of record or beneficial ownership
of a Class X-IO or Class R Certificate shall be made unless such transfer is
exempt from the registration requirements of the Securities Act, and any
applicable state securities laws or is made in accordance with said Securities
Act and laws. In the event of any such transfer: (i) in the case of transfers
for which an investment letter in the form of Exhibit I-1 or I-2 is provided by
the transferee to the Trustee and the Certificate Insurer, the Trustee or the
Depositor shall require a written Opinion of Counsel acceptable to and in form
and substance satisfactory to the Depositor, the Trustee and the Certificate
Insurer to the effect that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said Securities
Act and laws or is being made pursuant to said Securities Act and laws, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee, the
Trust Estate or the Certificate Insurer; and (ii) in the case of transfers for
which an investment letter in the form of Exhibit I-1 or I-2 is provided, the
investment letter shall not be an expense of the Depositor, the Trustee, the
Trust Estate or the Certificate Insurer. The Owner of a Class X-IO or Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Certificate Insurer, the Depositor and the Sellers
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
(c) No transfer of a Class X-IO or Class R Certificate shall be made
unless the Trustee shall have received either: (i) a representation letter from
the transferee of such Class X-IO or Class R Certificate, acceptable to and in
form and substance satisfactory to the Trustee and the Certificate Insurer
(which may be combined with the investment letter required by subsection (b)
above), to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 406 of ERISA nor a plan or other arrangement subject to Section 4975 of
the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor using
the assets of any Plan to effect such transfer or (ii) in the event that any
Class X-IO or Class R Certificate is purchased by a Plan, or by a person or
entity acting on behalf of any Plan or using the assets of any Plan to effect
such transfer (including the assets of any Plan held in an insurance company
separate or general account), an Opinion of Counsel, acceptable to and in form
and substance satisfactory to the Trustee and the Certificate Insurer, which
Opinion of Counsel shall not be at the expense of either the Depositor, the
Trustee, the Certificate Insurer or the Trust Estate, to the effect that the
purchase or holding of any Class X-IO or Class R Certificates will not result in
any non-exempt prohibited transaction under ERISA and/or Section 4975 of the
Code, and will not subject the Trustee to any obligation or liability in
addition to those expressly undertaken under this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate to
or on behalf of any Plan without the delivery to the Trustee and the Certificate
Insurer of an Opinion of Counsel as described above shall be null and void and
of no effect.
(d) Reserved.
(e) No sale or other transfer of any Class X-IO Certificates or Class
R Certificate may be made to the Depositor, to any Person that was, at any time,
an owner of a Home Equity Loan, or to any Seller except, with respect to the
Depositor, in connection with the initial issuance of such Certificates by the
Trust to the Depositor and except, with respect to CHEC and the Conduit
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Seller, in connection with (1) the payment in partial consideration for the
Home Equity Loans sold by the applicable Seller or in payment of the Deferred
Purchase Price (as defined in the Conduit Warehouse Facility) by CHEC Conduit
Funding LLC to CHEC on the Startup Day and (2) the contemporaneous transfer
of such Certificates to CHEC Residual Corporation, a Nevada corporation.
(f) Notwithstanding anything to the contrary contained in this Section
5.08, the Class R Certificates and Class X-IO Certificates may be transferred to
CHEC Residual Corporation, a Nevada corporation and wholly-owned subsidiary of
the Seller, without regard to Sections 5.08(b), (c) or (e) above.
Section 5.09. ASSIGNMENT OF RIGHTS.
Other than with respect to any Class R Certificates (unless the Trustee
shall have received a satisfactory Opinion of Counsel to the effect that such
action with respect to a Class R Certificate will not have an adverse effect on
the status of either REMIC I or REMIC II as a "REMIC") an Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute a transfer of an ownership interest sufficient
to render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01. DISTRIBUTIONS.
On each Distribution Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) in each other case, by check or draft mailed on each Distribution Date or,
if requested by any Owner (other than the Depository) of (A) a Class A
Certificate having an original principal balance of not less than $1,000,000 or
(B) a Class X-IO or Class R Certificate having a Percentage Interest of not less
than 10% in writing not later than one Business Day prior to the applicable
Record Date (which request does not have to be repeated unless it has been
withdrawn), to such Owner by wire transfer to an account within the United
States designated no later than five Business Days prior to the related Record
Date, in each case to each Owner of record on the immediately preceding Record
Date.
Section 6.02. MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST; WITHHOLDING.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If CHEC has appointed a Paying Agent pursuant to Section 11.15
hereof, the Trustee will, on the Business Day immediately preceding each
Distribution Date, deposit with such Paying Agent in immediately available funds
an aggregate sum sufficient to pay the amounts then becoming due on the
Certificates (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) CHEC may at any time direct any Paying Agent to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which the sums were held by such Paying
Agent; and upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
(d) CHEC shall require the Paying Agent, including the Trustee on
behalf of the Trust, to comply with all requirements of the Code and applicable
state and local law with respect to the withholding from any distributions made
by it to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith, and
the Trustee and Paying Agent agree to comply with such requirements.
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(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid, upon delivery to the
Trustee of an Opinion of Counsel that such payment is permitted by applicable
law, first to the Certificate Insurer on account of any Reimbursement Amount and
second to the Depositor; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Depositor and not
to the Certificate Insurer for payment thereof (but only to the extent of the
amounts so paid to the Depositor) and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent before being required to make any
such payment, may at the expense of the Trust cause to be published once, in the
eastern edition of THE WALL STREET JOURNAL, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Certificate Insurer on account of any
Reimbursement Amount or to the Depositor. The Trustee shall, at the written
direction of CHEC, also adopt and employ, at the expense of CHEC, any other
reasonable means of notification of such payment (including but not limited to
mailing notice of such payment to Owners whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the
Registrar, the Trustee or any Paying Agent, at the last address of record for
each such Owner).
Section 6.03. PROTECTION OF TRUST ESTATE.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon written request of the
Certificate Insurer or, with the consent of the Certificate Insurer, at the
request of the Depositor, will from time to time execute and deliver all such
supplements and amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will take such other
action upon such request from the Depositor (with the consent of the Certificate
Insurer) or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
To the extent not covered by the indemnity or other security contemplated
by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any costs or
expenses associated with this section pursuant to Section 7.03(b)(x).
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(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer or the Owners as such rights are set forth in this
Agreement; PROVIDED, HOWEVER, that nothing in this Section shall require any
action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested by the Certificate Insurer or the Owners of a majority of the Voting
Rights represented by the Certificates then Outstanding with the consent of the
Certificate Insurer (unless a Certificate Insurer Default under clause (a) of
the definition thereof has occurred and is continuing); PROVIDED, FURTHER,
HOWEVER, that if there is a dispute with respect to payments under the
Certificate Insurance Policies the Trustee's first responsibility is to the
Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights, indemnities and
immunities hereunder.
Section 6.04. PERFORMANCE OF OBLIGATIONS.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05. NEGATIVE COVENANTS.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Owner by reason of the payment of any taxes
levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
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(iv) dissolve or liquidate the Trust in whole or in part,
except pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenant or obligation with respect to the Trust or to the Certificates
under this Agreement, except as may be expressly permitted hereby or (B)
permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon
or burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof.
Section 6.06. NO OTHER POWERS.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07. LIMITATION OF SUITS.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policies,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Seller and
the Trustee of such Owner's intention to institute such
proceeding;
(2) the Owners of not less than 51% of the Voting Rights represented
by the Certificates then Outstanding shall have made written
request to the Trustee to institute such proceeding in its own
name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amounts are owed to the Certificate Insurer, the
Certificate Insurer has consented in writing thereto (unless a
Certificate Insurer Default as defined in clause (a) of the
definition thereof has occurred and is continuing); and
(6) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Owners of a
majority of the Voting Rights represented by the Certificates then
Outstanding;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to
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obtain priority or preference over any other Owner of the same Class or to
enforce any right under this Agreement, except in the manner herein provided
and for the equal and ratable benefit of all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement.
Section 6.08. UNCONDITIONAL RIGHTS OF OWNERS TO RECEIVE DISTRIBUTIONS.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee, the Certificate Insurer or to the Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion
or employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.10. DELAY OR OMISSION NOT WAIVER.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or by
the Owners, as the case may be.
Section 6.11. CONTROL BY OWNERS.
The Certificate Insurer or the Owners of a majority of the Voting Rights
represented by the Certificates then Outstanding with the consent of the
Certificate Insurer may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Estate, including, but not limited to,
those powers set forth in Section 6.03 and Section 8.20 hereof, PROVIDED THAT:
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(1) such direction shall not be in conflict with any rule of law or
with this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory
to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with such
direction (and which does not require Certificate Insurer consent
or direction pursuant to the terms of this Agreement); PROVIDED,
HOWEVER, that the Trustee need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12. INDEMNIFICATION BY CHEC.
CHEC agrees to indemnify and hold the Trustee, the Depositor, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Depositor, the Certificate
Insurer and any Owner sustain in any way related to the failure of Sellers to
perform their duties in compliance with the terms of this Agreement. CHEC shall
immediately notify the Trustee, the Depositor, the Certificate Insurer and each
Owner if a claim is made by a third party that the Servicer has failed to
perform its obligations to service and administer the Home Equity Loans in
compliance with the terms of this Agreement, and CHEC shall assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Depositor, the Servicer, the Sellers, the Trustee, the Certificate Insurer
and/or Owner in respect of such claim. The Trustee shall, in accordance with
instructions received from CHEC, reimburse CHEC only from amounts otherwise
distributable on the Class X-IO and the Class R Certificates for all amounts
advanced by it pursuant to the preceding sentence, except when a final
nonappealable adjudication determines that the claim relates directly to the
failure of the Sellers to perform their duties in compliance with the terms of
this Agreement. The provisions of this Section 6.12 shall survive the
termination of this Agreement, the resignation or removal of the Trustee and the
payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policies,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it as
part of the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02. ESTABLISHMENT OF ACCOUNTS.
(a) The Depositor shall cause the Certificate Account and the
Supplemental Interest Reserve Fund to be established on the Startup Day, and the
Trustee shall maintain each of the Certificate Account and the Supplemental
Interest Reserve Fund, at the Corporate Trust Office as an Eligible Account to
be held by the Trustee in the name of the Trust on behalf of (i) in the case of
the Certificate Account, the Owners of the Certificates and the Certificate
Insurer; and (ii) in the case of the Supplemental Interest Reserve Fund, the
Owners of the Class A-7 Certificates.
(b) On each Determination Date the Trustee shall determine (subject
to the terms of Section 10.03(j) hereof, based solely on information provided
to it electronically or in writing by the Servicer) with respect to the
immediately following Distribution Date, the amounts that are expected to be
on deposit in the Certificate Account as of such Distribution Date.
Section 7.03. FLOW OF FUNDS.
(a) (i) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, with respect to Group I, the proceeds
of any liquidation of the assets of the Trust insofar as such assets
relate to Group I, all remittances made to the Trustee pursuant to
Sections 8.08(e) and 8.09 with respect to Group I and the Group I Monthly
Remittance Amount remitted by the Servicer.
(ii) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, with respect to Group II, the proceeds
of any liquidation of the assets of the Trust insofar as such assets
relate to Group II, all remittances made to the Trustee pursuant to
Sections 8.08(e) and 8.09 with respect to Group II and the Group II
Monthly Remittance Amount remitted by the Servicer.
(b) On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers (based solely on information provided
by the Servicer in writing), for each Home Equity Loan Group from amounts
deposited in the Certificate Account pursuant to subsection (a) for the related
Home Equity Loan Group in the following order of priority, and
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each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations:
(i) Concurrently, to the Trustee and the Certificate
Insurer, the Trustee Fee and any Transition Expenses for the related Home
Equity Loan Group to the Trustee and, provided that no Certificate
Insurer Default as defined in clause (a) of the definition thereof has
occurred and is continuing, the Premium Amount for the related Classes of
Class A Certificates for the Distribution Date to the Certificate
Insurer.
(ii) To the related Classes of Class A Certificates, the
related Current Interest for the Classes (on a pro rata basis based on
each Class A Certificate's Current Interest without priority among the
Class A Certificates) for the Distribution Date.
(iii) To the related Classes of Class A Certificates, an
amount up to the related Class A Principal Distribution Amount in the
following order of priority:
(A) With respect to the Home Equity Loan Group
relating to the Group I Certificates, the Class A Principal
Distribution Amount applicable to the Group I Certificates shall
be distributed as follows:
(1) To the Certificateholders of the Class A-6
Certificates, an amount equal to the Class A-6 Lockout
Distribution Amount until the Certificate Principal
Balance of the Class A-6 Certificates has been reduced
to zero; and
(2) The remainder as follows: first, to the Class
A-1 Certificateholders until the Certificate Principal
Balance of the Class A-1 Certificates is reduced to
zero; second, to the Class A-2 Certificateholders until
the Certificate Principal Balance of the Class A-2
Certificates is reduced to zero; third, to the Class A-3
Certificateholders until the Certificate Principal
Balance of the Class A-3 Certificates is reduced to
zero; fourth, to the Class A-4 Certificateholders until
the Certificate Principal Balance of the Class A-4
Certificates is reduced to zero; fifth, to the Class A-5
Certificateholders until the Certificate Principal
Balance of the Class A-5 Certificates is reduced to
zero; and sixth to the Class A-6 Certificateholders
until the Certificate Principal Balance of the Class A-6
Certificates has been reduced to zero;
provided, however, during the continuance of a Certificate Insurer
Default, if there is a Collateralization Deficit with respect to
the Group I Certificates, then the Class A Principal Distribution
Amount applicable to the Group I Certificates shall be distributed
pro rata to the Certificateholders of the Group I Certificates.
(B) With respect to the Home Equity Loan Group
relating to the Group II Certificates, the Class A Principal
Distribution Amount applicable to the Group
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II Certificates shall be distributed to the Certificateholders of
the Class A-7 Certificates, until the Certificate Principal
Balance of the Class A-7 Certificates is reduced to zero.
(iv) Concurrently, to the Trustee and the Certificate
Insurer, any unpaid Trustee Fee and any unpaid Transition Expenses for
the unrelated Home Equity Loan Group to the Trustee and, provided that no
Certificate Insurer Default as defined in clause (a) of the definition
thereof has occurred and is continuing, any unpaid Premium Amount for the
unrelated Class or Classes of Class A Certificates for the Distribution
Date to the Certificate Insurer.
(v) To the Classes of Class A Certificates with respect to
the unrelated Home Equity Loan Group, the amount of the Available Funds
Shortfall with respect to the unrelated Home Equity Loan Group, allocated
to Current Interest on such Classes (on the same pro rata basis as
provided in clause (ii) above), to the extent of any shortfall in Current
Interest, and then to principal (allocated in the same order of priority
as provided in clause (iii) above);.
(vi) To the Certificate Insurer, in the following order of
priority, the sum of:
(1) Any Reimbursement Amount owed to the Certificate
Insurer with respect to the related Classes of Class A
Certificates; provided that if a Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred and
is continuing, then the priority of this allocation shall follow
immediately after clause (vii) below; and
(2) Any unpaid Reimbursement Amount owed to the
Certificate Insurer with respect to the unrelated Classes of Class
A Certificates; provided that if a Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred and
is continuing, then the priority of this allocation shall follow
immediately after clause (viii) below.
(vii) To the Classes of Class A Certificates with respect to
the related Home Equity Loan Group, an amount up to the Extra Principal
Distribution Amount for the related Home Equity Loan Group, until the
related Target Overcollateralization Amount is reached, such amounts to
be applied in reduction of the related Certificate Principal Balances in
the same order of priority as the Class A Principal Distribution Amount
is to be so applied for such related Home Equity Loan Group pursuant to
clause (iii) above.
(viii) To the Classes of Class A Certificates with respect to
the unrelated Home Equity Loan Group, an amount equal to any Target
Deficiency for such unrelated Home Equity Loan Group remaining after the
distributions above with respect to the unrelated Home Equity Loan Group,
such amounts to be applied in reduction of the related Certificate
Principal Balances in the same order of priority as the Class A Principal
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Distribution Amount is to be so applied for such unrelated Home Equity
Loan Group pursuant to clause (iii) above.
(ix) To the Class X-IO Certificate, the lesser of the Class
X-IO Distribution Amount and the Class A-7 Certificateholders' Interest
Index Carryover, provided that, pursuant to Section 7.04 hereof, on any
Distribution Date as to which there is any unpaid Class A-7
Certificateholders' Interest Index Carryover, the Trustee will transfer,
from amounts that would otherwise be distributable to the Class X-IO
Certificates pursuant to this clause, the amount of any Class A-7
Certificateholders' Interest Index Carryover into the Supplemental
Interest Reserve Fund, for immediate transfer pursuant to this clause to
the Class A-7 Certificates as payment of the Class A-7
Certificateholders' Interest Index Carryover.
(x) To the Trustee as reimbursement for all Trustee
Reimbursable Expenses incurred in connection with its duties and
obligations under this Agreement, to the extent not paid as Trustee Fees
or Transition Expenses pursuant to clauses (i) or (iv) above.
(xi) To the Servicer to the extent of any unreimbursed
Delinquency Advances, unreimbursed Servicing Advances and unreimbursed
Compensating Interest.
(xii) To the Class X-IO Certificates, an amount equal to the
Class X-IO Distribution Amount less any amounts thereof applied pursuant
to clause (ix) above; PROVIDED, HOWEVER, that on any Distribution Date on
which the Class X-IO Distribution Amount is distributable pursuant to
Section 9.02(d), any Class X-IO Distribution Amount shall instead be
distributed to the Classes of Class A Certificates of the related Home
Equity Loan Group, such amounts to be applied in reduction of the
Certificate Principal Balance of such Classes in the same order of
priority as the Class A Principal Distribution Amount is to be applied
for such related Home Equity Loan Group pursuant to clause (iii) above,
and then to the Classes of Class A Certificates of the unrelated Home
Equity Loan Group, such amounts to be applied in reduction of the
Certificate Principal Balance of such Classes in the same order of
priority as the Class A Principal Distribution Amount is to be applied
for such unrelated Home Equity Loan Group pursuant to clause (iii) above.
(xiii) To the Class R Certificates, the remainder.
(c) Reserved.
(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Distribution Dates to the Owners of the related Class
A Certificates on account of principal pursuant to Section 7.03(b) shall not
exceed the original Certificate Principal Balance of the related Class A
Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Policy Payments Account. On each Distribution Date,
pursuant to Section 12.02(b) hereof, such
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amounts will be transferred from the Policy Payments Account to the Certificate
Account and the Trustee shall distribute such Insured Payments, or the proceeds
thereof, to the Owners of such Class A Certificates, first, to the payment of
any unpaid Current Interest for such Class or Classes of Class A Certificates
on a pro rata basis, and second, any remaining Deficiency Amount shall be
applied to the related Class A Principal Distribution Amount on the related
Distribution Date, in the same order of priority as described in Section
7.03(b)(iii).
(f) The Trustee or Paying Agent shall (i) receive for each Owner of
the Class A Certificates any Insured Payment from the Certificate Insurer and
(ii) disburse the same to the Owners of the related Class A Certificates as set
forth in Section 7.03(e). Insured Payments disbursed by the Trustee or Paying
Agent from proceeds of the Certificate Insurance Policies shall not be
considered payments by the Trust, nor shall such payments discharge the
obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the Reimbursement Amount
pursuant to Section 7.03(b) hereof. Nothing contained in this paragraph shall
be construed so as to impose duties or obligations on the Trustee that are
different from or in addition to those expressly set forth in this Agreement.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class X-IO and Class R Certificates to receive
distributions in respect of the Class X-IO and Class R Certificates shall be
subject and subordinate to the preferential rights of the holders of the Class A
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class X-IO and Class R
Certificates in amounts deposited in the Accounts from time to time shall not
vest unless and until such amounts are distributed in respect of the Class X-IO
and Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Owners
of the Class X-IO and Class R Certificates shall not be required to refund any
amount properly distributed on the Class X-IO and Class R Certificates pursuant
to this Section 7.03.
Section 7.04. SUPPLEMENTAL INTEREST RESERVE FUND. On the Startup
Day, the holders of the Class X-IO Certificates will deposit, or cause to be
deposited, into the Supplemental Interest Reserve Fund, $10,000. On each
Distribution Date as to which there is Current WAC Excess or Class A-7
Certificateholders' Interest Index Carryover, the Trustee has been directed to,
and shall therefore, deposit into the Supplemental Interest Reserve Account an
amount equal to the Current WAC Excess of the Current Interest on the Class A-7
Certificates which is payable pursuant to Section 7.03(b)(ii), and/or the Class
A-7 Certificateholders' Interest Index Carryover pursuant to Section
7.03(b)(ix). If no Current WAC Excess or Class A-7 Certificateholders' Interest
Index Carryover is payable on a Distribution Date, the Trustee shall deposit
into the Supplemental Interest Reserve Fund on behalf of the Class X-IO
Certificateholders an amount such that when added to other amounts already on
deposit in the fund, the aggregate amount on deposit therein is equal to
$10,000. For federal and state income tax purposes, the Class X-IO
Certificateholders will be deemed to be the owners of the Supplemental Interest
Reserve Fund and all amounts deposited into the Supplemental Interest Reserve
Fund (other than the initial $10,000 deposit)
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shall be treated as amounts distributed by REMIC II with respect to the Class
X-IO Distribution Amount. Amounts held in the Supplemental Interest Reserve
Fund and not distributable to the Class A-7 Certificateholders on any
Distribution Date will be invested by the Trustee in investments designated
by the Class X-IO Certificateholders having maturities on or prior to the
next succeeding Distribution Date on which such amounts will be distributable
to the Class A-7 Certificateholders. Upon the termination of the Trust, or
the payment in full of the Class A-7 Certificates, all amounts remaining on
deposit in the Supplemental Interest Reserve Fund will be released from the
lien of the Trust and distributed to the Class X-IO Certificateholders or
their designees. The Supplemental Interest Reserve Fund will be part of the
Trust but not part of either REMIC I or REMIC II and any payments to the
Class A-7 Certificates of Current WAC Excess and Class A-7
Certificateholders' Interest Index Carryover will not be payments with
respect to a "regular interest" in a REMIC within the meaning of Code Section
860G(a)(1).
Section 7.05. INVESTMENT OF ACCOUNTS.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners may (i) remain
uninvested or (ii) be invested and reinvested by the Trustee as directed in
writing by the Servicer in the name of the Trustee for the benefit of the Owners
and the Certificate Insurer in one or more Eligible Investments bearing interest
or sold at a discount. The bank serving as Trustee or any Affiliate thereof may
be the obligor on any investment which otherwise qualifies as an Eligible
Investment. No investment in any Account shall mature later than the Business
Day immediately preceding the next Distribution Date. Amounts held in the
Certificate Account shall be invested in Eligible Investments, which Eligible
Investments shall mature no later than the Business Day preceding the
immediately following Distribution Date or, if such Eligible Investments are an
obligation of the Trustee or are money market funds for which the Trustee or any
Affiliate is the manager or the adviser, such Eligible Investments shall mature
no later than the following Distribution Date.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
as directed in writing by the Servicer a sufficient amount of the investments in
such Account. No investments will be liquidated prior to maturity unless the
proceeds thereof are needed for disbursement.
(c) All income or other gain from investment in the Certificate
Account held by the Trustee shall be withdrawn by the Trustee and remitted to
the Servicer (except with respect to all income or other gain from investment
earned on the Business Day immediately preceding a Distribution Date, which
amounts shall be retained by the Trustee). Any investment losses on amounts
held in the Certificate Account shall, promptly upon realization of such loss,
be contributed by the Servicer to the Trustee for deposit in the Certificate
Account.
Section 7.06. PAYMENT OF TRUST EXPENSES.
(a) With respect to the Certificate Account the Trustee shall receive
all income and other gains from investments as described in Section 7.05(c).
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(b) The Seller shall pay directly on the Startup Day the reasonable
fees and expenses of counsel to the Trustee.
Section 7.07. ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States, FHLMC
senior debt obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated A-l
by Standard & Poor's and P-l by Moody's and if rated by Fitch, F1+ by Fitch;
provided that any such certificates of deposit must be secured at all times by
collateral described in clause (a) or (b) above, such collateral must be held by
a third party and the Trustee must have a perfected first priority security
interest in such collateral;
(g) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is A2 or better by Moody's and BBB or better
by Standard & Poor's and if rated by Fitch, AA- or better by Fitch) which has
combined capital, surplus and undivided profits of at least $50,000,000 which
deposits are insured by the FDIC and held up to the limits insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in
clause (a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long term obligation rated
P-l or Aa2, respectively, or better by Moody's and A-1+ or AA, respectively, or
better by Standard & Poor's, and if rated by Fitch, AA- or F1+, respectively, or
better by Fitch provided:
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a. A master repurchase agreement or specific written
repurchase agreement governs the transaction;
b. The securities are held free and clear of any lien by
the Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank
which is a member of the FDIC and which has combined capital, surplus and
undivided profits of not less than $125,000,000, or (c) a bank approved
in writing for such purpose by the Certificate Insurer, and the Trustee
shall have received written confirmation from such third party that it
holds such securities, free and clear of any lien, as agent for the
Trustee;
c. A perfected first security interest under the Uniform
Commercial Code, or book-entry procedures prescribed at 31 CFR 306.1 ET
SEQ. or 31 CFR 350.0 ET SEQ., in such securities is created for the
benefit of the Trustee;
d. The repurchase agreement has a term of thirty days or
less and the Trustee will value the collateral securities no less
frequently than weekly marked-to-market at current market price plus
interest and will liquidate the collateral securities if any deficiency
in the required collateral percentage is not restored within two business
days of such valuation; and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including principal
and interest, is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's and if rated by Fitch, Fitch;
(j) Any money market fund rated AAAm or AAAm-G by Standard & Poor's
and Aaa by Moody's and if rated by Fitch, AA by Fitch which funds are registered
under the Investment Company Act of 1940 and whose shares are registered under
the Securities Act, including any such fund that is managed by the Trustee or
any Affiliate of the Trustee or for which the Trustee or any of its Affiliates
acts as an adviser; and
(k) Any other investment permitted by each of the Rating Agencies and
the Certificate Insurer;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Distribution Date unless otherwise provided in this Agreement
and that no instrument described hereunder may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
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Section 7.08. ACCOUNTING AND DIRECTIONS BY TRUSTEE.
By 12:00 noon New York time, on each Distribution Date (or such earlier
period as shall be agreed by the Seller and the Trustee), the Trustee shall
notify (subject to the terms of Section 10.03(j) hereof, based solely on
information provided to the Trustee by the Servicer and upon which the Trustee
may conclusively rely) the Seller, the Depositor, each Owner and the Certificate
Insurer, of the following information with respect to such Distribution Date
(which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account as of
the related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes in the aggregate on the next
Distribution Date;
(3) The amount of any Extra Principal Distribution Amount for each
Group;
(4) The amount of any Insured Payment to be made by the Certificate
Insurer on such Distribution Date;
(5) The application of the amounts described in clauses (1), (3) and
(4) above to be made on such Distribution Date in accordance with
Section 7.03 hereof;
(6) The Certificate Principal Balance of each Class, the aggregate
amount of the principal of each Class of the Class A Certificates
to be paid on such Distribution Date and the remaining Certificate
Principal Balance of each Class of Class A Certificates following
any such payment;
(7) The amount, if any, of any Realized Losses for each Group for the
related Remittance Period; and
(8) The amount of any Collateralization Deficit, any
Overcollateralization Release Amount and the Target
Overcollateralization Amount for each Group.
Section 7.09. REPORTS BY TRUSTEE TO OWNERS AND CERTIFICATE INSURER.
(a) On each Distribution Date the Trustee shall transmit a report in
writing to each Owner, the Underwriters, the Depositor, the Certificate Insurer,
Standard & Poor's, Moody's and Fitch setting forth:
(i) the amount of the distribution with respect to such
Owner's Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any Prepayments
in full or other Prepayments or other recoveries of principal included
therein with respect to Group I and Group II (based
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on a Certificate in the original principal amount of $1,000) and any
related Extra Principal Distribution Amount;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution to the Owners of any Class of the
Class A Certificates on such Distribution Date was less than the related
Class A Distribution Amount on such Distribution Date, the related
Carry-Forward Amount and the allocation thereof to the related Classes of
Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the
amounts distributed to the Owners of Class A Certificates on such
Distribution Date;
(vi) the principal amount of each Class of Class A
Certificate which will be Outstanding and the aggregate Loan Balance of
each Group, after giving effect to any payment of principal on such
Distribution Date;
(vii) the Overcollateralization Amount, Target
Overcollateralization Amount and Collateralization Deficit for each
Group, if any, remaining after giving effect to all distributions and
transfers on such Distribution Date;
(viii) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in computing
their market discount;
(ix) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to each
Group;
(x) the weighted average Coupon Rate of the Home Equity
Loans in each Group;
(xi) [Reserved];
(xii) such other information as the Certificate Insurer or any
Owner may reasonably request with respect to Delinquent Home Equity
Loans;
(xiii) the weighted average gross margin of the Home Equity
Loans in Group II;
(xiv) the largest Loan Balance outstanding in each Group;
(xv) the Class A-7 Certificate Rate for the related
Distribution Date;
(xvi) the Class A-7 Certificateholders' Interest Index
Carryover paid to the Owners of the Class A-7 Certificates for such
Distribution Date and any Class A-7 Certificateholders' Interest Index
Carryover remaining unpaid;
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(xvii) the Class A-1 Certificate Rate for the related
Distribution Date;
(xviii) the Class A-2 Certificate Rate for the related
Distribution Date;
(xix) the Class A-3 Certificate Rate for the related
Distribution Date;
(xx) the Class A-4 Certificate Rate for the related
Distribution Date;
(xxi) the Class A-5 Certificate Rate for the related
Distribution Date;
(xxii) the Class A-6 Certificate Rate for the related
Distribution Date;
(xxiii) the Group I Net WAC Cap, the Group II Net WAC Cap and
the Class A-7 Available Funds Cap for such Distribution Date; and
(xxiv) the Reimbursement Amount, if any, for such Distribution
Date.
The Servicer shall provide to the Trustee the information described in
Section 8.08(f) and in clause (b) below to enable the Trustee to perform its
reporting obligations under this Section, and such obligations of the Trustee
under this Section are conditioned upon such information being received and the
information provided in clauses (ii), (ix) and (x) above shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on each Distribution Date the Trustee will distribute
to each Owner, the Certificate Insurer, the Underwriters, Standard & Poor's,
Moody's and Fitch, together with the information described in subsection (a)
preceding, the following information with respect to each Home Equity Loan Group
and for both Groups in the aggregate which is hereby required to be prepared by
the Servicer and furnished to the Trustee for such purpose on or prior to the
related Monthly Remittance Date:
(i) the number and aggregate Loan Balances of Home Equity
Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or
more days Delinquent, as of the close of business on the last Business
Day of the calendar month immediately preceding the Distribution Date,
(d) the number and aggregate Loan Balances of all Home Equity Loans as of
such Distribution Date after giving effect to any payment of principal on
the last day of the Remittance Period immediately preceding the
Distribution Date and (e) the percentage that each of the amounts
represented by clauses (a), (b) and (c) represent as a percentage of the
respective amounts in clause (d);
(ii) the status and the number and dollar amounts of all Home
Equity Loans in foreclosure proceedings as of the close of business on
the last Business Day of the calendar month immediately preceding such
Distribution Date, separately stating, for this purpose, all Home Equity
Loans with respect to which foreclosure proceedings were commenced in the
immediately preceding calendar month;
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(iii) the number of Mortgagors and the Loan Balances of (a)
the related Home Equity Loans involved in bankruptcy proceedings as of
the close of business on the last Business Day of the calendar month
immediately preceding such Distribution Date and (b) Home Equity Loans
that are "balloon" loans;
(iv) the existence and status of any REO Properties, as of
the close of business on the last Business Day of the calendar month
immediately preceding the Distribution Date;
(v) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month immediately
preceding the Distribution Date;
(vi) cumulative Realized Losses incurred on the Home Equity
Loans from the Startup Day to and including the Remittance Period
immediately preceding the Distribution Date;
(vii) the amount of Net Liquidation Proceeds realized on the
Home Equity Loans during the Remittance Period immediately preceding the
Distribution Date;
(viii) the Annual Loss Percentage (Rolling Twelve Month) with
respect to such Distribution Date; and
(ix) the 90+ Delinquency Percentage (Rolling Three Month)
with respect to such Distribution Date.
The Trustee shall forward such report (together with the information
described in (a) above) concurrently with each distribution to the
Certificateholders, the Rating Agencies and the Certificate Insurer.
(c) The Trustee shall, on behalf of the Trust, cause to be filed with
the Commission any periodic reports required to be filed on behalf of the Trust
under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder. Upon the request of the Trustee, each of the Seller, the
Servicer and the Depositor shall cooperate with the Trustee in the preparation
of any such report and shall provide to the Trustee in a timely manner all such
information or documentation as is in the possession of such Person and that the
Trustee may reasonably request in connection with the performance of its duties
and obligations under this Section.
The Trustee shall file with the Commission a Form 15 with respect to the
Trust as soon as practicable following the first date on which the conditions to
filing thereof have been satisfied. Following the filing of such Form 15, the
Trustee will submit a certificate addressed to an officer of the Depositor
certifying that all filings under the Exchange Act have been made and shall
attach a copy of acceptance slips for such filings. On the Startup Day, the
Depositor shall provide the Trustee with a letter at Closing, substantially in
the form attached hereto as Exhibit M, instructing the Trustee, as filing agent,
to comply with the reporting obligations for the Trust under the Exchange Act.
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Section 7.10. REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Depositor, the Seller, the
Certificate Insurer and each Owner, with respect to the amount on deposit in the
Certificate Account (including the amount therein relating to each Group) and
the identity of the investments included therein, as the Depositor, the Seller,
any Owner or the Certificate Insurer may from time to time reasonably request.
Without limiting the generality of the foregoing, the Trustee shall, at the
reasonable request of the Depositor, the Seller, any Owner or the Certificate
Insurer, transmit promptly to the Depositor, the Seller, any Owner and the
Certificate Insurer copies of all accountings of receipts in respect of the Home
Equity Loans furnished to it by the Servicer and shall notify the Seller and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
(c) The Trustee will make the report referred to in Section 7.09
herein (and, at its option, any additional files containing the same information
in an alternative format) available each month to Certificateholders and other
parties to this Agreement via the Trustee's internet website, which is presently
located at www.abs.bankone.com. Persons that are unable to use the above
website are entitled to have a paper copy mailed to them via first Class mail by
calling the Trustee at 1-800-524-9472. The Trustee shall have the right to
change the way the report referred to in Section 7.09 herein is distributed in
order to make such distribution more convenient and/or more accessible to the
above parties and to the Certificateholders. The Trustee shall provide timely
and adequate notification to all above parties and to the Certificateholders
regarding any such change.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. SERVICER AND SUB-SERVICERS.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the terms of the respective Home Equity
Loans, and with prudent and reasonable care, using the degree of skill and
attention that the Servicer exercises with respect to comparable home equity
loans that it services for itself or others and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable but without regard to: (i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer may have with
the related Mortgagor; (ii) the ownership of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have the rights and powers of the Servicer which have been
delegated to such Sub-Servicer with respect to such Home Equity Loans under this
Agreement.
Without limiting the generality of the foregoing, but subject to Sections
8.13 and 8.14, the Servicer in its own name or in the name of a Sub-Servicer is
hereby authorized and empowered (i) to execute and deliver, on behalf of itself,
the Owners and the Trustee or any of them, any and all instruments of
satisfaction or cancellation or of partial or full release or discharge and all
other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; PROVIDED, HOWEVER, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and PROVIDED, FURTHER, however, that Section
8.13(a) and Section 8.14(a) shall each constitute a revocable power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of Mortgage without recourse) with respect to any Home Equity Loan
held by the Trustee hereunder paid in full or foreclosed (or with respect to
which payment in full has been escrowed). Revocation of the power of attorney
created by the final proviso of the preceding sentence shall take effect upon
(i) the receipt by the Servicer of written notice thereof from the Trustee, (ii)
a Servicer Termination Event or (iii) the termination of the Trust. The Trustee
shall at the written
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direction of the Servicer execute any documentation furnished to it by the
Servicer for recordation by the Servicer in the appropriate jurisdictions, as
shall be necessary to effectuate the foregoing. Subject to Sections 8.13 and
8.14, the Trustee shall, if necessary, execute a limited power of attorney in
the form reasonably acceptable to the Trustee to the Servicer or any
Sub-Servicer and furnish them with any other documents as the Servicer or
such Sub-Servicer shall reasonably request to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative
duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the Trustee
and, if requested by the Certificate Insurer, the Certificate Insurer, the
details concerning the servicing of the Home Equity Loans on computer generated
tape, diskette or other machine readable format which is mutually agreeable.
The Servicer shall give prompt written notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges on
any Property) shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02. COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Home Equity Loans, and shall, to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any applicable Insurance Policy, follow collection procedures for
all Home Equity Loans at least as rigorous as those described in the FNMA Guide.
Consistent with the foregoing, the Servicer may in its discretion waive or
permit to be waived any late payment charge, prepayment charge, assumption fee
or any penalty interest in connection with the prepayment of a Home Equity Loan
or any other fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation. In the event the Servicer shall consent to
the deferment of the due dates for payments due on a Note, the Servicer shall
nonetheless make payment of any required Delinquency Advance with respect to the
payments so extended to the same extent as if such installment were due, owing
and Delinquent and had not been deferred, and shall be entitled to reimbursement
therefor in accordance with Section 8.09(a) hereof.
Section 8.03. SUB-SERVICING AGREEMENTS BETWEEN SERVICER AND
SUB-SERVICERS.
The Servicer may, with the prior written consent of the Certificate
Insurer and the Trustee, enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution which is acceptable
to the Certificate Insurer and the Trustee and which (x) is in compliance with
the laws of each state necessary to enable it to perform its obligations under
such Sub-Servicing Agreement, (y) has experience servicing home equity loans
that are similar to the Home Equity Loans and (z) has equity of not less than
$5,000,000 (as
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determined in accordance with generally accepted accounting principles). The
Servicer shall give written notice to the Trustee, the Owners, the
Certificate Insurer and the Rating Agencies of the appointment of any
Sub-Servicer (and shall receive the confirmation of the Rating Agencies that
such Sub-Servicer shall not result in a withdrawal or downgrading by any
Rating Agency of the rating or the shadow rating of the Class A
Certificates). For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Home Equity Loans when any Sub-Servicer has
received such payments. Each Sub-Servicer shall be required to service the
Home Equity Loans in accordance with this Agreement and any such
Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement. Each Sub-Servicing Agreement shall provide that
the Trustee (if acting as successor Servicer) or any other successor Servicer
shall have the option to terminate such agreement without payment of any fees
if the original Servicer is terminated or resigns. The Servicer shall deliver
to the Trustee and the Certificate Insurer copies of all Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly upon the
Servicer's execution and delivery of such instrument.
Section 8.04. SUCCESSOR SUB-SERVICERS.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05. LIABILITY OF SERVICER; INDEMNIFICATION.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer agrees to indemnify and hold the Trustee, the
Depositor, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor, the Certificate Insurer and any Owner may sustain in any way related
to the failure of the Servicer to perform its duties and service the Home Equity
Loans in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Trustee, the Depositor, the Certificate Insurer and each
Owner if a claim is made by a third party with respect to this Agreement, and
the Servicer shall assume (with the consent of the Trustee and the Certificate
Insurer) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Trustee, the Depositor, the Certificate Insurer and/or Owner in respect of such
claim. The Trustee shall, in accordance with written
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instructions received from the Servicer, reimburse the Servicer only from
amounts otherwise distributable on the Class R Certificates for all amounts
advanced by it pursuant to the preceding sentence, except when a final
nonappealable adjudication determines that the claim relates directly to the
failure of the Servicer to perform its duties in compliance with the
Agreement. The provisions of this Section 8.05(b) shall survive the
termination of this Agreement, the resignation or removal of the Trustee, and
the payment of the outstanding Certificates.
Section 8.06. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER, TRUSTEE
OR THE OWNERS.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee and the Owners
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.07.
Section 8.07. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20 or another successor Servicer, it is
understood and agreed that the Servicer's rights and obligations under any
Sub-Servicing Agreement then in force between the Servicer and a Sub-Servicer
shall be assumed simultaneously by the Trustee or another successor Servicer
without act or deed on part of the Trustee or such successor servicer; PROVIDED,
HOWEVER, that the Trustee (if acting as successor Servicer) or any other
successor Servicer may, with the consent of the Certificate Insurer, and shall,
at the direction of the Certificate Insurer, terminate the Sub-Servicer as
provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08. PRINCIPAL AND INTEREST ACCOUNT.
(a) The Servicer shall establish and maintain at one or more
Designated Depository Institutions the Principal and Interest Account, which
shall be an Eligible Account. The Principal and Interest Account shall be
identified on the records of the Designated Depository Institution as follows:
Bank One, National Association, as Trustee on behalf of MBIA Insurance
Corporation and the Owners of the Centex Home Equity Loan Trust 2000-C Home
Equity Loan Asset-Backed Certificates. If the institution at any time holding
the Principal and Interest Account ceases to be eligible as a Designated
Depository Institution hereunder, then the Servicer shall immediately be
required to name a successor institution meeting the requirements for a
Designated Depository Institution hereunder. If the Servicer fails to name such
a successor institution, then the Principal and Interest Account shall
thenceforth be held as a trust account at the Corporate Trust Office of the
Trustee. The Servicer shall notify the Trustee, the Certificate
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Insurer and the Owners if there is a change in the name, account number or
institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all receipts
required pursuant to Subsection (c) below and related to the Home Equity Loans
to the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trust for the benefit of the Owners and the Certificate
Insurer. The Trust shall be divided into two separate sub-trusts; one for Group
I and any Trust assets allocable to Group I and the other for Group II and any
Trust assets allocable to Group II. Any investment earnings on funds held in
the Principal and Interest Account shall be for the account of the Servicer and
may only be withdrawn from the Principal and Interest Account by the Servicer
immediately following the remittance of the Monthly Remittance Amount by the
Servicer in accordance with the terms hereof. Any investment losses on amounts
held in the Principal and Interest Account shall be for the account of the
Servicer and promptly upon the realization of such loss shall be contributed by
the Servicer to the Principal and Interest Account. Any references herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account
no later than the second Business Day after receipt, all principal collected and
interest due on the Home Equity Loans (net of the Servicing Fee related to such
Home Equity Loans) on and after the Cut-Off Date and the Replacement Cut-Off
Date, as applicable, including any Prepayments and Net Liquidation Proceeds,
other recoveries or amounts related to the Home Equity Loans received by the
Servicer and any income from REO Properties, but net of (i) Net Liquidation
Proceeds to the extent such Net Liquidation Proceeds exceed the sum of (A) the
Loan Balance of the related Home Equity Loan immediately prior to liquidation,
plus (B) accrued and unpaid interest on such Home Equity Loan (net of the
related Servicing Fee) plus (C) any unrecovered Cram Down Losses, (ii)
reimbursements for unreimbursed Delinquency Advances and unreimbursed Servicing
Advances (but in each case solely from amounts received on the related Home
Equity Loan) as provided in Section 8.09 and (iii) reimbursements for amounts
deposited in the Principal and Interest Account representing payments of
principal and/or interest on a Note by a Mortgagor which are subsequently
returned by a depository institution as unpaid.
(d) The Servicer may make withdrawals from the Principal and Interest
Account, with respect to each Home Equity Loan Group, for the following
purposes:
(A) on each Monthly Remittance Date, to pay itself the
related Servicing Fees to the extent such Servicing Fees
are not retained by the Servicer;
(B) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account;
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(C) to withdraw amounts that have been deposited to the
Principal and Interest Account in error;
(D) to reimburse itself for unreimbursed Delinquency
Advances and for unreimbursed Servicing Advances (in
each case, solely from amounts recovered on the related
Home Equity Loan) as provided in Section 8.09;
(E) to reimburse itself pursuant to Section 8.09(a) for
Nonrecoverable Advances; and
(F) to clear and terminate the Principal and Interest
Account following the termination of the Trust pursuant
to Article IX.
(e) The Servicer shall (i) remit to the Trustee for deposit
in the Certificate Account by wire transfer, or otherwise make funds available
in immediately available funds, without duplication, the Monthly Remittance
Amount allocable to a Remittance Period not later than the related Monthly
Remittance Date, and (ii) on each Monthly Remittance Date, deliver to the
Trustee, the Depositor and the Certificate Insurer, a monthly servicing report,
with respect to each Home Equity Loan Group, containing (without limitation) the
following information: principal and interest collected in respect of the Home
Equity Loans, scheduled principal and interest that was due on the Home Equity
Loans, relevant information with respect to Liquidated Loans, if any, summary
and detailed delinquency reports, Liquidation Proceeds and other similar
information concerning the servicing of the Home Equity Loans and any other
information requested by the Certificate Insurer (including, without limitation,
a liquidation report with respect to each Liquidated Loan). In addition, the
Servicer shall inform the Trustee and the Certificate Insurer on each Monthly
Remittance Date, with respect to each Home Equity Loan Group, of the amounts of
any Loan Purchase Prices or Substitution Amounts so remitted during the related
Remittance Period, and of the Loan Balance of the Home Equity Loan having the
largest Loan Balance as of such date. The Servicer shall deliver copies of the
monthly statement for the Principal and Interest Account to the Certificate
Insurer promptly upon receipt thereof.
(f) The Servicer shall provide to the Trustee the
information described in Section 8.08(e)(ii) and in Section 7.09(b) to enable
the Trustee to perform its reporting requirements under Section 7.09 and to make
the allocations and disbursements set forth in Sections 7.02 and 7.03.
Section 8.09. DELINQUENCY ADVANCES AND SERVICING ADVANCES.
(a) On or before each Monthly Remittance Date, the Servicer shall be
required to remit to the Trustee for deposit to the Certificate Account out of
the Servicer's own funds or from collections on any Home Equity Loans that are
not required to be distributed on the Distribution Date occurring during the
month in which such remittance is made (all or any portion of such amount to be
replaced on future Monthly Remittance Dates to the extent required for
distribution) any Delinquent payment of interest with respect to each Delinquent
Home Equity Loan, which payment was not received on or prior to the last day of
the related Remittance Period. Such amounts of the Servicer's own funds so
deposited are "Delinquency Advances".
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The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds (i) from late
collections on the related Home Equity Loan or (ii) as otherwise provided in
Section 7.03(b).
Notwithstanding the foregoing, in the event that the Servicer determines
in its reasonable business judgment in accordance with the servicing standards
set out herein that any proposed Delinquency Advance would not be recoverable,
the Servicer shall not be required to make Delinquency Advances with respect to
such Home Equity Loan. To the extent that the Servicer previously has made
Delinquency Advances with respect to a Home Equity Loan that the Servicer
subsequently determines are Nonrecoverable Advances, the Servicer shall be
entitled to reimbursement for such aggregate Nonrecoverable Advances from
collections on any Home Equity Loan on deposit in the Principal and Interest
Account. The Servicer shall deliver an Officer's Certificate of such
determination as to why such amount would not be recoverable to the Trustee and
the Certificate Insurer; the Trustee shall promptly furnish a copy of such
notice to the Owners of the Class R Certificates upon request; PROVIDED,
FURTHER, that the Servicer shall be entitled to recover any unreimbursed
Delinquency Advances from Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Property, (iv) advances required by Section 8.13(a), and
(v) expenses incurred pursuant to Section 8.22, except to the extent that such
amounts are determined by the Servicer in its reasonable business judgment not
to be recoverable. Such costs will constitute "Servicing Advances". The
Servicer may recover a Servicing Advance (x) from the Mortgagors to the extent
permitted by the Home Equity Loans or, if not theretofore recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(b)(xi). The Servicer shall be entitled to recover
the Servicing Advances from the Liquidation Proceeds on the related Home Equity
Loan prior to the payment of the Liquidation Proceeds to any other party to this
Agreement. In no case may the Servicer recover Servicing Advances from the
principal and interest payments on any other Home Equity Loan except as provided
in Section 7.03(b)(xi).
Section 8.10. COMPENSATING INTEREST; REPURCHASE OF HOME EQUITY LOANS.
(a) If any Prepayment in full of a Home Equity Loan occurs during any
calendar month, any shortfall between (x) the interest collected from the
Mortgagor in connection with such payoff, and (y) the full month's interest at
the Coupon Rate that would be due on the related Due Date for such Home Equity
Loan ("Compensating Interest") (but not in excess of the aggregate Servicing Fee
for the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included in the Monthly Remittance Amount to be made available to the
Trustee on such Monthly Remittance
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Date. The Servicer may recover any unreimbursed payments of Compensating
Interest as provided in Section 7.03(b)(xi).
(b) Subject to clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which is 60 days or more Delinquent, or any Home Equity Loan as to which
enforcement proceedings have been brought by the Servicer pursuant to Section
8.13; PROVIDED, HOWEVER, that the Servicer may not purchase any such Home Equity
Loan unless the Servicer has delivered to the Trustee and the Certificate
Insurer at the Servicer's expense, an Opinion of Counsel acceptable to the
Certificate Insurer and to the Trustee to the effect that such a purchase would
not constitute a Prohibited Transaction for the Trust or otherwise subject the
Trust to tax and would not jeopardize the status of REMIC I or REMIC II as
REMICs. Any such Home Equity Loan so purchased shall be purchased by the
Servicer on or prior to a Monthly Remittance Date at a purchase price equal to
the Loan Purchase Price thereof, which purchase price shall be deposited in the
Principal and Interest Account.
(c) If a Home Equity Loan to be purchased by the Servicer pursuant to
clause (b) above is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans (including Home Equity Loans relating to REO
Property), the Servicer may purchase such Home Equity Loan without having first
notified the Certificate Insurer of such purchase. In all other cases, the
Servicer must notify the Certificate Insurer and the Trustee, in writing, of its
intent to purchase a Home Equity Loan pursuant to clause (b) above and the
Servicer may not purchase such Home Equity Loan without the written consent of
the Certificate Insurer.
(d) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Monthly Remittance Amount remitted by the Servicer
to the Trustee.
Section 8.11. MAINTENANCE OF INSURANCE.
(a) (i) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a carrier generally acceptable
to the Servicer that provides for fire and extended coverage, and which provides
for a recovery by the Trust of insurance proceeds relating to such Home Equity
Loan in an amount not less than the least of (A) the outstanding principal
balance of the Home Equity Loan (plus the related Senior Lien loan, if any), (B)
the minimum amount required to compensate for damage or loss on a replacement
cost basis and (C) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, and shall be named as loss payee. The policies
shall require the insurer to provide the mortgagee with 30 days' notice prior to
any cancellation or as otherwise required by law.
(ii) As an alternative to maintaining a hazard insurance policy
with respect to each Home Equity Loan as described in clause (i) above, the
Servicer may maintain a blanket hazard insurance policy or policies if the
insurer or insurers of such policies are rated investment grade by Moody's and
Standard & Poor's and if rated by Fitch, Fitch.
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(b) If the Home Equity Loan at the time of origination (or if required
by federal law, at any time thereafter) relates to a Property in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, the Servicer will cause to be maintained with
respect thereto a flood insurance policy in a form meeting the requirements of
the then current guidelines of the Federal Insurance Administration with a
carrier generally acceptable to the Servicer in an amount representing coverage,
and which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related Senior Lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust and the Certificate Insurer out of the Servicer's own funds
for any loss to the Trust or the Certificate Insurer resulting from the
Servicer's failure to advance premiums for such insurance required by this
Section when so permitted by the terms of the Mortgage as to which such loss
relates.
(c) Amounts collected by the Servicer under any Insurance Policy shall
be deposited into the Principal and Interest Account.
Section 8.12. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall (except as provided below), to the extent it has knowledge of
such conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Home Equity Loan under any "due-on-sale" clause
contained in the related Mortgage or Note; PROVIDED, HOWEVER, that the Servicer
shall not exercise any such right if the "due-on-sale" clause, in the reasonable
belief of the Servicer, is not enforceable under applicable law, or the
Servicer, in a manner consistent with reasonable commercial practice, and only
if the Servicer reasonably believes assumption by the purchaser would not
materially and adversely affect the interests of the Owners or of the
Certificate Insurer, permits the purchaser of the related Property to assume
such Home Equity Loan. An Opinion of Counsel, provided at the expense of the
Servicer, to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall enter into an
assumption and modification agreement with the person to whom such Property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the Mortgage
documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; PROVIDED, HOWEVER, that to the
extent any such substitution of liability agreement would be delivered by the
Servicer outside of its usual procedures for home equity loans held in its own
portfolio the Servicer shall, prior to executing and delivering such agreement,
obtain the prior written consent of the Certificate Insurer. The Home Equity
Loan, as assumed, shall conform in all material respects to the requirements,
representations and warranties of this Agreement. The Servicer shall notify the
Trustee in writing that any such assumption or substitution agreement has been
completed by forwarding to the Custodian on the Trustee's behalf the original
copy of such assumption or substitution agreement (indicating the
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File to which it relates) which copy shall be added by the Trustee or by the
Custodian on the Trustee's behalf to the related File and which shall, for all
purposes, be considered a part of such File to the same extent as all other
documents and instruments constituting a part thereof. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, no material term
of the Home Equity Loan (including, without limitation, the required monthly
payment on the related Home Equity Loan, the stated maturity, the outstanding
principal amount or the Coupon Rate) shall be changed nor shall any required
monthly payments of principal or interest be deferred or forgiven. Any fee
collected by the Servicer or the Sub-Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13. REALIZATION UPON DEFAULTED HOME EQUITY LOANS; WORKOUT OF
HOME EQUITY LOANS.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 35 months from the close of the taxable year
of its acquisition by the Trust, at such price as the Servicer in good faith
deems necessary to comply with this covenant unless the Servicer obtains for the
Certificate Insurer and the Trustee, an Opinion of Counsel (the expense of which
opinion shall be a Servicing Advance) experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee, addressed to the
Certificate Insurer, the Trustee and the Servicer, to the effect that the
holding by the Trust of such REO Property for any greater period will not result
in the imposition of taxes on "Prohibited Transactions" of the Trust or either
REMIC as defined in Section 860F of the Code or cause either REMIC to fail to
qualify as a REMIC under the REMIC Provisions at any time that any Certificates
are Outstanding. Notwithstanding the generality of the foregoing provisions,
the Servicer shall manage, conserve, protect and operate each REO Property for
the Owners solely for the purpoe of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
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receipt by either REMIC created hereunder of any "income from non-permitted
assets" within the meaning of Section 860F(a)(2)(B) of the Code or any "net
income from foreclosure property" which is subject to taxation under the
REMIC Provisions. Pursuant to its efforts to sell such REO Property, the
Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent
as is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the Owners,
rent the same, or any part thereof, as the Servicer deems to be in the best
interest of the Owners for the period prior to the sale of such REO Property.
The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in
the Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or
local environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such
Property. If the Servicer has actual knowledge of any environmental or
hazardous waste risk with respect to the Property that the Servicer is
contemplating acquiring in foreclosure or deed in lieu of foreclosure, the
Servicer will cause an environmental inspection of the Property in accordance
with the servicing standards set forth in this Agreement. The Servicer shall
not take any such action with respect to any Property known by the Servicer
to contain such wastes or substances or to be within one mile of the site of
such wastes or substances, without the prior written consent of the
Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan, when it has recovered, whether through trustee's sale, foreclosure
sale or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan" and the Servicer shall promptly submit a liquidation report to
the Certificate Insurer in substantially the form of Exhibit N hereto, provided
that such form is acceptable to the Certificate Insurer.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity Loan
or in the event that a payment default with respect to such Home Equity Loan is
reasonably foreseeable by the Servicer; PROVIDED, HOWEVER, that no such
modification, waiver or amendment shall extend the maturity date of such Home
Equity Loan beyond the date that is six months after the Final Scheduled
Distribution Date of the latest Class of Class A Certificates remaining in the
Trust. Notwithstanding anything set out in this Section 8.13(c) or elsewhere in
this Agreement to the contrary, the Servicer shall be permitted to modify, waive
or amend any provision of a Home Equity Loan if required by statute or a court
of competent jurisdiction to do so.
(d) The Servicer has no intent to foreclose on any Mortgage based on
the delinquency characteristics as of the Startup Day; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure proceedings
on any date hereafter if the facts and circumstances of
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such Mortgage including delinquency characteristics in the Servicer's
discretion so warrant such action.
Section 8.14. TRUSTEE TO COOPERATE; RELEASE OF FILES.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Custodian, on behalf of the Trustee, a written request of the Servicer signed by
an Authorized Officer which states the purpose of the release of a File. Upon
receipt of such written request, the Custodian, on behalf of the Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer is authorized to give,
as attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account or to the Trustee.
(b) The Servicer shall have the right (upon receiving the prior
written consent of the Certificate Insurer) to accept applications of Mortgagors
for consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of Properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not exceed
the Loan-to-Value Ratio and debt-to-income ratio of such Note on the Cut-Off
Date or Replacement Cut-Off Date, as applicable, and any increase in the
Loan-to-Value Ratio shall not exceed 5% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of a particular Home Equity Loan and certifying that the criteria set forth in
the immediately preceding sentence have been satisfied, the Trustee shall
execute and deliver to the Servicer the consent or partial release so requested
by the Servicer. A proposed form of consent or partial release, as the case may
be, shall accompany any Officer's Certificate delivered by the Servicer pursuant
to this paragraph. The Servicer shall notify the Certificate Insurer and the
Rating Agencies if an application is approved under clause (y) above without
approval in writing by the Certificate Insurer.
(c) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Custodian, on behalf of the Trustee, shall release the related File
to the Servicer, promptly upon a written request of the Servicer signed by an
Authorized Officer, which states the purpose of the release of a File;
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provided, however, that no more than 5% of the outstanding Home Equity Loans
(by number) shall be released to the Servicer at any time without the consent
of the Certificate Insurer. Such receipt shall obligate the Servicer to
return the File to the Custodian, on behalf of the Trustee, when the need
therefor by the Servicer no longer exists.
(d) In all cases where the Servicer directs the Custodian, on behalf
of the Trustee, to sign any document or to release a File within a particular
period of time, the Servicer shall notify an Authorized Officer of the Trustee
by telephone of such need and the Trustee shall thereon use its best efforts to
comply with the Servicer's needs, but in any event will comply within two
Business Days of such request.
(e) No costs associated with the procedures described in this Section
8.14 shall be an expense of the Trust.
Section 8.15. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan Group. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(i) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the
Certificate Insurer and the successor Servicer.
The right to receive the Servicing Fee may not be transferred in whole or
in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16. ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before
July 31 of each year, commencing in 2001, an Officer's Certificate stating,
as to each signer thereof, that (i) a review of the activities of the
Servicer during such preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the
best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement for such year, or, if
there has been a default in the fulfillment of any such obligations,
specifying each such default known to such officers and the nature and status
thereof including the steps being taken by the Servicer to remedy such
default.
The Servicer shall deliver to the Trustee, the Depositor, the Certificate
Insurer and the Rating Agencies, promptly after having obtained knowledge
thereof but in no event later than five Business Days thereafter, written notice
by means of an Officer's Certificate of any event which with the giving of
notice or the lapse of time would become a Servicer Termination Event.
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Section 8.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS.
On or before July 31 of each year, commencing in 2001, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Seller), shall cause to be delivered to the Trustee, the Certificate
Insurer, the Depositor, and the Rating Agencies a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Certificate Insurer stating that such firm has examined the
Servicer's overall servicing operations in accordance with the requirements of
the Uniform Single Attestation Program for Mortgage Bankers, and stating such
firm's conclusions relating thereto. In the event such firm requires the
Trustee to agree to the procedures performed by such firm, the Servicer shall
direct the Trustee in writing to so agree; it being understood and agreed that
the Trustee will deliver such letter of agreement in conclusive reliance upon
the direction of the Servicer, and the Trustee makes no independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity, or correctness of such procedures.
Section 8.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE HOME EQUITY LOANS.
The Servicer shall provide to the Trustee and the Certificate Insurer
access to the documentation regarding the Home Equity Loans and the Trust, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a copy
of such computer tape to the Trustee and in addition shall provide a copy of
such computer tape to the Trustee and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request.
Section 8.19. ASSIGNMENT OF AGREEMENT.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 8.03 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first obtained
the written consent of the Trustee and the Certificate Insurer, which such
consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that any assignee
must meet the eligibility requirements set forth in Section 8.20(h) hereof for a
successor Servicer.
Section 8.20. REMOVAL OF SERVICER; RETENTION OF SERVICER; RESIGNATION OF
SERVICER.
(a) The Certificate Insurer or the Trustee (with the prior written
consent of the Certificate Insurer) may remove the Servicer upon the occurrence
of any of the following events (each a "Servicer Termination Event"):
(i) The Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing its
inability to pay its debts generally as they become due, (III) make a
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general assignment for the benefit of creditors, (IV) be adjudicated a
bankrupt or insolvent, (V) commence a voluntary case under the federal
bankruptcy laws of the United States of America or any state bankruptcy
law or similar laws or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or (VI) take
corporate action for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Servicer
an order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if
such proceeding is being contested by the Servicer in good faith, the
same shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of
its obligations hereunder and shall continue in default thereof for a
period of thirty (30) days (one (1) Business Day in the case of a delay
in making a payment or deposit required of the Servicer under this
Agreement) after the earlier of (a) actual knowledge of an officer of the
Servicer or (b) receipt of notice from the Trustee or the Certificate
Insurer of said failure; PROVIDED, HOWEVER, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate Insurer
that it is diligently pursuing remedial action, then the cure period may
be extended with the written approval of the Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02 or in the other
Operative Documents which materially and adversely affects the interests
of the Owners or the Certificate Insurer which remains unremedied for a
period of sixty (60) days after the earlier of the Servicer's discovery
or receipt of notice thereof; PROVIDED, HOWEVER, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate Insurer
that it is diligently pursuing remedial action, then the cure period may
be extended with the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of the
Servicer with or into any other entity, unless (1) the Servicer or an
Affiliate of the Servicer is the surviving entity of such combination or
(2) the surviving entity (A) is servicing at least $300,000,000 of home
equity loans that are similar to the Home Equity Loans, (B) has Tangible
Net Worth of not less than $70,000,000 (as determined in accordance with
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generally accepted accounting principles), (C) is consented to by the
Certificate Insurer (such consent not to be unreasonably withheld) and
(D) agrees to assume the Servicer's obligations hereunder; or
(vi) The failure of the Servicer to satisfy the Servicer
Termination Test; or
(vii) The Servicer shall be declared in default of its credit
facility by its credit facility provider, which default, if left uncured,
would result in termination or acceleration of amounts owed thereunder;
or
(viii) Centex Corporation or its successors shall fail to own,
directly or indirectly, at least 51% of the Servicer unless the Servicer
shall be rated at least investment grade by each of Standard & Poor's and
Moody's and if rated by Fitch, by Fitch.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall continue to act as Servicer under this Agreement until removed as set
forth in this Section 8.20 and a successor Servicer has assumed the servicing
obligations. After the occurrence of a Servicer Termination Event, the
Certificate Insurer or the Trustee (with the prior written consent of the
Certificate Insurer) may remove the Servicer by written notice to the Servicer.
Such termination shall be effective on the date specified in such notice,
provided that a successor Servicer or the Trustee has assumed the servicing
obligations. Upon the effective date of termination of the Servicer, the Trustee
(or another successor Servicer appointed by the Certificate Insurer) shall
assume the servicing obligations hereunder. Notwithstanding the foregoing, the
parties hereto agree that the Trustee, in its capacity as successor Servicer,
immediately will assume all of the obligations of the Servicer to make
Delinquency Advances and the Trustee will assume the other duties of the
Servicer as soon as practicable, but in no event later than 90 days after the
Trustee becomes successor Servicer pursuant to the preceding sentence.
Notwithstanding the foregoing, the Trustee, in its capacity as successor
Servicer, shall not be responsible for the lack of information and or documents
that it cannot obtain through reasonable efforts. The Certificate Insurer may
appoint a successor Servicer other than the Trustee. Until a successor Servicer
has been appointed by the Certificate Insurer, the Trustee shall be the
successor Servicer in all respects without further action, and all authority and
power of the Servicer under this Agreement shall pass to and be vested in the
Trustee on and after the effective date of termination. Notwithstanding
anything herein to the contrary, in no event shall the Trustee be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Servicer o act as
successor Servicer under this Agreement and the transactions set forth or
provided for herein.
(c) Reserved.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon (i) determination that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer at the date of this Agreement or (ii) written consent
of the
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Certificate Insurer and the Trustee. Any such determination under clause
(i) shall be evidenced by an Opinion of Counsel acceptable to the Trustee and
the Certificate Insurer at the expense of the Servicer to such effect which
shall be delivered to the Trustee and the Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
Servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(g) Any collections due to the Trust then being held by the Servicer
prior to its removal and any collections received by the Servicer after removal
or resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee (A) may,
unless the Certificate Insurer has appointed a successor Servicer other than the
Trustee, solicit bids for a successor Servicer as described below and (B) until
such time as another successor Servicer is appointed by the Certificate Insurer,
shall assume the duties and obligations of the Servicer hereunder. The Trustee
agrees to act as Servicer during the solicitation process and shall assume all
duties and obligations of the Servicer. The Certificate Insurer may appoint a
successor Servicer other than the Trustee. If the Certificate Insurer fails to
appoint a successor Servicer, the Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Servicer, appoint, or
petition a court of competent jurisdiction to appoint, any housing and home
finance institution, bank or mortgage servicing institution which has been
designated as an approved seller-servicer by FNMA or FHLMC for first and second
home equity loans and having equity of not less than $5,000,000 (or such lower
level as may be acceptable to the Certificate Insurer), as determined in
accordance with generally accepted accounting principles, and acceptable to the
Certificate Insurer as the successor to the Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. The compensation of any successor Servicer (other than the
Trustee in its capacity as successor Servicer) so appointed shall be the amount
agreed to between the successor Servicer, the Certificate Insurer and the
Trustee (up to a maximum of 0.50% per annum on the outstanding principal balance
of each Home Equity Loan), together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15; PROVIDED, HOWEVER, that if the Trustee becomes the
successor Servicer it shall receive as its compensation the same compensation
paid to the Servicer immediately prior to the Servicer's removal or resignation;
PROVIDED, FURTHER, HOWEVER, that the predecessor Servicer agrees to pay to the
Trustee or other successor Servicer at such time that it becomes such successor
Servicer a set-up fee of twenty-five dollars ($25) for each Home Equity Loan
then included in the Trust
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Estate. The amount payable in excess of twenty-five dollars ($25) per Home
Equity Loan, if any, shall be payable to the successor Servicer and
reimbursable pursuant to Section 7.03(b)(x) hereof. The Trustee shall be
obligated to serve as successor Servicer whether or not the fee described in
this section is paid by the Servicer, but shall in any event be entitled to
receive, and to enforce payment of, such fee from the Servicer.
(i) In the event the Trustee elects to solicit bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to servicing compensation in accordance
with clause (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price it will pay to obtain
servicing provided that the Certificate Insurer has given its prior written
consent. The Trustee shall deduct from any sum received by the Trustee from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Trustee or the
Trust from the Servicer shall be paid by the Trustee to the predecessor Servicer
at the time of such sale, transfer and assignment to the Servicer's successor.
(j) The Trustee and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing. The predecessor Servicer agrees to cooperate with the Trustee and
any successor Servicer in effecting the termination of the predecessor
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer, as applicable, all documents
and records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the Principal and Interest Account by the Servicer or
which are thereafter received with respect to the Home Equity Loans. Any
amounts and documents which are property of the Trust held by the predecessor
Servicer shall be held in trust on behalf of the Trustee until transferred to
the successor Servicer or Trustee. Neither the Trustee nor any other
successor Servicer shall be held liable by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof caused
by (i) the failure of the Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer. If the Servicer
resigns or is replaced hereunder, the Servicer agrees to reimburse the Trust,
the Owners and the Certificate Insurer for the costs and expenses associated
with the transfer of servicing to the replacement Servicer, but subject to a
maximum reimbursement to all such parties in the amount of twenty-five
dollars ($25) for each Home Equity Loan then included in the Trust Estate.
The amount payable
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in excess of twenty-five dollars ($25) per Home Equity Loan, if any, shall be
payable to the successor Servicer and reimbursable pursuant to Section
7.03(b)(x) hereof.
(k) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately (i) record all assignments of
Home Equity Loans not previously recorded in the name of the Trustee pursuant to
Section 3.05(b)(ii) as a result of an Opinion of Counsel and (ii) make all
Delinquency Advances and Compensating Interest payments and deposit them to the
Principal and Interest Account which the Servicer has theretofore failed to
remit with respect to the Home Equity Loans.
(l) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors and to the Rating Agencies of the transfer of the
servicing to the successor.
(m) The Trustee shall give notice to the Certificate Insurer, the
Depositor, the Owners, the Seller, and the Rating Agencies of the occurrence of
any event described in paragraph (a) above of which the Trustee is aware.
(n) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.21(b) and
shall be entitled to the Servicing Fee and all of the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of any
of its representations or warranties contained herein or in any related document
or agreement.
(o) The Trustee shall be entitled to be reimbursed pursuant to
Sections 7.03(b) for all Transition Expenses (other than amounts reimbursed
pursuant to paragraph (j) above), including, without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Home Equity Loans properly and
effectively.
Section 8.21. INSPECTIONS BY CERTIFICATE INSURER; ERRORS AND OMISSIONS
INSURANCE.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer, any Owner of a Class X-IO or Class
R Certificate, or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
PROVIDED, HOWEVER, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
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(b) The Servicer (including the Trustee if it shall become the
Servicer hereunder) agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
FNMA Guide or any successor provision thereof; PROVIDED, HOWEVER, that in the
event that the fidelity bond or the errors and omissions coverage is no longer
in effect, the Servicer shall notify the Trustee, the Certificate Insurer and
the Owners.
Section 8.22. ADDITIONAL SERVICING RESPONSIBILITIES FOR SECOND MORTGAGE
LOANS.
The Servicer shall file (or cause to be filed) a request for notice of
any action by a superior lienholder under a superior lien for the protection of
the Trustee's interest, where permitted by local law and whenever applicable
state law does not require that a junior lienholder be named as a party
defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
If the Servicer is notified that any superior lienholder has accelerated
or intends to accelerate the obligations under a Senior 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 Owners and the
Certificate Insurer, and/or to preserve the security of the related Home Equity
Loan, subject to the application of the REMIC Provisions. The Servicer shall
advance the necessary funds to cure the default or reinstate the Senior Lien, if
such advance is in the best interests of the Certificate Insurer and the Owners;
PROVIDED, HOWEVER, that no such additional advance need be made if such advance
would be nonrecoverable from Liquidation Proceeds on the related Home Equity
Loan. The Servicer shall thereafter take such action as is necessary to recover
the amount so advanced. Any expenses incurred by the Servicer pursuant to this
Section 8.22 shall be Servicing Advances.
Section 8.23. THE GROUP II HOME EQUITY LOANS.
The Servicer shall enforce each Home Equity Loan in Group II in
accordance with its terms and shall timely calculate, record, report and apply
all interest rate adjustments in accordance with the related Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and monthly
payment and the Servicer shall timely notify the Mortgagor of any changes to the
Coupon Rate or the Mortgagor's monthly payment. If the Servicer fails to make
either a timely or accurate adjustment to the Coupon Rate or monthly payment or
to notify the Mortgagor of such adjustments, upon the Servicer's discovery of
such error and such continued failure, the Servicer shall pay from its own funds
any shortage. If the Servicer's continued failure after notice thereof to make
a scheduled change affects the Trust's rights to make future adjustments under
the terms of such Home Equity Loan, the Servicer shall repurchase such Home
Equity Loan in accordance with the provisions hereof. Any amounts paid by the
Servicer pursuant to this Section shall not be an advance and shall not be
reimbursable from the proceeds of any Home Equity Loan.
Section 8.24. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF SERVICER. Any corporation into which the Servicer may be merged or
converted or with which it may be
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consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party or any corporation
succeeding to all or substantially all of the business of the Servicer shall
be the successor of the Servicer hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto
provided that such corporation meets the qualifications set forth in Section
8.20(h) and the resulting corporation has a Tangible Net Worth of at least
$35,000,000.
Section 8.25. NOTICES OF MATERIAL EVENTS. The Servicer shall give
prompt notice to the Certificate Insurer, the Trustee, and the Rating Agencies
of the occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has
knowledge which results, or which with notice or the passage of time, or both,
would result in the occurrence of a default by the Seller or the Servicer under
any Operative Document or would constitute a material breach of a
representation, warranty or covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Seller or the Servicer to which the Servicer has knowledge in any federal, state
or local court or before any governmental body or agency or before any
arbitration board or any such proceedings threatened by any governmental agency,
which, if adversely determined, would have a material adverse effect upon any of
the Seller's or the Servicer's ability to perform its obligations under any
Operative Document;
(c) The commencement of any proceedings by or against the Seller or
the Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested for the Seller or the Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of any of the Seller's or the Servicer's business
that the Seller or the Servicer is to cease or desist, or to undertake, any
practice, program, procedure or policy employed by the Seller or the Servicer in
the conduct of the business of any of them, and such cessation or undertaking
will materially and adversely affect the conduct of the Seller's or the
Servicer's business or its ability to perform under the Operative Documents or
materially and adversely affect the financial affairs of the Seller or the
Servicer.
Section 8.26. INDEMNIFICATION BY THE SERVICER. The Servicer agrees to
indemnify and hold the Trustee, the Depositor, the Certificate Insurer and each
Owner harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, the Depositor, the Certificate Insurer and any
Owner may sustain in any way related to the failure of the Servicer to perform
its duties and service the Home Equity Loans in compliance with the terms of
this Agreement. A party against whom a claim is brought shall immediately
notify the other parties and the Rating Agencies if a claim is made by a third
party with respect to this Agreement, and the Servicer shall assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
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connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Certificate Insurer, the Servicer, the Trustee and/or Owner in respect of such
claim.
Section 8.27. REPORTS ON FORECLOSURE AND ABANDONMENT OF PROPERTIES. On
or before February 28th of each year beginning in 2001, the Servicer shall file
the reports of foreclosures and abandonments of any Property required by Code
Section 6050J with the Internal Revenue Service and provide a copy of such
filing to the Trustee. The reports from the Servicer shall be in a form and
substance sufficient to meet the reporting requirements imposed by such Section
6050J.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01. TERMINATION OF TRUST.
The Trust created hereunder and all obligations created by this Agreement
will terminate upon the payment to the Owners of all Certificates from amounts
other than those available under the Certificate Insurance Policies of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
this Agreement and payment in full of all amounts owed to the Certificate
Insurer upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate and (c) at any time if a
Qualified Liquidation of both Home Equity Loan Groups within the Trust is
effected as described in Section 9.02. In no event, however, will the Trust
created by this Agreement continue beyond the expiration of twenty-one (21)
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the United Kingdom, living
on the date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02. TERMINATION UPON OPTION OF THE OWNER OF THE CLASS X-IO
CERTIFICATES.
(a) On any Distribution Date on or after the Clean-Up Call Date, the
Owner of the Class X-IO Certificates may cause the purchase from the Trust of
all (but not fewer than all) Home Equity Loans and all property theretofore
acquired in respect of any Home Equity Loan by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate (i) on terms agreed
upon between the Certificate Insurer, the Servicer and the Owners of the Class
X-IO and Class R Certificates (if such terms result in payment to the Owners of
the Class A Certificates of their entire principal balance and interest at their
Certificate Rate (and any Carry-Forward Amount other than any Class A-7
Certificateholders' Interest Index Carryover)), or (ii) in the absence of such
an agreement, at a price equal to the Termination Price. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account (less amounts permitted to be withdrawn by the Servicer pursuant to
Section 8.08 (d)), which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) In the event that the Owner of the Class X-IO Certificates
purchases all Home Equity Loans remaining in the Trust Estate pursuant to
Section 9.02(a), the Trust Estate shall be terminated in accordance with the
following additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final tax return of the
REMICs created hereunder pursuant to Treasury regulation Section 1.860F-1
and shall satisfy all requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder;
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(ii) During such 90-day liquidation period, and at or prior
to the time of making the final payment on the Certificates, the Trustee
shall sell all of the Home Equity Loans to the Owner of the Class X-IO
Certificates for cash; and
(iii) At the time of the making of the final payment on the
Certificates and payment of all amounts owed to the Certificate Insurer,
the Trustee shall distribute or credit, or cause to be distributed or
credited, to the Owners of the Class X-IO and Class R Certificates all
cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) If the Owner of the Class X-IO Certificates does not repurchase
all of the Home Equity Loans pursuant to clause (a) of this Section 9.02 above
on the Clean-Up Call Date, then on the following Distribution Date the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans. The Owner of the Class X-IO Certificates may submit a bid in
connection with the auction, however neither of the Sellers nor the Depositor
shall be permitted to submit a bid or otherwise purchase any or all of the Home
Equity Loans in connection with the auction. The Trustee shall provide the
Owner of the Class X-IO Certificates written notice of such auction at least ten
(10) Business Days prior to the date bids must be received in such auction (the
"Auction Date"). The auction shall be conducted as follows:
(i) If at least two bids are received, the Trustee shall
solicit and resolicit new bids from all participating bidders until only
one bid remains or the remaining bidders decline to resubmit bids. The
Trustee shall accept the highest of such remaining bids if it is equal to
or in excess of the Termination Price, consummate the sale and end the
auction. If less than two bids are received or the highest bid after the
resolicitation process is completed is not equal to or in excess of the
Termination Price, the Trustee shall not consummate such sale. To
determine if a bid meeting the Termination Price is received, the Trustee
may, and if so requested by the Owner of the Class X-IO Certificates
shall, prior to accepting such bid, consult with a financial advisor,
which may be an Underwriter of the Certificates, to determine if the fair
market value of the Home Equity Loans and related property has been
offered.
(ii) If the first auction conducted by the Trustee does not
produce any bid at least equal to the Termination Price, then the Trustee
shall, beginning on the Distribution Date occurring approximately three
months after the first Auction Date, commence another auction in
accordance with the requirements of this subsection (c). If such second
auction does not produce any bid at least equal to the Termination Price,
then the Trustee shall, beginning on the Distribution Date occurring
approximately three months after the second Auction Date, commence
another auction in accordance with the requirements of this subsection
(c), and shall continue to conduct similar auctions approximately every
three months thereafter until the earliest of (A) the exercise by the
Owner of the Class X-IO Certificates of its repurchase option pursuant to
clause (a) of this Section 9.02 above, (B) receipt by the Trustee of a
bid meeting the conditions specified in the preceding
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paragraph, or (C) the Distribution Date on which the Loan Balance of
all the Home Equity Loans is reduced to zero.
(iii) If the Trustee receives a bid meeting the conditions
specified in this subsection (c), then the Trustee's written acceptance
of such bid shall constitute a plan of complete liquidation within the
meaning of Section 860F of the Code, and the Trustee shall release to the
winning bidder, upon payment of the bid purchase price, the Files
pertaining to the Home Equity Loans being purchased and take such other
actions as the winning bidder may reasonably request to effect the
transfer of the Home Equity Loans to the winning bidder.
(d) If the Owner of the Class X-IO Certificates does not repurchase
all of the Home Equity Loans pursuant to clause (a) of this Section 9.02 on the
Clean-Up Call Date, then on the third Distribution Date following the Clean-Up
Call Date and each Distribution Date thereafter the Owners of the Class A
Certificates shall be entitled to receive the Class X-IO Distribution Amount,
distributable pursuant to Section 7.03(b) (xii) hereof, allocated among the
Classes of Class A Certificates in the order of priority set forth in Section
7.03(b) (xii) hereof.
(e) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final tax
return, which shall be binding upon all successor Owners.
(f) In connection with any purchase pursuant to Section 9.02(a) or
(c), the Owner of the Class X-IO Certificates or other purchaser of the Home
Equity Loans, as the case may be, shall provide to the Trustee and the
Certificate Insurer at the expense of the Owner of the Class X-IO Certificates
or other purchaser of the Home Equity Loans, as the case may be, an Opinion of
Counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that such purchase and liquidation
constitutes a Qualified Liquidation of REMIC I and REMIC II.
(g) Promptly following any purchase described in Section 9.02(a) or
(c), the Trustee will release the Files to the Owner of the Class X-IO
Certificates or other purchaser of the Home Equity Loans, as the case may be, or
otherwise upon their order, in a manner similar to that described in Section
8.14 hereof. The Owner of the Class X-IO Certificates or other purchaser of the
Home Equity Loans, as the case may be, will promptly prepare and record
assignments of Mortgages from the Trustee to the appropriate person.
Section 9.03. TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either REMIC created hereunder does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final
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Determination (i) the Certificate Insurer or the Owners of a majority in
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer may direct the Trustee on behalf
of the Trust to adopt a plan of complete liquidation, as contemplated by
Section 860F(a)(4) of the Code and (ii) the Certificate Insurer may notify
the Trustee of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise in respect of any Home Equity Loan then remaining in the Trust
Estate at a price equal to the Termination Price.
Upon receipt of such direction from the Certificate Insurer, the Trustee
shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. If, during
the Purchase Option Period, the Owners of the Class R Certificates have not
exercised the option described in the immediately preceding paragraph, then upon
the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Trustee shall sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust Estate, each in accordance with the
plan of complete liquidation, such that, if so directed, the liquidation of the
Trust Estate, the distribution of the proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 60th day, or
such later day as the Certificate Insurer or the Owners of the Class A
Certificates with the consent of the Certificate Insurer shall permit or direct
in writing, after the expiration of the Purchase Option Period and (ii) in the
event that the Certificate Insurer has given the Trustee notice of the
Certificate Insurer's determination to purchase the Trust Estate described in
clause (a)(ii) preceding the Certificate Insurer shall, within 60 days, purchase
all (but not fewer than all) Home Equity Loans and al property theretofore
acquired by foreclosure, deed in lieu of foreclosure or otherwise in respect of
any Home Equity Loan then remaining in the Trust Estate. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account (less amounts permitted to be withdrawn by the Servicer pursuant to
Section 8.08(d)), which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but
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not fewer than all) Home Equity Loans and all property theretofore acquired
by foreclosure, deed in lieu of foreclosure, or otherwise in respect of any
Home Equity Loan then remaining in the Trust Estate at a purchase price equal
to the Termination Price. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account (less amounts
permitted to be withdrawn by the Servicer pursuant to Section 8.08(d)), which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Certificate
Insurer gives the Owners of a majority of the Percentage Interest of the
Class R Certificates notice that such opinion is not satisfactory within
thirty days after receipt by the Certificate Insurer of such opinion.
Section 9.04. DISPOSITION OF PROCEEDS.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
Termination Price or other liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for distribution in accordance with the
priorities set forth in Section 7.03(b) hereof; provided, however, that any
amounts representing unreimbursed Delinquency Advances and Servicing Advances
theretofore funded by the Servicer from the Servicer's own funds shall be paid
by the Trustee to the Servicer from the proceeds of the Trust Estate.
Notwithstanding the foregoing, no distribution of the proceeds of any
Termination Price shall be made to the Owners of the Class X-IO and Class R
Certificates until all such amounts have been applied in reduction of any
outstanding Class A-7 Certificateholders' Interest Index Carryover.
Section 9.05. NETTING OF AMOUNTS.
If any Person paying the Termination Price would receive a portion of the
amount to be paid, such Person may net any such amount against the Termination
Price otherwise payable.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee (i) (A) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (B) the banking institution that is the Trustee shall serve as the Trustee
at all times under this Agreement, and (ii) in the absence of bad faith on its
part, may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions or
any other resolutions, statements, reports, documents, orders or other
instruments furnished pursuant to and conforming to the requirements of this
Agreement; but in the case of any such certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments which
by any provision hereof are specifically required to be furnished to the
Trustee, shall be under a duty to examine the same to determine whether or not
on their face they conform to the requirements of this Agreement; PROVIDED,
HOWEVER, that the Trustee shall not be responsible for the accuracy or content
of any resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Servicer, the Certificate Insurer, the Sellers
or the Depositor hereunder. If any such instrument is found not to conform in
any material respect to the requirements of this Agreement, the Trustee shall
notify the Certificate Insurer if it cannot be timely corrected.
Notwithstanding the foregoing, if a Servicer Termination Event of which an
Authorized Officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee (unless the Servicer shall have resigned or been
terminated and a successor Servicer shall not have been appointed pursuant to
the terms of this Agreement), and that all parties hereto agree that, prior to
any termination of the Servicer, the Servicer and, thereafter, the Trustee or
any other successor Servicer shall perform such duties. Specifically, and not
in limitation of the foregoing, the Trustee shall upon termination or
resignation of the Servicer, and pending the appointment of any other Person as
successor Servicer have the power and duty during its performance as successor
Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
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(v) to enforce the Home Equity Loans;
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest; and
(vii) to conduct an auction of the Home Equity Loans pursuant to Section
9.02.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) This subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) The Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificate Insurer or of the Owners of a
majority in Percentage Interest of the Certificates of the
affected Class or Classes and the Certificate Insurer relating to
the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement relating to such
Certificates;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default unless an Authorized
Officer of the Trustee shall have received written notice thereof
or an Authorized Officer shall have actual knowledge thereof. In
the absence of receipt of such notice, the Trustee may
conclusively assume that there is no default; and
(v) Subject to the other provisions of this Agreement and without
limiting the generality of this Section l0.01, the Trustee shall
have no duty (A) to see to any recording, filing, or depositing of
this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such
recording or filing or depositing or to any rerecording, refiling
or redepositing of any thereof, (B) to see to any insurance or (C)
to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the
Trust Estate.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
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(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or indemnity reasonably satisfactory to it against such
risk or liability is not reasonably assured to it. None of the provisions
contained in this Agreement shall in any event require the Trustee to perform,
or be responsible for the manner of performance of, any of the obligations of
the Servicer under this Agreement, except during such time, if any, as the
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice, or other document it may receive or which may
be alleged to have been delivered to or served upon it by third parties as a
consequence of the assignment of any of the Home Equity Loans hereunder or may
otherwise pertain to its interests in any of the Properties; provided, however,
that the Trustee shall use commercially reasonable efforts to deliver to the
Servicer and the Certificate Insurer any such complaint, claim, demand, notice,
or other document which is delivered to the Corporate Trust Office of the
Trustee and contains sufficient information to enable an Authorized Officer of
the Trustee to identify it as pertaining to a Mortgage or a Property.
(i) The Trustee hereby agrees to disclose the Premium Amount to any
Person upon request.
Section 10.02. REMOVAL OF TRUSTEE FOR CAUSE.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Distribution Date any amounts available for
distribution that it has received in accordance with the terms hereof;
(PROVIDED, HOWEVER, that any such failure which is due to
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circumstances beyond the control of the Trustee shall not be a cause for
removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after there
shall have been given, by registered or certified mail, to the Trustee by
the Seller, the Certificate Insurer, or by the Owners of at least 25% of
the aggregate Percentage Interests represented by the Class A
Certificates then Outstanding, or, if there are no Class A Certificates
then Outstanding, by such Percentage Interests represented by the Class
X-IO Certificates, or if there are no Class X-IO Certificates then
Outstanding, by such Percentage Interests represented by the Class R
Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Trustee, and such decree or order shall have remained in force
undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency
is evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
The Depositor shall give to the Certificate Insurer and the Rating
Agencies notice of the occurrence of any such event of which the Depositor is
aware.
(b) If any event described an Paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates then Outstanding or if there are no
Class A Certificates then Outstanding by such majority of the Percentage
Interests represented by the Class X-IO Certificates or if there are no Class
X-IO Certificates then Outstanding by such majority of the Percentage Interests
represented by the Class R Certificates, may, whether or not the Trustee resigns
pursuant to Section l0.09(b) hereof, immediately, concurrently with the
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giving of notice to the Trustee, and without delaying the 30 days required
for notice therein, appoint a successor Trustee pursuant to the terms of
Section l0.09 hereof.
Section 10.03. CERTAIN RIGHTS OF THE TRUSTEE.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request
and may conclusively rely and shall be fully protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Certificate Insurer, or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the advice of such
counsel or any opinion of counsel (selected in good faith by the Trustee) shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reasonable
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee security or indemnity reasonably satisfactory to it
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, unless requested in writing to do so by the Owners; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition precedent to taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
nominees or custodians and shall not be responsible for any willful misconduct
or gross negligence on the part of any agent, attorney, custodian or nominee
appointed with due care;
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(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person and within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate or the Certificate Insurer (either in
writing or orally with prompt written or telecopy confirmations), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information;
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder;
(l) In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon. The Trustee shall have
no liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity. The Trustee shall invest and reinvest
amounts held in the Certificate Account in Eligible Investments as set forth in
Schedule I-E hereto; and
(m) In the event that the Trustee is also acting as Registrar,
transfer agent or Paying Agent hereunder, the rights and protections afforded to
the Trustee pursuant to this section shall also be afforded to the Registrar,
transfer agent and Paying Agent.
Section 10.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.
The recitals and representations contained herein and in the
Certificates, except the execution and authentication of the Certificates, shall
be taken as the statements of the Depositor, and the Trustee assumes no
responsibility for their correctness (other than with respect to such execution
and authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, the Certificates, the Certificate Insurance
Policies or any Home Equity Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Certificate Insurer, the
Seller or the Servicer in respect of the Home Equity Loans or deposited into or
withdrawn from the Principal and Interest Account or the Certificate Account by
the Depositor, the Servicer or the Seller, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or
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except as otherwise provided herein to prepare or file any tax returns or
Commission filings for the Trust or to record this Agreement. The Trustee
shall not be required to take notice or be deemed to have notice or knowledge
of any default unless an Authorized Officer of the Trustee shall have
received written notice thereof or an Authorized Officer has actual knowledge
thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
Section 10.05. MAY HOLD CERTIFICATES.
The Trustee, any Paying Agent, Registrar or any other agent of the Trust,
in its individual or any other capacity, may become an Owner or pledgee of
Certificates and may otherwise deal with the Trust, the Certificate Insurer and
the other parties hereto with the same rights it would have if it were not
Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other trust funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Depositor and except to the extent
of income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity and income or other gain
actually received by the Trustee on Eligible Investments.
Section 10.07. COMPENSATION AND REIMBURSEMENT.
As compensation for its services hereunder, the Trustee shall be entitled
to receive the Trustee Fee, any investment income or other benefit derived from
funds or Eligible Investments in the Certificate Account to the extent permitted
by Section 7.05(c), and such other amounts as separately agreed with the Seller.
Except as otherwise provided in this Agreement, the Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Trust and
held harmless against any loss, liability, or "unanticipated out-of-pocket"
expense incurred or paid to third parties (which expenses shall not include
salaries paid to employees, or allocable overhead, of the Trustee) in connection
with or any claim or legal action or any pending or threatened claim or legal
action arising out of or in connection with the acceptance or administration of
its trusts hereunder or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. All such amounts described in the preceding
sentence shall constitute Trustee Reimbursable Expenses. It is understood by
the parties hereto that a "claim" as used in this paragraph includes any claim
for indemnification made by the Custodian under the applicable provisions of the
Custodial Agreement. The Trustee and any director, officer, employee or agent
of the Trustee shall be indemnified by the Seller and held harmless against any
loss, liability or reasonable expenses incurred by the Trustee in performing its
duties as Tax Matters Person for the REMICs created under this Agreement, other
than any loss, liability or expense incurred by reason of willful misfeasance,
negligence or bad faith. When the Trustee incurs expenses or provides services
after the occurrence of a default and the commencement of a voluntary or
involuntary case under
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Title 11 of the United States Code or any other applicable fedral or state
bankruptcy, insolvency or similar law involving any of the Sellers or the
Servicer, the expenses and fees for such services are intended to constitute
expenses of administration under such laws. The provisions of this Section
10.07 shall survive the resignation or removal of the Trustee and the
termination of this Agreement.
Section 10.08. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any state authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, or any state, acceptable to the Certificate Insurer and having a
deposit rating of at least A- by Standard & Poor's and A2 by Moody's and if
rated by Fitch, A by Fitch. If such Trustee publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall, upon the request of
the Certificate Insurer, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor Trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
the Seller and by mailing notice of resignation by first-class mail, postage
prepaid, to the Certificate Insurer and the Owners at their addresses appearing
on the Register. A copy of such notice shall be sent by the resigning Trustee
to the Rating Agencies. Upon receiving notice of resignation, the Depositor
shall promptly appoint a successor Trustee or Trustees acceptable to the
Certificate Insurer by written instrument, in duplicate, executed on behalf of
the Trust by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so resigning and one copy to the
successor Trustee or Trustees. If no successor Trustee shall have been
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor Trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and appropriate, appoint a successor
Trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor by
the Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may
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remove the Trustee and appoint a successor Trustee acceptable to the
Certificate Insurer by written instrument, in duplicate, executed on behalf
of the Trust by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee.
(d) The Owners of a majority of the Voting Rights represented by the
Class A Certificates with the prior written consent of the Certificate Insurer,
or, if there are no Class A Certificates then Outstanding, by such majority of
the Voting Rights represented by the Class X-IO and Class R Certificates, may at
any time remove the Trustee and appoint a successor Trustee acceptable to the
Certificate Insurer by delivering to the Trustee to be removed, to the successor
Trustee so appointed, to the Depositor, to the Servicer and to the Certificate
Insurer, copies of the record of the act taken by the Owners, as provided for in
Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Depositor shall promptly appoint a successor Trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Depositor. If no
successor Trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust, to the Certificate Insurer
and to its predecessor Trustee an instrument accepting such appointment
hereunder and stating its eligibility to serve as Trustee hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become
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vested with all the rights, powers, trusts, duties and obligations of its
predecessor hereunder; but, on request of the Depositor, the Certificate
Insurer or the successor Trustee, such predecessor Trustee shall, upon
payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor Trustee all of the rights, powers and trusts
of the Trustee so ceasing to act, and shall duly assign, transfer and deliver
to such successor Trustee all property and money held by such Trustee so
ceasing to act hereunder. Upon request of any such successor Trustee, the
Depositor on behalf of the Trust shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor Trustee
all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Depositor shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing upon the Register and
to the Certificate Insurer. The Depositor shall send a copy of such notice to
the Rating Agencies. If the Depositor fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF THE TRUSTEE.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; PROVIDED, HOWEVER,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12. REPORTING; WITHHOLDING.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared
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by the Seller and required to be filed by the Trust, including other reports
that must be filed with the Owners, such as the Internal Revenue Service's
Form 1066 and Schedule Q. The Trustee shall, upon written request of the
Seller, collect any forms or reports from the Owners determined by the Seller
to be required under applicable federal, state and local tax laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a), (b) and (c) above.
Section 10.13. LIABILITY OF THE TRUSTEE.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Sellers, the Certificate Insurer, the
Servicer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In addition,
the Depositor and CHEC covenant and agree to indemnify the Trustee and the
Servicer (if the Servicer is also the Trustee) and their officers, directors,
agents and employees from, and hold it harmless against, any and all losses,
liabilities, damages, claims or expenses (including legal fees and expenses) of
whatsoever kind arising out of or in connection with the performance of its
duties hereunder other than those resulting from negligence or bad faith. The
Trustee and any director, officer, employee or agent of the Trustee may
conclusively rely and shall be fully protected in acting or refraining from
acting in good faith on any certificate, notice or other document of any kind
PRIMA FACIE properly executed and submitted by the Authorized Officer of any
Person respecting any matters arising hereunder. The provisions of this Section
10.13 shall survive the resignation or removal of the Trustee, termination of
this Agreement and the payment of the outstanding Certificates. When the
Trustee incurs expenses or provides services after the occurrence of a default
and the commencement of a voluntary or involuntary case under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law involving the Sellers or the Servicer, the expenses
and fees for such services are intended to constitute expenses of administration
under such laws.
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Section 10.14. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and reasonably acceptable to the Certificate Insurer to act as co-Trustee or
co-Trustees, jointly with the Trustee, of all or any part of the Trust Estate or
separate Trustee or separate Trustees of any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Owners and the Certificate Insurer, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section 10.14, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility as
a successor Trustee under Section 10.08 and no notice to Owner of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate Trustee or co-Trustee
jointly (it being understood that such separate Trustee or co-Trustee is
not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
Trustee or co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee
acting jointly may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its
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instrument of appointment, either jointly with the Trustee or separately, as may
be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Certificate Insurer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15. APPOINTMENT OF CUSTODIANS.
The Trustee may appoint one or more Custodians to hold all or a portion
of the Files as agent for the Trustee, by entering into a Custodial Agreement
acceptable to the Certificate Insurer. Subject to this Article X, the Trustee
agrees to comply with the terms of the Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the Owners
of the Certificates and the Certificate Insurer.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Depositor, the Sellers, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, each of the Sellers, the Certificate
Insurer or the Owners, as the case may be, shall furnish to the Trustee a
certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Agreement
relating to such particular application or request, no additional certificate
need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such Authorized Officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an
Authorized Officer of the Trustee or any Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, either of
the Sellers or the Servicer, stating that the information with respect to such
factual
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matters is in the possession of the Depositor, either of the Sellers or the
Servicer, unless such Authorized Officer or counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of
the Trustee, stating that the information with respect to such matters is in
the possession of the Trustee, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may be based on the written opinion of other counsel, in which event
such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such
counsel believes that such counsel and the Trustee may reasonably rely upon
the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03. ACTS OF OWNERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
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Section 11.04. NOTICES, ETC. TO TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver or
act of the Owners under this Agreement or other documents provided or permitted
by this Agreement to be made upon, given or furnished to, or filed with the
Trustee by any Owner, the Certificate Insurer, the Depositor, either of the
Sellers or the Servicer shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with and received by the Trustee at
its Corporate Trust Office as set forth in Section 2.02 hereof.
Section 11.05. NOTICES AND REPORTS TO OWNERS; WAIVER OF NOTICES.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report.
In any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the
Servicer is removed or resigned or the Trust is terminated, notice of any such
events shall be made by overnight courier, registered mail or telecopy followed
by a telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Owners when such notice is required to be given pursuant
to any provision of this Agreement, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice.
Where this Agreement provides for notice to any Rating Agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 11.06. RULES BY TRUSTEE.
The Trustee may make reasonable rules for any meeting of Owners.
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Section 11.07. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 11.08. SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.10. LEGAL HOLIDAYS.
In any case where the date of any Distribution Date, any other date on
which any distribution to any Owner is proposed to be paid, or any date on which
a notice is required to be sent to any Person pursuant to the terms of this
Agreement (with the exception of any Monthly Remittance Date) shall not be a
Business Day, then (notwithstanding any other provision of the Certificates or
this Agreement) payment or mailing need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made or mailed on the nominal date of any such Distribution Date, or such other
date for the payment of any distribution to any Owner or the mailing of such
notice, as the case may be, and no interest shall accrue for the period from and
after any such nominal date, provided such payment is made in full on such next
succeeding Business Day. In any case where the date of any Monthly Remittance
Date shall not be a Business Day, then payment or mailing need not be made on
such date, but must be made on the preceding Business Day.
Section 11.11. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York and
any court in the State of New York located in the City and County of New York,
and any appellate court from any thereof, in any action, suit or proceeding
brought against it or in connection with this Agreement or any of
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the related documents or the transactions contemplated hereunder or for
recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard or determined in such New York state court
or, to the extent permitted by law, in such federal court. The parties
hereto agree that a final judgment in any such action, suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. To the extent permitted by
applicable law, the parties hereto hereby waive and agree not to assert by
way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of such courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not
be litigated in or by such courts.
(c) Each of the Depositor, Seller, the Conduit Seller and the Servicer
hereby irrevocably appoints and designates the Trustee as its true and lawful
attorney and duly authorized agent for acceptance of service of legal process
with respect to any action, suit or proceeding set forth in paragraph (b)
hereof. Each of the Depositor, the Sellers and the Servicer agrees that service
of such process upon the Trustee shall constitute personal service of such
process upon it.
(d) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, either of the Sellers, the Servicer or the Certificate
Insurer or third-party beneficiary hereunder, as the case may be, to serve
process in any other manner permitted by law or to start legal proceedings
relating to any of the Home Equity Loans against any Mortgagor in the courts of
any jurisdiction.
Section 11.12. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13. USURY.
The amount of interest payable or paid on any Certificate under the terms
of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of
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Owners of Certificates for the use, forbearance or detention of money shall,
to the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such Certificates.
Section 11.14. AMENDMENT.
(a) The Trustee, the Depositor, the Sellers and the Servicer may, at
any time and from time to time, with the prior written approval of the
Certificate Insurer but without the giving of notice to or the receipt of the
consent of the Owners, amend this Agreement, and the Trustee shall consent to
the amendment for the purposes of (i) if accompanied by an approving Opinion of
Counsel experienced in federal income tax matters, and an Officer's Certificate,
which shall not be at the expense of the Trustee, removing the restriction
against the transfer of a Class R Certificate to a Disqualified Organization,
(ii) complying with the requirements of the Code including any amendments
necessary to maintain REMIC status of each REMIC, (iii) curing any ambiguity,
(iv) correcting or supplementing any provisions of this Agreement which are
inconsistent with any other provisions of this Agreement or (v) for any other
purpose, provided that in the case of clause (v), such amendment shall not
adversely affect in any material respect any Owner. Any such amendment shall be
deemed not to adversely affect in any material respect any Owner if such Owner
shall have consented thereto in writing or if there is delivered to the Trustee
written notification from each Rating Agency that such amendment will not cause
such Rating Agency to reduce its then current rating assigned to the Class A
Certificates without regard to the Certificate Insurance Policies.
Notwithstanding anything to the contrary, no such amendment shall (a) change in
any manner the amount of, or delay the timing of, payments which are required to
be distributed to any Owner without the consent of such Owner, (b) change the
percentages of Percentage Interest which are required to consent to any such
amendments, without the consent of the Owners of all Certificates of the Class
or Classes affected then outstanding or (c) affect in any manner the terms or
provisions of the Certificate Insurance Policies. The Trustee shall not be
required to execute any amendment or supplementif it affects its rights, duties,
immunities or indemnities.
(b) The Certificate Insurer and the Rating Agencies shall be provided
by the Seller and the Depositor with copies of any amendments to this Agreement,
together with copies of any opinions or other documents or instruments executed
in connection therewith.
(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause
either REMIC created hereunder to fail to qualify as a REMIC at any time that
any of the Certificates are outstanding.
Section 11.15. PAYING AGENT; APPOINTMENT AND ACCEPTANCE OF DUTIES.
The Trustee is hereby appointed Paying Agent. The Seller may, if such
Person meets the eligibility requirements for the Trustee set forth in Section
10.08 hereof, including, without
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limitation, the prior written consent of the Certificate Insurer, appoint one
or more other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the
Owners of Certificates of each Class for which it is acting as Paying
Agent on each Distribution Date among such Owners in the proportion
specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16. REMIC STATUS.
(a) The parties hereto intend that each REMIC created hereunder shall
constitute, and that the affairs of each REMIC created hereunder shall be
conducted so as to qualify it as a REMIC in accordance with the REMIC
Provisions. In furtherance of such intention, Bank One, National Association,
or such other person designated pursuant to Section 11.18 hereof shall act as
agent for the Trust and as Tax Matters Person for the Trust and that in such
capacity it shall: (i) prepare or cause to be prepared and filed, at its own
expense, in a timely manner, annual tax returns and any other tax return
required to be filed by each REMIC created hereunder using a calendar year as
the taxable year for such REMIC; (ii) in the related first such tax return, make
(or cause to be made) an election satisfying the requirements of the REMIC
Provisions, on behalf of each REMIC created hereunder, for it to be treated as a
REMIC; (iii) at the Tax Matters Person's expense, prepare and forward, or cause
to be prepared and forwarded, to the Owners all
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information, reports or tax returns required with respect to each REMIC
created hereunder, including Schedule Q to Form 1066, as, when and in the
form required to be provided to the Owners, and to the Internal Revenue
Service and any other relevant governmental taxing authority in accordance
with the REMIC Provisions and any other applicable federal, state or local
laws, including without limitation information reports relating to "original
issue discount" as defined in the Code based upon the prepayment assumption
and calculated by using the "Issue Price" (within the meaning of Section 1273
of the Code) of the Certificates of the related Class; provided that the tax
return filed on Schedule Q to Form 1066 shall be prepared and forwarded to
the Owners of the Class R Certificates no later than 50 days after the end of
the period to which such tax return was due; (iv) not take any action or omit
to take any action that would cause the termination of the REMIC status of
either REMIC created hereunde, except as provided under this Agreement; (v)
represent the Trust or each REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year
of the Trust or each REMIC created hereunder, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of the Trust or each REMIC created
hereunder, and otherwise act on behalf of the Trust or each REMIC created
hereunder in relation to any tax matter involving the Trust or each REMIC
created hereunder (the legal expenses and costs of any such action described
in this subsection (v) and any liability resulting therefrom shall constitute
expenses of the Trust and shall constitute Trustee Reimbursable Expenses,
unless such legal expenses and costs are incurred by reason of the Trustee's
willful misfeasance, bad faith or negligence); (vi) comply with all statutory
or regulatory requirements with regard to its conduct of activities pursuant
to the foregoing clauses of this Section 11.16, including, without
limitation, providing all notices and other information to the Internal
Revenue Service and Owners of Class R Certificates required of a "tax matters
person" pursuant to subtitle F of the Code and the Treasury Regulations
thereunder; (vii) make available information necessary for the computation of
any tax imposed (A) on transfer of residual interests to certain Disqualified
Organizations or (B) on pass-through entities, any interest in which is held
by a Disqualified Organization; and (viii) acquire and hold the Tax Matters
Person Residual Interest. The obligations of the Trustee or such other
designated Tax Matters Person pursuant to this Section 11.16 shall survive
the termination or discharge of this Agreement.
(b) The Sellers, the Depositor, the Trustee and the Servicer covenant
and agree for the benefit of the Owners and the Certificate Insurer (i) to take
no action which would result in the termination of REMIC status for either REMIC
created hereunder, (ii) not to engage in any "prohibited transaction", as such
term is defined in Section 860F(a)(2) of the Code, (iii) not to engage in any
other action which may result in the imposition on the Trust of any other taxes
under the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent that either of the Sellers is aware of any such proposed
action by the Servicer.
(c) Each REMIC created hereunder shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
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(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) None of the Depositor, either of the Sellers or the Trustee shall
enter into any arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, other than as
expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
either of the Sellers may engage in any of the transactions prohibited by such
clauses, provided that the Trustee shall have received an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
to the effect that such transaction does not result in a tax imposed on the
Trust or cause a termination of REMIC status for either REMIC created hereunder;
PROVIDED, HOWEVER, that such transaction is otherwise permitted under this
Agreement.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Date
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Trustee if such tax arises out of or results from the
willful misfeasance, bad faith or negligence in performance by the Trustee of
any of its obligations under Article X, or (ii) to the Servicer if such tax
arises out of or results from a breach by the Servicer of any of its obligations
under Article VIII or otherwise.
Section 11.17. ADDITIONAL LIMITATION ON ACTION AND IMPOSITION OF TAX.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or either REMIC created hereunder or cause a termination of REMIC
status for either REMIC created hereunder, (i) sell any assets in the Trust
Estate, (ii) accept any contribution of assets after the Startup Day, (iii)
allow the Servicer to foreclose upon any Home Equity Loan if such foreclosure
would result in a tax on the Trust or either REMIC created hereunder or cause
termination of REMIC status for either REMIC created hereunder or (iv) agree to
any modification of this Agreement. To the extent that sufficient amounts
cannot be so retained to pay or provide for the payment of such tax, the Trustee
is hereby authorized to and shall segregate, into a separate non-interest
bearing account, the net income from any such Prohibited Transactions of each
REMIC created hereunder and use such income, to the extent necessary, to pay
such tax; PROVIDED THAT, to the extent that any such income is paid to the
Internal Revenue Service, the Trustee shall retain an equal amount from future
amounts otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of Class A Certificates to the
extent they are fully reimbursed and then to the Owners of the Class R
Certificates. If any tax, including interest penalties or assessments,
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additional amounts or additions to tax, is imposed on the Trust, such tax shall
be charged against amounts otherwise distributable to the owners of the Class R
Certificates on a PRO RATA basis. The Trustee is hereby authorized to and shall
retain from amounts otherwise distributable to the Owners of the Class R
Certificates sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 11.18. APPOINTMENT OF TAX MATTERS PERSON.
A Tax Matters Person will be appointed for each REMIC created hereunder
for all purposes of the Code and such Tax Matters Person will perform, or cause
to be performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for each REMIC created hereunder shall be the Trustee as long
as it owns a Class R Certificate. If the Trustee does not own a Class R
Certificate, the Tax Matters Person will be the holder of the largest percentage
interest in the Class R Certificates. The Trustee is hereby irrevocably
appointed to act as the agent of the Tax Matters Person for all purposes of the
Code and regulations thereunder.
Section 11.19. THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer hereunder (except for the
Certificate Insurer's right of prior approval of amendments to this Agreement
that affect the Certificate Insurer's right to receive payments or the priority
of such payments to the Certificate Insurer under Section 7.03), including but
not limited to consent rights, shall be suspended and shall run to the benefit
of the Owners and shall be exercisable by a vote of Owners holding Certificates
representing at least a 51% Percentage Interest of all Class A Certificates
during any period in which there exists a Certificate Insurer Default; PROVIDED,
that the right of the Certificate Insurer to receive the Premium Amount or any
Reimbursement Amounts shall not be suspended if such Certificate Insurer Default
was a default other than a default under clause (a) of the definition thereof.
If a Certificate Insurer Default shall cease to exist, the rights of the
Certificate Issuer shall be immediately restored. At such time as the Class A
Certificates are no longer Outstanding hereunder and the Certificate Insurer has
received all Reimbursement Amounts, the Certificate Insurer's rights hereunder
shall terminate.
Section 11.20. RESERVED.
Section 11.21. THIRD PARTY RIGHTS.
The Trustee, the Sellers, the Servicer, the Depositor and the Owners
agree that the Certificate Insurer shall be deemed a third-party beneficiary of
this Agreement as if it were a party hereto.
Section 11.22. NOTICES.
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All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
THE TRUSTEE: Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Office
Tel: (312) 407-8810
Fax: (312) 407-1708
THE DEPOSITOR: CHEC Funding, LLC
2728 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
Fax: (214) 756-4580
Attention: Anne E. Sutherland
Tel: (214) 758-7045
Fax: (214) 758-7868
THE SELLER: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
2828 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
Fax: (214) 756-4580
Attention: Anne E. Sutherland
Tel: (214) 758-7045
Fax: (214) 758-7868
THE CONDUIT SELLER: CHEC Conduit Funding, LLC
2728 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
Fax: (214) 756-4580
Attention: Anne E. Sutherland
Tel: (214) 758-7045
Fax: (214) 758-7868
THE SERVICER: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
2828 North Harwood
Dallas, Texas 75201
Attention: Jeffrey B. Upperman
Tel: (214) 981-6811
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Fax: (214) 756-4580
Attention: Anne E. Sutherland
Tel: (214) 758-7045
Fax: (214) 758-7868
THE CUSTODIAN: Bank One Trust Company, N.A.
2220 Chemsearch Blvd., Suite 150
Irving, Texas 75062
Attention: Gloria Sadler
Fax: (972) 785-5342
Confirmation: (972) 785-5215
THE CERTIFICATE
INSURER: MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-
Structured Finance (IPM-SF)
Re: Centex Home Equity Loan Trust 2000-C
Tel: (914) 273-4545
Fax: (914) 765-3810
THE UNDERWRITERS: Banc of America Securities LLC
100 North Tryon Street
11th Floor
NC1-007-11-07
Charlotte, NC 28255
Attention: Michael Schoffelen
Tel: (704) 386-0932
Fax: (704) 388-9668
Lehman Brothers
3 World Financial Center
200 Vesey Street
New York, NY 10285
Attention: Aadit Sehasayee
Tel: (212) 526-9262
Fax: (212) 526-7415
Salomon Smith Barney Inc.
390 Greenwich Street
6th Floor
New York, NY 10013
Attention: Paul Humphrey
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Tel: (212) 723-9548
Fax: (212) 723-8591
MOODY'S: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
STANDARD & POOR'S: Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc.
55 Water Street
41st Floor
New York, New York 10041
Attention: Residential Mortgage Group
Tel: (212) 438-2000
Fax: (212) 438-2661
FITCH: Fitch, Inc.
One State Street Plaza
New York, NY 10004
Section 11.23. RULE 144A INFORMATION. For so long as any of the Class R
or Class X-IO Certificates are "restricted securities" within the meaning of
Rule 144A under the Securities Act, the Servicer (or if the Trustee is then
acting as Servicer, CHEC) agrees to provide to any Owner of the Class R or Class
X-IO Certificate and to any prospective purchaser of Class R or Class X-IO
Certificates designated by such an Owner, upon the request of such Owner or
prospective purchaser, the information specified below which is intended to
satisfy the conditions set forth in Rule 144A(d)(4) under the Securities Act;
PROVIDED that this Section 11.23 shall require, as to the Trustee or CHEC, only
that the Servicer (or if the Trustee is then acting as Servicer, CHEC) provide
publicly available information regarding it or the Trustee in response to any
such request; and PROVIDED FURTHER that the Servicer (or if the Trustee is then
acting as Servicer, CHEC) shall be obligated to provide only such basic,
material information concerning the structure of the Class R or Class X-IO
Certificates and distributions thereon, the nature, performance and servicing of
the Home Equity Loans supporting the Certificates, and any credit enhancement
mechanism, if any, associated with the Certificates. Any recipient of
information provided pursuant to this Section 11.23 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of the Class R or Class X-IO Certificates by the prospective
purchaser. The Trustee shall have no responsibility for the sufficiency under
Rule 144A of any information so provided by the Servicer or CHEC to any Owner or
prospective purchaser of Class R or Class X-IO Certificates.
END OF ARTICLE XI
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ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and in
the Certificates to the benefit of Owners of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Owners shall be deemed to include the
Certificate Insurer. Unless a Certificate Insurer Default exists, the Servicer
shall not terminate any Sub-Servicing Agreements without the prior consent of
the Certificate Insurer.
Section 12.02. CLAIMS UPON THE POLICIES; POLICY PAYMENTS ACCOUNT
(a) In the event that an Insured Payment becomes due pursuant to the
terms of a Certificate Insurance Policy, the Trustee shall submit a Notice (in
the form attached to such Certificate Insurance Policy) in accordance with the
terms of such Certificate Insurance Policy and in sufficient time that payment
will be made under such Certificate Insurance Policy on the related Distribution
Date.
(b) The Trustee shall establish and maintain a separate special
purpose trust account for the benefit of the Owners of the Class A Certificates
and the Certificate Insurer referred to herein as the "Policy Payments Account"
over which the Trustee shall have exclusive control and sole right of
withdrawal. The Policy Payments Account shall be an Eligible Account. The
Trustee shall deposit any amount paid under the Certificate Insurance Policies
into the Policy Payments Account and distribute such amount only for purposes of
payment to the Owners of the related Class A Certificates of the Insured
Payments for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Seller, the
Depositor, the Custodian, the Trustee or the Trust. Amounts paid under a
Certificate Insurance Policy shall be transferred to the Certificate Account in
accordance with the next succeeding paragraph and disbursed by the Trustee to
Owners of the related Class A Certificates in accordance with Section 7.03(e).
It shall not be necessary for such payments to be made by checks or wire
transfers separate from the checks or wire transfers used to pay the Insured
Payments with other funds available to make such payment. However, the amount
of any payment of principal of or interest on the related Class A Certificates
to be paid from funds transferred from the Policy Payments Account shall be
noted as provided in paragraph (c) below in the Register and in the statement to
be furnished to Owners of the Class A Certificates
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pursuant to Section 7.08. Funds held in the Policy Payments Account shall not
be invested by the Trustee.
On any Distribution Date with respect to which a claim has been made
under a Certificate Insurance Policy, the amount of funds received by the
Trustee as a result of any claim under such Certificate Insurance Policy, to the
extent required to make the Insured Payment on such Distribution Date shall be
withdrawn from the Policy Payments Account and deposited in the Certificate
Account and applied by the Trustee, directly to the payment in full of the
Insured Payment due on the related Class of Class A Certificates in accordance
with Section 7.03(e). Funds received by the Trustee as a result of any claim
under either Certificate Insurance Policy shall be deposited by the Trustee in
the Policy Payments Account and used solely for payment to the Owners of the
Class A Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Seller, the Depositor, the Custodian, the
Trustee or the Trust. Any funds remaining in the Policy Payments Account on the
first Business Day following a Distribution Date shall be remitted to the
Certificate Insurer, pursuant to the instructions of the Certificate Insurer, by
the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A Certificate from
moneys received under the Certificate Insurance Policies. The Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent (as defined in the Certificate Insurance Policies) of any
proceeding or the institution of any action, of which an Authorized Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Owner of a Class A Certificate, by its purchase of such
Certificate, the Servicer and the Trustee hereby agree that the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim, including without limitation, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Servicer, the Trustee and each
Owner of a Class A Certificate in the conduct of any such Preference Claim,
including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
Section 12.03. EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with respect
to principal of or interest on any of the Class A Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policies
shall not be considered payment of such Certificates from the Trust and shall
not result in the payment of or the provision for the payment of the
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principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each
Owner by its acceptance of a Certificate agrees, that without the need for
any further action on the part of the Certificate Insurer, the Depositor, the
Servicer, the Trustee or the Registrar (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Owners of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such holders to
receive such principal and interest from the Trust and (b) the Certificate
Insurer shall be paid such principal and interest but only from the sources
and in the manner provided herein for the payment of such principal and
interest.
The Trustee, the Sellers, the Depositor and the Servicer shall cooperate
in all respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Owners as otherwise set forth herein.
Section 12.04. NOTICES TO THE CERTIFICATE INSURER.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Owners
shall also be sent to the Certificate Insurer.
Section 12.05. THIRD-PARTY BENEFICIARY.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06. RIGHTS TO THE CERTIFICATE INSURER TO EXERCISE RIGHTS OF
OWNERS.
By accepting its Certificate, each Owner of a Class A Certificate agrees
that unless a Certificate Insurer Default exists, the Certificate Insurer shall
have the right to exercise all rights of the Owners of the Class A Certificates
as specified under this Agreement without any further consent of the Owners of
the Class A Certificates and that the Owners of Class A Certificates may not
exercise such rights except with the written consent of the Certificate Insurer.
Section 12.07. TRUSTEE TO HOLD THE CERTIFICATE INSURANCE POLICIES.
The Trustee will hold the Certificate Insurance Policies in trust as
agent for the Owners of the Class A Certificates for the purpose of making
claims thereon and distributing the proceeds thereof. Neither the Certificate
Insurance Policies nor the amounts paid on the Certificate Insurance Policies
will constitute part of the Trust created by this Agreement. Each Owner of
Class A Certificates, by accepting its Class A Certificates, appoints the
Trustee as attorney-in-fact for the purpose of making claims on the Certificate
Insurance Policies.
Section 12.08. TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE
INSURER.
Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the Certificate
Insurer:
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(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 8.20 hereof;
(b) agree to any amendment pursuant to Section 11.14 hereof; or
(c) undertake any litigation with respect to the Trust.
END OF ARTICLE XII
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IN WITNESS WHEREOF, the Depositor, the Sellers, the Servicer and the
Trustee have caused this Agreement to be duly executed their respective
officers thereunto duly authorized, all as of the day and year first above
written.
CHEC FUNDING, LLC,
as Depositor
By: /s/ Jeffrey B. Upperman
----------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME
EQUITY CORPORATION,
as Seller
By: /s/ Jeffrey B. Upperman
-----------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
CHEC CONDUIT FUNDING, LLC
as Conduit Seller
By: /s/ Jeffrey B. Upperman
------------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Servicer
By: /s/ Jeffrey B. Upperman
-------------------------------------
Name: Jeffrey B. Upperman
Title: Vice President
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BANK ONE, NATIONAL ASSOCIATION
as Trustee
By: /s/ Christopher C. Holly
-------------------------------------
Name: Christopher C. Holly
Title: Assistant Vice President
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of September, 2000, before me personally came Jeffrey B.
Upperman to me known that he is a Vice President of CHEC Funding, LLC, a
Delaware limited liability agreement; and that he signed his name thereto by
order of the sole member of said company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Amy A. Mellon
-----------------------------------
Notary Public
148
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of September 2000, before me personally came Jeffrey B.
Upperman to me known that he is a Vice President of Centex Credit Corporation
d/b/a Centex Home Equity Corporation, a Nevada corporation and that he signed
his name thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Amy A. Mellon
------------------------------------
Notary Public
149
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of September, 2000, before me personally came Jeffrey B.
Upperman to me known that he is a Vice President of CHEC Conduit Funding, LLC, a
Delaware limited liability corporation and that he signed his name thereto by
order of Centex Credit Corporation d/b/a Centex Home Equity Corporation, the
sole member of CHEC Conduit Funding, LLC.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Amy A. Mellon
----------------------------------
Notary Public
150
<PAGE>
STATE OF NEW YORK )
: ss.:
NEW YORK COUNTY )
On the 15th day of September, 2000, before me personally came Christopher
C. Holly, to me known that he is an Assistant Vice President of Bank One,
National Association, described in and that he executed the above instrument as
Trustee; and that he signed his name thereto by order of the Board of Directors
of said bank.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Amy A. Mellon
----------------------------------
Notary Public
151
<PAGE>
SCHEDULE I-A
GROUP I SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-A-1
<PAGE>
SCHEDULE I-B
GROUP II SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-B-1
<PAGE>
SCHEDULE I-C
SELLER SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-C-1
<PAGE>
SCHEDULE I-D
CONDUIT SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-D-1
<PAGE>
SCHEDULE I-E
INVESTMENT INSTRUCTIONS TO TRUSTEE
ACCOUNT ELIGIBLE INVESTMENT
------- -------------------
(1) Certificate Account One Group Institutional Prime Fund
(2) Supplemental Interest Reserve Fund One Group Institutional Prime Fund
I-E-1
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-1
(7.62% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
the Group I Home Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-C") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-1-1 152314CN8
---------
CUSIP
A-1-1
<PAGE>
$97,000,000 August 25, 2015
Original Class A-1 September 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Seller are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-1 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-1 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
October 25, 2000 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-1 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed canceled for all
purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-1-2
<PAGE>
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO OCTOBER 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-2
(the "Class A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class A-1 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificates on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
A-1-3
<PAGE>
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-1 Certificates. The Percentage Interest of
each Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-1 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the related Certificate Insurance Policy, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
A-1-4
<PAGE>
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-1
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-1 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-1 Certificates and shall receive all future distributions of the Class A
Distribution Amount relating to such Certificates until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
A-1-5
<PAGE>
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: ________________________________
Title: ____________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By: _________________________________
Title: ________________________________
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-2
(7.40% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
the Group I Home Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-C") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-2-1 152314CP3
CUSIP
A-2-1
<PAGE>
$47,000,000 December 25, 2020
Original Class A-2 September 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Seller are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-2 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-2 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
October 25, 2000 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-2 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed canceled for all
purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-2-2
<PAGE>
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO OCTOBER 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class A-2 (the "Class A-2 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class A-2 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificates, on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-2
A-2-3
<PAGE>
Certificates. The Percentage Interest of each Class A-2 Certificate as of any
date of determination will be equal to the percentage obtained by dividing the
original Certificate Principal Balance of such Class A-2 Certificate on the
Startup Day by the aggregate Certificate Principal Balance of the Class A-2
Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the related Certificate Insurance Policy, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive
A-2-4
<PAGE>
distributions to the extent provided in the Pooling and Servicing Agreement
with respect to such Certificate or to institute suit for the enforcement of
any such distribution, and such right shall not be impaired without the
consent of such Owner. The Owner of this Certificate, by its acceptance
hereof, agrees, however, that to the extent the Certificate Insurer makes
Insured Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the Owners of such Class A-2 Certificates, the
Certificate Insurer will be subrogated to the rights of such Owners of Class
A-2 Certificates with respect to such Insured Payment, shall be deemed to the
extent of the payments so made to be a registered Owner of such Class A-2
Certificates and shall receive all future distributions of the Class A
Distribution Amount relating to such Certificates until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-2-5
<PAGE>
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Title:______________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By: _________________________________
Title: ________________________________
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-3
(7.46% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
the Group I Home Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-C") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-3-1 152314CQ1
CUSIP
$46,000,000 September 25, 2025
Original Class A-3 September 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
A-3-1
<PAGE>
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement (as defined below) (which the Seller
and the Conduit Seller are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-3 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-3 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
October 25, 2000 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-3 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed canceled for all
purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO OCTOBER 25, 2000 (THE
A-3-2
<PAGE>
FIRST DISTRIBUTION DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL
BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class A-3 (the "Class A-3 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class A-3 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificates on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-3 Certificates. The Percentage Interest of
each Class A-3 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
A-3-3
<PAGE>
Principal Balance of such Class A-3 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-3 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the related Certificate Insurance Policy, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall
A-3-4
<PAGE>
not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-3 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-3 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-3 Certificates and shall receive all future
distributions of the Class A Distribution Amount relating to such
Certificates until all such Insured Payments by the Certificate Insurer have
been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-3-5
<PAGE>
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable for new
Class A-3 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-3-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: ________________________________
Title: _____________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:_________________________________
Title:________________________________
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-4
(7.72% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
the Group I Home Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-C") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-4-1 152314CR9
CUSIP
$63,000,000 May 25, 2029
Original Class A-4 September 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
A-4-1
<PAGE>
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Seller are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-4 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-4 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
October 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-4 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed canceled for all
purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO OCTOBER 25, 2000 (THE
A-4-2
<PAGE>
FIRST DISTRIBUTION DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL
BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class A-4 (the "Class A-4 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class A-4 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificates on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-4 Certificates. The Percentage Interest of
each Class A-4 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
A-4-3
<PAGE>
Principal Balance of such Class A-4 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-4 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the Distribution Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the related Certificate Insurance Policy, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall
A-4-4
<PAGE>
not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-4 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-4 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-4 Certificates and shall receive all future
distributions of the Class A Distribution Amount relating to such
Certificates until all such Insured Payments by the Certificate Insurer have
been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-4-5
<PAGE>
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:___________________________________
Title:________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_______________________________
A-4-7
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-5
(7.99% CERTIFICATE RATE (OR 8.49% FOR EACH INTEREST PERIOD OCCURRING AFTER
THE DATE ON WHICH AN AFFILIATE OF THE SERVICER FIRST FAILS TO EXERCISE ITS
CLEAN-UP CALL OPTION), SUBJECT TO GROUP I NET WAC CAP)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
Group I Home Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-C") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-5-1 152314CS7
CUSIP
A-5-1
<PAGE>
$23,840,000 October 25, 2030
Original Class A-5 September 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Seller are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-5 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-5 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
October 25, 2000 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-5 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed canceled for all
purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-5-2
<PAGE>
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO OCTOBER 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class A-5 (the "Class A-5 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class A-5 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificates on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-5
A-5-3
<PAGE>
Certificates. The Percentage Interest of each Class A-5 Certificate as of any
date of determination will be equal to the percentage obtained by dividing the
original Certificate Principal Balance of such Class A-5 Certificate on the
Startup Day by the aggregate Certificate Principal Balance of the Class A-5
Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the related Certificate Insurance Policy, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive
A-5-4
<PAGE>
distributions to the extent provided in the Pooling and Servicing Agreement
with respect to such Certificate or to institute suit for the enforcement of
any such distribution, and such right shall not be impaired without the
consent of such Owner. The Owner of this Certificate, by its acceptance
hereof, agrees, however, that to the extent the Certificate Insurer makes
Insured Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the Owners of such Class A-5 Certificates, the
Certificate Insurer will be subrogated to the rights of such Owners of Class
A-5 Certificates with respect to such Insured Payment, shall be deemed to the
extent of the payments so made to be a registered Owner of such Class A-5
Certificates and shall receive all future distributions of the Class A
Distribution Amount relating to such Certificates until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-5-5
<PAGE>
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
Title:__________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_______________________________
A-5-7
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-6
(7.54% CERTIFICATE RATE SUBJECT TO GROUP I NET WAC CAP)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by, CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-C") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-6-1 152314CT5
CUSIP
$31,000,000 October 25, 2030
Original Class A-6 September 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
A-6-1
<PAGE>
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Seller are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-6 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-6 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
October 25, 2000 (the first Distribution Date),be less than the original
Certificate Principal Balance of the Class A-6 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed canceled for all
purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO OCTOBER 25, 2000 (THE
A-6-2
<PAGE>
FIRST DISTRIBUTION DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL
BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class A-6 (the "Class A-6 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-5 (the "Class A-5 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class A-6 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificates on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-6 Certificates. The Percentage Interest of
each Class A-6 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
A-6-3
<PAGE>
Principal Balance of such Class A-6 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-6 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the related Certificate Insurance Policy, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall
A-6-4
<PAGE>
not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-6 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-6 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A Certificates and shall receive all future
distributions of the Class A Distribution Amount relating to such
Certificates until all such Insured Payments by the Certificate Insurer have
been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-6-5
<PAGE>
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for new
Class A-6 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:___________________________________
Title:________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_______________________________
A-6-7
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-7
(VARIABLE CERTIFICATE RATE, WITH AN INCREASE IN MARGIN ON OR AFTER
THE CLEAN-UP CALL DATE)
(SUBJECT TO AVAILABLE FUNDS CAP)
Representing Certain Interests in a Pool of Group II Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
the Group II Home Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-C") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-7-1 152314CU2
CUSIP
A-7-1
<PAGE>
$92,160,000 October 25, 2030
Original Class A-7 September 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group II listed in SCHEDULE
I-B to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Seller are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group II as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-7 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-7 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
October 25, 2000 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-7 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed canceled for all
purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-7-2
<PAGE>
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO OCTOBER 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class A-7 (the "Class A-7 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class A-7 Certificates as
of the close of business on the last Business Day immediately preceding a
Distribution Date, or if Definitive Certificates have been issued, as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A Distribution Amount relating to
such Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
A-7-3
<PAGE>
Each Owner of record of a Class A-7 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-7 Certificates. The Percentage Interest of
each Class A-7 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-7 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-7 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the Distribution Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
A-7-4
<PAGE>
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-7
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-7 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-7 Certificates and shall receive all future distributions of the Class A
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
A-7-5
<PAGE>
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable for new
Class A-7 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-7-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
Title:__________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_________________________________
A-7-7
<PAGE>
EXHIBIT B
FORM OF CLASS X-IO CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS CLASS X-IO CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS X-IO
(REGULAR INTEREST)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
the Group I and Group II Home Equity Loans and certain other property held by
the Trust.)
NO: X-IO-1
Date: September 15, 2000
Percentage Interest _____%
B-1
<PAGE>
CHEC RESIDUAL CORPORATION
-------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in SCHEDULE I-A and
SCHEDULE I-B to the Pooling and Servicing Agreement (as defined below) which the
Seller and the Conduit Seller are causing to be delivered to the Depositor and
the Depositor is causing to be delivered to the Trustee, together with the
related Home Equity Loan documents and the Depositor's interest in any Property,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, together with investment earnings on such amounts, and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, inclusive of investment earnings thereon, whether in
the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); and (c) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class X-IO (the "Class X-IO Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of September 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates"), Class A-7 (the "Class A-7 Certificates") and Class R-1 and Class
R-2 (together, the "Class R Certificates"). The Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates,
the Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates shall be together referred to as the "Class A Certificates" and the
Class A Certificates, the Class X-IO Certificates and the Class R Certificates
are together referred to
B-2
<PAGE>
herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling
and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, the Owners of the Class X-IO Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class X-IO Distribution
Amount relating to such Certificates on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Class X-IO Certificates
having an aggregate Percentage Interest of at least 10% (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
B-3
<PAGE>
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time when a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor
B-4
<PAGE>
and a like aggregate fractional undivided interest in the Trust Estate will
be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner of this Certificate shall be conclusive and binding
upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class X-IO Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class X-IO Certificates are exchangeable for new
Class X-IO Certificates evidencing the same Percentage Interest as the Class
X-IO Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Title:___________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_______________________________
B-6
<PAGE>
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS OWNERSHIP OF
EACH OF THE SOLE CLASSES OF "RESIDUAL INTERESTS" IN TWO "REAL ESTATE MORTGAGE
INVESTMENT CONDUITS" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A
C-1
<PAGE>
DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR GENERALLY
WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF (A) THE
AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS CERTIFICATE
OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND
(B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR PURPOSES OF
THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES REGULATED
INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS,
PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T
OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CLASS R CERTIFICATE REPRESENTS A RESIDUAL INTEREST IN EACH OF REMIC
I AND REMIC II FOR FEDERAL INCOME TAX PURPOSES.
C-2
<PAGE>
CENTEX HOME EQUITY LOAN TRUST 2000-C
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS R
(RESIDUAL INTEREST)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of, nor
are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation d/b/a Centex Home
Equity Corporation. This Certificate represents a fractional ownership interest
in the Trust Estate as defined below.)
NO: R-1_
Date: September 15, 2000
Percentage Interest _____%
CHEC Residual Corporation
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in SCHEDULE I-A and
SCHEDULE I-B to the Pooling and Servicing Agreement which the Seller and the
Conduit Seller are causing to be delivered to the Depositor and the Depositor is
causing to be delivered to the Trustee, together with the related Home Equity
Loan documents and the Seller's interest in any Property which secured a Home
Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, together with investment earnings on such amounts,
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
THIS CERTIFICATE IS AN ASSET-BACKED CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
C-3
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-C, Home Equity Loan
Asset-Backed Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of September 1, 2000 (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Association, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-C Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates"), Class A-7 (the "Class A-7 Certificates"), and Class X-IO (the
"Class X-IO Certificates"). The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the Class
A-5 Certificates, the Class A-6 Certificates and the Class A-7 Certificates
shall be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class X-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing October 25, 2000, each owner of a Class R Certificate as of
the close of business on the last day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Residual Net Monthly Excess Cashflow
relating to such Certificates on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Class R Certificates having an
aggregate Percentage Interest of at least 10% (by wire transfer or otherwise) to
the account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-
C-4
<PAGE>
Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their Affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time when a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home
C-5
<PAGE>
Equity Loans and (ii) on the third Distribution Date following such date and
on each Distribution Date thereafter, the amounts that otherwise would have
been payable to the Class X-IO Certificates will be paid to the Class A
Certificates as an additional principal distribution amount. In addition,
under certain circumstances relating to the qualification of REMIC I and
REMIC II as REMICs under the Code, the Home Equity Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Class R Certificates evidence ownership in the "residual interest" in
REMIC I and the "residual interest" in REMIC II. The registered Owner of a
Class R Certificate will be entitled to separate such Certificate into such
component parts. The Trustee shall, upon delivery to it of this Class R
Certificate and a written request of the registered Owner thereof to separate
such Certificate into its component parts, issued to such registered Owner in
exchange for such Class R Certificate (i) a separately transferable, certified
and fully registered security (a "Class R-1 Certificate") that will, from the
date of its issuance, represent the Owner's Percentage Interest in the residual
interest in REMIC I and (ii) a separately transferable, certified and fully
registered security (a "Class R-2 Certificate") that will, from the date of its
issuance, represent the Owner's Percentage Interest in the residual interest in
REMIC II. The Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection with such exchange of this
Class R Certificate.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration
C-6
<PAGE>
of transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
C-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Title:___________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_________________________________
C-8
<PAGE>
EXHIBIT D
[Intentionally Omitted]
D-1
<PAGE>
EXHIBIT E-1
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Reference is made to that certain Pooling and Servicing Agreement dated
as of September 1, 2000 (the "Pooling and Servicing Agreement") among CHEC
Funding, LLC, as depositor, CHEC Conduit Funding, LLC, as conduit seller, Centex
Credit Corporation d/b/a Centex Home Equity Corporation, as seller and servicer,
and Bank One, National Association, as trustee (the "Trustee"). Capitalized
terms used herein but not defined herein have the meaning assigned to them in
the Pooling and Servicing Agreement.
The Trustee hereby acknowledges the receipt of the sum of $___________,
representing the net proceeds disbursed from the Underwriters, and the
Certificate Guaranty Insurance Policies (numbers: 330990 and 331000) dated
September 15, 2000, issued by MBIA Insurance Corporation.
Dated: September 15, 2000
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT E-2
FORM OF CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
Bank One Trust Company, N.A., in its capacity as custodian (the
"Custodian") under the Custodial Agreement dated as of September 1, 2000, among
the Custodian and Bank One, National Association, in its capacity as trustee
(the "Trustee") under that certain Pooling and Servicing Agreement dated as of
September 1, 2000 (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as depositor (the "Depositor"), CHEC Conduit Funding, LLC, as a seller,
Centex Credit Corporation d/b/a Centex Home Equity Corporation, a Nevada
corporation, as seller and servicer ("Centex"), and the Trustee, as trustee,
hereby acknowledges receipt (subject to review as required by Section 3.06(a) of
the Pooling and Servicing Agreement) of the items delivered to it by Centex with
respect to the Home Equity Loans pursuant to Section 3.05(b)(i) of the Pooling
and Servicing Agreement.
The Schedule of Home Equity Loans is attached to this receipt as Schedule
I.
The Custodian hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling and
Servicing Agreement as required thereby.
BANK ONE TRUST COMPANY, N.A.
as Custodian
By: ______________________________________
Name:
Title:
Dated: September 15, 2000
E-2
<PAGE>
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bank One Trust
Company, N.A., in its capacity as custodian (the "Custodian") under the
Custodial Agreement dated September 1, 2000, between the Custodian and Bank One,
National Association, acting in its capacity as trustee (the "Trustee") of a
certain pool of home equity loans heretofore conveyed in trust to the Trustee,
pursuant to that certain Pooling and Servicing Agreement dated as of September
1, 2000, (the "Pooling and Servicing Agreement") among CHEC Funding, LLC, as
depositor, Centex Credit Corporation d/b/a Centex Home Equity Corporation, as
seller and servicer, CHEC Conduit Funding, LLC, as a seller, and the Trustee, as
trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Home Equity Loans, and the
Seller is required to remedy such defects or take certain other action, all as
set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Custodian to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
3.05 of the Pooling and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
F-I-1
<PAGE>
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Pooling and Servicing Agreement.
BANK ONE TRUST COMPANY, N.A., as
Custodian
By: ____________________________________
Name:
Title
Dated: October 30, 2000
F-I-2
<PAGE>
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated as
of September 1, 2000 (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as Depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, as Seller and Servicer, CHEC Conduit Funding,
LLC, as a Seller, and Bank One, National Association, as Trustee (the
"Trustee"), THE DEPOSITOR HEREBY CERTIFIES that all conditions precedent to the
issuance of the Centex Home Equity Loan Trust 2000-C Home Equity Loan
Asset-Backed Certificates, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class X-IO and Class R (the "Certificates"), HAVE
BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said
Certificates, and to RELEASE said Certificates to the owners thereof, or
otherwise upon their order. Instructions regarding the registration of the
Certificates are attached hereto.
Very truly yours,
CHEC FUNDING, LLC
By:______________________________
Title:_____________________________
Dated: September 15, 2000
G-1
<PAGE>
EXHIBIT H
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and
will not be a "disqualified organization" as of [date of transfer] (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other than
certain taxable instrumentalities), any cooperative organization furnishing
electric energy or providing telephone service to persons in rural areas, or any
organization (other than a farmers' cooperative) that is exempt from federal
income tax unless such organization is subject to the tax on unrelated business
income.); (ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
H-I-1
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ___ day of __________, 2000.
[NAME OF INVESTOR]
By:__________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
_________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this __ day of ____________, 2000.
_________________
NOTARY PUBLIC
COUNTY OF __________________
STATE OF ____________________
My commission expires the _ day of _______________, 2000.
H-1-2
<PAGE>
EXHIBIT I-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2000-C
Home Equity Loan Asset-Backed Certificates, Class ___
("CERTIFICATES")
Gentlemen:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ___________________ ("Seller"), [PURCHASER]
(the "Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment
purposes only for](1) the Purchaser's own account and not with a view to or for
sale or transfer in connection with any distribution thereof in any manner which
would violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and will
not be registered under the Act and may not be resold or transferred unless they
are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of September 1, 2000 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
______________________
(1) Not required if the Purchaser is a broker/dealer.
I-1
<PAGE>
5. The Purchaser (i) is not an employee benefit plan subject to Section
406 of ERISA nor a plan or other arrangement subject to Section 406 of ERISA nor
a plan or other arrangement subject to Section 4975 of the Code (collectively, a
"Plan"), nor is acting on behalf of any Plan nor using the assets of any Plan to
effect such purchase or (ii) in the event that any Class X-IO or Class R
Certificate is purchased by a Plan, or by a person or entity acting on behalf of
any Plan or using the assets of any Plan to effect such purchase (including the
assets of any Plan held in an insurance company separate or general account), is
delivering herewith an Opinion of Counsel, acceptable to and in form and
substance satisfactory to the Trustee and the Certificate Insurer, which Opinion
of Counsel shall not be at the expense of either the Trustee, the Certificate
Insurer or the Trust, to the effect that the purchase or holding of any Class
X-IO or Class R Certificates will not result in a prohibited transaction under
ERISA and/or Section 4975 of the Code, and will not subject the Trustee to any
obligation or liability in addition to those expressly undertaken under the
Pooling and Servicing Agreement. Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate to or on behalf of any Plan
without the delivery to the Trustee and the Certificate Insurer of an Opinion of
Counsel as described above shall be null and void and no effect;
6. If the Purchaser sells any of the Certificates, it will (i) obtain
from any investor that purchases any Certificate from it a letter substantially
in the form of Exhibit I-1 or I-2 to the Pooling and Servicing Agreement and
(ii) to the extent required by the Pooling and Servicing Agreement, cause an
Opinion of Counsel to be delivered, addressed and satisfactory to the Seller and
the Trustee, to the effect that such sale is in compliance with all applicable
federal and state securities laws; and
7. For purposes of the Certificate Register, its address, including
telecopier number and telephone number, is as follows:
____________________________________
____________________________________
____________________________________
____________________________________
telecopier:_________________________
telephone:__________________________
8. The purchase of the Certificates by the Purchaser does not violate the
provisions of the first sentence of Section 5.08(c) of the Pooling and Servicing
Agreement.
I-1-2
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed
by its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:___________________________________
Name:_________________________________
Title:________________________________
I-1-3
<PAGE>
EXHIBIT I-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2000-C
Home Equity Loan Asset-Backed Certificates,
Class ___-_____ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ______________________ ("Seller"), we
hereby certify that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated
as of September 1, 2000 (the "Pooling and Servicing Agreement") pursuant to
which the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the Certificates
represent interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates, at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 4 and this paragraph 5 or (ii)
deliver an Opinion of Counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
I-2-1
<PAGE>
6. We are acquiring the Certificates for our own account and the source
of funds is not an employee benefit plan subject to Section 406 of ERISA nor a
plan or other arrangement subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 4975 of the Code (collectively, a "Plan"), nor
are we acting on behalf of any Plan nor using the assets of any Plan to effect
such acquisition or (ii) in the event that any Class X-IO or Class R Certificate
is purchased by a Plan, or by a person or entity acting on behalf of any Plan or
using the assets of any Plan to effect such purchase (including the assets of
any Plan held in an insurance company separate or general account), we are
delivering herewith an Opinion of Counsel, acceptable to and in form and
substance satisfactory to the Trustee and the Certificate Insurer, which Opinion
of Counsel shall not be at the expense of either the Trustee, the Certificate
Insurer or the Trust, to the effect that the purchase or holding of any Class
X-IO or Class R Certificates will not result in a prohibited transaction under
ERISA and/or Section 4975 of the Code, and will not subject the Trustee to any
obligation or liability in addition to those expressly undertaken under the
Pooling and Servicing Agreement. Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate to or on behalf of any Plan
without the delivery to the Trustee and the Certificate Insurer of an Opinion of
Counsel as described above shall be null and void and no effect;
7. For purposes of the Certificate Register, our address, including
telecopier number and telephone number, is as follows:
_________________________________________
_________________________________________
_________________________________________
telecopier: _____________________________
telephone: ______________________________
8. If we sell any of the Certificates, we will obtain from any purchaser
from us the same representations contained in the foregoing paragraph 6 and this
paragraph 8; and
9. Our purchase of the Certificates does not violate the provisions of
the first sentence of Section 5.08(c) of the Pooling and Servicing Agreement.
I-2-2
<PAGE>
IN WITNESS WHEREOF, we have signed this certificate as of the date first
written above.
By:_____________________________________
Name:___________________________________
Title:__________________________________
I-2-3
<PAGE>
EXHIBIT J
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
<TABLE>
<CAPTION>
Loan Number Borrower Name Original Loan Amount Exception
----------- ------------- -------------------- ---------
<S> <C> <C> <C>
</TABLE>
J-1-1
<PAGE>
EXHIBIT K
DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"GROUP II DELINQUENCY AMOUNT" means, with respect to each Distribution
Date, the product of (i) the Group II Delinquency Percentage and (ii) the
aggregate Loan Balance of the Home Equity Loans in Group II as of the end of the
related Remittance Period.
"GROUP II DELINQUENCY PERCENTAGE" means with respect to Group II and
any date of determination, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods (x) the numerator of each of which is equal to the sum (without
duplication) of (i) the aggregate Loan Balance of the Home Equity Loans in Group
II which are 90-Day Delinquent Loans, and (ii) the aggregate Loan Balance of the
Home Equity Loans in Group II in foreclosure, in each case as of the end of such
Remittance Period, and (y) the denominator of which is the aggregate Loan
Balance of the Home Equity Loans in Group II as of the end of such Remittance
Period.
"GROUP II INITIAL TARGET OVERCOLLATERALIZATION AMOUNT" means the Group
II Target Percentage times the Original Group II Pool Balance.
"GROUP II TARGET OVERCOLLATERALIZATION AMOUNT" means:
(a) for any Distribution Date occurring during the period
commencing on the Startup Day and ending on the later of (A) the date upon
which principal in the amount equal to one half of the Original Group II Pool
Balance has been received by the Owners of the Class A-7 Certificates and (B)
the thirtieth Distribution Date following the Startup Day, the Group II
Target Overcollateralization Amount shall be the greater of: (i) the Group II
Initial Target Overcollateralization Amount, and (ii) 110% of the Group II
Delinquency Amount.
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, the Group II Target Overcollateralization Amount shall be the
greatest of (i)(x) two times the Group II Target Percentage times (y) the
aggregate Loan Balance of the Home Equity Loans in Group II as of the end of the
immediately preceding Remittance Period, (ii) 0.75% of the Original Group II
Pool Balance, (iii) 110% of the Group II Delinquency Amount and (iv) the
aggregate Loan Balance of the three Home Equity Loans with the largest
outstanding Loan Balances in Group II as of the end of the immediately preceding
Remittance Period;
provided, however, for any Distribution Date occurring after the end of the
period specified in clause (a) above, if the Group II Delinquency Percentage
exceeds 10.00%, the Group II Target Overcollateralization Amount shall be no
less than the Group II Target Overcollateralization Amount as of the previous
Distribution Date.
K-1-1
<PAGE>
Notwithstanding anything contained in the Agreement to the contrary,
the Certificate Insurer may, in its sole discretion, modify this definition of
Group II Target Overcollateralization Amount (and any related definitions in
this Exhibit K) for the purpose of reducing the overcollateralization amounts
hereof or eliminating, in whole or in part, the definitions hereof, provided the
Trustee and the Rating Agencies shall have been notified in writing of such
modification prior to the related Distribution Date and such modification has
not resulted in a downgrading of the then-current ratings of the Class A
Certificates, without regard to the Certificate Insurance Policies.
"GROUP II TARGET PERCENTAGE" means 6.00%.
"ORIGINAL GROUP II POOL BALANCE" means the aggregate Loan Balance of
the Home Equity Loans in Group II as of the Cut-Off Date.
K-1-2
<PAGE>
EXHIBIT L
DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"GROUP I DELINQUENCY AMOUNT" means, with respect to each Distribution
Date, the product of (i) the Group I Delinquency Percentage and (ii) the
aggregate Loan Balance of the Home Equity Loans in Group I as of the end of the
related Remittance Period.
"GROUP I DELINQUENCY PERCENTAGE" means with respect to Group I and any
date of determination, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods, (x) the numerator of each of which is equal to the sum (without
duplication) of (i) the aggregate Loan Balance of the Home Equity Loans in Group
I which are 90-Day Delinquent Loans, and (ii) the aggregate Loan Balance of the
Home Equity Loans in Group I in foreclosure, in each case as of the end of such
Remittance Period, and (y) the denominator of which is the aggregate Loan
Balance of the Home Equity Loans in Group I as of the end of such Remittance
Period.
"GROUP I INITIAL TARGET OVERCOLLATERALIZATION AMOUNT" means the Group I
Target Percentage times the Original Group I Pool Balance.
"GROUP I TARGET OVERCOLLATERALIZATION AMOUNT" means:
(a) for any Distribution Date occurring during the period
commencing on the Startup Day and ending on the later of (A) the date upon
which principal in the amount equal to one half of the Original Group I Pool
Balance has been received by the Owners of the Group I Certificates and (B)
the thirtieth Distribution Date following the Startup Day, the Group I Target
Overcollateralization Amount shall be the greater of: (i) the Group I Initial
Target Overcollateralization Amount, and (ii) 75% of the Group I Delinquency
Amount.
(b) for any Distribution Date occurring after the end of the period
in clause (a) above, the Group I Target Overcollateralization Amount shall be
the greatest of (i)(x) two times the Group I Target Percentage times (y) the
aggregate Loan Balance of the Home Equity Loans in Group I as of the end of
the immediately preceding Remittance Period, (ii) 0.75% of the Original Group
I Pool Balance, (iii) 75% of the Group I Delinquency Amount, and (iv) the
aggregate Loan Balance of the three Home Equity Loans with the largest
outstanding Loan Balances in Group I as of the end of the immediately
preceding Remittance Period; provided, however, for any Distribution Date
occurring after the end of the period specified in clause (a) above, if the
Group I Delinquency Percentage exceeds 8.00%, the Group I Target
Overcollateralization Amount shall be no less than the Group I Target
Overcollateralization Amount as of the previous Distribution Date.
Notwithstanding anything contained in the Agreement to the contrary,
the Certificate Insurer may, in its sole discretion, modify the definition of
Group I Target Overcollateralization Amount (and any related definitions in this
Exhibit L) for the purpose of reducing the
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<PAGE>
overcollateralization amounts hereof or eliminating, in whole or in part, the
definitions hereof, provided the Trustee and the Rating Agencies have been
notified in writing of such modification prior to the related Distribution
Date and such modification has not resulted in a downgrading of the
then-current ratings of the Class A Certificates, without regard to the
Certificate Insurance Policies.
"GROUP I TARGET PERCENTAGE" means 3.80%.
"ORIGINAL GROUP I POOL BALANCE" means the aggregate Loan Balance of the
Home Equity Loans in Group I as of the Cut-Off Date.
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<PAGE>
EXHIBIT M
FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
________, 200_
Bank One, National Association
1 Bank One Plaza, Suite IL1-0126
Chicago, Illinois 60670
Re: Centex Home Equity Loan Trust 2000-C
Home Equity Loan Asset-Backed Certificates,
Series 2000-C
-------------------------------------------
Ladies and Gentlemen:
Pursuant to and in reference to Section 7.09(c) of the Pooling and
Servicing Agreement dated as of September 1, 2000 relating to the above
referenced Certificates, please note the following:
(a) CIK Number for Centex Home Equity Loan Trust 2000-C (the
"Trust"): .
(b) CCC for the Trust: .
In order to comply with the reporting obligations for the Trust under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Trustee
must file within 15 days following each Distribution Date a copy of the report
distributed by the Trustee to the Certificateholders in a current report on Form
8-K. Such reports provide all current information ordinarily of interest to the
Certificateholders. The Trustee must also report on a current report on Form
8-K any significant occurrences during the reporting period that would be
reportable under Item 1, Item 2, Item 4 and Item 5. In addition, the Trustee
should cause the filing of an annual report on Form 10-K within 90 days
following the end of the Trust's fiscal year containing the following
information:
Part I, Item 3. A description of any material pending litigation;
Part I, Item 4. A description of any matters submitted to vote of
Certificateholders;
Part II, Item 5. A statement of the number of Certificateholders
and the principal market, if any, in which the
Certificates trade;
Part II, Item 9. A statement as to any changes in or disagreements
with the independent public accountants for the
Trust;
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<PAGE>
Part IV, Item 14. A copy of the annual certificate of compliance by
an officer of the Servicer and any Subservicer,
and the audit of the servicing by the independent
accounting firm.
The Trustee shall timely file the Form 10-K, and the Trustee should file a Form
15 in accordance with Section 7.09(c) of the Pooling and Servicing Agreement,
deregistering the Trust and terminating the reporting obligations under the
Exchange Act.
All filings must be made through the Edgar System and all acceptance slips from
the filings should be saved as they will be needed for the annual certificate.
CHEC FUNDING, LLC
By:_____________________________________
Name:
Title:
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<PAGE>
EXHIBIT N
FORM OF LIQUIDATION REPORT
<TABLE>
<S> <C>
(1) Issue Name:
(2) Customer Name:
Loan Number:
Lien Position:
(3) Original Mortgage Amount: $_______________
Current Mortgage Amount: $_______________
(4) Interest Paid Through Date:
(5) Liquidation Date:
(6) Original Appraised Value: $_______________
(7) Most Recent Appraised Value: $_______________
Recent Appraisal Date:
(8) Interest Rate: [ ]% $_______________
(9) Sale Price: $_______________
(10) Interest Carry: $_______________
(11) Taxes Advances: $_______________
(12) Maintenance Costs $_______________
(13) Legal Expenses: $_______________
(14) Miscellaneous Expenses: $_______________
(15) Net Proceeds: $_______________
(16) Loss Severity Percentage: [ ]% $_______________
</TABLE>
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