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ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: The Trust Fund Held by the Trustee under the Pooling
and Servicing Agreement, dated as of December 1, 2000,
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
Conduit Seller, and Bank One, National Association, as
Trustee.
CERTIFICATES: $400,000,000 Original Principal Amount Centex Home Equity
Loan Trust 2000-D, Centex Home Equity Loan Asset-Backed
Certificates, Series 2000-D, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6 and Class A-7
POLICY NO.:. 51017-N
DATE OF ISSUANCE: December 14, 2000
1. DEFINITIONS. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
provided in the Pooling and Servicing Agreement unless the context shall
otherwise require.
"BUSINESS DAY" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in New York City, the State of Texas
or the city in which the corporate trust office of the Trustee is located are
authorized or obligated by law, executive order or governmental decree to be
closed.
"GUARANTEED DISTRIBUTIONS" means, with respect to each Distribution
Date, the distribution to be made to Holders (as defined in this Policy) in
an aggregate amount equal to the sum of the Current Interest and the sum of
the Collateralization Deficits with respect to each of the Group I and Group
II Certificates (net of any payment of such Collateralization Deficits that
would be made on such Distribution Date in the absence of a payment under
this Policy) and, without duplication, on the Final Scheduled Distribution
Date for each Class of Certificates, the then outstanding Certificate
Principal Balance of such Class of Certificates, in accordance with the
original terms of the Certificates when issued and without regard to any
amendment or modification of the Certificates or the Pooling and Servicing
Agreement except amendments or modifications to which Financial Security has
given its prior written consent. Guaranteed Distributions shall not include,
nor shall coverage be provided under this Policy in respect of, any taxes,
withholding or other charge imposed by any governmental authority.
"POLICY" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
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Policy No.: 51017-N Date of Issuance: December 14, 2000
"POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement, dated as of December 1, 2000 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 Conduit Seller, and Bank One,
National Association as Trustee, as amended from time to time with the
consent of Financial Security.
"RECEIPT" AND "RECEIVED" mean actual delivery to Financial Security
and to the Fiscal Agent (as defined below), if any, prior to 12:00 noon, New
York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
receipt on the next succeeding Business Day. If any notice or certificate
given hereunder by the Trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been
Received, and Financial Security or its Fiscal Agent shall promptly so advise
the Trustee and the Trustee may submit an amended notice.
"TERM OF THIS POLICY" means the period from and including the Date of
Issuance to and including the latest of the date on which (i) the Certificate
Principal Balance is zero, (ii) any period during which any payment on the
Certificates could have been avoided in whole or in part as a preference
payment under applicable bankruptcy, insolvency, receivership or similar law
has expired, and (iii) if any proceedings requisite to avoidance as a
preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and nonappealable order in resolution of each such proceeding
has been entered.
"TRUSTEE" means Bank One, National Association in its capacity as
Trustee under the Pooling and Servicing Agreement and any successor in such
capacity.
2. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS. Following Receipt by Financial Security of a notice and
certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of Financial Security on
the later to occur of (a) 12:00 noon, New York City time, on the third
Business Day following such Receipt; and (b) 12:00 noon, New York City time,
on the Distribution Date to which such claim relates. Payments due hereunder
in respect of Guaranteed Distributions will be disbursed by wire transfer of
immediately available funds to the Policy Payments Account established
pursuant to the Pooling and Servicing Agreement or, if no such Policy
Payments Account has been established, to the Trustee for deposit to the
Certificate Account.
Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions, including any acceleration payment,
whether or not any notice and certificate shall have been Received by
Financial Security as provided above, provided, however, that by acceptance
of this Policy the Trustee agrees to provide to Financial Security, upon
Financial Security's request to the Trustee, a notice and certificate in
respect of any such payments made by Financial Security. Financial Security
shall be entitled to pay hereunder any amount in respect of Guaranteed
Distributions on an accelerated basis at any time or from time to time, in
whole or in part, prior to the scheduled date of payment thereof; Guaranteed
Distributions insured hereunder shall not include interest, in respect of
principal paid hereunder on an accelerated basis, accruing from and after the
date of such payment of principal. Financial Security's obligations
hereunder in respect of Guaranteed Distributions shall be discharged to the
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Policy No.: 51017-N Date of Issuance: December 14, 2000
extent funds are disbursed by Financial Security as provided herein whether
or not such funds are properly applied by the Trustee.
3. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS AVOIDED AS PREFERENCE PAYMENTS. If any Guaranteed Distribution
is avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of
the funds of Financial Security on the later of (a) the date when due to be
paid pursuant to the Order referred to below or (b) the first to occur of (i)
the fourth Business Day following Receipt by Financial Security from the
Trustee of (A) a certified copy of the order of the court or other
governmental body which exercised jurisdiction to the effect that the Holder
is required to return principal or interest distributed with respect to the
Certificates during the Term Of This Policy because such distributions were
avoidable as preference payments under applicable bankruptcy law (the
"Order"), (B) a certificate of the Holder that the Order has been entered and
is not subject to any stay and (C) an assignment duly executed and delivered
by the Holder, in such form as is reasonably required by Financial Security
and provided to the Holder by Financial Security, irrevocably assigning to
Financial Security all rights and claims of the Holder relating to or arising
under the Certificates against the debtor which made such preference payment
or otherwise with respect to such preference payment or (ii) the date of
Receipt by Financial Security from the Trustee of the items referred to in
clauses (A), (B) and (C) above if, at least four Business Days prior to such
date of Receipt, Financial Security shall have Received written notice from
the Trustee that such items were to be delivered on such date and such date
was specified in such notice. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order and not to the Trustee or any Holder directly (unless a Holder has
previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which
case such payment shall be disbursed to the Trustee for distribution to such
Holder upon proof of such payment reasonably satisfactory to Financial
Security). In connection with the foregoing, Financial Security shall have
the rights provided pursuant to Sections 12.02(d) and 12.03 of the Pooling
and Servicing Agreement.
4. GOVERNING LAW. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
5. FISCAL AGENT. At any time during the Term Of This Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for
purposes of this Policy by written notice to the Trustee at the notice
address specified in the Pooling and Servicing Agreement specifying the name
and notice address of the Fiscal Agent. From and after the date of receipt
of such notice by the Trustee, (i) copies of all notices and documents
required to be delivered to Financial Security pursuant to this Policy shall
be simultaneously delivered to the Fiscal Agent and to Financial Security and
shall not be deemed Received until Received by both and (ii) all payments
required to be made by Financial Security under this Policy may be made
directly by Financial Security or by the Fiscal Agent on behalf of Financial
Security. The Fiscal Agent is the agent of Financial Security only and the
Fiscal Agent shall in no event be liable to any Holder for any acts of the
Fiscal Agent or any failure of Financial Security to deposit, or cause to be
deposited, sufficient funds to make payments due under this Policy.
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Policy No.: 51017-N Date of Issuance: December 14, 2000
6. WAIVER OF DEFENSES. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the
benefit of each Holder, all rights (whether by counterclaim, set off or
otherwise) and defenses (including, without limitation, the defense of
fraud), whether acquired by subrogation, assignment or otherwise, to the
extent that such rights and defenses may be available to Financial Security
to avoid payment of its obligations under this Policy in accordance with the
express provisions of this Policy.
7. NOTICES. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security
as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Managing Director - Transaction Oversight
Re: Centex Home Equity Loan Trust 2000-D
Policy No.: 51017-N
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. PRIORITIES. In the event any term or provision of the face of
this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. EXCLUSIONS FROM INSURANCE GUARANTY FUNDS. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article
76 of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to
Article 14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance
Code.
10. SURRENDER OF POLICY. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term Of This
Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Robert P. Cochran
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Authorized Officer
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Policy No.: 51017-N Date of Issuance: December 14, 2000
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Re: Centex Home Equity Loan Trust 2000-D, Centex Home Equity Loan
Asset-Backed Certificates, Series 2000-D, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7
The undersigned, a duly authorized officer of Bank One, National
Association (the "Trustee"), hereby certifies to Financial Security Assurance
Inc. ("Financial Security"), with reference to Financial Guaranty Insurance
Policy No. 51017-N dated December 14, 2000 (the "Policy") issued by Financial
Security in respect of the Centex Home Equity Loan Trust 2000-D, Centex Home
Equity Loan Asset-Backed Certificates, Series 2000-D, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7 (the
"Certificates"), that:
(i) The Trustee is the Trustee for the Holders under the
Pooling and Servicing Agreement for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Certificate Account and available for distribution to the
Holders pursuant to the Pooling and Servicing Agreement on [insert
applicable Distribution Date] (the "Distribution Date") will be
$___________ (the "Shortfall") less than the Current Interest with
respect to the Distribution Date ($____________); the sum of the
Collateralization Deficits with respect to Group I and Group II is
__________[; the Distribution Date is the Final Scheduled Distribution
Date for the Class __ Certificates and the Shortfall in available
principal to reduce the Certificate Principal Balance of such Class[es]
to zero is $_________ (the "Final Principal Amount")].
(iii) The Trustee is making a claim under the Policy for the
sum of (a) the Shortfall and (b) the Collateralization Deficit [and (c)
the Final Principal Amount] with respect to the Distribution Date, to be
applied to distributions of principal or interest or both with respect to
the Certificates.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and apply the
same directly to the payment of Guaranteed Distributions on the
Certificates when due; (b) not apply such funds for any other purpose;
(c) not commingle such funds with other funds held by the Trustee; and
(d) maintain an accurate record of such payments with respect to each
Certificate and the corresponding claim on the Policy and proceeds
thereof and, if the Certificate is required to be surrendered or
presented
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Policy No.: 51017-N Date of Issuance: December 14, 2000
for such payment, shall stamp on each such Certificate the legend
"$[insert applicable amount] paid by Financial Security and the
balance hereof has been canceled and reissued" and then shall deliver
such Certificate to Financial Security.
(v) The Trustee, on behalf of the Holders, hereby assigns
to Financial Security the rights of the Holders with respect to the
Certificates to the extent of any payments under the Policy, including,
without limitation, any amounts due to the Holders in respect of
securities law violations arising from the offer and sale of the
Certificates. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The Trustee shall take such action
and deliver such instruments as may be reasonably requested or required
by Financial Security to effectuate the purpose or provisions of this
clause (v).
(vi) The Trustee, on its behalf and on behalf of the Holders,
hereby appoints Financial Security as agent and attorney-in-fact for the
Trustee and each such Holder in any legal proceeding with respect to the
Certificates. The Trustee hereby agrees that Financial Security may at
any time during the continuation of any proceeding by or against any
debtor with respect to which a Preference Claim (as defined below) or
other claim with respect to the Certificates is being asserted under the
United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency
Proceeding") direct all matters relating to such Insolvency Proceeding,
including without limitation, (A) all matters relating to any claim in
connection with an Insolvency Proceeding seeking the avoidance as a
preferential transfer of any payment made with respect to the
Certificates (a "Preference Claim"), (B) the direction of any appeal of
any order relating to any Preference Claim at the expense of Financial
Security but subject to reimbursement as provided in the Insurance
Agreement and (C) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition, the Trustee hereby agrees
that Financial Security shall be subrogated to, and the Trustee on its
behalf and on behalf of each Holder, hereby delegates and assigns, to the
fullest extent permitted by law, the rights of the Trustee and each
Holder in the conduct of any Insolvency Proceeding, including, without
limitation, all rights of any party to an adversary proceeding or action
with respect to any court order issued in connection with any such
Insolvency Proceeding.
(vii) Payments should be made by wire transfer directed to
[SPECIFY POLICY PAYMENTS ACCOUNT OR CERTIFICATE ACCOUNT].
Unless the context otherwise requires, capitalized terms used in
this Notice of Claim and Certificate and not defined herein shall have
the meanings provided in the Policy.
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Policy No.: 51017-N Date of Issuance: December 14, 2000
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the ____ day of _______, _________.
BANK ONE, NATIONAL ASSOCIATION, as
Trustee
By:
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Title:
-----------------------------------
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For Financial Security or Fiscal Agent Use Only
Wire transfer sent on ____________ by __________________________________________
Confirmation Number ____________________________________________________________
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FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 51017-N
Certificates: $400,000,000 (Approximate) Original Date of Issuance: 12/14/2000
Principal Amount Centex Home Equity
Trust 2000-D, Centex Home Equity
Loan Asset-Backed Certificates,
Series 2000-D, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-7
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
the Trustee for the benefit of each Holder, subject only to the terms of this
Policy (which includes each endorsement hereto), the full and complete
payment of Guaranteed Distributions with respect to the Certificates of the
Trust referred to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be
made following receipt by Financial Security of notice as described in
Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto,
the following terms shall have the meanings specified for all purposes of
this Policy. "Holder" means the registered owner of any Certificate as
indicated on the registration books maintained by or on behalf of the Trustee
for such purpose or, if the Certificate is in bearer form, the holder of the
Certificate. "Trustee", "Guaranteed Distributions" and "Term of this Policy"
shall have the meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in
respect of this Policy are nonrefundable for any reason whatsoever. This
Policy may not be canceled or revoked during the Term of this Policy. An
acceleration payment shall not be due under this Policy unless such
acceleration is at the sole option of Financial Security. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE
76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Robert P. Cochran
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AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-1000
Form 101NY (5/89)
