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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
September 29, 1998
(date of earliest event reported)
PNC MORTGAGE SECURITIES CORP.
as Depositor and Master Servicer under a
Pooling and Servicing Agreement
dated as of September 1, 1998
providing for the issuance of
$460,206,255.66
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-9
Delaware 333-50053 T/B/D
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
Incorporation) Number)
75 NORTH FAIRWAY DRIVE
VERNON HILLS, ILLINOIS 60061
(Address of principal executive offices)
Registrant's telephone number, including area code:
(847) 549-6500
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Item 1. Changes in Control of Registrant. Not applicable.
Item 2. Acquisition or Disposition of Assets. Not applicable.
Item 3. Bankruptcy or Receivership. Not applicable.
Item 4. Changes in Registrant's Certifying Accountant. Not applicable.
Item 5. Other Events. Not applicable.
Item 6. Resignation of Registrant's Directors. Not applicable.
Item 7. Financial Statements and Exhibits.
The following exhibit is furnished herewith:
7.1 Pooling and Servicing Agreement between PNC Mortgage Securities
Corp., Depositor and Master Servicer, and State Street Bank and
Trust Company, Trustee, dated as of September 1, 1998.
Item 8. Change in Fiscal Year. Not applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S. Not applicable.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 29, 1998
PNC MORTGAGE SECURITIES
CORP.
(Registrant)
By: /s/ Thomas G. Lehmann
--------------------------
Thomas G. Lehmann
Vice President
(Authorized Officer)
3
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as ................................ 'D'
The Greek letter Delta shall be expressed as ........................... [D]
The Greek lower case letter alpha shall be expressed as ................ [a]
The Greek lower case letter gamma shall be expressed as ................ [g]
The Greek lower case letter delta shall be expressed as ................ [d]
The less than or equal to sign shall be expressed as ................... <-
The greater than or equal to sign shall be expressed as ................ >-
Any subscript symbol shall be preceded by .............................. [s]
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EXECUTION COPY
PNC MORTGAGE SECURITIES CORP.,
as Depositor and Master Servicer
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
POOLING AND SERVICING AGREEMENT
$460,206,255.66
PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates
Series 1998-9
Cut-Off Date: September 1, 1998
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ARTICLE I .......................................................................................................4
Section 1.01. Definitions..........................................................................4
Aggregate Certificate Principal Balance..........................................................................4
Appraised Value..................................................................................................5
Assignment of Proprietary Lease..................................................................................5
Authenticating Agent.............................................................................................5
Authorized Denomination..........................................................................................5
Bankruptcy Loss..................................................................................................5
Bankruptcy and Extraordinary Hazard Expense Reserve Fund.........................................................5
Beneficial Holder................................................................................................6
Book-Entry Certificates..........................................................................................6
Business Day.....................................................................................................6
Buydown Agreement................................................................................................6
Buydown Fund.....................................................................................................6
Buydown Fund Account.............................................................................................6
Buydown Loan.....................................................................................................6
Certificate......................................................................................................6
Certificate Account..............................................................................................6
Certificateholder or Holder......................................................................................7
Certificate Group................................................................................................7
Certificate Principal Balance....................................................................................7
Certificate Register and Certificate Registrar...................................................................7
Class............................................................................................................7
Class A Certificates.............................................................................................8
Class AM Certificates............................................................................................8
Class I-A-1 Certificates.........................................................................................8
Class I-A-2 Certificates.........................................................................................8
Class I-A-2 Rounding Account.....................................................................................8
Class I-A-3 Adjusted Percentage..................................................................................8
Class I-A-3 Certificates.........................................................................................8
Class I-A-3 Liquidation Amount...................................................................................8
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Class I-A-3 Lockout Priority Amount..............................................................................8
Class I-A-3 Percentage...........................................................................................9
Class I-A-3 Prepayment Percentage................................................................................9
Class I-A-4 Certificates.........................................................................................9
Class I-A-5 Certificates.........................................................................................9
Class I-A-6 Certificates.........................................................................................9
Class I-A-7 Certificates.........................................................................................9
Class I-A-7 Rounding Account.....................................................................................9
Class I-A-8 Certificates.........................................................................................9
Class I-A-8 Fraction.............................................................................................9
Class I-A-8 Principal Distribution Amount........................................................................9
Class I-AM Certificates.........................................................................................10
Class I-AM Liquidation Amount...................................................................................10
Class I-AM Percentage...........................................................................................10
Class I-AM Prepayment Percentage................................................................................10
Class I-AM Principal Distribution Amount........................................................................10
Class I-P Certificates..........................................................................................11
Class I-P Fraction..............................................................................................11
Class I-P-L Regular Interest....................................................................................11
Class I-P Mortgage Loan.........................................................................................11
Class I-X Certificates..........................................................................................11
Class I-X Notional Amount.......................................................................................11
Class I-X-L Regular Interest....................................................................................11
Class II-A-1 Certificates.......................................................................................11
Class II-A-1-L Regular Interest.................................................................................12
Class II-A-2 Certificates.......................................................................................12
Class II-A-2-L Regular Interest.................................................................................12
Class II-AM Certificates........................................................................................12
Class II-AM Liquidation Amount..................................................................................12
Class II-AM Percentage..........................................................................................12
Class II-AM Prepayment Percentage...............................................................................12
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Class II-AM Principal Distribution Amount.......................................................................12
Class II-AM-L Regular Interest..................................................................................12
Class II-P Certificates.........................................................................................13
Class II-P Fraction.............................................................................................13
Class II-P Mortgage Loan........................................................................................13
Class II-P-L Regular Interest...................................................................................13
Class II-X Certificates.........................................................................................13
Class II-X Notional Amount......................................................................................13
Class II-X-L Regular Interest...................................................................................13
Class III-A-1 Certificates......................................................................................13
Class III-A-1-L Regular Interest................................................................................13
Class III-A-2 Certificates......................................................................................13
Class III-A-2 Notional Amount...................................................................................13
Class III-A-3 Certificates......................................................................................13
Class III-A-3-L Regular Interest................................................................................13
Class III-A-4 Certificates......................................................................................14
Class III-A-4-L Adjusted Percentage.............................................................................14
Class III-A-4-L Liquidation Amount..............................................................................14
Class III-A-4-L Lockout Priority Amount.........................................................................14
Class III-A-4-L Percentage......................................................................................14
Class III-A-4-L Prepayment Percentage...........................................................................14
Class III-A-4-L Regular Interest................................................................................14
Class III-A-5 Certificates......................................................................................14
Class III-A-5-L Regular Interest................................................................................14
Class III-AM Certificates.......................................................................................14
Class III-AM Liquidation Amount.................................................................................14
Class III-AM Percentage.........................................................................................15
Class III-AM Prepayment Percentage..............................................................................15
Class III-AM Principal Distribution Amount......................................................................15
Class III-AM-L Regular Interest.................................................................................15
Class III-X Certificates........................................................................................15
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Class III-X Notional Amount.....................................................................................15
Class III-X-L Regular Interest..................................................................................15
Class AM Certificates...........................................................................................15
Class Notional Amount...........................................................................................15
Class P Certificates............................................................................................15
Class P Fraction................................................................................................15
Class P Mortgage Loan...........................................................................................16
Class P-L Regular Interests.....................................................................................16
Class Principal Balance.........................................................................................16
Class R-1 Certificates..........................................................................................16
Class R-2 Certificates..........................................................................................16
Class X Certificates............................................................................................16
Class X-L Regular Interests.....................................................................................16
Class Y Principal Reduction Amounts.............................................................................16
Class Y Regular Interests.......................................................................................24
Class Y-1 Principal Distribution Amount.........................................................................24
Class Y-1 Regular Interest......................................................................................24
Class Y-2 Principal Distribution Amount.........................................................................24
Class Y-2 Regular Interest......................................................................................25
Class Y-3 Principal Distribution Amount.........................................................................25
Class Y-3 Regular Interest......................................................................................25
Class Y-4 Principal Distribution Amount.........................................................................25
Class Y-4 Regular Interest......................................................................................25
Class Z Principal Reduction Amounts.............................................................................25
Class Z Regular Interests.......................................................................................25
Class Z-1 Principal Distribution Amount.........................................................................25
Class Z-1 Regular Interests.....................................................................................25
Class Z-2 Principal Distribution Amount.........................................................................26
Class Z-2 Regular Interests.....................................................................................26
Class Z-3 Principal Distribution Amount.........................................................................26
Class Z-3 Regular Interests.....................................................................................26
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Class Z-4 Principal Distribution Amount.........................................................................26
Class Z-4 Regular Interests.....................................................................................26
Clearing Agency.................................................................................................26
Closing Date....................................................................................................26
Code............................................................................................................26
Company.........................................................................................................26
Compensating Interest...........................................................................................26
Cooperative.....................................................................................................26
Cooperative Apartment...........................................................................................27
Cooperative Lease...............................................................................................27
Cooperative Loans...............................................................................................27
Cooperative Stock...............................................................................................27
Cooperative Stock Certificate...................................................................................27
Corporate Trust Office..........................................................................................27
Corresponding Class.............................................................................................27
Curtailment.....................................................................................................28
Curtailment Shortfall...........................................................................................28
Custodial Account for P&I.......................................................................................28
Custodial Account for Reserves..................................................................................28
Custodial Agreement.............................................................................................28
Custodian.......................................................................................................29
Cut-Off Date....................................................................................................29
Deceased Holder.................................................................................................29
Definitive Certificates.........................................................................................29
Depositary Agreement............................................................................................29
Destroyed Mortgage Note.........................................................................................29
Determination Date..............................................................................................29
Disqualified Organization.......................................................................................29
Distribution Date...............................................................................................29
DLJ.............................................................................................................29
DTC.............................................................................................................29
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DTC Participant.................................................................................................29
Due Date........................................................................................................29
Eligible Institution............................................................................................29
Eligible Investments............................................................................................30
ERISA...........................................................................................................31
Event of Default................................................................................................31
Excess Amount...................................................................................................31
Excess Liquidation Proceeds.....................................................................................31
Expense Account.................................................................................................31
Extraordinary Hazard Loss.......................................................................................32
FDIC............................................................................................................32
FHA.............................................................................................................32
FHLB............................................................................................................32
FHLMC...........................................................................................................32
Fitch...........................................................................................................32
FNMA............................................................................................................32
Fraud Loss......................................................................................................32
Fraud Waiver....................................................................................................32
Group I Certificates............................................................................................32
Group I Credit Support Depletion Date...........................................................................32
Group I Loans...................................................................................................32
Group I Premium Rate Mortgage Loans.............................................................................33
Group I Senior Certificates.....................................................................................33
Group I Senior Liquidation Amount...............................................................................33
Group I Senior Percentage.......................................................................................33
Group I Senior Prepayment Percentage............................................................................33
Group I Senior Principal Distribution Amount....................................................................35
Group I-A Certificates..........................................................................................35
Group I-L Regular Interests.....................................................................................35
Group II Certificates...........................................................................................35
Group II Credit Support Depletion Date..........................................................................35
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Group II Loans..................................................................................................35
Group II Premium Rate Mortgage Loans............................................................................35
Group II Senior Certificates....................................................................................35
Group II Senior Liquidation Amount..............................................................................35
Group II Senior Percentage......................................................................................36
Group II Senior Prepayment Percentage...........................................................................36
Group II Senior Principal Distribution Amount...................................................................38
Group II-A Certificates.........................................................................................38
Group II-A-L Regular Interests..................................................................................38
Group II-L Regular Interests....................................................................................38
Group II-L Senior Regular Interests.............................................................................38
Group III Certificates..........................................................................................38
Group III Credit Support Depletion Date.........................................................................38
Group III Loans.................................................................................................38
Group III Premium Rate Mortgage Loans...........................................................................38
Group III Senior Certificates...................................................................................38
Group III Senior Liquidation Amount.............................................................................39
Group III Senior Percentage.....................................................................................39
Group III Senior Prepayment Percentage..........................................................................39
Group III Senior Principal Distribution Amount..................................................................41
Group III-A Certificates........................................................................................41
Group III-A-L Regular Interests.................................................................................41
Group III-L Regular Interests...................................................................................41
Group III-L Senior Regular Interests............................................................................41
Indirect DTC Participants.......................................................................................41
Insurance Proceeds..............................................................................................41
Interest Distribution Amount....................................................................................41
Investment Account..............................................................................................41
Investment Depository...........................................................................................42
Lender..........................................................................................................42
Living Holder...................................................................................................42
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Liquidated Mortgage Loan........................................................................................42
Liquidation Principal...........................................................................................42
Liquidation Proceeds............................................................................................42
Loan Group......................................................................................................42
Loan Group I....................................................................................................42
Loan Group II...................................................................................................42
Loan Group III..................................................................................................42
Loan-to-Value Ratio.............................................................................................42
Master Servicer.................................................................................................42
Master Servicing Fee............................................................................................42
Monthly P&I Advance.............................................................................................43
Monthly Payment.................................................................................................43
Mortgage........................................................................................................43
Mortgaged Property..............................................................................................43
Mortgage File...................................................................................................43
Mortgage Interest Rate..........................................................................................45
Mortgage Loan Schedule..........................................................................................45
Mortgage Loans..................................................................................................46
Mortgage Note...................................................................................................46
Mortgage Pool...................................................................................................46
Mortgage Pool Insurance Policy..................................................................................46
Mortgage Pool Insurer...........................................................................................46
Mortgagor.......................................................................................................46
Ninety-Seven Percent Loan-to-Value Program Endorsement..........................................................46
Nonrecoverable Advance..........................................................................................46
Non-U.S. Person.................................................................................................46
OTS.............................................................................................................46
Officer's Certificate...........................................................................................47
Opinion of Counsel..............................................................................................47
Original Value..................................................................................................47
Ownership Interest .............................................................................................47
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Pass-Through Entity.............................................................................................47
Pass-Through Rate...............................................................................................47
Paying Agent....................................................................................................47
Payoff..........................................................................................................47
Payoff Earnings.................................................................................................47
Payoff Interest.................................................................................................48
Payoff Period...................................................................................................48
Percentage Interest.............................................................................................48
Permitted Transferee............................................................................................49
Person..........................................................................................................49
Prepaid Monthly Payment.........................................................................................49
Premium.........................................................................................................49
Premium Payment Amount..........................................................................................49
Premium Payment Rate............................................................................................50
Primary Insurance Policy........................................................................................50
Principal Balance...............................................................................................50
Principal Payment...............................................................................................50
Principal Payment Amount........................................................................................50
Principal Prepayment............................................................................................51
Principal Prepayment Amount.....................................................................................51
Prior Period....................................................................................................51
Pro Rata Allocation.............................................................................................51
Purchase Obligation.............................................................................................52
Purchase Price..................................................................................................52
Qualified Insurer...............................................................................................52
Random Lot......................................................................................................52
Rating Agency...................................................................................................52
Ratings.........................................................................................................52
Realized Loss...................................................................................................52
Record Date.....................................................................................................56
Regular Interests...............................................................................................56
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REMIC...........................................................................................................57
REMIC Provisions................................................................................................57
REMIC I.........................................................................................................57
REMIC I Available Distribution Amount...........................................................................57
REMIC I Distribution Amount.....................................................................................58
REMIC I Regular Interest........................................................................................63
REMIC I Trust Fund..............................................................................................63
REMIC II........................................................................................................63
REMIC II Available Distribution Amount..........................................................................63
REMIC II Distribution Amount....................................................................................64
REMIC II Trust Fund.............................................................................................68
Remittance Rate.................................................................................................68
Residual Certificates...........................................................................................68
Residual Distribution Amount....................................................................................68
Responsible Officer.............................................................................................68
Rounding Account................................................................................................69
Rounding Amount.................................................................................................69
S&P.............................................................................................................69
Securities Act..................................................................................................69
Security Agreement .............................................................................................69
Selling and Servicing Contract..................................................................................69
Senior Certificates.............................................................................................69
Servicer........................................................................................................69
Servicing Fee...................................................................................................69
Servicing Officer...............................................................................................69
Special Hazard Insurance Policy.................................................................................70
Special Hazard Insurer..........................................................................................70
Special Hazard Loss.............................................................................................70
Special Insurance Proceeds......................................................................................70
Special Retail Certificates.....................................................................................70
Standard Insurance Proceeds.....................................................................................70
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Step Down Percentage............................................................................................71
Stripped Interest Rate..........................................................................................71
Subgroup........................................................................................................71
Subgroup I-1....................................................................................................71
Subgroup I-1 Class I-AM Component Balance.......................................................................71
Subgroup I-1 Class I-AM Percentage..............................................................................71
Subgroup I-1 Initial Senior Component Balance...................................................................71
Subgroup I-1 Loans..............................................................................................71
Subgroup I-1 Senior Component Balance...........................................................................71
Subgroup I-1 Senior Liquidation Amount..........................................................................72
Subgroup I-1 Senior Percentage..................................................................................72
Subgroup I-1 Senior Prepayment Percentage.......................................................................72
Subgroup I-1 Senior Principal Distribution Amount...............................................................74
Subgroup I-2....................................................................................................74
Subgroup I-2 Class I-AM Component Balance.......................................................................74
Subgroup I-2 Class I-AM Percentage..............................................................................74
Subgroup I-2 Initial Senior Component Balance...................................................................74
Subgroup I-2 Loans..............................................................................................75
Subgroup I-2 Senior Component Balance...........................................................................75
Subgroup I-2 Senior Liquidation Amount..........................................................................75
Subgroup I-2 Senior Percentage..................................................................................75
Subgroup I-2 Senior Prepayment Percentage.......................................................................75
Subgroup I-2 Senior Principal Distribution Amount...............................................................77
Subgroup I-3....................................................................................................77
Subgroup I-3 Class I-AM Component Balance.......................................................................77
Subgroup I-3 Class I-AM Percentage..............................................................................77
Subgroup I-3 Initial Senior Component Balance...................................................................77
Subgroup I-3 Loans..............................................................................................77
Subgroup I-3 Senior Component Balance...........................................................................77
Subgroup I-3 Senior Liquidation Amount..........................................................................78
Subgroup I-3 Senior Percentage..................................................................................78
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Subgroup I-3 Senior Prepayment Percentage.......................................................................78
Subgroup I-3 Senior Principal Distribution Amount...............................................................80
Subgroup I-4....................................................................................................80
Subgroup I-4 Class I-AM Component Balance.......................................................................80
Subgroup I-4 Class I-AM Percentage..............................................................................80
Subgroup I-4 Initial Senior Component Balance...................................................................80
Subgroup I-4 Loans..............................................................................................80
Subgroup I-4 Senior Component Balance...........................................................................80
Subgroup I-4 Senior Liquidation Amount..........................................................................81
Subgroup I-4 Senior Percentage..................................................................................81
Subgroup I-4 Senior Prepayment Percentage.......................................................................81
Subgroup I-4 Senior Principal Distribution Amount...............................................................83
Substitute Mortgage Loan........................................................................................83
Tax Matters Person..............................................................................................83
Termination Date................................................................................................83
Termination Payment.............................................................................................83
Transfer........................................................................................................83
Transferee......................................................................................................83
Transferee Affidavit and Agreement..............................................................................84
Travelers.......................................................................................................84
Trust...........................................................................................................84
Trust Fund......................................................................................................84
Trustee.........................................................................................................84
Uncollected Interest............................................................................................84
Uncompensated Interest Shortfall................................................................................84
Underwriting Standards..........................................................................................85
Uninsured Cause.................................................................................................85
U.S. Person.....................................................................................................85
VA..............................................................................................................85
Withdrawal Date.................................................................................................85
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ARTICLE II Conveyance of the Trust Funds; REMIC Election and Designations; Original Issuance
of Certificates...........................................................................85
Section 2.01. Conveyance of the Trust Fund; REMIC Election and Designations.......................85
Section 2.02. Acceptance by Trustee...............................................................90
Section 2.03. Representations and Warranties of the Company Concerning the Mortgage Loans.........92
Section 2.04. Acknowledgment of Transfer of Trust Fund; Authentication of the Class R-1
Certificates..................................................................................96
Section 2.05. Conveyance of REMIC II; REMIC Election and Designations.............................97
Section 2.06. Acceptance by Trustee; Authentication of Certificates..............................100
ARTICLE III Administration and Servicing of Mortgage Loans...........................................100
Section 3.01. The Company to Act as Master Servicer..............................................100
Section 3.02. Custodial Accounts.................................................................102
Section 3.03. The Investment Account; Eligible Investments.......................................103
Section 3.04. The Certificate Account............................................................103
Section 3.05. Permitted Withdrawals from the Certificate Account, the Investment Account
and Custodial Accounts for P&I and of Buydown Funds from the Buydown Fund Accounts...........104
Section 3.06. Maintenance of Primary Insurance Policies; Collections Thereunder..................106
Section 3.07. Maintenance of Hazard Insurance....................................................106
Section 3.08. Enforcement of Due-on-Sale Clauses; Assumption Agreements..........................106
Section 3.09. Realization Upon Defaulted Mortgage Loans..........................................107
Section 3.10. Trustee to Cooperate; Release of Mortgage Files....................................109
Section 3.11. Compensation to the Master Servicer and the Servicers..............................110
Section 3.12. Reports to the Trustee; Certificate Account Statement..............................110
Section 3.13. Annual Statement as to Compliance..................................................110
Section 3.14. Access to Certain Documentation and Information Regarding the Mortgage Loans.......111
Section 3.15. Annual Independent Public Accountants' Servicing Report............................111
Section 3.16. Mortgage Pool Insurance Policy.....................................................111
Section 3.18. Bankruptcy and Extraordinary Hazard Expense Reserve Fund...........................112
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Section 3.20. Assumption or Termination of Selling and Servicing Contracts by Trustee........... 114
Section 3.21. Maintenance of the Class I-A-2 Rounding Account and the Class I-A-7 Rounding
Account; Collections Thereunder..............................................................115
ARTICLE IV Payments to Certificateholders; Payment of Expenses......................................116
Section 4.01. Distributions to Holders of REMIC I Regular Interests and Class R-1
Certificateholders...........................................................................116
Section 4.02. Advances by the Master Servicer; Distribution Reports to the Trustee...............116
Section 4.03. Nonrecoverable Advances............................................................118
Section 4.04. Distributions to Certificateholders (other than Class R-1 Certificateholders)......118
Section 4.05. Statements to Certificateholders...................................................119
Section 4.06. Principal Distributions on the Special Retail Certificates.........................120
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ARTICLE V The Certificates.........................................................................124
Section 5.01. The Certificates...................................................................124
Section 5.02. Certificates Issuable in Classes; Distributions of Principal and Interest;
Authorized Denominations.....................................................................128
Section 5.03. Registration of Transfer and Exchange of Certificates..............................129
Section 5.04. Mutilated, Destroyed, Lost or Stolen Certificates..................................129
Section 5.05. Persons Deemed Owners..............................................................130
Section 5.06. Temporary Certificates.............................................................130
Section 5.07. Book-Entry for Book-Entry Certificates.............................................130
Section 5.08. Notices to Clearing Agency.........................................................131
Section 5.09. Definitive Certificates............................................................131
Section 5.10. Office for Transfer of Certificates................................................132
ARTICLE VI The Company and the Master Servicer......................................................132
Section 6.01. Liability of the Company and the Master Servicer...................................132
Section 6.02. Merger or Consolidation of the Company, or the Master Servicer.....................132
Section 6.03. Limitation on Liability of the Company, the Master Servicer and
Others........................................................................................132
Section 6.04. The Company and the Master Servicer not to Resign..................................133
ARTICLE VII Default..................................................................................133
Section 7.01. Events of Default..................................................................133
Section 7.02. Trustee to Act; Appointment of Successor...........................................136
Section 7.03. Notification to Certificateholders.................................................137
ARTICLE VIII Concerning the Trustee...................................................................137
Section 8.01. Duties of Trustee..................................................................137
Section 8.02. Certain Matters Affecting the Trustee..............................................138
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans..............................139
Section 8.04. Trustee May Own Certificates.......................................................139
Section 8.05. The Master Servicer to Pay Trustee's Fees and Expenses.............................139
Section 8.06. Eligibility Requirements for Trustee...............................................140
Section 8.07. Resignation and Removal of Trustee.................................................140
Section 8.08. Successor Trustee..................................................................141
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Section 8.09. Merger or Consolidation of Trustee.................................................141
Section 8.10. Appointment of Co-Trustee or Separate Trustee......................................141
Section 8.11. Authenticating Agents..............................................................142
Section 8.12. Paying Agents......................................................................143
ARTICLE IX Termination..............................................................................144
Section 9.01. Termination Upon Repurchase by the Company or Liquidation of All Mortgage Loans....144
Section 9.02. Additional Termination Requirements................................................145
Section 9.03. Trusts Irrevocable.................................................................146
ARTICLE X Miscellaneous Provisions.................................................................146
Section 10.01. Amendment..........................................................................146
Section 10.02. Recordation of Agreement...........................................................147
Section 10.03. Limitation on Rights of Certificateholders.........................................147
Section 10.04. Access to List of Certificateholders...............................................148
Section 10.05. Governing Law......................................................................149
Section 10.06. Notices............................................................................149
Section 10.07. Severability of Provisions.........................................................149
Section 10.08. Counterpart Signatures.............................................................149
Section 10.09. Benefits of Agreement..............................................................150
Section 10.10. Notices and Copies to Rating Agencies..............................................150
Exhibit A Form of Certificates (other than Residual Certificates)
Exhibit B Form of Class R-2 Certificates
Exhibit C Form of Class R-1 Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E Selling And Servicing Contract
Exhibit F [Reserved]
Exhibit G [Reserved]
Exhibit H Form Of Additional Matter Incorporated Into The Certificates (other than the Class R-1
Certificates)
Exhibit I Transferor Certificate
Exhibit J Transferee Affidavit And Agreement
Exhibit K [Reserved]
Exhibit L [Reserved]
Exhibit M Form of Trustee's Certification Pursuant to Section 2.02
Exhibit N Officer's Certificate With Respect to ERISA Matters
Exhibit O Form of Mortgage Pool Insurance Policy
-xvi-
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<PAGE>
This Pooling and Servicing Agreement, dated and effective as of
September 1, 1998 (this "Agreement"), is executed by and between PNC Mortgage
Securities Corp., as Depositor and Master Servicer (the "Company") and State
Street Bank and Trust Company, as Trustee (the "Trustee"). Capitalized terms
used in this Agreement and not otherwise defined have the meanings ascribed to
such terms in Article I hereof.
PRELIMINARY STATEMENT
The Company at the Closing Date is the owner of the Mortgage Loans and
the other property being conveyed by it to the Trustee for inclusion in the
Trust Fund. On the Closing Date, the Company will acquire the REMIC I Regular
Interests and the Class R-1 Certificates from the Trust Fund as consideration
for its transfer to the Trust Fund of the Mortgage Loans and certain other
assets and will be the owner of the REMIC I Regular Interests and the Class R-1
Certificates. Thereafter on the Closing Date, the Company will acquire the
Certificates (other than the Class R-1 Certificates) from REMIC II as
consideration for its transfer to REMIC II of the REMIC I Regular Interests and
will be the owner of the Certificates. The Company has duly authorized the
execution and delivery of this Agreement to provide for (i) the conveyance to
the Trustee of the Mortgage Loans and the issuance to the Company of the REMIC I
Regular Interests and the Class R-1 Certificates representing in the aggregate
the entire beneficial ownership of REMIC I and (ii) the conveyance to the
Trustee of the REMIC I Regular Interests and the issuance to the Company of the
Certificates (other than the Class R-1 Certificates) representing in the
aggregate the entire beneficial interest of REMIC II. All covenants and
agreements made by the Company and the Trustee herein with respect to the
Mortgage Loans and the other property constituting the assets of REMIC I are for
the benefit of the Holders from time to time of the REMIC I Regular Interests
and the Class R-1 Certificates. All covenants and agreements made by the Company
and the Trustee herein with respect to the REMIC I Regular Interests are for the
benefit of the Holders from time to time of the Certificates (other than the
Class R-1 Certificates). The Company is entering into this Agreement, and the
Trustee is accepting the two separate trusts created hereby, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
The Certificates issued hereunder have been offered for sale pursuant
to a Prospectus, dated June 24, 1998, and a Prospectus Supplement, dated
September 28, 1998, of the Company (together, the "Prospectus"). The Trust Fund
and the REMIC II Trust Fund created hereunder are collectively intended to be
the "Trust" described in the Prospectus and the Certificates are intended to be
the "Certificates" described therein. The following tables set forth the
designation, type of interest, initial Remittance Rate, initial Class Principal
Balance, initial Class Notional Amount and Final Maturity Date for the REMIC I
Regular Interests and the Class R-1 Certificates and each Class of Certificates
comprising the interests in REMIC II created hereunder:
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<PAGE>
REMIC I Trust Fund
</TABLE>
<TABLE>
<CAPTION>
Class Designation for
each REMIC I Regular Initial Class
Interest and the Class R-1 Type of Remittance Principal Final Maturity
Certificates Interest Rate (1) Balance Date*
- ---------------------- ------------ -------------------- -------------------- ------------------------
<S> <C> <C> <C> <C>
Class Y-1 Regular 6.375% $ 20,027.29 October 2028
Class Y-2 Regular 6.500% 21,131.16 October 2028
Class Y-3 Regular 6.625% 22,033.64 October 2028
Class Y-4 Regular 6.750% 32,718.08 October 2028
Class Z-1 Regular 6.375% 40,034,492.72 October 2028
Class Z-2 Regular 6.500% 42,241,185.84 October 2028
Class Z-3 Regular 6.625% 44,072,691.36 October 2028
Class Z-4 Regular 6.750% 65,444,181.92 October 2028
Class II-A-1-L Regular 6.500% 136,753,092.00 September 2013
Class II-A-2-L Regular (2) 2,299,720.00 September 2013
Class III-A-1-L Regular 6.750% 59,250,866.00 November 2028
Class III-A-3-L Regular 6.750% 20,218,866.00 November 2028
Class III-A-4-L Regular 6.750% 11,500,000.00 November 2028
Class III-A-5-L Regular 6.750% 25,500,000.00 November 2028
Class I-X-L Regular 6.750% (3) -------------- October 2028
Class II-X-L Regular 6.500% (3) -------------- September 2013
Class III-X-L Regular 6.750% (3) -------------- November 2028
Class I-P-L Regular (2) 35,790.00 October 2028
Class II-P-L Regular (2) 774,341.00 September 2013
Class II-AM-L Regular 6.3925% 3,218,528.19 September 2013
Class III-AM-L Regular 6.750% 8,766,539.41 November 2028
Excess Amount(4) Regular -------------- -------------- November 2028
Class R-1'D' Residual 6.750% 50.00 November 2028
</TABLE>
* The Distribution Date in the month following the month the latest
maturing Mortgage Loan in the related Loan Group matures.
'D' The Class R-1 Certificates are entitled to receive Excess Liquidation
Proceeds and the applicable Residual Distribution Amount.
(1) Interest distributed to the REMIC I Regular Interests (other than the
Class II-A-2-L and Class P-L Regular Interests, which shall not be
entitled to receive any distributions of interest) and the Class R-1
Certificates on each Distribution Date will have accrued at the
applicable per annum Remittance Rate on the Class Principal Balance or
Class Notional Amount outstanding following the immediately prior
Distribution Date (or with respect to the first Distribution Date, as
of the Closing Date).
(2) The Class II-A-2-L and Class P-L Regular Interests will not be entitled
to receive any distributions of interest.
(3) Each Class of the Class X-L Regular Interests will accrue interest on
the related Class Notional Amount. The Class X-L Regular Interests will
not be entitled to receive any distributions of principal.
(4) The Excess Amount will accrue interest at a per annum rate of 0.1075%
on the outstanding Principal Balance of each Mortgage Loan in the Trust
Fund.
As provided herein, with respect to REMIC I, the Company will cause an
election to be made on behalf of REMIC I to be treated for federal income tax
purposes as a REMIC. The REMIC I Regular Interests will be designated regular
interests in REMIC I and the Class R-1 Certificates will be designated the sole
class of residual interest in REMIC I, for purposes of the REMIC Provisions.
2
<PAGE>
<PAGE>
REMIC II
<TABLE>
<CAPTION>
Class Designation for
each of the
Certificates (other
than the Class R-1 Initial Class
Certificates) Type of Remittance Principal Final Maturity
Interest Rate (1) Balance Date*
- ---------------------- ------------ -------------------- -------------------- ------------------------
<S> <C> <C> <C> <C>
Class I-A-1 Regular 6.750% $ 95,449,243.00 October 2028
Class I-A-2 Regular 6.750% 5,760,610.00 October 2028
Class I-A-3 Regular 6.750% 18,111,600.00 October 2028
Class I-A-4 Regular 6.750% 47,500,000.00 October 2028
Class I-A-5 Regular 6.750% 7,030,678.00 October 2028
Class I-A-6 Regular 7.000% 2,500,000.00 October 2028
Class I-A-7 Regular 6.500% 2,500,000.00 October 2028
Class I-A-8 Regular (2) 4,399,686.00 October 2028
Class II-A-1 Regular 6.500% 136,753,092.00 September 2013
Class II-A-2 Regular (2) 2,299,720.00 September 2013
Class III-A-1 Regular 6.350% 59,250,866.00 November 2028
Class III-A-2 Regular 6.750% (3) ------------------ November 2028
Class III-A-3 Regular 6.750% 20,218,866.00 November 2028
Class III-A-4 Regular 6.750% 11,500,000.00 November 2028
Class III-A-5 Regular 6.750% 25,500,000.00 November 2028
Class I-X Regular 6.750% (4) ------------------ October 2028
Class II-X Regular 6.500% (4) ------------------ September 2013
Class III-X Regular 6.750% (4) ------------------ November 2028
Class I-P Regular (2) 35,790.00 October 2028
Class II-P Regular (2) 774,341.00 September 2013
Class I-AM Regular Variable (5) 8,636,596.06 October 2028
Class II-AM Regular 6.3925% 3,218,528.19 September 2013
Class III-AM Regular 6.750% 8,766,539.41 November 2028
Class R-2'D' Residual 6.750% 50.00 November 2028
</TABLE>
* The Distribution Date in the month following the month the latest
maturing Mortgage Loan in the related Loan Group matures.
'D' The Class R-2 Certificates are entitled to receive the applicable
Residual Distribution Amount.
(1) Interest distributed to the Certificates (other than the Class I-A-8,
Class II-A-2 and Class P Certificates, which will not be entitled to
receive any distributions of interest) on each Distribution Date will
have accrued at the applicable per annum Remittance Rate on the Class
Principal Balance or Class Notional Amount outstanding following the
immediately prior Distribution Date (or with respect to the first
Distribution Date, as of the Closing Date).
(2) The Class I-A-8, Class II-A-2 and Class P Certificates will not be
entitled to receive any distributions of interest.
(3) The Class III-A-2 Certificates will accrue interest on the Class
III-A-2 Notional Amount. The Class III-A-2 Certificates will not be
entitled to receive any distributions of principal.
(4) Each Class of Class X Certificates will accrue interest on the related
Class Notional Amount. The Class X Certificates will not be entitled to
receive any distributions of principal.
(5) The Remittance Rate on the Class I-AM Certificates will equal, on any
Distribution Date, the quotient expressed as a percentage of (a) the
sum of (i) the product of (x) 6.375% and (y) the Subgroup I-1 Class
I-AM Component Balance immediately prior to such Distribution Date,
(ii) the product of (x) 6.500% and (y) the Subgroup I-2 Class I-AM
Component Balance immediately prior to such Distribution Date, (iii)
the product of (x) 6.625% and (y) the Subgroup I-3 Class I-AM Component
Balance immediately prior to such Distribution Date and (iv) the
product of (x) 6.750% and (y) the Subgroup I-4 Class I-AM Component
Balance immediately prior to such Distribution Date divided by (b) the
sum of the Subgroup I-1 Class I-AM Component Balance, the Subgroup I-2
Class I-AM Component Balance, the Subgroup I-3 Class I-AM Component
Balance and the Subgroup I-4 Class I-AM Component Balance immediately
prior to such Distribution Date.
3
<PAGE>
<PAGE>
As provided herein, with respect to REMIC II, the Company will cause an
election to be made on behalf of REMIC II to be treated for federal income tax
purposes as a REMIC. The Certificates (other than the Class R-1 and Class R-2
Certificates) will be designated regular interests in REMIC II and the Class R-2
Certificates will be designated the sole class of residual interest in REMIC II,
for purposes of the REMIC Provisions. As of the Cut-Off Date, the Mortgage Loans
have an aggregate Principal Balance of $460,206,255.66 and the Certificates have
an Aggregate Certificate Principal Balance of $460,206,255.66.
W I T N E S S E T H :
WHEREAS, the Company is a corporation duly organized and existing under
and by virtue of the laws of the State of Delaware and has full corporate power
and authority to enter into this Agreement and to undertake the obligations
undertaken by it herein;
WHEREAS, the Company is the owner of the Mortgage Loans identified in
the Mortgage Loan Schedule hereto having unpaid Principal Balances on the
Cut-Off Date as stated therein;
WHEREAS, the Company has been duly authorized to (i) create a trust
(the "Trust Fund") to hold the Mortgage Loans and certain other property and
(ii) sell undivided beneficial ownership interests in REMIC I and in order to do
so is selling the REMIC I Regular Interests issued hereunder as hereinafter
provided;
WHEREAS, the Company has been duly authorized to (i) create a trust
("REMIC II") to hold the REMIC I Regular Interests and (ii) sell undivided
beneficial ownership interests in REMIC II and in order to do so is selling the
Certificates issued hereunder as hereinafter provided; and
WHEREAS, the Trustee is a Massachusetts trust company duly organized
and existing under the laws of The Commonwealth of Massachusetts and has full
power and authority to enter into this Agreement.
NOW, THEREFORE, in order to declare the terms and conditions upon which
the Certificates are, and are to be, authenticated, issued and delivered, and in
consideration of the premises and of the purchase and acceptance of the
Certificates by the Holders thereof, the Company covenants and agrees with the
Trustee, for the equal and proportionate benefit of the respective Holders from
time to time of the Certificates, as follows:
ARTICLE I
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
4
<PAGE>
<PAGE>
Aggregate Certificate Principal Balance: At any given time, the sum of
the then current Class Principal Balances of the Certificates.
Appraised Value: The amount set forth in an appraisal made by or for
the mortgage originator in connection with its origination of each Mortgage
Loan, or with respect to certain Mortgage Loans originated to refinance mortgage
debt, the appraisal made by or for the mortgage originator in connection with
the origination of such mortgage debt.
Assignment of Proprietary Lease: With respect to a Cooperative Loan,
the assignment or mortgage of the related Cooperative Lease from the Mortgagor
to the originator of the Cooperative Loan.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 8.11.
Authorized Denomination: With respect to the Certificates (other than
the Class I-A-2, Class I-A-5, Class I-A-6, Class I-A-7, Class III-A-2, Class X
and Residual Certificates), an initial Certificate Principal Balance equal to
$25,000 and integral multiples of $1 in excess thereof, except that one
Certificate of each Class of the Class AM Certificates may be issued in a
different amount. With respect to the Class I-A-2, Class I-A-5, Class I-A-6 and
Class I-A-7 Certificates, an initial Certificate Principal Balance equal to
$1,000 and integral multiples of $1 in excess thereof. With respect to the Class
III-A-2 and Class X Certificates, a Class Notional Amount as of the Cut-Off Date
equal to $100,000 and multiples of $1 in excess thereof. With respect to each
Class of the Residual Certificates, one Certificate with a Percentage Interest
equal to 0.01% and one Certificate with a Percentage Interest equal to 99.99%.
Bankruptcy Loss: A loss on a Mortgage Loan arising out of (i) a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a case under the United States Bankruptcy Code, other
than any such reduction that arises out of clause (ii) of this definition of
"Bankruptcy Loss", including, without limitation, any such reduction that
results in a permanent forgiveness of principal, or (ii) with respect to any
Mortgage Loan, a valuation, by a court of competent jurisdiction in a case under
such Bankruptcy Code, of the related Mortgaged Property in an amount less than
the then outstanding Principal Balance of such Mortgage Loan. Notwithstanding
the foregoing, no such occurrence shall be considered a Bankruptcy Loss so long
as the Master Servicer or the related Servicer is pursuing any other remedies
that may be available with respect to the related Mortgage Loan and (i) such
Mortgage Loan is not in default with respect to payments due thereunder or (ii)
scheduled monthly payments of principal and interest are being advanced by the
Master Servicer or the related Servicer without giving effect to any reduction
in the scheduled Monthly Payment referred to in clause (i) of the preceding
sentence.
Bankruptcy and Extraordinary Hazard Expense Reserve Fund: The separate
trust account held by the Trustee in accordance with Section 3.18, which account
shall bear a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Trustee on behalf of the
Certificateholders, or any other account serving a similar function acceptable
to the
5
<PAGE>
<PAGE>
Rating Agencies and the Trustee, and which account provides that the
Trustee may make, or cause to be made, withdrawals therefrom in accordance with
Section 3.18.
Beneficial Holder: A Person holding a beneficial interest in any
Book-Entry Certificate as or through a DTC Participant or an Indirect DTC
Participant or a Person holding a beneficial interest in any Definitive
Certificate.
Book-Entry Certificates: The Class A, Class X and Class P Certificates,
beneficial ownership and transfers of which shall be made through book entries
as described in Section 5.07.
Business Day: Any day other than a Saturday, a Sunday, or a day on
which banking institutions in Chicago, Illinois, Boston, Massachusetts or New
York, New York are authorized or obligated by law or executive order to be
closed.
Buydown Agreement: An agreement between a Person and a Mortgagor
pursuant to which such Person has provided a Buydown Fund.
Buydown Fund: A fund provided by the originator of a Mortgage Loan or
another Person with respect to a Buydown Loan which provides an amount
sufficient to subsidize regularly scheduled principal and interest payments due
on such Buydown Loan for a period. Buydown Funds may be (i) funded at the par
values of future payment subsidies, or (ii) funded in an amount less than the
par values of future payment subsidies, and determined by discounting such par
values in accordance with interest accruing on such amounts, in which event they
will be deposited in an account bearing interest. Buydown Funds may be held in a
separate Buydown Fund Account or may be held in a Custodial Account for P&I or a
Custodial Account for Reserves and monitored by a Servicer.
Buydown Fund Account: A separate account or accounts created and
maintained pursuant to Section 3.02 (a) with the corporate trust department of
the Trustee or another financial institution approved by the Master Servicer,
(b) within FDIC insured accounts (or other accounts with comparable insurance
coverage acceptable to the Rating Agencies) created, maintained and monitored by
a Servicer or (c) in a separate non-trust account without FDIC or other
insurance in an Eligible Institution. Such account or accounts may be
non-interest bearing or may bear interest. In the event that a Buydown Fund
Account is established pursuant to clause (b) of the preceding sentence, amounts
held in such Buydown Fund Account shall not exceed the level of deposit
insurance coverage on such account; accordingly, more than one Buydown Fund
Account may be established.
Buydown Loan: A Mortgage Loan for which the Mortgage Interest Rate has
been subsidized through a Buydown Fund provided at the time of origination of
such Mortgage Loan.
Certificate: Any one of the Group I, Group II, Group III or Residual
Certificates, issued pursuant to this Agreement, executed by the Trustee and
authenticated by or on behalf of the Trustee hereunder in substantially one of
the forms set forth in Exhibit A, B and C hereto. The additional matter
appearing in Exhibit H shall be deemed incorporated into Exhibits A and B as
though set forth at the end of such Exhibits.
6
<PAGE>
<PAGE>
Certificate Account: The separate trust account created and maintained
with the Trustee, the Investment Depository or any other bank or trust company
acceptable to the Rating Agencies which is incorporated under the laws of the
United States or any state thereof pursuant to Section 3.04, which account shall
bear a designation clearly indicating that the funds deposited therein are held
in trust for the benefit of the Trustee on behalf of the Certificateholders or
any other account serving a similar function acceptable to the Rating Agencies.
Funds in the Certificate Account in respect of the Mortgage Loans in each of the
Loan Groups and Subgroups and amounts withdrawn from the Certificate Account
attributable to each of such Loan Groups and Subgroups shall be accounted for
separately. Funds in the Certificate Account may be invested in Eligible
Investments and reinvestment earnings thereon shall be paid to the Master
Servicer as additional servicing compensation. Funds deposited in the
Certificate Account (exclusive of the Master Servicing Fee) shall be held in
trust for the Certificateholders and for the uses and purposes set forth in
Section 3.04, Section 3.05, Section 4.01 and Section 4.04.
Certificateholder or Holder: With respect to the Certificates, the
person in whose name a Certificate is registered in the Certificate Register,
except that, solely for the purposes of giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Company, the Master
Servicer or any affiliate thereof shall be deemed not to be outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite percentage of Percentage Interests necessary
to effect any such consent has been obtained; provided, that the Trustee may
conclusively rely upon an Officer's Certificate to determine whether any Person
is an affiliate of the Company or the Master Servicer. With respect to the REMIC
I Regular Interests, the owner of the REMIC I Regular Interests, which as of the
Closing Date shall be the Trustee.
Certificate Group: The Group I, Group II, and Group III Certificates,
as applicable.
Certificate Principal Balance: For each Certificate of any Class, the
portion of the related Class Principal Balance, if any, represented by such
Certificate.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed, respectively, pursuant to Section 5.03.
Class: All REMIC I Regular Interests or the Class R-1 Certificates
having the same priority and rights to payments on the Mortgage Loans from the
REMIC I Available Distribution Amount and all Certificates (other than the Class
R-1 Certificates) having the same priority and rights to payments on the REMIC I
Regular Interests from the REMIC II Available Distribution Amount, as
applicable, which Certificates and REMIC I Regular Interests, as applicable,
shall be designated as a separate Class, and which, in the case of the
Certificates, shall be set forth in the applicable forms of Certificates
attached hereto as Exhibits A, B and C. Each Class of REMIC I Regular Interests
and the Class R-1 Certificates shall be entitled to receive the amounts
allocated to such Class pursuant to the definition of "REMIC I Distribution
Amount" only to the extent of the REMIC I Available Distribution Amount for such
Distribution Date remaining after distributions in accordance with prior clauses
of the definition of "REMIC I Distribution Amount" and each Class of
Certificates (other than the Class R-1 Certificates) shall be entitled to
receive the amounts allocated to such Class pursuant to the definition of "REMIC
II Distribution
7
<PAGE>
<PAGE>
Amount" only to the extent of the REMIC II Available Distribution Amount for
such Distribution Date remaining after distributions in accordance with prior
clauses of the definition of "REMIC II Distribution Amount."
Class A Certificates: The Group I-A, Group II-A and Group III-A
Certificates.
Class AM Certificates: The Class I-AM, Class II-AM and Class III-AM
Certificates.
Class I-A-1 Certificates: The Certificates designated as "Class I-A-1"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-1.
Class I-A-2 Certificates: The Certificates designated as "Class I-A-2"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-2.
Class I-A-2 Rounding Account: The separate trust account established by
DLJ by deposit as of the Closing Date of $999.99 and maintained by the Master
Servicer with the Trustee, the Investment Depository or any other bank or trust
company acceptable to the Rating Agencies which is incorporated under the laws
of the United States or any state thereof pursuant to Section 3.21, which
account shall bear a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Trustee on behalf of the Class
I-A-2 Certificateholders or any other account serving a similar function
acceptable to the Rating Agencies, and which account provides that the Trustee
may make, or cause to be made, withdrawals as provided in Section 3.21 hereof,
to the extent of the amount then remaining in the Class I-A-2 Rounding Account.
Class I-A-3 Adjusted Percentage: For any Distribution Date occurring
prior to the Distribution Date in October 2003, 0%, and for the October 2003
Distribution Date and any Distribution Date thereafter, the Class I-A-3
Percentage.
Class I-A-3 Certificates: The Certificates designated as "Class I-A-3"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-3.
Class I-A-3 Liquidation Amount: The aggregate, for each Group I Loan
which became a Liquidated Mortgage Loan during the calendar month preceding the
month of the Distribution Date, of the lesser of (i) the Class I-A-3 Percentage
of the Principal Balance of such Mortgage Loan (exclusive of the Class I-P
Fraction thereof, with respect to any Class I-P Mortgage Loan) and (ii) the
Class I-A-3 Percentage on any Distribution Date occurring prior to the fifth
anniversary of the first Distribution Date, and the Class I-A-3 Prepayment
Percentage on the fifth anniversary of the first Distribution Date and each
Distribution Date thereafter, in each case, of the sum of (x) the Liquidation
Principal with respect to such Mortgage Loan and (y) the portion attributable to
such Mortgage Loan of the excess, if any, of the principal portion of Special
Insurance Proceeds received with respect to the Group I Loans which became
Liquidated Mortgage Loans during the Prior Period (exclusive of the portion
thereof attributable to principal distributions to the Class I-P Certificates
pursuant to clauses (I)(a)(i) and (II)(a)(i) of the definition of "REMIC II
Distribution Amount") over the amount specified in clause (II) of the definition
of "Class I-AM Principal Distribution Amount".
8
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<PAGE>
Class I-A-3 Lockout Priority Amount: For any Distribution Date, the sum
of (i) the Class I-A-3 Adjusted Percentage of the Principal Payment Amount for
Loan Group I (exclusive of the portion thereof attributable to principal
distributions to the Class I-P Certificates pursuant to clause (I)(a)(i) of the
definition of "REMIC II Distribution Amount"), (ii) the Class I-A-3 Prepayment
Percentage of the Principal Prepayment Amount for Loan Group I (exclusive of the
portion thereof attributable to principal distributions to the Class I-P
Certificates pursuant to clause (I)(a)(i) of the definition of "REMIC II
Distribution Amount") and (iii) the Class I-A-3 Liquidation Amount.
Class I-A-3 Percentage: For any Distribution Date, the Class I-A-3
Principal Balance divided by the aggregate Class Principal Balance of the Group
I Certificates (less the Class I-P Principal Balance) and the Residual
Certificates, in each case immediately prior to such Distribution Date.
Class I-A-3 Prepayment Percentage: For any Distribution Date, the
product of the Class I-A-3 Percentage and the Step Down Percentage.
Class I-A-4 Certificates: The Certificates designated as "Class I-A-4"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-4.
Class I-A-5 Certificates: The Certificates designated as "Class I-A-5"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-5.
Class I-A-6 Certificates: The Certificates designated as "Class I-A-6"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-6.
Class I-A-7 Certificates: The Certificates designated as "Class I-A-7"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-7.
Class I-A-7 Rounding Account: The separate trust account established by
DLJ by deposit as of the Closing Date of $999.99 and maintained by the Master
Servicer with the Trustee, the Investment Depository or any other bank or trust
company acceptable to the Rating Agencies which is incorporated under the laws
of the United States or any state thereof pursuant to Section 3.21, which
account shall bear a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Trustee on behalf of the Class
I-A-7 Certificateholders or any other account serving a similar function
acceptable to the Rating Agencies, and which account provides that the Trustee
may make, or cause to be made, withdrawals as provided in Section 3.21 hereof,
to the extent of the amount then remaining in the Class I-A-7 Rounding Account.
Class I-A-8 Certificates: The Certificates designated as "Class I-A-8"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-8.
Class I-A-8 Fraction: For Subgroup I-1 and for each Subgroup I-1 Loan,
0.375/6.750; for Subgroup I-2 and for each Subgroup I-2 Loan, 0.250/6.750; for
Subgroup I-3 and for each Subgroup I-3 Loan, 0.125/6.750; and for Subgroup I-4,
zero.
9
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Class I-A-8 Principal Distribution Amount: For any Distribution Date,
the sum of: (i) the Subgroup I-1 Senior Principal Distribution Amount multiplied
by 0.375/6.750, (ii) the Subgroup I-2 Senior Principal Distribution Amount
multiplied by 0.250/6.750 and (iii) the Subgroup I-3 Senior Principal
Distribution Amount multiplied by 0.125/6.750.
Notwithstanding the foregoing, for any Distribution Date on which there
has been an increase (a "Component Increase") in the Senior Component Balance
for one or more Subgroups (each, an "Overcollateralized Subgroup") in respect of
Realized Losses in another Subgroup (an "Undercollateralized Subgroup") pursuant
to the fifth paragraph of the definition of "Realized Loss", the Class I-A-8
Principal Distribution Amount calculated in accordance with the first paragraph
of this definition shall be adjusted as follows: for each Overcollateralized
Subgroup, (A) if the Class I-A-8 Fraction for such Overcollateralized Subgroup
is greater than the Class I-A-8 Fraction for the Undercollateralized Subgroup,
then the Class I-A-8 Principal Distribution Amount shall be reduced by the
product of (x) the excess of the Class I-A-8 Fraction for such
Overcollateralized Subgroup over the Class I-A-8 Fraction for the
Undercollateralized Subgroup and (y) the amount of the applicable Component
Increase, and (B) if the Class I-A-8 Fraction for such Overcollateralized
Subgroup is less than the Class I-A-8 Fraction for the Undercollateralized
Subgroup, then the Class I-A-8 Principal Distribution Amount shall be increased
by the product of (x) the excess of the Class I-A-8 Fraction for the
Undercollateralized Subgroup over the Class I-A-8 Fraction for such
Overcollateralized Subgroup and (y) the amount of the applicable Component
Increase (the net reduction or net increase in the Class I-A-8 Principal
Distribution Amount resulting from application of clauses (A) and (B) to all
Overcollateralized Subgroups referred to herein as the "Net Reduction" or "Net
Increase", respectively); provided, however, that (i) if the Net Reduction is
greater than the Class I-A-8 Principal Distribution Amount calculated in
accordance with the first paragraph of this definition, then the Class I-A-8
Principal Distribution Amount shall equal zero, and the remainder of the Net
Reduction shall be carried out on the next Distribution Date or Distribution
Dates, as necessary, and (ii) if the Net Increase is greater than the Group I
Senior Principal Distribution Amount (less the Class I-A-8 Principal
Distribution Amount calculated in accordance with the first paragraph of this
definition), then the Class I-A-8 Principal Distribution Amount shall equal the
Group I Senior Principal Distribution Amount, and the remainder of the Net
Increase shall be carried out on the next Distribution Date or Distribution
Dates, as necessary.
Class I-AM Certificates: The Certificates designated as "Class I-AM" on
the face thereof in substantially the form attached hereto as Exhibit A-I-AM.
Class I-AM Liquidation Amount: The excess, if any, of the aggregate of
Liquidation Principal for all Group I Loans which became Liquidated Mortgage
Loans during the Prior Period, over the Group I Senior Liquidation Amount for
such Distribution Date.
Class I-AM Percentage: With respect to any Distribution Date, the
excess of 100% over the Group I Senior Percentage for such date.
Class I-AM Prepayment Percentage: On any Distribution Date, the excess
of 100% over the Group I Senior Prepayment Percentage for such Distribution
Date; provided, however, that if
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the aggregate Class Principal Balance of the Group I-A Certificates has been
reduced to zero, then the Class I-AM Prepayment Percentage shall equal 100%.
Class I-AM Principal Distribution Amount: On any Distribution Date, the
sum of (I) the excess of (A) the sum of (i) the Class I-AM Percentage of the
Principal Payment Amount for Loan Group I (exclusive of the portion thereof
attributable to principal distributions to the Class I-P Certificates pursuant
to clause (I)(a)(i) of the definition of "REMIC II Distribution Amount"), (ii)
the Class I-AM Prepayment Percentage of the Principal Prepayment Amount for Loan
Group I (exclusive of the portion thereof attributable to principal
distributions to the Class I-P Certificates pursuant to clause (I)(a)(i) of the
definition of "REMIC II Distribution Amount") and (iii) the Class I-AM
Liquidation Amount over (B) the amounts required to be distributed to the Class
I-P Certificates pursuant to clauses (I)(a)(v) and (I)(a)(vi) of the definition
of "REMIC II Distribution Amount" on such Distribution Date, as applicable, and
(II) the lesser of (x) the principal portion of Special Insurance Proceeds
received with respect to the Group I Loans which became Liquidated Mortgage
Loans during the Prior Period (exclusive of the portion thereof attributable to
principal distributions to the Class I-P Certificates pursuant to clauses
(I)(a)(i) and (II)(a)(i) of the definition of "REMIC II Distribution Amount")
and (y) the Class I-AM Principal Balance after giving effect to all
distributions of principal (without regard to this clause (II) of this
definition) and allocations of principal losses to such Class on such date.
Class I-P Certificates: The Certificates designated as "Class I-P" on
the face thereof in substantially the form attached hereto as Exhibit A-I-P.
Class I-P Fraction: For each Class I-P Mortgage Loan, a fraction, the
numerator of which is 6.375% less the Pass-Through Rate on such Class I-P
Mortgage Loan and the denominator of which is 6.375%.
Class I-P-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class I-P Mortgage Loan: Any Group I Loan with a Pass-Through Rate of
less than 6.375% per annum.
Class I-X Certificates: The Certificates designated as "Class I-X" on
the face thereof in substantially the form attached hereto as Exhibit A-I-X.
Class I-X Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-Off Date, of the Group I Premium Rate Mortgage
Loans and (y) a fraction, the numerator of which is the weighted average of the
Stripped Interest Rates for the Group I Premium Rate Mortgage Loans as of such
Due Date and the denominator of which is 6.750%.
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Class I-X-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class II-A-1 Certificates: The Certificates designated as "Class
II-A-1" on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-1.
Class II-A-1-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class II-A-2 Certificates: The Certificates designated as "Class
II-A-2" on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-2.
Class II-A-2-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class II-AM Certificates: The Certificates designated as "Class II-AM"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-AM.
Class II-AM Liquidation Amount: The excess, if any, of the aggregate of
Liquidation Principal for all Group II Loans which became Liquidated Mortgage
Loans during the Prior Period, over the Group II Senior Liquidation Amount for
such Distribution Date.
Class II-AM Percentage: With respect to any Distribution Date, the
excess of 100% over the Group II Senior Percentage for such date.
Class II-AM Prepayment Percentage: On any Distribution Date, the excess
of 100% over the Group II Senior Prepayment Percentage for such Distribution
Date; provided, however, that if the aggregate Class Principal Balance of the
Group II-A Certificates has been reduced to zero, then the Class II-AM
Prepayment Percentage shall equal 100%.
Class II-AM Principal Distribution Amount: On any Distribution Date,
the sum of (I) the excess of (A) the sum of (i) the Class II-AM Percentage of
the Principal Payment Amount for Loan Group II (exclusive of the portion thereof
attributable to principal distributions to the Class II-P-L Regular Interests
pursuant to clause (I)(b)(i) of the definition of "REMIC I Distribution
Amount"), (ii) the Class II-AM Prepayment Percentage of the Principal Prepayment
Amount for Loan Group II (exclusive of the portion thereof attributable to
principal distributions to the Class II-P-L Regular Interests pursuant to clause
(I)(b)(i) of the definition of "REMIC I Distribution Amount") and (iii) the
Class II-AM Liquidation Amount over (B) the amounts required to be distributed
to the Class II-P-L Regular Interests pursuant to clauses (I)(b)(v) and
(I)(b)(vi) of the definition of "REMIC I Distribution Amount" on such
Distribution Date, as applicable, and (II) the lesser of (x) the principal
portion of Special Insurance Proceeds received with respect to the Group II
Loans which became Liquidated Mortgage Loans during the Prior Period (exclusive
of the portion thereof attributable to principal distributions to the Class
II-P-L Regular Interests pursuant to clauses (I)(b)(i) and (II)(b)(i) of the
definition of "REMIC I Distribution Amount")
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and (y) the Class II-AM-L Principal Balance after giving effect to all
distributions of principal (without regard to this clause (II) of this
definition) and allocations of principal losses to such Class on such date.
Class II-AM-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class II-P Certificates: The Certificates designated as "Class II-P" on
the face thereof in substantially the form attached hereto as Exhibit A-II-P.
Class II-P Fraction: For each Class II-P Mortgage Loan, a fraction, the
numerator of which is 6.3925% less the Pass-Through Rate on such Class II-P
Mortgage Loan and the denominator of which is 6.3925%.
Class II-P Mortgage Loan: Any Group II Loan with a Pass-Through Rate of
less than 6.3925% per annum.
Class II-P-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class II-X Certificates: The Certificates designated as "Class II-X" on
the face thereof in substantially the form attached hereto as Exhibit A-II-X.
Class II-X Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-Off Date, of the Group II Premium Rate Mortgage
Loans and (y) a fraction, the numerator of which is the weighted average of the
Stripped Interest Rates for the Group II Premium Rate Mortgage Loans as of such
Due Date and the denominator of which is 6.500%.
Class II-X-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class III-A-1 Certificates: The Certificates designated as "Class
III-A-1" on the face thereof in substantially the form attached hereto as
Exhibit A-III-A-1.
Class III-A-1-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class III-A-2 Certificates: The Certificates designated as "Class
III-A-2" on the face thereof in substantially the form attached hereto as
Exhibit A-III-A-2.
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Class III-A-2 Notional Amount: For any Distribution Date, the Class
III-A-1 Principal Balance immediately prior to such Distribution Date multiplied
by 40/675.
Class III-A-3 Certificates: The Certificates designated as "Class
III-A-3" on the face thereof in substantially the form attached hereto as
Exhibit A-III-A-3.
Class III-A-3-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class III-A-4 Certificates: The Certificates designated as "Class
III-A-4" on the face thereof in substantially the form attached hereto as
Exhibit A-III-A-4.
Class III-A-4-L Adjusted Percentage: For any Distribution Date
occurring prior to the Distribution Date in October 2003, 0%, and for the
October 2003 Distribution Date and any Distribution Date thereafter, the Class
III-A-4-L Percentage.
Class III-A-4-L Liquidation Amount: The aggregate, for each Group III
Loan which became a Liquidated Mortgage Loan during the calendar month preceding
the month of the Distribution Date, of the lesser of (i) the Class III-A-4-L
Percentage of the Principal Balance of such Mortgage Loan and (ii) the Class
III-A-4-L Percentage on any Distribution Date occurring prior to the fifth
anniversary of the first Distribution Date, and the Class III-A-4-L Prepayment
Percentage on the fifth anniversary of the first Distribution Date and each
Distribution Date thereafter, in each case, of the sum of (x) the Liquidation
Principal with respect to such Mortgage Loan and (y) the portion attributable to
such Mortgage Loan of the amount specified in clause (d) of the definition of
"Group III Senior Principal Distribution Amount".
Class III-A-4-L Lockout Priority Amount: For any Distribution Date, the
sum of (i) the Class III-A-4-L Adjusted Percentage of the Principal Payment
Amount for Loan Group III, (ii) the Class III-A-4-L Prepayment Percentage of the
Principal Prepayment Amount for Loan Group III and (iii) the Class III-A-4-L
Liquidation Amount.
Class III-A-4-L Percentage: For any Distribution Date, the Class
III-A-4-L Principal Balance divided by the aggregate Class Principal Balance of
the Group III-L Regular Interests, in each case immediately prior to such
Distribution Date.
Class III-A-4-L Prepayment Percentage: For any Distribution Date, the
product of the Class III-A-4-L Percentage and the Step Down Percentage.
Class III-A-4-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class III-A-5 Certificates: The Certificates designated as "Class
III-A-5" on the face thereof in substantially the form attached hereto as
Exhibit A-III-A-5.
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Class III-A-5-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class III-AM Certificates: The Certificates designated as "Class
III-AM" on the face thereof in substantially the form attached hereto as Exhibit
A-III-AM.
Class III-AM Liquidation Amount: The excess, if any, of the aggregate
of Liquidation Principal for all Group III Loans which became Liquidated
Mortgage Loans during the Prior Period, over the Group III Senior Liquidation
Amount for such Distribution Date.
Class III-AM Percentage: With respect to any Distribution Date, the
excess of 100% over the Group III Senior Percentage for such date.
Class III-AM Prepayment Percentage: On any Distribution Date, the
excess of 100% over the Group III Senior Prepayment Percentage for such
Distribution Date; provided, however, that if the aggregate Class Principal
Balance of the Group III-A Certificates has been reduced to zero, then the Class
III-AM Prepayment Percentage shall equal 100%.
Class III-AM Principal Distribution Amount: On any Distribution Date,
the sum of (i) the Class III-AM Percentage of the Principal Payment Amount for
Loan Group III, (ii) the Class III-AM Prepayment Percentage of the Principal
Prepayment Amount for Loan Group III, (iii) the Class III-AM Liquidation Amount
and (iv) the lesser of (x) the principal portion of Special Insurance Proceeds
received with respect to the Group III Loans which became Liquidated Mortgage
Loans during the Prior Period and (y) the Class III-AM-L Principal Balance after
giving effect to all distributions of principal (without regard to this clause
(iv) of this definition) and allocations of principal losses to such Class on
such date.
Class III-AM-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class III-X Certificates: The Certificates designated as "Class III-X"
on the face thereof in substantially the form attached hereto as Exhibit
A-III-X.
Class III-X Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-Off Date, of the Group III Premium Rate
Mortgage Loans and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Group III Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 6.750%.
Class III-X-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
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Class AM Certificates: The Class I-AM, Class II-AM and Class III-AM
Certificates.
Class Notional Amount: With respect to any of the Class III-A-2 and
Class X Certificates and the Class X-L Regular Interests, the related notional
amount for any such Class, as specified herein (i.e. the "Class Notional Amount"
for the Class I-X Certificates and the Class I-X-L Regular Interests is the
Class I-X Notional Amount, and the "Class Notional Amount" for the Class III-A-2
Certificates is the Class III-A-2 Notional Amount).
Class P Certificates: The Class I-P and Class II-P Certificates.
Class P Fraction: The Class I-P or Class II-P Fraction, as applicable.
Class P Mortgage Loan: Any of the Class I-P or Class II-P Mortgage
Loans.
Class P-L Regular Interests: The Class I-P-L and Class II-P-L Regular
Interests.
Class Principal Balance: For any Class of Certificates and for any
Class of Regular Interests, the applicable initial Class Principal Balance
therefor set forth in the Preliminary Statement hereto, corresponding to the
rights of such Class in payments of principal due to be passed through to
Certificateholders or the Holders of the Regular Interests from principal
payments on the Mortgage Loans or the REMIC I Regular Interests, as applicable,
as reduced from time to time by (x) distributions of principal to
Certificateholders or the Holders of the Regular Interests of such Class and (y)
the portion of Realized Losses allocated to the Class Principal Balance of such
Class pursuant to the definition of "Realized Loss" with respect to a given
Distribution Date. For any Distribution Date, the reduction of the Class
Principal Balance of any Class of Certificates and Regular Interests pursuant to
the definition of "Realized Loss" shall be deemed effective prior to the
determination and distribution of principal on such Class pursuant to the
definition of "REMIC I Distribution Amount" and "REMIC II Distribution Amount".
Notwithstanding the foregoing, any amounts distributed in respect of losses
pursuant to paragraph (I)(b)(vi) of the definition of "REMIC I Distribution
Amount" or paragraph (I)(a)(vi) of the definition of "REMIC II Distribution
Amount" shall not cause a further reduction in the Class Principal Balances of
the Class II-P-L Regular Interests or the Class P Certificates. The Class
Principal Balance for the Class I-A-1 Certificates shall be referred to as the
"Class I-A-1 Principal Balance", the Class Principal Balance for the Class Y-1
Regular Interests shall be referred to as the "Class Y-1 Principal Balance" and
so on. The Class Principal Balances for the Class III-A-2, Class I-X, Class II-X
and Class III-X Certificates and the Class I-X-L, Class II-X-L and Class III-X-L
Regular Interests shall each be zero.
Class R-1 Certificates: The Certificates designated as "Class R-1" on
the face thereof in substantially the form attached hereto as Exhibit B, which
have been designated as the single class of "residual interest" in REMIC I
pursuant to Section 2.01.
Class R-2 Certificates: The Certificates designated as "Class R-2" on
the face thereof in substantially the form attached hereto as Exhibit C, which
have been designated as the single class of "residual interest" in REMIC II
pursuant to Section 2.05.
Class X Certificates: The Class I-X, Class II-X and Class III-X
Certificates.
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Class X-L Regular Interests: The Class I-X-L, Class II-X-L and Class
III-X-L Regular Interests.
Class Y Principal Reduction Amounts: For any Distribution Date, the amounts
by which the Class Principal Balances of the Class Y-1, Class Y-2, Class Y-3 and
Class Y-4 Regular Interests, respectively, will be reduced on such Distribution
Date by the allocation of Realized Losses and the distribution of principal,
determined as follows:
For purposes of the succeeding formulas the following symbols shall have
the meanings set forth below:
P[s]IB = the Subordinate Component Balance for Subgroup I-1 after the allocation
of Realized Losses and distributions of principal on such Distribution Date.
P[s]IIB = the Subordinate Component Balance for Subgroup I-2 after the
allocation of Realized Losses and distributions of principal on such
Distribution Date.
P[s]IIIB = the Subordinate Component Balance for Subgroup I-3 after the
allocation of Realized Losses and distributions of principal on such
Distribution Date.
P[s]IVB = the Subordinate Component Balance for Subgroup I-4 after the
allocation of Realized Losses and distributions of principal on such
Distribution Date.
R = the Remittance Rate on the Class I-B-L Regular Interests
= (6.375%P[s]IB + 6.5%P[s]IIB + 6.625%P[s]IIIB + 6.75%P[s]IVB)/(P[s]IB +
P[s]IIB + P[s]IIIB + P[s]IVB)
R[s]1 = the weighted average of the Remittance Rates on the Subgroup I-1-L,
Subgroup I-2-L and Subgroup I-3-L Regular Interests (other than the Class I-P-L,
Class I-X-1-L and Class I-X-2-L Regular Interests)
= (6.375%(P[s]1 - [D]P[s]1) + 6.5%(P[s]2 - [D]P[s]2) + 6.625%(P[s]3 -
[D]P[s]3))/(P[s]1 - [D]P[s]1 + P[s]2 - [D]P[s]2 + P[s]3 - [D]P[s]3)
R[s]2 = the weighted average of the Remittance Rates on the Subgroup I-2-L,
Subgroup I-3-L and Subgroup I-4-L Regular Interests (other than the Class
I-X-1-L, Class I-X-2-L and Class I-P-L Regular Interests)
= (6.5%(P[s]2 - [D]P[s]2) + 6.625%(P[s]3 - [D]P[s]3) + 6.75%(P[s]4 -
[D]P[s]4))/(P[s]2 - [D]P[s]2 + P[s]3 - [D]P[s]3 + P[s]4 - [D]P[s]4)
R[s]3 = the weighted average of the Remittance Rates on the Subgroup I-1-L and
Subgroup I-2-L Regular Interests (other than the Class I-P-L, Class I-X-1-L and
Class I-X-2-L Regular Interests)
= (6.375%(P[s]1 - [D]P[s]1) + 6.5%(P[s]2 - [D]P[s]2))/(P[s]1 - [D]P[s]1 +
P[s]2 - [D]P[s]2)
R[s]4 = the weighted average of the Remittance Rates on the Subgroup I-3-L and
Subgroup I-4-L Regular Interests (other than the Class I-X-1-L, Class I-X-2-L
and Class I-P-L Regular Interests)
= (6.625%(P[s]3 - [D]P[s]3) + 6.75%(P[s]4 - [D]P[s]4))/(P[s]3 - [D]P[s]3 +
P[s]4 - [D]P[s]4)
r[s]1 = the weighted average of the Class Y-1, Class Y-2 and Class Y-3
Remittance Rates
= (6.375% Y[s]1 + 6.5% Y[s]2 + 6.625% Y[s]3)/(Y[s]1 + Y[s]2 + Y[s]3)
r[s]2 = the weighted average of the Class Y-2, Class Y-3 and Class Y-4
Remittance Rates
= (6.5% Y[s]2 + 6.625% Y[s]3 + 6.75% Y[s]4)/(Y[s]2 + Y[s]3 + Y[s]4)
r[s]3 = the weighted average of the Class Y-1 and Class Y-2 Remittance Rates
= (6.375% Y[s]1 + 6.5% Y[s]2)/(Y[s]1 + Y[s]2)
r[s]4 = the weighted average of the Class Y-3 and Class Y-4 Remittance Rates
= (6.625% Y[s]3 + 6.75% Y[s]4)/(Y[s]3 + Y[s]4)
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Y[s]1 = the principal balance of the Class Y-1 Regular Interests after
distributions on the prior Distribution Date.
Y[s]2 = the principal balance of the Class Y-2 Regular Interests after
distributions on the prior Distribution Date.
Y[s]3 = the principal balance of the Class Y-3 Regular Interests after
distributions on the prior Distribution Date.
Y[s]4 = the principal balance of the Class Y-4 Regular Interests after
distributions on the prior Distribution Date.
[D]Y[s]1 = the Class Y-1 Principal Reduction Amount.
[D]Y[s]2 = the Class Y-2 Principal Reduction Amount.
[D]Y[s]3 = the Class Y-3 Principal Reduction Amount.
[D]Y[s]4 = the Class Y-4 Principal Reduction Amount.
P[s]1 = the aggregate principal balance of the Class Y-1 and Class Z-1 Regular
Interests after distributions on the prior Distribution Date.
P[s]2 = the aggregate principal balance of the Class Y-2 and Class Z-2 Regular
Interests after distributions on the prior Distribution Date.
P[s]3 = the aggregate principal balance of the Class Y-3 and Class Z-3 Regular
Interests after distributions on the prior Distribution Date.
P[s]4 = the aggregate principal balance of the Class Y-4 and Class Z-4 Regular
Interests after distributions on the prior Distribution Date.
[D]P[s]1 = the aggregate of the Class Y-1 and Class Z-1 Principal Reduction
Amounts.
[D]P[s]2= the aggregate of the Class Y-2 and Class Z-2 Principal Reduction
Amounts.
[D]P[s]3 = the aggregate of the Class Y-3 and Class Z-3 Principal Reduction
Amounts.
[D]P[s]4 = the aggregate of the Class Y-4 and Class Z-4 Principal Reduction
Amounts.
[a] = .0005
[g][s]1 = (R - R[s]1)/(6.75% - R). If R>-6.625%, [g][s]1 is a non-negative
number unless its denominator is zero, in which event it is undefined.
[g][s]2 = (R - 6.375%)/(R[s]2 - R). If R<6.5%, [g][s]2 is a non-negative number.
[g][s]3 = (R - R[s]3)/(R[s]4 - R). If 6.5%<-R<-6.625%, [g][s]2 is a non-negative
number unless its denominator is zero, in which case it is undefined.
If [g][s]1 is undefined, [D]Y[s]1 = Y[s]1, [D]Y[s]2 = Y[s]2, [D]Y[s]3 = Y[s]3,
and [D]Y[s]4 = (Y[s]4/P[s]4)[D]P[s]4.
If [g][s]2 is zero, [D]Y[s]1 = (Y[s]1/P[s]1)[D]P[s]1, [D]Y[s]2 = Y[s]2, [D]Y[s]3
= Y[s]3 and [D]Y[s]4 = Y[s]4.
If 6.5%<-R<-6.625% and [g][s]3 is undefined, [D]Y[s]1 = Y[s]1, [D]Y[s]2 = Y[s]2,
[D]Y[s]4 = Y[s]4, and [D]Y[s]3 = (Y[s]3/P[s]3)[D]P[s]3.
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If 6.5%<-R<-6.625% and [g][s]3 is zero, [D]Y[s]2 = (Y[s]2/P[s]2)[D]P[s]2,
[D]Y[s]1 = Y[s]1, [D]Y[s]3 = Y[s]3 and [D]Y[s]4 = Y[s]4.
In the remaining situations, [D]Y[s]1, [D]Y[s]2, [D]Y[s]3 and [D]Y[s]4 shall be
defined as follows:
I. If R>-6.625%, make the following additional definitions:
<TABLE>
<S> <C> <C>
[d]Y[s]1= 0, if R[s]1< r[s]1;
(R[s]1- r[s]1)(Y[s]1 + Y[s]2 + Y[s]3)Y[s]1/((R[s]1 - 6.375%)Y[s]1 + (R[s]1 - 6.5%)Y[s]2), if R[s]1>- r[s]1 and
R[s]1>-6.5%; and
(R[s]1- r[s]1)(Y[s]1 + Y[s]2 + Y[s]3)/(R[s]1 - 6.375%), if R[s]1>- r[s]1 and
R[s]1<6.5%;
[d]Y[s]2= 0, if R[s]1< r[s]1 and
R[s]1>-6.5%;
(R[s]1- r[s]1)(Y[s]1 + Y[s]2 + Y[s]3)Y[s]2/((R[s]1 - 6.5%)Y[s]2 + (R[s]1 - 6.625%)Y[s]3), if R[s]1< r[s]1 and
R[s]1<6.5%;
(R[s]1- r[s]1)(Y[s]1 + Y[s]2 + Y[s]3)Y[s]2/((R[s]1 - 6.375%)Y[s]1 + (R[s]1 - 6.5%)Y[s]2), if R[s]1>- r[s]1 and
R[s]1>-6.5%; and
0, if R[s]1>- r[s]1 and
R[s]1<6.5%; and
[d]Y[s]3= (R[s]1- r[s]1)(Y[s]1 + Y[s]2 + Y[s]3)/(R[s]1 - 6.625%), if R[s]1< r[s]1 and
R[s]1>-6.5%;
(R[s]1- r[s]1)(Y[s]1 + Y[s]2 + Y[s]3)Y[s]3/((R[s]1 - 6.5%)Y[s]2 + (R[s]1 - 6.625%)Y[s]3), if R[s]1< r[s]1 and
R[s]1<6.5%; and
0, if R[s]1>- r[s]1.
</TABLE>
[d]Y[s]1, [d]Y[s]2, and [d]Y[s]3 are numbers between Y[s]1 and 0, Y[s]2 and 0,
and Y[s]3 and 0, respectively, such that (6.375%(Y[s]1 - [d]Y[s]1) + 6.5%
(Y[s]2.- [d]Y[s]2) + 6.625%(Y[s]3.- [d]Y[s]3))/(Y[s]1 - [d]Y[s]1 + Y[s]2.-
[d]Y[s]2 + Y[s]3.- [d]Y[s]3) = R[s]1.
Y[s]5 = Y[s]1 - [d]Y[s]1 + Y[s]2.- [d]Y[s]2 + Y[s]3.- [d]Y[s]3
P[s]5 = P[s]1 + P[s]2 + P[s]3.
[D]P[s]5 = [D]P[s]1 + [D]P[s]2 + [D]P[s]3.
[D]Y[s]5 = [D]Y[s]1 - [d]Y[s]1 + [D]Y[s]2.- [d]Y[s]2 + [D]Y[s]3.- [d]Y[s]3
1. If Y[s]4 - [a](P[s]4 - [D]P[s]4)>- 0, Y[s]5- [a](P[s]5 - [D]P[s]5)>- 0, and
[g][s]1(P[s]5 - [D]P[s]5) < (P[s]4 - [D]P[s]4), [D]Y[s]4 = Y[s]4 -
[a][g][s]1(P[s]5 - [D]P[s]5) and [D]Y[s]5 = Y[s]5 - [a](P[s]5 - [D]P[s]5).
2. If Y[s]4 - [a](P[s]4 - [D]P[s]4) >- 0, Y[s]5 - [a](P[s]5 - [D]P[s]5) >- 0,
and [g][s]1(P[s]5 - [D]P[s]5) >- (P[s]4 - [D]P[s]4), [D]Y[s]4 = Y[s]4 -
[a](P[s]4 - [D]P[s]4) and [D]Y[s]5 = Y[s]5 - ([a]/[g][s]1)(P[s]4 -
[D]P[s]4).
3. If Y[s]4 - [a](P[s]4 - [D]P[s]4) < 0, Y[s]5 - [a](P[s]5 - [D]P[s]5) >- 0,
and Y[s]5 - [a](P[s]5 - [D]P[s]5) >- Y[s]5 - (Y[s]4/[g][s]1), [D]Y[s]4 =
Y[s]4 - [a][g][s]1(P[s]5 - [D]P[s]5) and [D]Y[s]5 = Y[s]5 - [a](P[s]5 -
[D]P[s]5).
4. If Y[s]4 - [a](P[s]4 - [D]P[s]4) < 0, Y[s]5 - (Y[s]4/[g][s]1) >- 0, and
Y[s]5 - [a](P[s]5 - [D]P[s]5) <- Y[s]5 - (Y[s]4/[g][s]1), [D]Y[s]4 = 0 and
[D]Y[s]5 = Y[s]5 - (Y[s]4/[g][s]1).
5. If Y[s]5 - [a](P[s]5 - [D]P[s]5) < 0, Y[s]5 - (Y[s]4/[g][s]1) < 0, and
Y[s]4 - [a](P[s]4 - [D]P[s]4) <- Y[s]4 - ([g][s]1Y[s]5), [D]Y[s]4 = Y[s]4 -
([g][s]1Y[s]5) and [D]Y[s]5 = 0.
6. If Y[s]5 - [a](P[s]5 - [D]P[s]5) < 0, Y[s]4 - [a](P[s]4 - [D]P[s]4) >- 0,
and Y[s]4 - [a](P[s]4 - [D]P[s]4) >- Y[s]4 - ([g][s]1Y[s]5), [D]Y[s]4 =
Y[s]4 - [a](P[s]4 - [D]P[s]4) and [D]Y[s]5 = Y[s]5 - ([a]/[g][s]1)(P[s]4 -
[D]P[s]4).
[D]Y[s]1 = [d]Y[s]1 + [(Y[s]1 - [d]Y[s]1)/(Y[s]1 - [d]Y[s]1 + Y[s]2 - [d]Y[s]2 +
Y[s]3 - [d]Y[s]3)][D]Y[s]5
[D]Y[s]2 = [d]Y[s]2 + [(Y[s]2 - [d]Y[s]2)/(Y[s]1 - [d]Y[s]1 + Y[s]2 - [d]Y[s]2 +
Y[s]3 - [d]Y[s]3)][D]Y[s]5
19
<PAGE>
<PAGE>
[D]Y[s]3 = [d]Y[s]3 +[(Y[s]3 - [d]Y[s]3)/(Y[s]1 - [d]Y[s]1 + Y[s]2 -
[d]Y[s]2 + Y[s]3 - [d]Y[s]3)][D]Y[s]5
The purpose of the foregoing definitional provisions together with the related
provisions allocating Realized Losses and defining the Class Y and Class Z
Principal Distribution Amounts is to accomplish the following goals in the
following order of priority:
1. Making the ratio of Y4 to Y5 equal to [g]1 after taking account of
the allocation Realized Losses and the distributions that will be made
through end of the Distribution Date to which such provisions relate
and assuring that the Principal Reduction Amount for each of the Class
Y-1, Class Y-2, Class Y-3, Class Y-4, Class Z-1, Class Z-2, Class Z-3
and Class Z-4 Regular Interests is greater than or equal to zero for
such Distribution Date;
2. Making the Class Y-1 Principal Balance less than or equal to 0.0005 of
the sum of the Class Y-1 and Class Z-1 Principal Balances, the Class
Y-2 Principal Balance less than or equal to 0.0005 of the sum of the
Class Y-2 and Class Z-2 Principal Balances, the Class Y-2 Principal
Balance less than or equal to 0.0005 of the sum of the Class Y-3 and
Class Z-3 Principal Balances and the Class Y-4 Principal Balance less
than or equal to 0.0005 of the sum of the Class Y-4 and Class Z-4
Principal Balances in each case after giving effect to allocations of
Realized Losses and distributions to be made through the end of the
Distribution Date to which such provisions relate; and
3. Making the larger of (a) the fraction whose numerator is Y[s]4 and
whose denominator is the sum of Y[s]4 and Class Z-4 Principal Balance
and (b) the fraction whose numerator is Y[s]5 and whose denominator is
the sum of Y[s]5, the Class Z-1 Principal Balance, the Class Z-2
Principal Balance and the Class Z-3 Principal Balance as large as
possible while remaining less than or equal to 0.0005.
In the event of a failure of the foregoing portion of the definition of Class Y
Principal Reduction Amount to accomplish both of goals 1 and 2 above, the
amounts thereof should be adjusted to so as to accomplish such goals within the
requirement that each Class Y Principal Reduction Amount must be less than or
equal to the sum of (a) the principal portion of Realized Losses to be allocated
on the related Distribution Date for the related Subgroup remaining after the
allocation of such Realized Losses to the related Class P-M Regular Interest (if
any) and (b) the remainder of the portion of the REMIC I Available Distribution
Amount derived from the related Subgroup after reduction thereof by the
distributions to be made on such Distribution Date (i) to the related Class P-M
Regular Interest (if any), (ii) to the related Class X-M Regular Interests and
(iii) in respect of interest on the related Class Y and Class Z Regular
Interests, or, if both of such goals cannot be accomplished within such
requirement, such adjustment as is necessary shall be made to accomplish goal 1
within such requirement. In the event of any conflict among the provisions of
the definition of the Class Y Principal Reduction Amounts, such conflict shall
be resolved on the basis of the goals and their priorities set forth above
within the requirement set forth in the preceding sentence. If the formula
allocation of [D]Y[s]5 among [D]Y[s]1, [D]Y[s]2 and [D]Y[s]3 cannot be achieved
because either [D]Y[s]1 as so defined is greater than [D]P[s]1, [D]Y[s]2 as so
defined is greater than [D]P[s]2 or [D]Y[s]3 as so defined is greater than
[D]P[s]3, such an allocation shall be made as close as possible to the formula
allocation within the requirement that [D]Y[s]1 <[D]P[s]1, [D]Y[s]2 <[D]P[s]2
and [D]Y[s]3 <[D]P[s]3.
II. If R<-6.5%, make the following additional definitions:
<TABLE>
<S> <C> <C>
[d]Y[s]2 = 0, if R[s]2<r[s]2;
(R[s]2- r[s]2)(Y[s]2 + Y[s]3 + Y[s]4)Y[s]2/((R[s]2 - 6.5%)Y[s]2 + (R[s]2 - 6.625%)Y[s]3), if R[s]2>-r[s]2 and
(R[s]2- r[s]2)(Y[s]2 + Y[s]3 + Y[s]4)/(R[s]2 - 6.5%), R2.>-6.625%;
[d]Y[s]3 = 0, if R[s]2<r[s]2 and
R[s]2>-6.625%;
(R[s]2- r[s]2)(Y[s]2 + Y[s]3 + Y[s]4)Y[s]3/((R[s]2 - 6.625%)Y[s]3 + (R[s]2 - 6.75%)Y[s]4), if R[s]2<r[s]2 and
R[s]2<6.625%;
(R[s]2- r[s]2)(Y[s]2 + Y[s]3 + Y[s]4)Y[s]3/((R[s]2 - 6.5%)Y[s]2 + (R[s]2 - 6.625%)Y[s]3), if R[s]2>-r[s]2 and
R[s]2>-6.625%; and
0, if R[s]2>-r[s]2 and
R[s]2<6.625%; and
[d]Y[s]4 = (R[s]2- r[s]2)(Y[s]2 + Y[s]3 + Y[s]4)/(R[s]2 - 6.75%), if R[s]2<r[s]2 and
R[s]2>-6.625%;
(R[s]2- r[s]2)(Y[s]2 + Y[s]3 + Y[s]4)Y[s]4/((R[s]2 - 6.625%)Y[s]3 + (R[s]2 - 6.75%)Y[s]4), if R[s]2<r[s]2 and
R2[s]2<6.625%; and
</TABLE>
20
<PAGE>
<PAGE>
<TABLE>
<S> <C>
0, if R[s]2>-r[s]2.
</TABLE>
[d]Y[s]2, [d]Y[s]3, and [d]Y[s]4 are numbers between Y[s]2 and 0, Y[s]3 and 0,
and Y[s]4 and 0, respectively, such that (6.5%(Y[s]2 - [d[Y[s]2) +
6.625%(Y[s]3.- [d]Y[s]3) + 6.75%(Y[s]4.- [d]Y[s]4))/(Y[s]2 - [d]Y[s]2 +
Y[s]3.- [d]Y[s]3 + Y[s]4.- [d]Y[s]4) = R[s]2.
Y[s]6 = Y[s]2 - [d]Y[s]2 + Y[s]3.- [d]Y[s]3 + Y[s]4.- [d]Y[s]4
P[s]6 = P[s]2 + P[s]3 + P[s]4.
[D]P[s]6 = [D]P[s]2 + [D]P[s]3 + [D]P[s]4.
[D]Y[s]6 = [D]Y[s]2 - [d]Y[s]2 + [D]Y[s]3.- [d]Y[s]3 + [D]Y[s]4.- [d]Y[s]4
1. If Y[s]6 - [a](P[s]6 - [D]P[s]6) >- 0, Y[s]1- [a](P[s]1 - [D]P[s]1) >- 0,
and [g][s]2(P[s]1 - [D]P[s]1) < (P[s]6 - [D]P[s]6), [D]Y[s]6 = Y[s]6 -
[a][g][s]2(P[s]1 - [D]P[s]1) and [D]Y[s]1 = Y[s]1 - [a](P[s]1 - [D]P[s]1).
2. If Y[s]6 - [a](P[s]6 - [D]P6) >- 0, Y[s]1 - [a](P[s]1 - [D]P[s]1) >- 0, and
[g][s]2(P[s]1 - [D]P[s]1) >- (P[s]6 - [D]P[s]6), [D]Y[s]6 = Y[s]6 -
[a](P[s]6 - [D]P[s]6) and [D]Y[s]1 = Y[s]1 - ([a]/[g][s]2)(P[s]6 -
[D]P[s]6).
3. If Y[s]6 - [a](P[s]6 - [D]P[s]6) < 0, Y[s]1 - [a](P[s]1 - [D]P[s]1) >- 0,
and Y[s]1 - [a](P[s]1 - [D]P[s]1) >- Y[s]1 - (Y[s]6/[a]2), [D]Y[s]6 = Y[s]6
- [a][g][s]2(P[s]1 - [d]P[s]1) and [D]Y[s]1 = Y[s]1 - [a](P[s]1 -
[D]P[s]1).
4. If Y[s]6 - [a](P[s]6 - [D]P[s]6) < 0, Y[s]1 - (Y[s]6/[g][s]2) >- 0, and
Y[s]1 - [a](P[s]1 - [D]P[s]1) >- Y[s]1 - (Y[s]6/[g][s]2), [D]Y[s]6 = 0 and
[D]Y[s]1 = Y[s]1 - (Y[s]6/[g][s]2).
5. If Y[s]1 - (P[s]1 - [D]P[s]1) < 0, Y[s]1 - (Y[s]6/[g][s]2) < 0, and Y[s]6 -
[a](P[s]6 - [D]P[s]6) <- Y[s]6 - ([g][s]2Y[s]1), [D]Y[s]6 = Y[s]6 -
([g][s]2Y[s]1) and [D]Y[s]1 = 0.
6. If Y[s]1 - [a](P[s]1 - [D]P[s]1) < 0, Y[s]6 - [a](P[s]6 - [D]P[s]6) >- 0,
and Y[s]6 - [a](P[s]6 - [D]P6) >- Y[s]6 - ([g][s]2Y[s]1), [D]Y[s]6 = Y[s]6
- [a](P[s]6 - [D]P[s]6) and [D]Y[s]1 = Y[s]1 - ([a]/[g][s]2)(P[s]6 -
[D]P[s]6).
[D]Y[s]2 = [d]Y[s]2 + [(Y[s]2 - [d]Y[s]2)/(Y[s]2 - [d]Y[s]2 + Y[s]3 - [d]Y[s]3 +
Y[s]4 - [d]Y[s]4)][D]Y[s]6
[D]Y[s]3 = [d]Y[s]3 + [(Y[s]3 - [d]Y[s]3)/(Y[s]2 - [d]Y[s]2 + Y[s]3 - [d]Y[s]3 +
Y[s]4 - [d]Ys[]4)][D]Y[s]6
[D]Y[s]4 = [d]Y[s]4 + [(Y[s]4 - [d]Y[s]4)/(Y[s]2 - [d]Y[s]2 + Y[s]3 - [d]Y[s]3 +
Y[s]4 - [d]Y[s]4)][D]Y[s]6
The purpose of the foregoing definitional provisions together with the related
provisions allocating Realized Losses and defining the Class Y and Class Z
Principal Distribution Amounts is to accomplish the following goals in the
following order of priority:
1. Making the ratio of Y6 to Y1 equal to [g]2 after taking account of
the allocation Realized Losses and the distributions that will be made
through end of the Distribution Date to which such provisions relate
and assuring that the Principal Reduction Amount for each of the Class
Y-1, Class Y-2, Class Y-3, Class Y-4, Class Z-1, Class Z-2, Class Z-3
and Class Z-4 Regular Interests is greater than or equal to zero for
such Distribution Date;
2. Making the Class Y-1 Principal Balance less than or equal to 0.0005 of
the sum of the Class Y-1 and Class Z-1 Principal Balances, the Class
Y-2 Principal Balance less than or equal to 0.0005 of the sum of the
Class Y-2 and Class Z-2 Principal Balances, the Class Y-2 Principal
Balance less than or equal to 0.0005 of the sum of the Class Y-3 and
Class Z-3 Principal Balances and the Class Y-4 Principal Balance less
than or equal to 0.0005 of the sum of the Class Y-4 and Class Z-4
Principal Balances in each case after giving effect to allocations of
Realized Losses and distributions to be made through the end of the
Distribution Date to which such provisions relate; and
21
<PAGE>
<PAGE>
3. Making the larger of (a) the fraction whose numerator is Y1 and whose
denominator is the sum of Y1 and Class Z-1 Principal Balance and (b)
the fraction whose numerator is Y6 and whose denominator is the sum of
Y6, the Class Z-2 Principal Balance, the Class Z-3 Principal Balance
and the Class Z-4 Principal Balance as large as possible while
remaining less than or equal to 0.0005.
In the event of a failure of the foregoing portion of the definition of
Class Y Principal Reduction Amount to accomplish both of goals 1 and 2
above, the amounts thereof should be adjusted to so as to accomplish
such goals within the requirement that each Class Y Principal Reduction
Amount must be less than or equal to the sum of (a) the principal
portion of Realized Losses to be allocated on the related Distribution
Date for the related Subgroup remaining after the allocation of such
Realized Losses to the related Class P-M Regular Interest (if any) and
(b) the remainder of the portion of the REMIC I Available Distribution
Amount derived from the related Subgroup after reduction thereof by the
distributions to be made on such Distribution Date (i) to the related
Class P-M Regular Interest (if any), (ii) to the related Class X-M
Regular Interests and (iii) in respect of interest on the related Class
Y and Class Z Regular Interests, or, if both of such goals cannot be
accomplished within such requirement, such adjustment as is necessary
shall be made to accomplish goal 1 within such requirement. In the
event of any conflict among the provisions of the definition of the
Class Y Principal Reduction Amounts, such conflict shall be resolved on
the basis of the goals and their priorities set forth above within the
requirement set forth in the preceding sentence. If the formula
allocation of [D]Y[s]6 among [D]Y[s]2, [D]Y[s]3 and [D]Y[s]4 cannot be
achieved because either [D]Y[s]2 as so defined is greater than
[D]P[s]2, [D]Y[s]3 as so defined is greater than [D]P[s]3 or [D]Y[s]4
as so defined is greater than [D]P[s]4, such an allocation shall be
made as close as possible to the formula allocation within the
requirement that [D]Y[s]2 < [D]P[s]2, [D]Y[s]3 < [D]P[s]3 and [D]Y[s]4
< [D]P[s]4.
III. If 6.5%<-R<-6.625%, make the following additional definitions:
<TABLE>
<S> <C> <C>
[d]Y[s]1 = 0, if R[s]3< r[s]3; and
(R[s]3- r[s]3)(Y[s]1 + Y[s]2)/(R[s]3 - 6.375%), if R[s]3>- r[s]3;
[d]Y[s]2 = 0, if R[s]3>- r[s]3; and
(R[s]3- r[s]3)(Y[s]1 + Y[s]2)/(R[s]3 - 6.5%), if R[s]3< r[s]3;
[d]Y[s]3 = 0, if R[s]4< r[s]4; and
(R4- r4)(Y3 + Y4)/(R4 - 6.625%), if R[s]4>- r[s]4; and
[d]Y[s]4 = R[s]4- r[s]4)(Y[s]3 + Y[s]4)/(R[s]4 - 6.75%), if R[s]4< r[s]4; and
0, if R[s]4>- r[s]4.
</TABLE>
[d]Y[s]1, [d]Y[s]2, [d]Y[s]3, and [d]Y[s]4 are numbers between Y[s]1 and 0,
Y[s]2 and 0, Y[s]3 and 0, and Y[s]4 and 0, respectively, such that
(6.375%(Y[s]1 - [d]Y[s]1) + 6.5%(Y[s]2.- [d]Y[s]2))/(Y[s]1 - [d]Y[s]1
+ Y[s]2.- [d]Y[s]2) = R[s]3 and (6.625%(Y[s]3 - [d]Y[s]3) +
6.75%(Y[s]4.- [d]Y[s]4))/(Y[s]3 - [d]Y[s]3 + Y[s]4.- [d]Y[s]4) =
R[s]4.
Y[s]7 = Y[s]1 - [d]Y[s]1 + Y[s]2.- [d]Y[s]2
P[s]7 = P[s]1 + P[s]2.
[d]P[s]7 = [d]P[s]1 + [d]P[s]2.
[D]Y[s]7 = [D]Y[s]1 - [d]Y[s]1 + [D]Y[s]2.- [d]Y[s]2.
Y[s]8 = Y[s]3.- [d]Y[s]3 + Y[s]4.- [d]Y[s]4.
P[s]8 = P[s]3 + P[s]4.
22
<PAGE>
<PAGE>
[d]P[s]8 = [d]P[s]3 + [d]P[s]4.
[D]Y[s]8 = [D]Y[s]3.- [d]Y[s]3 + [D]Y[s]4.- [d]Y[s]4
1. If Y[s]8 - [a](P[s]8 - [d]P[s]8) >- 0, Y[s]7- [a](P[s]7 - [d]P[s]7) => 0,
and [g][s]3(P[s]7 - [d]P[s]7) < (P[s]8 - [d]P[s]8), [d]Y[s]8 = Y[s]8 -
[a][g]3(P[s]7 - [d]P[s]7) and [d]Y[s]7 = Y[s]7 - [a](P[s]7 - [d]P7).
2. If Y[s]8 - [a](P[s]8 - [d]P[s]8) >- 0, Y[s]7 - [a](P[s]7 - [d]P[s]7) >- 0,
and [g][s]3(P[s]7 - [d]P[s]7) >- (P[s]8 - [d]P[s]8), [d]Y[s]8 = Y[s]8 -
[a](P[s]8 - [d]P[s]8) and [d]Y[s]7 = Y[s]7 - ([a]/[g][s]3)(P[s]8 -
[d]P[s]8).
3. If Y[s]8 - [a](P[s]8 - [d]P[s]8) < 0, Y[s]7 - [a](P[s]7 - [d]P[s]7) >- 0,
and Y[s]7 - [a](P[s]7 - [d]P[s]7) >- Y[s]7 - (Y[s]8/[g][s]3), [d]Y[s]8 =
Y[s]8 - [a][g][s]3(P[s]7 - [d]P[s]7) and [d]Y[s]7 = Y[s]7 - [a](P[s]7 -
[d]P[s]7).
4. If Y[s]8 - [a](P[s]8 - [d]P[s]8) < 0, Y[s]7 - (Y[s]8/[g][s]3) >- 0, and
Y[s]7 - [a](P[s]7 - [d]P[s]7) <- Y[s]7 - (Y[s]8/[g][s]3), [d]Y[s]8 = 0 and
[d]Y[s]7 = Y[s]7 - (Y[s]8/[g][s]3).
5. If Y[s]7 - [a](P[s]7 - [d]P[s]7) < 0, Y[s]7 - (Y[s]8/[g][s]3) < 0, and
Y[s]8 - [a](P[s]8 - [d]P[s]8) <- Y[s]8 - ([g][s]3Y[s]7), [d]Y[s]8 = Y[s]8 -
([g][s]3Y[s]7) and [d]Y[s]7 = 0.
6. If Y[s]7 - [a](P[s]7 - [d]P[s]7) < 0, Y[s]8 - [a](P[s]8 - [d]P[s]8) >- 0,
and Y[s]8 - [a](P[s]8 - [d]P[s]8) >- Y[s]8 - ([g][s]3Y[s]7), [d]Y[s]8 =
Y[s]8 - [a](P[s]8 - [d]P[s]8) and [d]Y[s]7 = Y[s]7 - ([a]/[g][s]3)(P[s]8 -
[d]P[s]8).
[D]Y[s]1 = [d]Y[s]1 + [(Y[s]1 - [d]Y[s]1)/(Y[s]1 - [d]Y[s]1 + Y[s]2 -
[d]Y[s]2)][D]Y[s]7
[D]Y[s]2 = [d]Y[s]2 + [(Y[s]2 - [d]Y[s]2)/(Y[s]1 - [d]Y[s]1 + Y[s]2 -
[d]Y[s]2)][D]Y[s]7
[D]Y[s]3 = [d]Y[s]3 + [(Y[s]3 - [d]Y[s]3)/(Y[s]3 - [d]Y[s]3 + Y[s]4 -
[d]Y[s]4)][D]Y[s]8
Y[s]4 = [d]Y[s]4 + [(Y[s]4 - [d]Y[s]4)/(Y[s]3 - [d]Y[s]3 + Y[s]4 -
[d]Y[s]4)][D]Y[s]8
The purpose of the foregoing definitional provisions together with the related
provisions allocating Realized Losses and defining the Class Y and Class Z
Principal Distribution Amounts is to accomplish the following goals in the
following order of priority:
1. Making the ratio of Y8 to Y7 equal to [g]3 after taking account of
the allocation Realized Losses and the distributions that will be made
through end of the Distribution Date to which such provisions relate
and assuring that the Principal Reduction Amount for each of the Class
Y-1, Class Y-2, Class Y-3, Class Y-4, Class Z-1, Class Z-2, Class Z-3
and Class Z-4 Regular Interests is greater than or equal to zero for
such Distribution Date;
2. Making the Class Y-1 Principal Balance less than or equal to 0.0005 of
the sum of the Class Y-1 and Class Z-1 Principal Balances, the Class
Y-2 Principal Balance less than or equal to 0.0005 of the sum of the
Class Y-2 and Class Z-2 Principal Balances, the Class Y-2 Principal
Balance less than or equal to 0.0005 of the sum of the Class Y-3 and
Class Z-3 Principal Balances and the Class Y-4 Principal Balance less
than or equal to 0.0005 of the sum of the Class Y-4 and Class Z-4
Principal Balances in each case after giving effect to allocations of
Realized Losses and distributions to be made through the end of the
Distribution Date to which such provisions relate; and
3. Making the larger of (a) the fraction whose numerator is Y7 and whose
denominator is the sum of Y7, the Class Z-1 Principal Balance and the
Class Z-2 Principal Balance and (b) the fraction whose numerator is Y8
and whose denominator is the sum of Y[s]8, the Class Z-3 Principal
Balance and the Class Z-4 Principal Balance as large as possible while
remaining less than or equal to 0.0005.
In the event of a failure of the foregoing portion of the definition of
Class Y Principal Reduction Amount to accomplish both of goals 1 and 2
above, the amounts thereof should be adjusted to so as to accomplish
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such goals within the requirement that each Class Y Principal Reduction
Amount must be less than or equal to the sum of (a) the principal
portion of Realized Losses to be allocated on the related Distribution
Date for the related Subgroup remaining after the allocation of such
Realized Losses to the related Class P-M Regular Interest (if any) and
(b) the remainder of the portion of the REMIC I Available Distribution
Amount derived from the related Subgroup after reduction thereof by the
distributions to be made on such Distribution Date (i) to the related
Class P-M Regular Interest (if any), (ii) to the related Class X-M
Regular Interests and (iii) in respect of interest on the related Class
Y and Class Z Regular Interests, or, if both of such goals cannot be
accomplished within such requirement, such adjustment as is necessary
shall be made to accomplish goal 1 within such requirement. In the
event of any conflict among the provisions of the definition of the
Class Y Principal Reduction Amounts, such conflict shall be resolved on
the basis of the goals and their priorities set forth above within the
requirement set forth in the preceding sentence. If the formula
allocation of [D]Y[s]7 between [D]Y[s]1 and [D]Y[s]2, or of [D]Y[s]8
between [D]Y[s]3 and [D]Y[s]4 cannot be achieved because either
[D]Y[s]1 as so defined is greater than [D]P[s]1, [D]Y[s]2 as so defined
is greater than [D]P[s]2, [D]Y[s]3 as so defined is greater than
[D]P[s]3 or [D]Y[s]4 as so defined is greater than [D]P[s]4, such an
allocation shall be made as close as possible to the formula allocation
within the requirement that [D]Y[s]1 < [D]P[s]1, [D]Y[s]2 < [D]P[s]2,
[D]Y[s]3 < [D]P[s]3 and [D]Y[s]4 < [D]P[s]4.
NOTE:
The principal balances for the Class Y-1, Class Y-2, Class Y-3 and Class Y-4
Regular Interests as of the Cut-Off Date should be calculated as follows: First,
calculate the Cut-Off Date values for P1, P2, P3 and P4. Then calculate the
Cut-Off Date value of R using those balances and the Subordinate Component
Balances for the Subgroups of Group I.
If R>-6.625%,calculate R[s]1 = (6.375%P[s]1 + 6.5%P2 + 6.625%P3)/(P1 + P2 + P3)
and [g]1 = (R - R1)/(6.75% - R).
If P4 <- [g][s]1(P[s]1 + P[s]2 + P[s]3), the Cut-Off Date principal balance of
the Class Y-4 Regular Interest (Y[s]4) equals 0.0005P[s]4 and the Cut-Off Date
principal balances of the Class Y-1, Class Y-2 and Class Y-3 Regular Interests
(Y[s]1, Y[s]2 and Y[s]3) equal 0.0005 P[s]1P[s]4/[[g]1(P[s]1 + P[s]2 + P[s]3)],
0.0005 P[s]2P[s]4/[[g][s]1(P[s]1 + P[s]2 + P[s]3)] and 0.0005
P[s]3P[s]4/[[g]1(P[s]1 + P[s]2 + P[s]3)] respectively.
If P4 > [g][s]1(P[s]1 + P[s]2 + P[s]3), the Cut-Off Date principal balances of
the Class Y-1, Class Y-2 and Class Y-3 Interests (Y[s]1, Y[s]2 and Y[s]3) equal
0.0005 P[s]1, 0.0005 P[s]2 and 0.0005 P[s]3 respectively and the Cut-Off Date
principal balance of the Class Y-4 Regular Interest (Y[s]4) equals
0.0005[g][s]1(P[s]1 + P[s]2 + P[s]3).
If R<-6.5%,calculate R[s]2 = (6.5%P[s]2 + 6.625%P[s]3 + 6.75%P[s]4)/(P[s]2 +
P[s]3 + P[s]4) and [g][s]2 =(R - 6.5%)/(R[s]2 - R).
If P[s]2 + P[s]3 + P[s]4 <- [g][s]2P[s]1, the Cut-Off Date principal balances of
the Class Y-2, Class Y-3 and Class Y-3 Regular Interests (Y[s]2, Y[s]3 and
Y[s]4) equal 0.0005P[s]2, 0.0005P[s]3 and 0.0005P[s]4, respectively, and the
Cut-Off Date principal balance of the Class Y-1 Interest (Y[s]1) equals
0.0005(P[s]2+P[s]3+P[s]4)/[g][s]2.
If P[s]2 + P[s]3 + P[s]4 > [g][s]2P[s]1, the Cut-Off Date principal balance of
the Class Y-1 Interest (Y1) equals 0.0005 P[s]1 and the Cut-Off Date principal
balances of the Class Y-2, Class Y-3 and Class Y-4 Interests (Y[s]2, Y[s]3 and
Y[s]4) equal 0.0005[g][s]2P[s]1P[s]2/(P[s]2 + P[s]3 + P[s]4),
0.0005[g][s]2P[s]1P[s]3/(P[s]2 + P[s]3 + P[s]4) and
0.0005[g][s]2P[s]1P[s]4/(P[s]2 + P[s]3 + P[s]4), respectively.
If 6.5%<R<6.625%, calculate R[s]3 = (6.375%P[s]1 + 6.5%P[s]2)/(P[s]1 + P[s]2),
R[s]4 = (6.625%P[s]3 + 6.75%P[s]4)/(P[s]3 + P[s]4) and [g][s]3 =(R -
R[s]3)/(R[s]4 - R).
If P[s]3 + P[s]4 <- [g][s]2(P[s]1 + P[s]2), the Cut-Off Date principal balances
of the Class Y-3 and Class Y-4 Regular Interests (Y[s]3 and Y[s]4) equal
0.0005P[s]3 and 0.0005P[s]4, respectively, and the Cut-Off Date principal
balances of the Class Y-1 and Class Y-2 Interests (Y[s]1 and Y[s]2) equal 0.0005
P[s]1 (P[s]3+P[s]4)/[[g][s]3(P[s]1 + P[s]2)] and 0.0005 P[s]2
(P[s]3+P[s]4)/[[g][s]3(P[s]1 + P[s]2)], respectively.
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If P[s]3 + P[s]4 > [g][s]2(P[s]1 + P[s]2), the Cut-Off Date principal balances
of the Class Y-1 and Class Y-2 Interests (Y[s]1 and Y[s]2) equal 0.0005 P[s]1
and 0.0005 P[s]2 and the Cut-Off Date principal balances of the Class Y-3 and
Class Y-4 Interests (Y[s]3 and Y[s]4) equal 0.0005[g][s]3P[s]3(P[s]1 +
P[s]2)/(P[s]3 + P[s]4) and 0.0005[g][s]3P[s]4(P[s]1 + P[s]2)/(P[s]3 + P[s]4),
respectively.
Class Y Regular Interests: The Class Y-1, Class Y-2, Class Y-3 and Class
Y-4 Regular Interests.
Class Y-1 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Y-1 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Y-1 Regular Interests on such Distribution Date.
Class Y-1 Regular Interest: The uncertificated partial undivided beneficial
ownership interest in REMIC I which constitutes a REMIC I Regular Interest and
is entitled to distributions as set forth herein.
Class Y-2 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Y-2 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Y-2 Regular Interests on such Distribution Date.
Class Y-2 Regular Interest: The uncertificated partial undivided beneficial
ownership interest in REMIC I which constitutes a REMIC I Regular Interest and
is entitled to distributions as set forth herein.
Class Y-3 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Y-3 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Y-3 Regular Interests on such Distribution Date.
Class Y-3 Regular Interest: The uncertificated partial undivided beneficial
ownership interest in REMIC I which constitutes a REMIC I Regular Interest and
is entitled to distributions as set forth herein.
Class Y-4 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Y-4 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Y-4 Regular Interests on such Distribution Date.
Class Y-4 Regular Interest: The uncertificated partial undivided beneficial
ownership interest in REMIC I which constitutes a REMIC I Regular Interest and
is entitled to distributions as set forth herein.
Class Z Principal Reduction Amounts: For any Distribution Date, the amounts
by which the Class Principal Balances of the Class Z-1, Class Z-2, Class Z-3 and
Class Z-4 Regular Interests, respectively, will be reduced on such Distribution
Date by the allocation of Realized Losses and the distribution of principal,
which shall be in each case the excess of (A) the sum of (x) the excess of the
REMIC I Available Distribution Amount for the related Subgroup (i.e. the
"related Subgroup" for the Class Z-1 Regular Interests is Subgroup I-1) over the
sum of the amounts thereof distributable (i) to the Class I-P-L Regular
Interests, (ii) to the Class I-X-L Regular Interests, (iii) in respect of
interest on the related Class Y and Class Z Regular Interests
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and (iv) to the Class R-1 Certificates and (y) the excess of the principal
portion of Realized Losses for the related Subgroup allocable to the Group I-L
Regular Interests over the portion of such Realized Losses allocable to the
Class I-P-L Regular Interests over (B) the Class Y Principal Reduction Amount
for the related Subgroup.
Class Z Regular Interests: The Class Z-1, Class Z-2, Class Z-3 and Class
Z-4 Regular Interests.
Class Z-1 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Z-1 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Z-1 Regular Interests on such Distribution Date.
Class Z-1 Regular Interests: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class Z-2 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Z-2 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Z-2 Regular Interests on such Distribution Date.
Class Z-2 Regular Interests: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class Z-3 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Z-3 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Z-3 Regular Interests on such Distribution Date.
Class Z-3 Regular Interests: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Class Z-4 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the Class Z-4 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to the
Class Z-4 Regular Interests on such Distribution Date.
Class Z-4 Regular Interests: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest and is entitled to distributions as set forth herein.
Clearing Agency: An organization registered as a "clearing agency" pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended, which
initially shall be DTC.
Closing Date: September 29, 1998, which is the date of settlement of the
sale of the Certificates to the original purchasers thereof.
Code: The Internal Revenue Code of 1986, as amended.
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Company: PNC Mortgage Securities Corp., a Delaware corporation, or its
successor-in-interest.
Compensating Interest: For any Distribution Date with respect to each Loan
Group and the Mortgage Loans contained therein, the lesser of (i) the sum of (a)
the aggregate Master Servicing Fee payable with respect to such Loan Group on
such Distribution Date, (b) the aggregate Payoff Earnings with respect to such
Loan Group and (c) the aggregate Payoff Interest with respect to such Loan Group
and (ii) the aggregate Uncollected Interest with respect to such Loan Group.
Cooperative: A private, cooperative housing corporation organized under the
laws of, and headquartered in, the States of New York or New Jersey which owns
or leases land and all or part of a building or buildings located in such
states, including apartments, spaces used for commercial purposes and common
areas therein and whose board of directors authorizes, among other things, the
sale of Cooperative Stock.
Cooperative Apartment: A dwelling unit in a multi-dwelling building owned
or leased by a Cooperative, which unit the Mortgagor has an exclusive right to
occupy pursuant to the terms of a proprietary lease or occupancy agreement.
Cooperative Lease: With respect to a Cooperative Loan, the proprietary
lease or occupancy agreement with respect to the Cooperative Apartment occupied
by the Mortgagor and relating to the related Cooperative Stock, which lease or
agreement confers an exclusive right to the holder of such Cooperative Stock to
occupy such apartment.
Cooperative Loans: Any of the Mortgage Loans made in respect of a
Cooperative Apartment, evidenced by a Mortgage Note and secured by (i) a
Security Agreement, (ii) the related Cooperative Stock Certificate, (iii) an
assignment or mortgage of the Cooperative Lease, (iv) financing statements and
(v) a stock power (or other similar instrument), and ancillary thereto, a
recognition agreement between the Cooperative and the originator of the
Cooperative Loan, each of which was transferred and assigned to the Trustee
pursuant to Section 2.01 and are from time to time held as part of the Trust
Fund created hereunder.
Cooperative Stock: With respect to a Cooperative Loan, the single
outstanding class of stock, partnership interest or other ownership instrument
in the related Cooperative.
Cooperative Stock Certificate: With respect to a Cooperative Loan, the
stock certificate or other instrument evidencing the related Cooperative Stock.
Corporate Trust Office: The corporate trust office of the Trustee in the
Commonwealth of Massachusetts, at which at any particular time its corporate
trust business with respect to this Agreement shall be administered, which
office at the date of the execution of this Agreement is located at Two
International Place, Boston, MA 02110, Attention: Corporate Trust PNC 1998-9.
Corresponding Class: With respect to the Group II Certificates and the
Group II-L Regular Interests, the "Corresponding Class" shall be as indicated in
the following table.
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Class II-A-1-L Class II-A-1
Class II-A-2-L Class II-A-2
Class II-X-L Class II-X
Class II-P-L Class II-P
Class II-AM-L Class II-AM
With respect to the Group III Certificates and the Group III-L Regular
Interests, the "Corresponding Class" shall be as indicated in the following
table:
Class III-A-1-L Class III-A-1
Class III-A-3-L Class III-A-3
Class III-A-4-L Class III-A-4
Class III-A-5-L Class III-A-5
Class III-X-L Class III-X
Class III-AM-L Class III-AM
Curtailment: Any payment of principal on a Mortgage Loan, made by or on
behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid Monthly
Payment or a Payoff, which is applied to reduce the outstanding principal
balance of the Mortgage Loan.
Curtailment Shortfall: With respect to any Curtailment applied with a
Monthly Payment other than a Prepaid Monthly Payment, an amount equal to one
month's interest on such Curtailment at the applicable Pass-Through Rate on such
Mortgage Loan.
Custodial Account for P&I: The Custodial Account for principal and interest
established and maintained by each Servicer pursuant to its Selling and
Servicing Contract and caused by the Master Servicer to be established and
maintained pursuant to Section 3.02 (a) with the corporate trust department of
the Trustee or another financial institution approved by the Master Servicer
such that the rights of the Master Servicer, the Trustee and the
Certificateholders thereto shall be fully protected against the claims of any
creditors of the applicable Servicer and of any creditors or depositors of the
institution in which such account is maintained, (b) within FDIC insured
accounts (or other accounts with comparable insurance coverage acceptable to the
Rating Agencies) created, maintained and monitored by a Servicer or (c) in a
separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account for P&I is established
pursuant to clause (b) of the preceding sentence, amounts held in such Custodial
Account for P&I shall not exceed the level of deposit insurance coverage on such
account; accordingly, more than one Custodial Account for P&I may be
established. Any amount that is at any time not protected or insured in
accordance with the first sentence of this definition of "Custodial Account for
P&I" shall promptly be withdrawn from such Custodial Account for P&I and be
remitted to the Investment Account.
Custodial Account for Reserves: The Custodial Account for Reserves
established and maintained by each Servicer pursuant to its Selling and
Servicing Contract and caused by the Master Servicer to be established and
maintained pursuant to Section 3.02 (a) with the corporate trust department of
the Trustee or another financial institution approved by the Master Servicer
such that the rights of the Master Servicer, the Trustee and the
Certificateholders thereto shall be fully protected against the claims of any
creditors of the applicable Servicer and of any creditors or depositors of the
institution in which such account is maintained, (b) within FDIC insured
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accounts (or other accounts with comparable insurance coverage acceptable to the
Rating Agencies) created, maintained and monitored by a Servicer or (c) in a
separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account for Reserves is established
pursuant to clause (b) of the preceding sentence, amounts held in such Custodial
Account for Reserves shall not exceed the level of deposit insurance coverage on
such account; accordingly, more than one Custodial Account for Reserves may be
established. Any amount that is at any time not protected or insured in
accordance with the first sentence of this definition of "Custodial Account for
Reserves" shall promptly be withdrawn from such Custodial Account for Reserves
and be remitted to the Investment Account.
Custodial Agreement: The agreement, if any, among the Master Servicer, the
Trustee and a Custodian providing for the safekeeping of the Mortgage Files on
behalf of the Certificateholders.
Custodian: A custodian (other than the Trustee) which is not an affiliate
of the Master Servicer or the Company and which is appointed pursuant to a
Custodial Agreement. Any Custodian so appointed shall act as agent on behalf of
the Trustee, and shall be compensated by the Trustee at no additional charge to
the Master Servicer. The Trustee shall remain at all times responsible under the
terms of this Agreement, notwithstanding the fact that certain duties have been
assigned to a Custodian.
Cut-Off Date: September 1, 1998.
Deceased Holder: A Beneficial Holder of a Special Retail Certificate who
was living at the time such Special Retail Certificate was acquired and whose
authorized personal representative, surviving tenant by the entirety, surviving
joint tenant or surviving tenant in common or other person empowered to act on
behalf of such Beneficial Holder causes to be furnished to DTC evidence of such
Beneficial Holder's death satisfactory to the Trustee and any tax waivers
requested by the Trustee.
Definitive Certificates: Certificates in definitive, fully registered and
certificated form.
Depositary Agreement: The Letter of Representations, dated September 27,
1998 by and among DTC, the Company and the Trustee.
Destroyed Mortgage Note: A Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Determination Date: A day not later than the 10th day preceding a related
Distribution Date.
Disqualified Organization: Any Person which is not a Permitted Transferee,
but does not include any Pass-Through Entity which owns or holds a Residual
Certificate and of which a Disqualified Organization, directly or indirectly,
may be a stockholder, partner or beneficiary.
Distribution Date: With respect to distributions on the REMIC I Regular
Interests and the Certificates, the 25th day (or, if such 25th day is not a
Business Day, the Business Day
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immediately succeeding such 25th day) of each month, with the first such date
occurring in October 1998.
DLJ: Donaldson, Lufkin & Jenrette Securities Corporation.
DTC: The Depository Trust Company.
DTC Participant: A broker, dealer, bank, other financial institution or
other Person for whom DTC effects book-entry transfers and pledges of securities
deposited with DTC.
Due Date: The first day of each calendar month, which is the day on which
the Monthly Payment for each Mortgage Loan is due.
Eligible Institution: An institution having (i) the highest short-term debt
rating, and one of the two highest long-term debt ratings of the Rating
Agencies, (ii) with respect to any Custodial Account for P&I and special
Custodial Account for Reserves, an unsecured long-term debt rating of at least
one of the two highest unsecured long-term debt ratings of the Rating Agencies,
(iii) with respect to any Buydown Fund Account or Custodial Account which also
serves as a Buydown Fund Account, the highest unsecured long-term debt rating by
the Rating Agencies, or (iv) the approval of the Rating Agencies. Such
institution may be the Servicer if the applicable Selling and Servicing Contract
requires the Servicer to provide the Master Servicer with written notice on the
Business Day following the date on which the Servicer determines that such
Servicer's short-term debt and unsecured long-term debt ratings fail to meet the
requirements of the prior sentence.
Eligible Investments: Any one or more of the obligations or securities
listed below in which funds deposited in the Investment Account, the Certificate
Account, the Custodial Account for P&I, the Custodial Account for Reserves, the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund and the Expense Account
may be invested:
(i) Obligations of, or guaranteed as to principal and interest by, the
United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(ii) Repurchase agreements on obligations described in clause (i) of
this definition of "Eligible Investments", provided that the unsecured
obligations of the party (including the Trustee in its commercial capacity)
agreeing to repurchase such obligations have at the time one of the two
highest short term debt ratings of the Rating Agencies and provided that
such repurchaser's unsecured long term debt has one of the two highest
unsecured long term debt ratings of the Rating Agencies;
(iii) Federal funds, certificates of deposit, time deposits and
bankers' acceptances of any U.S. bank or trust company incorporated under
the laws of the United States or any state (including the Trustee in its
commercial capacity), provided that the debt obligations of such bank or
trust company (or, in the case of the principal bank in a bank holding
company system, debt obligations of the bank holding company) at the date
of acquisition thereof have one of the two highest short term debt ratings
of the Rating
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Agencies and unsecured long term debt has one of the two highest unsecured
long term debt ratings of the Rating Agencies;
(iv) Obligations of, or obligations guaranteed by, any state of the
United States or the District of Columbia, provided that such obligations
at the date of acquisition thereof shall have the highest long-term debt
ratings available for such securities from the Rating Agencies;
(v) Commercial paper of any corporation incorporated under the laws of
the United States or any state thereof, which on the date of acquisition
has the highest commercial paper rating of the Rating Agencies, provided
that the corporation has unsecured long term debt that has one of the two
highest unsecured long term debt ratings of the Rating Agencies;
(vi) Securities (other than stripped bonds or stripped coupons)
bearing interest or sold at a discount that are issued by any corporation
incorporated under the laws of the United States or any state thereof and
have the highest long-term unsecured rating available for such securities
from the Rating Agencies; provided, however, that securities issued by any
such corporation will not be investments to the extent that investment
therein would cause the outstanding principal amount of securities issued
by such corporation that are then held as part of the Investment Account or
the Certificate Account to exceed 20% of the aggregate principal amount of
all Eligible Investments then held in the Investment Account and the
Certificate Account;
(vii) Units of taxable money market funds (which may be 12b-1 funds,
as contemplated under the rules promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940), which funds have the
highest rating available for such securities from the Rating Agencies or
which have been designated in writing by the Rating Agencies as Eligible
Investments; and
(viii) Such other investments the investment in which will not, as
evidenced by a letter from each of the Rating Agencies, result in the
downgrading or withdrawal of the Ratings;
provided, however, that such obligation or security is held for a temporary
period pursuant to Section 1.860G-2(g)(1) of the Treasury Regulations, and that
such period can in no event exceed thirteen months.
In no event shall an instrument be an Eligible Investment if such
instrument (a) evidences a right to receive only interest payments with respect
to the obligations underlying such instrument or (b) has been purchased at a
price greater than the outstanding principal balance of such instrument.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: Any event of default as specified in Section 7.01.
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Excess Amount: The uncertificated partial undivided beneficial ownership
interest in REMIC I which constitutes a REMIC I Regular Interest and is entitled
to distributions as set forth herein. The Excess Amount will accrue interest at
a per annum rate of 0.1075% on the outstanding Principal Balance of each
Mortgage Loan in the Trust Fund.
Excess Liquidation Proceeds: With respect to any Distribution Date, the
excess, if any, of aggregate Liquidation Proceeds received during the Prior
Period over the amount that would have been received if Payoffs had been made
with respect to such Mortgage Loans on the date such Liquidation Proceeds were
received.
Expense Account: The separate trust account created and maintained with
the Trustee, the Investment Depository or any other bank or trust company
acceptable to the Rating Agencies which is incorporated under the laws of the
United States or any state thereof pursuant to Section 3.19, which account shall
bear a designation clearly indicating that the funds deposited therein are held
in trust for the benefit of the Trustee on behalf of the Certificateholders or
any other account serving a similar function acceptable to the Rating Agencies.
Funds deposited in the Expense Account shall be held in trust for the
Certificateholders and the beneficial owners of the Expense Account as set forth
in Section 3.19.
Extraordinary Hazard Loss: The occurrence of a loss on a Mortgage Loan,
with respect to which standard hazard insurance coverage has expired or been
terminated or otherwise is no longer in effect, but which loss would have been
covered by standard hazard insurance of the type required pursuant to Section
3.07 had such standard hazard insurance been in effect, including without
limitation losses relating to vandalism and property restoration of the related
Mortgaged Properties.
FDIC: Federal Deposit Insurance Corporation, or any successor thereto.
FHA: Federal Housing Administration, or any successor thereto.
FHLB: Federal Home Loan Bank of San Francisco, or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation, or any successor thereto.
Final Maturity Date: With respect to each Class of the REMIC I Regular
Interests and the Certificates, the date set forth in the table contained in the
Preliminary Statement hereto.
Fitch: Fitch IBCA, Inc., provided that at any time it be a Rating
Agency.
FNMA: Federal National Mortgage Association, or any successor thereto.
Fraud Loss: A loss on a Mortgage Loan (i) with respect to which coverage
is denied under the Mortgage Pool Insurance Policy due to fraud, dishonesty or
misrepresentation in connection with the origination of such Mortgage Loan or
(ii) with respect to which there would have occurred a denial of coverage under
the Mortgage Pool Insurance Policy but for the applicability of the Fraud
Waiver.
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Fraud Waiver: With respect to the Mortgage Pool Insurance Policy, a
limited waiver of the Mortgage Pool Insurer's right to deny or reduce a claim
under the Mortgage Pool Insurance Policy by reason of fraud, dishonesty or
misrepresentation in connection with the origination of any Mortgage Loan
covered by such Mortgage Pool Insurance Policy. The Fraud Waiver shall be
provided in an endorsement to the Mortgage Pool Insurance Policy.
Group I Certificates: The Group I-A, Class I-P, Class I-X and Class
I-AM Certificates.
Group I Credit Support Depletion Date: The later of (i) the first
Distribution Date on which the Class I-AM Principal Balance has been or will be
reduced to zero as a result of principal distributions thereon and the
allocation of Realized Losses on such Distribution Date and (ii) the date on
which coverage under the Mortgage Pool Insurance Policy has been exhausted.
Group I Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group I Loans.
Group I Premium Rate Mortgage Loans: The Subgroup I-1 Loans having
Pass-Through Rates in excess of 6.375% per annum; the Subgroup I-2 Loans; the
Subgroup I-3 Loans; and the Subgroup I-4 Loans.
Group I Senior Certificates: The Group I-A, Class I-X and Class I-P
Certificates.
Group I Senior Liquidation Amount: For any Distribution Date, the sum of
(i) the Subgroup I-1 Senior Liquidation Amount, (ii) the Subgroup I-2 Senior
Liquidation Amount, (iii) the Subgroup I-3 Senior Liquidation Amount and (iv)
the Subgroup I-4 Senior Liquidation Amount.
Group I Senior Percentage: With respect to any Distribution Date, the
aggregate Class Principal Balance of the Group I-A Certificates and the Residual
Certificates divided by the aggregate Class Principal Balance of the Group I
Certificates (less the Class I-P Principal Balance) and the Residual
Certificates, in each case immediately prior to the Distribution Date.
Group I Senior Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group I Senior Percentage for such Distribution Date exceeds the Group I
Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group I Loans which are 60 or
more days delinquent (including loans in foreclosure and property held
by the Trust Fund) for each of the immediately preceding six calendar
months is less than or equal to 50% of the sum of (1) the product of
(x) a fraction, the numerator of which is the aggregate Class
Principal Balance of the Group I Certificates and the denominator of
which is the aggregate Class Principal Balance of all of the
Certificates and (y) the remaining coverage available under the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy
and the Bankruptcy and Extraordinary Hazard
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Expense Reserve Fund and (2) the Class I-AM Principal Balance as of
such Distribution Date; and
(b) cumulative Realized Losses on the Group I Loans allocated to the Class
I-AM Certificates or covered under the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund are less than or equal to
(1) for any Distribution Date before the month of the sixth
anniversary of the month of the first Distribution Date, 30% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date and
(II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (2)
for any Distribution Date in or after the month of the sixth
anniversary of the month of the first Distribution Date but before the
seventh anniversary of the month of the first Distribution Date, 35%
of the sum of (I) the Class I-AM Principal Balance as of the Cut-Off
Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (3)
for any Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the
eighth anniversary of the month of the first Distribution Date, 40% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (4)
for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the
ninth anniversary of the month of the first Distribution Date, 45% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, and
(5) for any Distribution Date in or after the month of the ninth
anniversary of the month of the first Distribution Date, 50% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off
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Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group I Senior Percentage for such Distribution Date plus 70% of the Class I-AM
Percentage for such Distribution Date; (2) for any such Distribution Date in or
after the month of the sixth anniversary of the month of the first Distribution
Date but before the seventh anniversary of the month of the first Distribution
Date, the Group I Senior Percentage for such Distribution Date plus 60% of the
Class I-AM Percentage for such Distribution Date; (3) for any such Distribution
Date in or after the month of the seventh anniversary of the month of the first
Distribution Date but before the eighth anniversary of the month of the first
Distribution Date, the Group I Senior Percentage for such Distribution Date plus
40% of the Class I-AM Percentage for such Distribution Date; (4) for any such
Distribution Date in or after the month of the eighth anniversary of the month
of the first Distribution Date but before the ninth anniversary of the month of
the first Distribution Date, the Group I Senior Percentage for such Distribution
Date plus 20% of the Class I-AM Percentage for such Distribution Date; and (5)
for any such Distribution Date thereafter, the Group I Senior Percentage for
such Distribution Date.
If on any Distribution Date the allocation to the Group I-A Certificates of
Principal Prepayments in the percentage required would reduce the sum of the
Class Principal Balances of such Certificates below zero, the Group I Senior
Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce such sum to zero. Notwithstanding the foregoing,
however, on each Distribution Date, the Class I-P Certificates will receive the
Class I-P Fraction of all principal payments, including, without limitation,
Principal Prepayments, received in respect of each Class I-P Mortgage Loan.
Group I Senior Principal Distribution Amount: For any Distribution Date,
the sum of (i) the Subgroup I-1 Senior Principal Distribution Amount, (ii) the
Subgroup I-2 Senior Principal Distribution Amount, (iii) the Subgroup I-3 Senior
Principal Distribution Amount and (iv) the Subgroup I-4 Senior Principal
Distribution Amount.
Group I-A Certificates: The Class I-A-1, Class I-A-2, Class I-A-3, Class
I-A-4, Class I-A-5, Class I-A-6, Class I-A-7 and Class I-A-8 Certificates.
Group I-L Regular Interests: The Class Y, Class Z, Class I-P-L and Class
I-X-L Regular Interests.
Group II Certificates: The Group II-A, Class II-X, Class II-P and Class
II-AM Certificates.
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Group II Credit Support Depletion Date: The later of (i) the first
Distribution Date on which the Class II-AM Principal Balance has been or will be
reduced to zero as a result of principal distributions thereon and the
allocation of Realized Losses on such Distribution Date and (ii) the date on
which coverage under the Mortgage Pool Insurance Policy has been exhausted.
Group II Loans: The Mortgage Loans designated on the Mortgage Loan Schedule
as Group II Loans.
Group II Premium Rate Mortgage Loans: The Group II Loans having
Pass-Through Rates in excess of 6.3925% per annum.
Group II Senior Certificates: The Group II-A, Class II-X and Class II-P
Certificates.
Group II Senior Liquidation Amount: The aggregate, for each Group II Loan
which became a Liquidated Mortgage Loan during the Prior Period, of the lesser
of: (i) the Group II Senior Percentage of the Principal Balance of such Mortgage
Loan (exclusive of the Class II-P Fraction thereof, with respect to any Class
II-P Mortgage Loan), and (ii) the Group II Senior Prepayment Percentage of the
Liquidation Principal with respect to such Mortgage Loan.
Group II Senior Percentage: With respect to any Distribution Date, the
aggregate Class Principal Balance of the Group II-A Certificates divided by the
aggregate Class Principal Balance of the Group II Certificates (less the Class
II-P Principal Balance), in each case immediately prior to the Distribution
Date.
Group II Senior Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group II Senior Percentage for such Distribution Date exceeds the Group II
Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group II Loans which are 60 or
more days delinquent (including loans in foreclosure and property held
by the Trust Fund) for each of the immediately preceding six calendar
months is less than or equal to 50% of the sum of (1) the product of
(x) a fraction, the numerator of which is the aggregate Class
Principal Balance of the Group II Certificates and the denominator of
which is the aggregate Class Principal Balance of all of the
Certificates and (y) the remaining coverage available under the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy
and the Bankruptcy and Extraordinary Hazard Expense Reserve Fund and
(2) the Class II-AM Principal Balance as of such Distribution Date;
and
(b) cumulative Realized Losses on the Group II Loans allocated to the
Class II-AM Certificates or covered under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund are less than or equal to
(1) for any Distribution Date before the
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month of the sixth anniversary of the month of the first Distribution
Date, 30% of the sum of (I) the Class II-AM Principal Balance as of
the Cut-Off Date and (II) the product of (x) a fraction, the numerator
of which is the aggregate Class Principal Balance of the Group II
Certificates as of the Cut-Off Date and the denominator of which is
the aggregate Class Principal Balance of all of the Certificates as of
the Cut-Off Date and (y) the coverage available under the Mortgage
Pool Insurance Policy, the Special Hazard Insurance Policy and the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund as of the
Cut-Off Date, (2) for any Distribution Date in or after the month of
the sixth anniversary of the month of the first Distribution Date but
before the seventh anniversary of the month of the first Distribution
Date, 35% of the sum of (I) the Class II-AM Principal Balance as of
the Cut-Off Date and (II) the product of (x) a fraction, the numerator
of which is the aggregate Class Principal Balance of the Group II
Certificates as of the Cut-Off Date and the denominator of which is
the aggregate Class Principal Balance of all of the Certificates as of
the Cut-Off Date and (y) the coverage available under the Mortgage
Pool Insurance Policy, the Special Hazard Insurance Policy and the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund as of the
Cut-Off Date, (3) for any Distribution Date in or after the month of
the seventh anniversary of the month of the first Distribution Date
but before the eighth anniversary of the month of the first
Distribution Date, 40% of the sum of (I) the Class II-AM Principal
Balance as of the Cut-Off Date and (II) the product of (x) a fraction,
the numerator of which is the aggregate Class Principal Balance of the
Group II Certificates as of the Cut-Off Date and the denominator of
which is the aggregate Class Principal Balance of all of the
Certificates as of the Cut-Off Date and (y) the coverage available
under the Mortgage Pool Insurance Policy, the Special Hazard Insurance
Policy and the Bankruptcy and Extraordinary Hazard Expense Reserve
Fund as of the Cut-Off Date, (4) for any Distribution Date in or after
the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the
first Distribution Date, 45% of the sum of (I) the Class II-AM
Principal Balance as of the Cut-Off Date and (II) the product of (x) a
fraction, the numerator of which is the aggregate Class Principal
Balance of the Group II Certificates as of the Cut-Off Date and the
denominator of which is the aggregate Class Principal Balance of all
of the Certificates as of the Cut-Off Date and (y) the coverage
available under the Mortgage Pool Insurance Policy, the Special Hazard
Insurance Policy and the Bankruptcy and Extraordinary Hazard Expense
Reserve Fund as of the Cut-Off Date, and (5) for any Distribution Date
in or after the month of the ninth anniversary of the month of the
first Distribution Date, 50% of the sum of (I) the Class II-AM
Principal Balance as of the Cut-Off Date and (II) the product of (x) a
fraction, the numerator of which is the aggregate Class Principal
Balance of the Group II Certificates as of the Cut-Off Date and the
denominator of which is the aggregate Class Principal Balance of all
of the Certificates as of the Cut-Off Date and (y) the coverage
available under the Mortgage Pool Insurance Policy, the
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Special Hazard Insurance Policy and the Bankruptcy and Extraordinary
Hazard Expense Reserve Fund as of the Cut-Off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group II Senior Percentage for such Distribution Date plus 70% of the Class
II-AM Percentage for such Distribution Date; (2) for any such Distribution Date
in or after the month of the sixth anniversary of the month of the first
Distribution Date but before the seventh anniversary of the month of the first
Distribution Date, the Group II Senior Percentage for such Distribution Date
plus 60% of the Class II-AM Percentage for such Distribution Date; (3) for any
such Distribution Date in or after the month of the seventh anniversary of the
month of the first Distribution Date but before the eighth anniversary of the
month of the first Distribution Date, the Group II Senior Percentage for such
Distribution Date plus 40% of the Class II-AM Percentage for such Distribution
Date; (4) for any such Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the ninth
anniversary of the month of the first Distribution Date, the Group II Senior
Percentage for such Distribution Date plus 20% of the Class II-AM Percentage for
such Distribution Date; and (5) for any such Distribution Date thereafter, the
Group II Senior Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Group II-A-L Regular
Interests of Principal Prepayments in the percentage required would reduce the
sum of the Class Principal Balances of such Certificates below zero, the Group
II Senior Prepayment Percentage for such Distribution Date shall be limited to
the percentage necessary to reduce such sum to zero. Notwithstanding the
foregoing, however, on each Distribution Date, the Class II-P-L Regular
Interests will receive the Class II-P Fraction of all principal payments,
including, without limitation, Principal Prepayments, received in respect of
each Class II-P Mortgage Loan.
Group II Senior Principal Distribution Amount: For any Distribution Date,
an amount equal to the sum of (a) the Group II Senior Percentage of the
Principal Payment Amount for Loan Group II (exclusive of the portion thereof
attributable to principal distributions to the Class II-P-L Regular Interests
pursuant to clauses (I)(b)(i) and (II)(b)(i) of the definition of "REMIC I
Distribution Amount"), (b) the Group II Senior Prepayment Percentage of the
Principal Prepayment Amount for Loan Group II (exclusive of the portion thereof
attributable to principal distributions to the Class II-P-L Regular Interests
pursuant to clauses (I)(b)(i) and (II)(b)(i) of the definition of "REMIC I
Distribution Amount"), (c) the Group II Senior Liquidation Amount and (d) the
excess, if any, of the principal portion of Special Insurance Proceeds received
with respect to the Group II Loans which became Liquidated Mortgage Loans during
the Prior Period (exclusive of the portion thereof attributable to principal
distributions to the Class II-P-L Regular Interests pursuant to clauses
(I)(b)(i) and (II)(b)(i) of the definition of "REMIC I Distribution Amount")
over the amount specified in clause (II) of the definition of "Class II-AM
Principal Distribution Amount".
Group II-A Certificates: The Class II-A-1 and Class II-A-2 Certificates.
Group II-A-L Regular Interests: The Class II-A-1-L and Class II-A-2-L
Regular Interests.
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Group II-L Regular Interests: The Group II-A-L, Class II-X-L, Class II-P-L
and Class II-AM-L Regular Interests.
Group II-L Senior Regular Interests: The Group II-A-L, Class II-X-L and
Class II-P-L Regular Interests.
Group III Certificates: The Group III-A, Class III-X and Class III-AM
Certificates.
Group III Credit Support Depletion Date: The later of (i) the first
Distribution Date on which the Class III-AM Principal Balance has been or will
be reduced to zero as a result of principal distributions thereon and the
allocation of Realized Losses on such Distribution Date and (ii) the date on
which coverage under the Mortgage Pool Insurance Policy has been exhausted.
Group III Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group III Loans.
Group III Premium Rate Mortgage Loans: The Group III Loans having
Pass-Through Rates in excess of 6.750% per annum.
Group III Senior Certificates: The Group III-A and Class III-X
Certificates.
Group III Senior Liquidation Amount: The aggregate, for each Group III Loan
which became a Liquidated Mortgage Loan during the Prior Period, of the lesser
of: (i) the Group III Senior Percentage of the Principal Balance of such
Mortgage Loan, and (ii) the Group III Senior Prepayment Percentage of the
Liquidation Principal with respect to such Mortgage Loan.
Group III Senior Percentage: With respect to any Distribution Date, the
aggregate Class Principal Balance of the Group III-A Certificates divided by the
aggregate Class Principal Balances of the Group III Certificates, in each case
immediately prior to the Distribution Date.
Group III Senior Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group III Senior Percentage for such Distribution Date exceeds the Group III
Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group III Loans which are 60
or more days delinquent (including loans in foreclosure and property
held by the Trust Fund) for each of the immediately preceding six
calendar months is less than or equal to 50% of the sum of (1) the
product of (x) a fraction, the numerator of which is the aggregate
Class Principal Balance of the Group III Certificates and the
denominator of which is the aggregate Class Principal Balance of all
of the Certificates and (y) the remaining coverage available under the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy
and the Bankruptcy and Extraordinary Hazard Expense Reserve Fund and
(2) the Class III-AM Principal Balance as of such Distribution Date;
and
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(b) cumulative Realized Losses on the Group III Loans allocated to the
Class III-AM Certificates or covered under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund are less than or equal to
(1) for any Distribution Date before the month of the sixth
anniversary of the month of the first Distribution Date, 30% of the
sum of (I) the Class III-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group III Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (2)
for any Distribution Date in or after the month of the sixth
anniversary of the month of the first Distribution Date but before the
seventh anniversary of the month of the first Distribution Date, 35%
of the sum of (I) the Class III-AM Principal Balance as of the Cut-Off
Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group III Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (3)
for any Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the
eighth anniversary of the month of the first Distribution Date, 40% of
the sum of (I) the Class III-AM Principal Balance as of the Cut-Off
Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group III Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (4)
for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the
ninth anniversary of the month of the first Distribution Date, 45% of
the sum of (I) the Class III-AM Principal Balance as of the Cut-Off
Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group III Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, and
(5) for any Distribution Date in or after the month of the ninth
anniversary of the month of the first Distribution Date, 50% of the
sum of (I) the Class III-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group III Certificates as of
the Cut-Off Date and the denominator of which is the
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aggregate Class Principal Balance of all of the Certificates as of the
Cut-Off Date and (y) the coverage available under the Mortgage Pool
Insurance Policy, the Special Hazard Insurance Policy and the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund as of the
Cut-Off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group III Senior Percentage for such Distribution Date plus 70% of the Class
III-AM Percentage for such Distribution Date; (2) for any such Distribution Date
in or after the month of the sixth anniversary of the month of the first
Distribution Date but before the seventh anniversary of the month of the first
Distribution Date, the Group III Senior Percentage for such Distribution Date
plus 60% of the Class III-AM Percentage for such Distribution Date; (3) for any
such Distribution Date in or after the month of the seventh anniversary of the
month of the first Distribution Date but before the eighth anniversary of the
month of the first Distribution Date, the Group III Senior Percentage for such
Distribution Date plus 40% of the Class III-AM Percentage for such Distribution
Date; (4) for any such Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the ninth
anniversary of the month of the first Distribution Date, the Group III Senior
Percentage for such Distribution Date plus 20% of the Class III-AM Percentage
for such Distribution Date; and (5) for any such Distribution Date thereafter,
the Group III Senior Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Group III-A-L Regular
Interests of Principal Prepayments in the percentage required would reduce the
sum of the Class Principal Balances of such Regular Interests below zero, the
Group III Senior Prepayment Percentage for such Distribution Date shall be
limited to the percentage necessary to reduce such Class Principal Balance to
zero.
Group III Senior Principal Distribution Amount: For any Distribution Date,
an amount equal to the sum of (a) the Group III Senior Percentage of the
Principal Payment Amount for Loan Group III, (b) the Group III Senior Prepayment
Percentage of the Principal Prepayment Amount for Loan Group III, (c) the Group
III Senior Liquidation Amount and (d) the excess, if any, of the principal
portion of Special Insurance Proceeds received with respect to the Group III
Loans which became Liquidated Mortgage Loans during the Prior Period over the
amount specified in clause (iv) of the definition of "Class III-AM Principal
Distribution Amount".
Group III-A Certificates: The Class III-A-1, Class III-A-2, Class III-A-3,
Class III-A-4 and Class III-A-5 Certificates.
Group III-A-L Regular Interests: The Class III-A-1-L, Class III-A-3-L,
Class III-A-4-L and Class III-A-5-L Regular Interests.
Group III-L Regular Interests: The Group III-A-L, Class III-X-L and Class
III-AM-L Regular Interests.
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Group III-L Senior Regular Interests: The Group III-A-L and Class III-X-L
Regular Interests.
Indirect DTC Participants: Entities such as banks, brokers, dealers or
trust companies, that clear through or maintain a custodial relationship with a
DTC Participant, either directly or indirectly.
Insurance Proceeds: Standard Insurance Proceeds and Special Insurance
Proceeds.
Interest Distribution Amount: On any Distribution Date, for any Class of
the REMIC I Regular Interests, the Group I Certificates and the Residual
Certificates, the amount of interest accrued on the respective Class Principal
Balance or Class Notional Amount, as applicable, at the related Remittance Rate
for such Class during the Prior Period, in each case before giving effect to
allocations of Realized Losses for the Prior Period or distributions to be made
on such Distribution Date, reduced by Uncompensated Interest Shortfall, interest
shortfalls related to the Relief Act and the interest portion of Realized Losses
allocated to such Class pursuant to the definitions of "Uncompensated Interest
Shortfall", "Relief Act" and "Realized Loss", respectively. The Interest
Distribution Amount for the Class I-A-8 and Class I-P Certificates and the Class
II-A-2-L and Class P-L Regular Interests shall equal zero.
Investment Account: The commingled account (which shall be commingled only
with investment accounts related to series of pass-through certificates with a
class of certificates which has a rating equal to the highest of the Ratings of
the Certificates) maintained by the Master Servicer in the trust department of
the Investment Depository pursuant to Section 3.03 and which bears a designation
acceptable to the Rating Agencies.
Investment Depository: Chemical Bank, New York, New York or another bank or
trust company designated from time to time by the Master Servicer. The
Investment Depository shall at all times be an Eligible Institution.
Lender: An institution from which the Company purchased any Mortgage Loans
pursuant to a Selling and Servicing Contract.
Living Holder: A Beneficial Holder of a Special Retail Certificate other
than a Deceased Holder.
Liquidated Mortgage Loan: A Mortgage Loan as to which the Master Servicer
or the applicable Servicer has determined in accordance with its customary
servicing practices that all amounts which it expects to recover from or on
account of such Mortgage Loan, whether from Insurance Proceeds, Liquidation
Proceeds or otherwise, have been recovered. For purposes of this definition,
acquisition of a Mortgaged Property by the Trust Fund shall not constitute final
liquidation of the related Mortgage Loan.
Liquidation Principal: The principal portion of Liquidation Proceeds
received (exclusive of the portion thereof attributable to distributions to the
Class P-L Regular Interests pursuant to clauses (I)(a)(i), (I)(b)(i), (II)(a)(i)
and (II)(b)(i) of the definition of "REMIC I Distribution
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Amount", as applicable) with respect to each Mortgage Loan which became a
Liquidated Mortgage Loan (but not in excess of the principal balance thereof)
during the Prior Period.
Liquidation Proceeds: Amounts after deduction of amounts reimbursable under
Section 3.05(a)(i) and (ii) received and retained in connection with the
liquidation of defaulted Mortgage Loans, whether through foreclosure or
otherwise, other than Insurance Proceeds.
Loan Group: Loan Group I, Loan Group II or Loan Group III, as applicable.
Loan Group I: The group of Mortgage Loans comprised of the Group I Loans.
Loan Group II: The group of Mortgage Loans comprised of the Group II Loans.
Loan Group III: The group of Mortgage Loans comprised of the Group III
Loans.
Loan-to-Value Ratio: The original principal amount of a Mortgage Loan
divided by the Original Value; however, references to "current Loan-to-Value
Ratio" shall mean the then current Principal Balance of a Mortgage Loan divided
by the Original Value.
Master Servicer: The Company, or any successor thereto appointed as
provided pursuant to Section 7.02, acting to service and administer the Mortgage
Loans pursuant to Section 3.01.
Master Servicing Fee: The fee charged by the Master Servicer for
supervising the mortgage servicing and advancing certain expenses, equal to a
per annum rate set forth for each Mortgage Loan in Exhibit D on the outstanding
Principal Balance of such Mortgage Loan, payable monthly from the Certificate
Account, the Investment Account or the Custodial Account for P&I.
Monthly P&I Advance: An advance of funds by the Master Servicer pursuant to
Section 4.02 or a Servicer pursuant to its Selling and Servicing Contract to
cover delinquent principal and interest installments.
Monthly Payment: The scheduled payment of principal and interest on a
Mortgage Loan (including any amounts due from a Buydown Fund, if any) which is
due on the related Due Date for such Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note.
Mortgaged Property: With respect to any Mortgage Loan, other than a
Cooperative Loan, the real property, together with improvements thereto, and,
with respect to any Cooperative Loan, the related Cooperative Stock and
Cooperative Lease, securing the indebtedness of the Mortgagor under the related
Mortgage Loan.
Mortgage File: The following documents or instruments with respect to each
Mortgage Loan transferred and assigned pursuant to Section 2.01, (X) with
respect to each Mortgage Loan that is not a Cooperative Loan:
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(i) The original Mortgage Note endorsed to "State Street Bank
and Trust Company, as Custodian/Trustee, without recourse" or "State
Street Bank and Trust Company, as Trustee for the benefit of the
Holders from time to time of PNC Mortgage Securities Corp. Mortgage
Pass-Through Certificates, Series 1998-9, without recourse" and all
intervening endorsements evidencing a complete chain of endorsements
from the originator to the Trustee, or, in the event of any Destroyed
Mortgage Note, a copy or a duplicate original of the Mortgage Note,
together with an original lost note affidavit from the originator of
the related Mortgage Loan or the Company stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of
the related Mortgage Note; in the event the Mortgage Notes or the
assignments referred to in Section (iii)(2) of this definition of
"Mortgage File" are endorsed or executed in blank as of the Closing
Date, the Company shall, within 45 days of the Closing Date, cause such
Mortgage Notes or assignments to be endorsed or executed pursuant to
the terms set forth herein, provided, that, with respect to any
Mortgage Note whereby the related Mortgaged Property is located in
California, such original Mortgage Note may be endorsed or executed in
blank and the Company shall not be required to endorse or execute such
Mortgage Note pursuant to the terms set forth in this clause (i);
(ii) The Buydown Agreement, if applicable;
(iii) A Mortgage that is either
(1) the original recorded Mortgage with recording information
thereon for the jurisdiction in which the Mortgaged Property is
located, together with a Mortgage assignment thereof in recordable form
to "State Street Bank and Trust Company, as Custodian/Trustee", or to
"State Street Bank and Trust Company, as Trustee for the Holders of PNC
Mortgage Securities Corp. Mortgage Pass-Through Certificates, Series
1998-9" and all intervening assignments evidencing a complete chain of
assignment, from the originator to the name holder or the payee
endorsing the related Mortgage Note; or
(2) a copy of the Mortgage which represents a true and correct
reproduction of the original Mortgage and which has either been
certified (i) on the face thereof by the public recording office in the
appropriate jurisdiction in which the Mortgaged Property is located, or
(ii) by the originator or Lender as a true and correct copy the
original of which has been sent for recordation and an original
Mortgage assignment thereof duly executed and acknowledged in
recordable form to "State Street Bank and Trust Company, as
Custodian/Trustee" or to "State Street Bank and Trust Company, as
Trustee for the Holders of PNC Mortgage Securities Corp. Mortgage
Pass-Through Certificates, Series 1998-9" and all intervening
assignments evidencing a complete chain of assignment from the
originator to the name holder or the payee endorsing the related
Mortgage Note; provided, that, with respect to any Mortgage whereby the
related Mortgaged Property is located in California, the Mortgage
assignment may be executed and acknowledged in blank and the Company
shall not be required to deliver such Mortgage assignment in the form
otherwise set forth in this clause (iii) or clause (i);
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(iv) A copy of (a) the title insurance policy, or (b) in lieu
thereof, a title insurance binder, a copy of an attorney's title
opinion, certificate or other evidence of title acceptable to the
Company; and
(v) For any Mortgage Loan that has been modified or amended,
the original instrument or instruments effecting such modification or
amendment;
and (Y) with respect to each Cooperative Loan:
(i) the original Mortgage Note endorsed to "State Street Bank
and Trust Company, as Custodian/Trustee", or to "State Street Bank and
Trust Company, as Trustee for the Holders of PNC Mortgage Securities
Corp. Mortgage Pass-Through Certificates, Series 1998-9" and all
intervening endorsements evidencing a complete chain of endorsements,
from the originator to the Trustee, or, in the event of any Destroyed
Mortgage Note, a copy or a duplicate original of the Mortgage Note,
together with an original lost note affidavit from the originator of
the related Mortgage Loan or the Company stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of
the related Mortgage Note, provided, that, with respect to any Mortgage
Note whereby the related Mortgaged Property is located in California,
such original Mortgage Note may be endorsed or executed in blank and
the Company shall not be required to endorse or execute such Mortgage
Note pursuant to the terms set forth in this clause (i);
(ii) A counterpart of the Cooperative Lease and the Assignment
of Proprietary Lease to the originator of the Cooperative Loan with
intervening assignments showing an unbroken chain of title from such
originator to the Trustee;
(iii) The related Cooperative Stock Certificate, representing
the related Cooperative Stock pledged with respect to such Cooperative
Loan, together with an undated stock power (or other similar
instrument) executed in blank;
(iv) The original recognition agreement by the Cooperative of
the interests of the mortgagee with respect to the related Cooperative
Loan;
(v) The Security Agreement;
(vi) Copies of the original UCC-1 financing statement, and any
continuation statements, filed by the originator of such Cooperative
Loan as secured party, each with evidence of recording thereof,
evidencing the interest of the originator under the Security Agreement
and the Assignment of Proprietary Lease;
(vii) Copies of the filed UCC-3 assignments of the security
interest referenced in clause (vi) above showing an unbroken chain of
title from the originator to the Trustee, each with evidence of
recording thereof, evidencing the interest of the originator under the
Security Agreement and the Assignment of Proprietary Lease;
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(viii) An executed assignment of the interest of the
originator in the Security Agreement, Assignment of Proprietary Lease
and the recognition agreement referenced in clause (iv) above, showing
an unbroken chain of title from the originator to the Trustee;
(ix) An executed UCC-1 financing statement showing the Company
as debtor and the Trustee as secured party, each in a form sufficient
for filing, evidencing the interest of such debtors in the Cooperative
Loans; and
(x) For any Cooperative Loan that has been modified or
amended, the original instrument or instruments effecting such
modification or amendment.
Mortgage Interest Rate: For any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan pursuant to the terms of the related
Mortgage Note.
Mortgage Loan Schedule: The schedule, as amended from time to time, of
Mortgage Loans attached hereto as Exhibit D, which shall set forth as to each
Mortgage Loan the following, among other things:
(i) its loan number,
(ii) the address of the Mortgaged Property,
(iii) the name of the Mortgagor,
(iv) the Original Value of the property subject to the
Mortgage,
(v) the Principal Balance as of the Cut-Off Date,
(vi) the Mortgage Interest Rate borne by the Mortgage Note,
(vii) whether a Primary Insurance Policy is in effect as of
the Cut-Off Date,
(viii) the maturity of the Mortgage Note,
(ix) the Servicing Fee and the Master Servicing Fee, and
(x) its Loan Group and, if applicable, its Subgroup.
Mortgage Loans: With respect to each Cooperative Loan, the related Mortgage
Note, Security Agreement, Assignment of Proprietary Lease, Cooperative Stock
Certificate and Cooperative Lease, and, with respect to each Mortgage Loan other
than a Cooperative Loan, the Mortgages and the related Mortgage Notes, each
transferred and assigned to the Trustee pursuant to the provisions hereof as
from time to time are held as part of the Trust Fund, the Mortgage Loans so held
being identified in the Mortgage Loan Schedule.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
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Mortgage Pool: All of the Mortgage Loans.
Mortgage Pool Insurance Policy: The mortgage pool insurance policy, a form
of which is attached as Exhibit O to this Agreement, and the Fraud Waiver and
Ninety-Seven Percent Loan-to-Value Program Endorsement relating thereto, or any
replacement insurance policy obtained by the Master Servicer pursuant to Section
3.16, in the total initial amount equal to 4.50% of the aggregate unpaid
principal balance of the Mortgage Loans as of the Cut-Off Date. The initial
Mortgage Pool Insurance Policy shall be issued by United Guaranty Residential
Insurance Company.
Mortgage Pool Insurer: Initially, United Guaranty Residential Insurance
Company, or any successor thereto or the named insurer in any replacement policy
obtained by the Master Servicer pursuant to Section 3.16.
Mortgage Pool Insurance Premium Sub-Account: An administrative subaccount
established and maintained by the Trustee within the Expense Account for the
payment of the Premiums with respect to the Mortgage Pool Insurance Policy.
Mortgagor: The obligor on a Mortgage Note.
Ninety-Seven Percent Loan-to-Value Program Endorsement: With respect to the
Mortgage Pool Insurance Policy, an endorsement pursuant to which the Mortgage
Pool Insurer will cover Mortgage Loans with loan-to-value ratios of up to
ninety-seven percent (97%) at the time of origination. The Ninety-Seven Percent
Loan-to-Value Program Endorsement shall be provided in an endorsement to the
Mortgage Pool Insurance Policy.
Nonrecoverable Advance: With respect to any Mortgage Loan, any advance
which the Master Servicer shall determine to be a Nonrecoverable Advance
pursuant to Section 4.03 and which was, or is proposed to be, made by (i) the
Master Servicer or (ii) a Servicer pursuant to its Selling and Servicing
Contract.
Non-U.S. Person: A Person that is not a U.S. Person.
OTS: The Office of Thrift Supervision, or any successor thereto.
Officer's Certificate: A certificate signed by the Chairman of the Board,
the President, a Vice President, or the Treasurer of the Master Servicer and
delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, who shall be reasonably
acceptable to the Trustee and who may be counsel (including in-house counsel)
for the Company or the Master Servicer.
Original Value: With respect to any Mortgage Loan other than a Mortgage
Loan originated for the purpose of refinancing an existing mortgage debt, the
lesser of (a) the Appraised Value (if any) of the Mortgaged Property at the time
the Mortgage Loan was originated or (b) the purchase price paid for the
Mortgaged Property by the Mortgagor. With respect to a Mortgage Loan originated
for the purpose of refinancing existing mortgage debt, the
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Original Value shall be equal to the Appraised Value of the Mortgaged Property
at the time the Mortgage Loan was originated or the appraised value at the time
the refinanced mortgage debt was incurred.
Ownership Interest: With respect to any Residual Certificate, any ownership
or security interest in such Residual Certificate, including any interest in a
Residual Certificate as the Holder thereof and any other interest therein
whether direct or indirect, legal or beneficial, as owner or as pledgee.
Pass-Through Entity: Any regulated investment company, real estate
investment trust, common trust fund, partnership, trust or estate, and any
organization to which Section 1381 of the Code applies.
Pass-Through Rate: For each Mortgage Loan, a rate equal to the Mortgage
Interest Rate for such Mortgage Loan less the applicable per annum percentage
rates related to each of (i) the Servicing Fee, (ii) the Master Servicing Fee
and (iii) the Excess Amount. For each Mortgage Loan, any calculation of monthly
interest at such rate shall be based upon annual interest at such rate (computed
on the basis of a 360-day year of twelve 30-day months) on the unpaid Principal
Balance of the related Mortgage Loan divided by twelve, and any calculation of
interest at such rate by reason of a Payoff shall be based upon annual interest
at such rate on the outstanding Principal Balance of the related Mortgage Loan
multiplied by a fraction, the numerator of which is the number of days elapsed
from the Due Date of the last scheduled payment of principal and interest to,
but not including, the date of such Payoff, and the denominator of which is (a)
for Payoffs received on a Due Date, 360, and (b) for all other Payoffs, 365.
Paying Agent: Any paying agent appointed by the Trustee pursuant to Section
8.12.
Payoff: Any Mortgagor payment of principal on a Mortgage Loan equal to the
entire outstanding Principal Balance of such Mortgage Loan, if received in
advance of the last scheduled Due Date for such Mortgage Loan and accompanied by
an amount of interest equal to accrued unpaid interest on the Mortgage Loan to
the date of such payment-in-full.
Payoff Earnings: For any Distribution Date with respect to each Mortgage
Loan on which a Payoff was received by the Master Servicer during the Payoff
Period, the aggregate of the interest earned by the Master Servicer from
investment of each such Payoff from the date of receipt of such Payoff until the
Business Day immediately preceding the related Distribution Date (net of
investment losses).
Payoff Interest: For any Distribution Date with respect to a Mortgage Loan
for which a Payoff was received on or after the first calendar day of the month
of such Distribution Date and before the 15th calendar day of such month, an
amount of interest thereon at the applicable Pass-Through Rate from the first
day of the month of distribution through the day of receipt thereof; to the
extent (together with Payoff Earnings and the aggregate Master Servicing Fee)
not required to be distributed as Compensating Interest on such Distribution
Date, Payoff Interest shall be payable to the Master Servicer as additional
servicing compensation.
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Payoff Period: With respect to the first Distribution Date, the period from
the Cut-Off Date through October 14, 1998, inclusive; and with respect to any
Distribution Date thereafter, the period from the 15th day of the Prior Period
through the 14th day of the month of such Distribution Date, inclusive.
Percentage Interest: (a) With respect to the right of each Certificate of a
particular Class in the distributions allocated to such Class, "Percentage
Interest" shall mean the percentage undivided beneficial ownership interest
evidenced by such Certificate of such Class, which percentage shall equal:
(i) with respect to any Certificate (other than the Residual, Class X
and Class III-A-2 Certificates), its Certificate Principal Balance divided
by the applicable Class Principal Balance;
(ii) with respect to the Class X and Class III-A-2 Certificates, the
portion of the respective Class Notional Amount evidenced by such
Certificate divided by the respective Class Notional Amount; and
(iii) with respect to the Residual Certificates, the percentage set
forth on the face of such Certificate.
(b) With respect to the rights of each Certificate in connection with
Sections 5.09, 7.01, 8.01(c), 8.02, 8.07, 10.01 and 10.03, "Percentage Interest"
shall mean the percentage undivided beneficial interest evidenced by such
Certificate in REMIC II, which for purposes of such rights only shall equal:
(i) with respect to any Certificate (other than the Class X, Class
III-A-2 and Class R-2 Certificates), the product of (x) ninety-six percent
(96%) and (y) the percentage calculated by dividing its Certificate
Principal Balance by the Aggregate Certificate Principal Balance of the
Certificates; provided, however, that the percentage in (x) above shall be
increased by one percent (1%) upon each retirement of the Classes of
Certificates referenced in the parenthetical above (other than the Class
R-2 Certificates);
(ii) with respect to any of the Class X and Class III-A-2
Certificates, one percent (1%) of such Certificate's Percentage Interest as
calculated by paragraph (a)(ii) of this definition; and
(iii) with respect to the Class R-2 Certificates, zero.
Permitted Transferee: With respect to the holding or ownership of any
Residual Certificate, any Person other than (i) the United States, a State or
any political subdivision thereof, or any agency or instrumentality of any of
the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from the taxes imposed by Chapter 1 of the Code (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Code Section 1381(a)(2)(C), (v) any "electing
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large partnership" as defined in Section 775(a) of the Code, (vi) any Person
from whom the Trustee has not received an affidavit to the effect that it is not
a "disqualified organization" within the meaning of Section 860E(e)(5) of the
Code, and (vii) any other Person so designated by the Company based upon an
Opinion of Counsel that the transfer of an Ownership Interest in a Residual
Certificate to such Person may cause REMIC I or REMIC II, as applicable, to fail
to qualify as a REMIC at any time that the Certificates are outstanding. The
terms "United States", "State" and "International Organization" shall have the
meanings set forth in Code Section 7701 or successor provisions. A corporation
shall not be treated as an instrumentality of the United States or of any State
or political subdivision thereof if all of its activities are subject to tax,
and, with the exception of the FHLMC, a majority of its board of directors is
not selected by such governmental unit.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepaid Monthly Payment: Any Monthly Payment received prior to its
scheduled Due Date, which is intended to be applied to a Mortgage Loan on its
scheduled Due Date and held in the related Custodial Account for P&I until the
Withdrawal Date following its scheduled Due Date.
Premium: With respect to each of the Mortgage Pool Insurance Policy and the
Special Hazard Insurance Policy, the amount that is due and payable to maintain
each such policy in full force and effect pursuant to the terms of the Mortgage
Pool Insurance Policy or the Special Hazard Insurance Policy, as applicable.
Premium Payment Amount: With respect to the Mortgage Pool Insurance Policy,
for any Distribution Date, an amount equal to the aggregate, for each Mortgage
Loan, of the product of (a) 1/12th of the applicable Premium Payment Rate for
such Mortgage Loan and (b) the outstanding principal balance of such Mortgage
Loan on the first day of the month of such Distribution Date. With respect to
the Special Hazard Insurance Policy, for any Distribution Date, an amount equal
to the aggregate, for each Mortgage Loan, of the product of (a) 1/12th of the
applicable Premium Payment Rate for such Mortgage Loan and (b) the outstanding
principal balance of such Mortgage Loan on the first day of the month of such
Distribution Date.
Premium Payment Rate: For each Mortgage Loan and with respect to each of
the Mortgage Pool Insurance Policy and the Special Hazard Insurance Policy,
0.040% per annum and 0.0675% per annum, respectively.
Primary Insurance Policy: A policy of mortgage guaranty insurance, if any,
on an individual Mortgage Loan, providing coverage as required by Section
2.03(xi).
Principal Balance: Except as used in Sections 2.02, 3.09 and 9.01 and for
purposes of the definition of Purchase Price, at the time of any determination,
the principal balance of a Mortgage Loan remaining to be paid at the close of
business on the Cut-Off Date, after application of all scheduled principal
payments due on or before the Cut-Off Date, whether or not received,
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reduced by all amounts distributed or (except when such determination occurs
earlier in the month than the Distribution Date) to be distributed to
Certificateholders through the Distribution Date in the month of determination
that are reported as allocable to principal of such Mortgage Loan.
For purposes of the definition of Purchase Price and as used in Sections
2.02, 3.09 and 9.01, at the time of any determination, the principal balance of
a Mortgage Loan remaining to be paid at the close of business on the Cut-Off
Date, after deduction of all scheduled principal payments due on or before the
Cut-Off Date, whether or not received, reduced by all amounts distributed or to
be distributed to Certificateholders through the Distribution Date in the month
of determination that are reported as allocable to principal of such Mortgage
Loan.
In the case of a Substitute Mortgage Loan, "Principal Balance" shall mean,
at the time of any determination, the principal balance of such Substitute
Mortgage Loan transferred to the Trust Fund, on the date of substitution,
reduced by all amounts distributed or to be distributed to Certificateholders
through the Distribution Date in the month of determination that are reported as
allocable to principal of such Substitute Mortgage Loan.
The Principal Balance of a Mortgage Loan (including a Substitute Mortgage
Loan) shall not be adjusted solely by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period. Whenever a
Realized Loss has been incurred with respect to a Mortgage Loan during a
calendar month, the Principal Balance of such Mortgage Loan shall be reduced by
the amount of such Realized Loss as of the Distribution Date next following the
end of such calendar month after giving effect to the allocation of Realized
Losses and distributions of principal to the Certificates.
Principal Payment: Any payment of principal on a Mortgage Loan other than a
Principal Prepayment.
Principal Payment Amount: On any Distribution Date and for any Loan Group
or Subgroup, the sum with respect to the Mortgage Loans in such Loan Group or
Subgroup of (i) the scheduled principal payments on the Mortgage Loans due on
the related Due Date, (ii) the principal portion of repurchase proceeds received
with respect to any Mortgage Loan which was repurchased by the Company pursuant
to a Purchase Obligation or as permitted by this Agreement during the Prior
Period, (iii) the principal portion of Standard Insurance Proceeds received
during the Prior Period, and (iv) any other unscheduled payments of principal
which were received with respect to any Mortgage Loan during the Prior Period,
other than Payoffs, Curtailments, Liquidation Principal and Special Insurance
Proceeds.
Principal Prepayment: Any payment of principal on a Mortgage Loan which
constitutes a Payoff or a Curtailment.
Principal Prepayment Amount: On any Distribution Date and for any Loan
Group or Subgroup, the sum with respect to the Mortgage Loans in such Loan Group
or Subgroup of (i) Curtailments received during the Prior Period from such
Mortgage Loans and (ii) Payoffs received during the Payoff Period from such
Mortgage Loans.
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Prior Period: The calendar month immediately preceding any Distribution
Date.
Pro Rata Allocation: (i) With respect to losses on Group I Loans, the
allocation of the principal portion of Realized Losses to the outstanding
Classes of Group I Certificates (other than the Class I-P and Class I-A-8
Certificates) and the Class R-2 Certificates, pro rata according to their
respective Class Principal Balances, in reduction of their respective Class
Principal Balances (except (x) if the loss is recognized with respect to a Class
I-P Mortgage Loan, in which case the applicable Class I-P Fraction of such loss
will first be allocated to the Class I-P Certificates and (y) if the loss is
recognized with respect to a Subgroup I-1, Subgroup I-2 or Subgroup I-3 Loan, in
which case the applicable Class I-A-8 Fraction of such loss (or of the remainder
of such loss, if the applicable Class I-P Fraction of such loss has been
allocated to the Class I-P Certificates in accordance with clause (x) above)
will first be allocated to the Class I-A-8 Certificates, and the remainder of
such loss will be allocated as set forth above), and the allocation of the
interest portion of Realized Losses to the outstanding Group I Certificates
(other than the Class I-P and Class I-A-8 Certificates) and the Class R-2
Certificates, pro rata according to the amount of interest accrued but unpaid on
each such Class in reduction thereof, and then in reduction of their respective
Class Principal Balances, (ii) with respect to losses on Group II Loans, the
allocation of the principal portion of Realized Losses relating to a Group II
Loan to the outstanding Classes of Group II-L Regular Interests (other than the
Class II-P-L Regular Interests), pro rata according to their respective Class
Principal Balances (except if the loss is recognized with respect to a Class
II-P Mortgage Loan, in which case the applicable Class II-P Fraction of such
loss will first be allocated to the Class II-P-L Regular Interests, and the
remainder of such loss will be allocated as set forth above), and the allocation
of the interest portion of Realized Losses to the outstanding Classes of Group
II-L Regular Interests (other than the Class II-A-2-L and Class II-P-L Regular
Interests), pro rata according to the amount of interest accrued but unpaid on
each such Class in reduction thereof, and then in reduction of their related
Class Principal Balances and (iii) with respect to losses on Group III Loans,
the allocation of the principal portion of Realized Losses relating to a Group
III Loan to the outstanding Classes of Group III-L Regular Interests, pro rata
according to their respective Class Principal Balances, and the allocation of
the interest portion of Realized Losses to the outstanding Classes of Group
III-L Regular Interests, pro rata according to the amount of interest accrued
but unpaid on each such Class in reduction thereof, and then in reduction of
their related Class Principal Balances. Any losses allocated among the
outstanding Classes of Group I-L and Group II-L Regular Interests pursuant to
this definition of "Pro Rata Allocation" shall also be allocated to the
Corresponding Classes of Certificates thereof in the same manner and amounts as
they reduce such attributes of such Classes of Regular Interests; provided,
however, that the interest portion of such losses allocated to the Class
III-A-1-L Regular Interests and applied to reduce the Interest Distribution
Amount thereof shall be allocated to the Class III-A-1 and Class III-A-2
Certificates in reduction of the distribution of interest to such Certificates
pursuant to the distributions set forth in clause (I)(c)(ii)(B) of the
definition of "REMIC II Distribution Amount", pro rata according to the
allocation set forth in such clause.
Prospectus: The Prospectus, dated June 24, 1998, and the Prospectus
Supplement, dated September 28, 1998, of the Company.
Purchase Obligation: An obligation of the Company to repurchase Mortgage
Loans under the circumstances and in the manner provided in Section 2.02 or
Section 2.03.
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Purchase Price: With respect to any Mortgage Loan to be purchased pursuant
to a Purchase Obligation, an amount equal to the sum of the Principal Balance
thereof, and unpaid accrued interest thereon, if any, to the last day of the
calendar month in which the date of repurchase occurs at a rate equal to the
applicable Pass-Through Rate; provided, however, that no Mortgage Loan shall be
purchased or required to be purchased pursuant to Section 2.03, or more than two
years after the Closing Date under Section 2.02, unless (a) the Mortgage Loan to
be purchased is in default, or default is in the judgment of the Company
reasonably imminent, or (b) the Company, at its expense, delivers to the Trustee
an Opinion of Counsel to the effect that the purchase of such Mortgage Loan will
not give rise to a tax on a prohibited transaction, as defined in Section
860F(a) of the Code.
Qualified Insurer: A mortgage guaranty insurance company duly qualified as
such under the laws of the states in which the Mortgaged Properties are located
if such qualification is necessary to issue the applicable insurance policy or
bond, duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided by the Primary Insurance
Policies and approved as an insurer by FHLMC or FNMA and the Master Servicer. A
Qualified Insurer must have the rating required by the Rating Agencies.
Random Lot: With respect to any Distribution Date on which a mandatory
distribution is to be made on either Class of the Special Retail Certificates
(as described in Section 4.06), the method by which DTC will determine which
Special Retail Certificates of such Class will be paid principal, using its
established random lot procedures or, if the such Certificates are no longer
represented by a Book-Entry Certificate, using the Trustee's procedures.
Rating Agency: Initially, each of S&P and Fitch and thereafter, each
nationally recognized statistical rating organization that has rated the
Certificates at the request of the Company, or their respective successors in
interest.
Ratings: As of any date of determination, the ratings, if any, of the
Certificates as assigned by the Rating Agencies.
Realized Loss: For any Distribution Date, with respect to any Mortgage Loan
which became a Liquidated Mortgage Loan during the related Prior Period, the sum
of (i) the principal balance of such Mortgage Loan remaining outstanding and the
principal portion of Nonrecoverable Advances actually reimbursed with respect to
such Mortgage Loan (the principal portion of such Realized Loss), and (ii) the
accrued interest on such Mortgage Loan remaining unpaid and the interest portion
of Nonrecoverable Advances actually reimbursed with respect to such Mortgage
Loan (the interest portion of such Realized Loss). For any Distribution Date,
with respect to any Mortgage Loan which is not a Liquidated Mortgage Loan, the
amount of the Bankruptcy Loss incurred with respect to such Mortgage Loan as of
the related Due Date.
Realized Losses with respect to each of the Subgroup I-1, Subgroup I-2,
Subgroup I-3 and Subgroup I-4 Loans (to the extent that (x) such losses are not
covered by the Mortgage Pool Insurance Policy, the Special Hazard Insurance
Policy or the Bankruptcy and Extraordinary Hazard Expense Reserve Fund, (y)
coverage under the Mortgage Pool Insurance Policy has been exhausted through the
payment of claims or (z) the Mortgage Pool Insurer or the Special Hazard
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Insurer defaults on a valid claim for such loss) shall be allocated to the Group
I-L Regular Interests as follows: The interest portion of such Realized Losses,
if any, shall be allocated among the Class Z and Class Y Regular Interests
related to such Subgroup (i.e. the "related" Subgroup for the Class Z-1 and
Class Y-1 Regular Interests is Subgroup I-1) and the Class I-X-L Regular
Interests, pro rata according to (i) in the case of the Class Z and Class Y
Regular Interests, the amount of interest accrued but unpaid thereon, and (ii)
in the case of the Class I-X-L Regular Interests, the portion of the amount of
interest accrued but unpaid thereon attributable to such Subgroup, in each case
in reduction thereof. Any interest portion of such Realized Losses with respect
to the Group I Loans in excess of the amount allocated pursuant to the preceding
sentence shall be treated as a principal portion of Realized Losses not
attributable to any specific Group I Loan and allocated pursuant to the
succeeding sentences. The applicable Class I-P Fraction of any principal portion
of such Realized Losses attributable to a Class I-P Mortgage Loan shall be
allocated to the Class I-P-L Regular Interests in reduction of the principal
balance thereof. The remainder of the principal portion of Realized Losses with
respect to each of the Subgroup I-1, Subgroup I-2, Subgroup I-3 and Subgroup I-4
Loans shall be allocated, first, to the Class Y Regular Interests related to the
Subgroup, pro rata according to the applicable Class Y Principal Reduction
Amount, to the extent of the applicable Class Y Principal Reduction Amount in
reduction of the Class Principal Balance of such Regular Interests and, second,
the remainder, if any, of such principal portion of such Realized Losses shall
be allocated to the Class Z Regular Interests related to the Subgroup in
reduction of the Class Principal Balance thereof.
Realized Losses allocated to any Class of Group II-L or Group III-L Regular
Interests shall also be allocated to the Corresponding Class of Certificates
thereof and applied to reduce the Class Principal Balance of such Corresponding
Class thereof in the same manner and amounts as they reduce such attributes of
such Class of Group II-L or Group III-L Regular Interests; provided, however,
that the allocation of the interest portion of such losses is subject to the
proviso contained in the last sentence of the definition of "Pro Rata
Allocation" herein.
Except for Special Hazard Losses, Fraud Losses and Bankruptcy and
Extraordinary Hazard Losses not covered by the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, respectively, Realized Losses with respect to the Group I
Loans (to the extent that (x) such losses are not covered by the Mortgage Pool
Insurance Policy, the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund, (y) coverage under the Mortgage Pool
Insurance Policy has been exhausted through the payment of claims or (z) the
Mortgage Pool Insurer or the Special Hazard Insurer defaults on a valid claim
for such loss) shall be allocated among the Group I and Class R-2 Certificates
(i) for Realized Losses allocable to principal (a) first, to the Class I-AM
Certificates, until the Class I-AM Principal Balance has been reduced to zero,
(b) second, if the loss is recognized with respect to a Subgroup I-1, Subgroup
I-2 or Subgroup I-3 Loan, to the Class I-A-8 Certificates, the applicable Class
I-A-8 Fraction of such loss, until the Class I-A-8 Principal Balance has been
reduced to zero, and (c) third, to the Group I-A Certificates (other than the
Class I-A-8 Certificates) and the Class R-2 Certificates, pro rata according to
their respective Class Principal Balances in reduction of their respective Class
Principal Balances; provided, however, that if the loss is recognized with
respect to a Class I-P Mortgage Loan, the Class I-P Fraction of such loss will
first be allocated to the Class I-P Certificates and the remainder of such loss
will be allocated as set forth above in this clause (i); and (ii) for Realized
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Losses allocable to interest (a) first, to the Class I-AM Certificates, in
reduction of accrued but unpaid interest thereon and then in reduction of the
Class I-AM Principal Balance and (b) second, to the Group I-A Certificates
(other than the Class I-A-8 Certificates) and the Class I-X and Class R-2
Certificates, pro rata according to accrued but unpaid interest on such Classes
and then pro rata according to their Class Principal Balances in reduction
thereof; provided, however, that (X) if on any Distribution Date multiple losses
are to be allocated both to the Class I-AM Certificates pursuant to clause
(i)(a) and to other Certificates pursuant to clauses (i)(b) and (i)(c), then
each such loss shall be so allocated, in the same proportions as such losses in
the aggregate; and (Y) if on any Distribution Date multiple losses are to be
allocated both to the Class I-AM Certificates pursuant to clause (ii)(a) and to
other Certificates pursuant to clause (ii)(b), then each such loss shall be so
allocated, in the same proportions as such losses in the aggregate.
If, as a result of the allocation of losses pursuant to the immediately
preceding paragraph, the Senior Component Balance for any Subgroup becomes
greater than the aggregate Principal Balance of the Mortgage Loans in such
Subgroup (reduced by the Class I-P Fraction of the Principal Balance of any
Class I-P Mortgage Loan), then such Senior Component Balance shall be reduced by
the amount of such excess, and such excess shall be added to the Senior
Component Balances for the other Subgroups, pro rata according to the respective
Class I-AM Component Balances for such other Subgroups.
Except for Special Hazard Losses, Fraud Losses and Bankruptcy and
Extraordinary Hazard Losses not covered by the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, respectively, Realized Losses with respect to the Group II
Loans (to the extent that (x) such losses are not covered by the Mortgage Pool
Insurance Policy, the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund, (y) coverage under the Mortgage Pool
Insurance Policy has been exhausted through the payment of claims or (z) the
Mortgage Pool Insurer or the Special Hazard Insurer defaults on a valid claim
for such loss) shall be allocated among the Group II-L Regular Interests (i) for
Realized Losses allocable to principal (a) first, to the Class II-AM-L Regular
Interests, until the Class II-AM-L Principal Balance has been reduced to zero
and (b) second, to the Group II-A-L Regular Interests, pro rata according to
their respective Class Principal Balances in reduction of their respective Class
Principal Balances; provided, however, that if the loss is recognized with
respect to a Class II-P Mortgage Loan, the Class II-P Fraction of such loss will
first be allocated to the Class II-P-L Regular Interests, and the remainder of
such loss will be allocated as set forth above in this clause (i); and (ii) for
Realized Losses allocable to interest (a) first, to the Class II-AM-L Regular
Interests, in reduction of accrued but unpaid interest thereon and then in
reduction of the Class II-AM-L Principal Balance and (b) second, to the Class
II-A-1-L and Class II-X-L Regular Interests pro rata according to accrued but
unpaid interest on such Classes and then in reduction of the Class II-A-1-L
Principal Balance.
Except for Special Hazard Losses, Fraud Losses and Bankruptcy and
Extraordinary Hazard Losses not covered by the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, respectively, Realized Losses with respect to the Group
III Loans (to the extent that (x) such losses are not covered by the Mortgage
Pool Insurance Policy, the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund, (y) coverage under the Mortgage Pool
Insurance
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Policy has been exhausted through the payment of claims or (z) the Mortgage Pool
Insurer or the Special Hazard Insurer defaults on a valid claim for such loss)
shall be allocated among the Group III-L Regular Interests (i) for Realized
Losses allocable to principal (a) first, to the Class III-AM-L Regular
Interests, until the Class III-AM-L Principal Balance has been reduced to zero
and (b) second, to the Group III-A-L Regular Interests, pro rata according to
their respective Class Principal Balances in reduction of their respective Class
Principal Balances; and (ii) for Realized Losses allocable to interest (a)
first, to the Class III-AM-L Regular Interests, in reduction of accrued but
unpaid interest thereon and then in reduction of the Class III-AM-L Principal
Balance and (b) second, to the Group III-A-L and Class III-X-L Regular Interests
pro rata according to accrued but unpaid interest on such Classes and then pro
rata according to their Class Principal Balances in reduction thereof.
Special Hazard Losses, Fraud Losses and Bankruptcy and Extraordinary Hazard
Losses on Group I Loans not covered by the Mortgage Pool Insurance Policy, the
Special Hazard Insurance Policy or the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, respectively, shall be allocated among the Group I
Certificates by Pro Rata Allocation.
Special Hazard Losses, Fraud Losses and Bankruptcy and Extraordinary Hazard
Losses on Group II Loans not covered by the Mortgage Pool Insurance Policy, the
Special Hazard Insurance Policy or the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, respectively, shall be allocated among the Group II-L
Regular Interests by Pro Rata Allocation.
Special Hazard Losses, Fraud Losses and Bankruptcy and Extraordinary Hazard
Losses on Group III Loans not covered by the Mortgage Pool Insurance Policy, the
Special Hazard Insurance Policy or the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, respectively, shall be allocated among the Group III-L
Regular Interests by Pro Rata Allocation.
On each Distribution Date, after giving effect to the principal
distributions and allocations of losses as provided in this Agreement (without
regard to this paragraph), if the aggregate Class Principal Balance of all
outstanding Group I Certificates exceeds the aggregate principal balance of the
Group I Loans remaining to be paid at the close of business on the Cut-Off Date,
after deduction of (i) all principal payments due on or before the Cut-Off Date
in respect of each such Mortgage Loan whether or not paid and (ii) all amounts
of principal in respect of each such Mortgage Loan that have been received or
advanced and included in the REMIC II Available Distribution Amount for the
Group I Certificates, and all losses in respect of each such Mortgage Loan that
have been allocated to the Group I Certificates, on such Distribution Date or
prior Distribution Dates, then such excess will be deemed a principal loss and
will be allocated to the Class I-AM Certificates, in reduction of the Class I-AM
Principal Balance.
On each Distribution Date, after giving effect to the principal
distributions and allocations of losses as provided in this Agreement (without
regard to this paragraph), if the aggregate Class Principal Balance of all
outstanding Group II-L Regular Interests exceeds the aggregate principal balance
of the Group II Loans remaining to be paid at the close of business on the
Cut-Off Date, after deduction of (i) all principal payments due on or before the
Cut-Off Date in respect of each such Mortgage Loan whether or not paid and (ii)
all amounts of principal in respect of each such Mortgage Loan that have been
received or advanced and included in the REMIC II Available
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Distribution Amount for the Group II-L Regular Interests, and all losses in
respect of each such Mortgage Loan that have been allocated to the Group II-L
Regular Interests, on such Distribution Date or prior Distribution Dates, then
such excess will be deemed a principal loss and will be allocated to the Class
II-AM-L Regular Interests, in reduction of the Class II-AM-L Principal Balance.
On each Distribution Date, after giving effect to the principal
distributions and allocations of losses as provided in this Agreement (without
regard to this paragraph), if the aggregate Class Principal Balance of all
outstanding Group III-L Regular Interests exceeds the aggregate principal
balance of the Group III Loans remaining to be paid at the close of business on
the Cut-Off Date, after deduction of (i) all principal payments due on or before
the Cut-Off Date in respect of each such Mortgage Loan whether or not paid and
(ii) all amounts of principal in respect of each such Mortgage Loan that have
been received or advanced and included in the REMIC II Available Distribution
Amount for the Group III-L Regular Interests, and all losses in respect of each
such Mortgage Loan that have been allocated to the Group III-L Regular
Interests, on such Distribution Date or prior Distribution Dates, then such
excess will be deemed a principal loss and will be allocated to the Class
III-AM-L Regular Interests, in reduction of the Class III-AM-L Principal
Balance.
Record Date: The last Business Day of the month immediately preceding the
month of the related Distribution Date.
Regular Interests: (i) With respect to REMIC I, the REMIC I Regular
Interests and (ii) with respect to REMIC II, the Certificates (other than the
Residual Certificates).
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Interest shortfalls related to the Relief Act for Loan Group I shall be
allocated to the Group I and Class R-2 Certificates pro rata according to the
amount of the Interest Distribution Amount to which each such Class would
otherwise be entitled in reduction thereof.
Interest shortfalls related to the Relief Act for Loan Group II shall be
allocated to the Group II-L Regular Interests pro rata according to the amount
of the Interest Distribution Amount to which each such Class would otherwise be
entitled in reduction thereof.
Interest shortfalls related to the Relief Act for Loan Group III shall be
allocated to the Group III-L Regular Interests pro rata according to the amount
of the Interest Distribution Amount to which each such Class would otherwise be
entitled in reduction thereof.
Interest shortfalls related to the Relief Act for each of Subgroup I-1,
Subgroup I-2, Subgroup I-3 and Subgroup I-4 shall be allocated among the Class Z
and Class Y Regular Interests related to such Subgroup (i.e. the "related"
Subgroup for the Class Z-1 and Class Y-1 Regular Interests is Subgroup I-1) and
the Class I-X-L Regular Interests, pro rata according to (i) in the case of the
Class Z and Class Y Regular Interests, the amount of the Interest Distribution
Amount to which each such Class would otherwise be entitled and (ii) in the case
of the Class I-
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X-L Regular Interests, the portion of the Interest Distribution Amount to which
such Class would otherwise be entitled attributable to such Subgroup, in each
case in reduction thereof.
REMIC: A real estate mortgage investment conduit, as such term is defined
in the Code.
REMIC Provisions: Sections 860A through 860G of the Code, related Code
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
REMIC I: The segregated pool of assets consisting of the REMIC I Trust
Fund, with respect to which a separate REMIC election is to be made.
REMIC I Available Distribution Amount: On any Distribution Date, with
respect to each Loan Group or Subgroup, the sum of the following amounts with
respect to the Mortgage Loans in such Loan Group or Subgroup:
(1) the total amount of all cash received by or on behalf of the
Master Servicer with respect to such Mortgage Loans by the Determination
Date for such Distribution Date and not previously distributed (including
Monthly P&I Advances made by Servicers, amounts received with respect to
the Mortgage Pool Insurance Policy (including the Fraud Endorsement and the
Ninety-Seven Percent Loan-to-Value Program Endorsement), the Special Hazard
Insurance Policy and the Bankruptcy and Extraordinary Hazard Expense
Reserve Fund, proceeds of Mortgage Loans in such Loan Group which have been
liquidated and scheduled amounts of distributions from Buydown Funds
respecting Buydown Loans, if any), except:
(a) all scheduled payments of principal and interest collected
but due on a date subsequent to the related Due Date;
(b) all Curtailments received after the Prior Period (together
with any interest payment received with such prepayments to the extent
that it represents the payment of interest accrued on a related
Mortgage Loan subsequent to the Prior Period);
(c) all Payoffs received after the Payoff Period immediately
preceding such Distribution Date (together with any interest payment
received with such Payoffs to the extent that it represents the
payment of interest accrued on the Mortgage Loans for the period
subsequent to the Prior Period), and interest which was accrued and
received on Payoffs received during the period from the 1st to the
14th day of the month of such Determination Date, which interest shall
not be included in the calculation of the REMIC I Available
Distribution Amount for any Distribution Date;
(d) Insurance Proceeds and Liquidation Proceeds received on such
Mortgage Loans after the Prior Period;
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(e) all amounts in the Certificate Account which are due and
reimbursable to a Servicer or the Master Servicer pursuant to the
terms of this Agreement;
(f) the sum of the Master Servicing Fee, the Servicing Fee and
the Excess Amount for each such Mortgage Loan; and
(g) Excess Liquidation Proceeds;
(2) the sum, to the extent not previously distributed, of the
following amounts, to the extent advanced or received, as applicable, by
the Master Servicer:
(a) any Monthly P&I Advance made by the Master Servicer to the
Trustee with respect to such Distribution Date relating to such
Mortgage Loans; and
(b) Compensating Interest; and
(3) the total amount, to the extent not previously distributed, of all
cash received by the Distribution Date by the Trustee or the Master
Servicer, in respect of a Purchase Obligation under Section 2.02 and
Section 2.03 or any permitted repurchase of a Mortgage Loan.
REMIC I Distribution Amount: (I) For any Distribution Date prior to the
Group I, Group II or Group III Credit Support Depletion Date, as applicable, the
REMIC I Available Distribution Amount shall be distributed to the REMIC I
Regular Interests and the Class R-1 Certificates in the following amounts and
priority:
(a) With respect to the Group I-L Regular Interests and the Class R-1
Certificates, on any Distribution Date prior to the Group I Credit Support
Depletion Date, to the extent of the REMIC I Available Distribution Amount for
Loan Group I remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class I-P-L Regular Interests, the aggregate for all
of the Class I-P Mortgage Loans of the product for each Class I-P Mortgage
Loan of the applicable Class I-P Fraction and the sum of (x) scheduled
payments of principal on such Class I-P Mortgage Loan due on or before the
related Due Date in respect of which no distribution has been made on any
previous Distribution Date and which were received by the Determination
Date, or which have been advanced as part of a Monthly P&I Advance with
respect to such Distribution Date, (y) the principal portion received in
respect of such Class I-P Mortgage Loan during the Prior Period of (1)
Curtailments, (2) Insurance Proceeds, (3) the amount, if any, of the
principal portion of the Purchase Price paid pursuant to a Purchase
Obligation or any repurchase of a Mortgage Loan permitted hereunder and (4)
Liquidation Proceeds and (z) the principal portion of Payoffs received in
respect of such Class I-P Mortgage Loan during the Payoff Period;
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(ii) second, to the Class I-X-L, Class Y-1, Class Y-2, Class Y-3,
Class Y-4, Class Z-1, Class Z-2, Class Z-3 and Class Z-4 Regular Interests
and the Class R-1 Certificates, concurrently, the sum of the Interest
Distribution Amounts for such Classes of Regular Interests and Certificates
remaining unpaid from previous Distribution Dates, pro rata according to
their respective shares of such unpaid amounts;
(iii) third, to the Class I-X-L, Class Y-1, Class Y-2, Class Y-3,
Class Y-4, Class Z-1, Class Z-2, Class Z-3 and Class Z-4 Regular Interests
and the Class R-1 Certificates, concurrently, the sum of the Interest
Distribution Amounts for such Classes of Certificates for the current
Distribution Date, pro rata according to their respective Interest
Distribution Amounts;
(iv) fourth, to the Class R-1 Certificates until the Class R-1
Principal Balance has been reduced to zero (such distributions shall be
deemed to be made from the REMIC I Available Distribution Amount for
Subgroup I-1);
(v) fifth, to the Class Y-1, Class Y-2, Class Y-3, Class Y-4, Class
Z-1, Class Z-2, Class Z-3 and Class Z-4 Regular Interests, the Class Y-1,
Class Y-2, Class Y-3, Class Y-4, Class Z-1, Class Z-2, Class Z-3 and Class
Z-4 Principal Distribution Amount, respectively; and
(vi) sixth, to the Class R-1 Certificates, the Residual Distribution
Amount for Loan Group I for such Distribution Date;
(b) With respect to the Group II-L Regular Interests and the Class R-1
Certificates, on any Distribution Date prior to the Group II Credit Support
Depletion Date, to the extent of the REMIC I Available Distribution Amount for
Loan Group II remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class II-P-L Regular Interests, the aggregate for
all Class II-P Mortgage Loans of the product for each Class II-P Mortgage
Loan of the applicable Class II-P Fraction and the sum of (x) scheduled
payments of principal on such Class II-P Mortgage Loan due on or before the
related Due Date in respect of which no distribution has been made on any
previous Distribution Date and which were received by the Determination
Date, or which have been advanced as part of a Monthly P&I Advance with
respect to such Distribution Date, (y) the principal portion received in
respect of such Class II-P Mortgage Loan during the Prior Period of (1)
Curtailments, (2) Insurance Proceeds, (3) the amount, if any, of the
principal portion of the Purchase Price paid pursuant to a Purchase
Obligation or any repurchase of a Mortgage Loan permitted hereunder and (4)
Liquidation Proceeds and (z) the principal portion of Payoffs received in
respect of such Class II-P Mortgage Loan during the Payoff Period;
(ii) second, to the Class II-A-1-L and Class II-X-L Regular Interests,
the sum of the Interest Distribution Amounts for such Classes of Regular
Interests remaining unpaid from previous Distribution Dates, pro rata
according to their respective shares of such unpaid amounts;
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(iii) third, to the Class II-A-1-L and Class II-X-L Regular Interests,
the sum of the Interest Distribution Amounts for such Classes of Regular
Interests for the current Distribution Date, pro rata according to their
respective Interest Distribution Amounts;
(iv) fourth, to the Group II-A-L Regular Interests, as principal, the
Group II Senior Principal Distribution Amount, pro rata according to their
respective Class Principal Balances, until the aggregate Class Principal
Balance of the Group II-A-L Regular Interests has been reduced to zero;
(v) fifth, to the Class II-P-L Regular Interests, to the extent of
amounts otherwise available to pay the Class II-AM Principal Distribution
Amount (without regard to clause (I)(B) of the definition thereof) on such
Distribution Date, the amount payable to the Class II-P-L Regular Interests
on previous Distribution Dates pursuant to clause (I)(b)(vi) of this
definition of "REMIC I Distribution Amount" and remaining unpaid from such
previous Distribution Dates;
(vi) sixth, to the Class II-P-L Regular Interests, to the extent of
amounts otherwise available to pay the Class II-AM Principal Distribution
Amount (without regard to clause (I)(B) of the definition thereof) on such
Distribution Date, an amount equal to the Class II-P Fraction of any
Realized Loss on a Class II-P Mortgage Loan previously allocated to the
Class II-P-L Regular Interests (other than a Special Hazard Loss, Fraud
Loss, or Bankruptcy or Extraordinary Hazard Loss not covered by the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy or the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund, respectively),
provided that any amounts distributed in respect of losses pursuant to
paragraph (I)(b)(v) or this paragraph (I)(b)(vi) of this definition of
"REMIC I Distribution Amount" shall not cause a further reduction in the
Class II-P-L Principal Balance;
(vii) seventh, to the Class II-AM-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests remaining unpaid
from previous Distribution Dates;
(viii) eighth, to the Class II-AM-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests for the current
Distribution Date;
(ix) ninth, to the Class II-AM-L Regular Interests, the Class II-AM
Principal Distribution Amount, until the Class II-AM-L Principal Balance
has been reduced to zero;
(x) tenth, to the Class II-AM-L Regular Interests, the remaining
portion, if any, of the REMIC I Available Distribution Amount for Loan
Group II, up to the amount of unreimbursed Realized Losses previously
allocated to such Class, if any, provided that any amounts distributed
pursuant to this paragraph (I)(b)(x) of this definition of "REMIC I
Distribution Amount" shall not cause a further reduction in the Class
II-AM-L Principal Balance; and
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(xi) eleventh, to the Class R-1 Certificates, the Residual
Distribution Amount for the Group II-L Regular Interests for such
Distribution Date; and
(c) With respect to the Group III-L Regular Interests and the Class R-1
Certificates, on any Distribution Date prior to the Group III Credit Support
Depletion Date, to the extent of the REMIC I Available Distribution Amount for
Loan Group III remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Group III-A-L and Class III-X-L Regular Interests,
the sum of the Interest Distribution Amounts for such Classes of Regular
Interests remaining unpaid from previous Distribution Dates, pro rata
according to their respective shares of such unpaid amounts;
(ii) second, to the Group III-A-L and Class III-X-L Regular Interests,
the sum of the Interest Distribution Amounts for such Classes of Regular
Interests for the current Distribution Date, pro rata according to their
respective Interest Distribution Amounts;
(iii) third, to the Group III-A-L Regular Interests, as principal, the
Group III Senior Principal Distribution Amount, as follows:
(a) first, to the Class III-A-4-L Regular Interests, an amount,
up to the amount of the Class III-A-4-L Lockout Priority Amount for
such Distribution Date, until the Class III-A-4-L Principal Balance
has been reduced to zero;
(b) second, to the Class III-A-1-L Regular Interests, the portion
of the Group III Senior Principal Distribution Amount remaining after
the distribution described above, until the Class III-A-1-L Principal
Balance has been reduced to zero;
(c) third, concurrently, the portion of the Group III Senior
Principal Distribution Amount remaining after the distributions
described above, until the Class III-A-5-L Principal Balance has been
reduced to zero, as follows:
(1) 56.8693064259% to the Class III-A-5-L Regular Interests;
and
(2) 43.1306935741% to the Class III-A-3-L Regular Interests;
(d) fourth, to the Class III-A-3-L Regular Interests, the portion
of the Group III Senior Principal Distribution Amount remaining after
the distributions described above, until the Class III-A-3-L Principal
Balance has been reduced to zero; and
(e) fifth, to the Class III-A-4-L Regular Interests, the portion
of the Group III Senior Principal Distribution Amount remaining after
the distributions described above, until the Class III-A-4-L Principal
Balance has been reduced to zero; and
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(iv) fourth, to the Class III-AM-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests remaining unpaid
from previous Distribution Dates;
(v) fifth, to the Class III-AM-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests for the current
Distribution Date;
(vi) sixth, to the Class III-AM-L Regular Interests, the Class III-AM
Principal Distribution Amount, until the Class III-AM-L Principal Balance
has been reduced to zero;
(vii) seventh, to the Class III-AM-L Regular Interests, the remaining
portion, if any, of the REMIC I Available Distribution Amount for Loan
Group III, up to the amount of unreimbursed Realized Losses previously
allocated to such Class, if any, provided that any amounts distributed
pursuant to this paragraph (I)(c)(vii) of this definition of "REMIC I
Distribution Amount" shall not cause a further reduction in the Class
III-AM-L Principal Balance; and
(viii) eighth, to the Class R-1 Certificates, the Residual
Distribution Amount for the Group III-L Regular Interests for such
Distribution Date.
(II) For any Distribution Date on or after the Group I, Group II or Group
III Credit Support Depletion Date, as applicable, the REMIC I Available
Distribution Amount shall be distributed to the outstanding Classes of REMIC I
Regular Interests and the Class R-1 Certificates in the following amounts and
priority:
(a) With respect to the Group I-L Regular Interests and Class R-1
Certificates, on each Distribution Date on or after the Group I Credit Support
Depletion Date, to the extent of the REMIC I Available Distribution Amount for
the Loan Group I remaining following prior distributions, if any, on such
Distribution Date, to such Regular Interests and Certificates in the amounts and
priority set forth in clauses (I)(a)(i) through (I)(a)(vi) of this definition of
"REMIC I Distribution Amount";
(b) With respect to the Group II-L Regular Interests and the Class R-1
Certificates, on each Distribution Date on or after the Group II Credit Support
Depletion Date, to the extent of the REMIC I Available Distribution Amount for
Loan Group II remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class II-P-L Regular Interests, principal in the
amount that would otherwise be distributed to such Class on such
Distribution Date pursuant to clause (I)(b)(i) of this definition of "REMIC
I Distribution Amount";
(ii) second, to the Class II-A-1-L and Class II-X-L Regular Interests,
the amount payable to each such Class of Regular Interests on prior
Distribution Dates pursuant to clause (I)(b)(ii) or (II)(b)(iii) of this
definition of "REMIC I Distribution Amount", and remaining unpaid, pro rata
according to such amount;
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(iii) third, to the Class II-A-1-L and Class II-X-L Regular Interests,
the sum of the Interest Distribution Amounts for such Classes of Regular
Interests for the current Distribution Date, pro rata according to their
respective Interest Distribution Amounts;
(iv) fourth, to the Group II-A-L Regular Interests, the Group II
Senior Principal Distribution Amount, pro rata according to their
respective Class Principal Balances; and
(v) fifth, to the Class R-1 Certificates, the Residual Distribution
Amount for the Group II-L Regular Interests for such Distribution Date; and
(c) With respect to the Group III-L Regular Interests and the Class R-1
Certificates, on each Distribution Date on or after the Group III Credit Support
Depletion Date, to the extent of the REMIC I Available Distribution Amount for
Loan Group III remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Group III-A-L and Class III-X-L Regular Interests,
the amount payable to each such Class of Regular Interests on prior
Distribution Dates pursuant to clause (I)(c)(i) or (II)(c)(ii) of this
definition of "REMIC I Distribution Amount", and remaining unpaid, pro rata
according to such amount;
(ii) second, to the Group III-A-L and Class III-X-L Regular Interests,
the sum of the Interest Distribution Amounts for such Classes of Regular
Interests for the current Distribution Date, pro rata according to their
respective Interest Distribution Amounts;
(iii) third, to the Group III-A-L Regular Interests, the Group III
Senior Principal Distribution Amount, pro rata according to their
respective Class Principal Balances; and
(iv) fourth, to the Class R-1 Certificates, the Residual Distribution
Amount for the Group III-L Regular Interests for such Distribution Date.
REMIC I Regular Interest: The Classes of Regular Interests in the REMIC I
Trust Fund designated as "regular interests" in the table titled "REMIC I Trust
Fund" in the Preliminary Statement hereto.
REMIC I Trust Fund: All of the assets in the Trust Fund other than the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund, the Expense Account
and the Rounding Accounts.
REMIC II: The segregated pool of assets consisting of the REMIC II Trust
Fund conveyed in trust to the Trustee for the benefit of the Certificateholders
(other than the Class R-1 Certificateholders) pursuant to Section 2.05, with
respect to which a separate REMIC election is to be made.
REMIC II Available Distribution Amount: With respect to the Group I
Certificates, on any Distribution Date, the aggregate of all distributions with
respect to the Group I-L Regular Interests. With respect to the Group II
Certificates, on any Distribution Date, the aggregate of all
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distributions with respect to the Group II-L Regular Interests. With respect to
the Group III Certificates, on any Distribution Date, the aggregate of all
distributions with respect to the Group III-L Regular Interests.
REMIC II Distribution Amount: (I) For any Distribution Date prior to the
Group I, Group II or Group III Credit Support Depletion Date, as applicable, the
REMIC II Available Distribution Amount shall be distributed to the
Certificateholders (other than the Class R-1 Certificateholders) in the
following amounts and priority:
(a) With respect to the Group I and Class R-2 Certificates, on any
Distribution Date prior to the Group I Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the Group I
Certificates remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class I-P Certificates, the aggregate for all Class
I-P Mortgage Loans of the product for each Class I-P Mortgage Loan of the
applicable Class I-P Fraction and the sum of (x) scheduled payments of
principal on such Class I-P Mortgage Loan due on or before the related Due
Date in respect of which no distribution has been made on any previous
Distribution Date and which were received by the Determination Date, or
which have been advanced as part of a Monthly P&I Advance with respect to
such Distribution Date, (y) the principal portion received in respect of
such Class I-P Mortgage Loan during the Prior Period of (1) Curtailments,
(2) Insurance Proceeds, (3) the amount, if any, of the principal portion of
the Purchase Price paid pursuant to a Purchase Obligation or any repurchase
of a Mortgage Loan permitted hereunder and (4) Liquidation Proceeds and (z)
the principal portion of Payoffs received in respect of such Class I-P
Mortgage Loan during the Payoff Period;
(ii) second, to the Group I-A Certificates entitled to interest and
the Class I-X and Class R-2 Certificates, the sum of the Interest
Distribution Amounts for such Classes of Certificates remaining unpaid from
previous Distribution Dates, pro rata according to their respective shares
of such unpaid amounts;
(iii) third, to the Group I-A Certificates entitled to interest and
the Class I-X and Class R-2 Certificates, the sum of the Interest
Distribution Amounts for such Classes of Regular Interests and Certificates
for the current Distribution Date, pro rata according to their respective
Interest Distribution Amounts;
(iv) fourth, to the Group I-A and Class R-2 Certificates, as
principal, the Group I Senior Principal Distribution Amount, as follows:
(a) first, to the Class I-A-8 Certificates, an amount, up to the
amount of the Class I-A-8 Principal Distribution Amount for such
Distribution Date, until the Class I-A-8 Principal Balance has been
reduced to zero;
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(b) second, to the Class I-A-3 Certificates, an amount, up to the
amount of the Class I-A-3 Lockout Priority Amount for such
Distribution Date, until the Class I-A-3 Principal Balance has been
reduced to zero;
(c) third, concurrently, the portion of the Group I Senior
Principal Distribution Amount remaining after the distributions
described above, as follows:
(1) 62.9647602914%, sequentially, as follows:
(A) first, to the Class R-2 Certificates, until the
Class R-2 Principal Balance has been reduced to zero;
(B) second, to the Class I-A-1 Certificates, until the
Class I-A-1 Principal Balance has been reduced to zero; and
(C) third, to the Class I-A-2 Certificates, until the
Class I-A-2 Principal Balance has been reduced to zero; and
(2) 37.0352397086%, sequentially, as follows:
(A) first, to the Class I-A-4 Certificates, until the
Class I-A-4 Principal Balance has been reduced to zero;
(B) second, to the Class I-A5 Certificates, until the
Class I-A-5 Principal Balance has been reduced to zero; and
(C) third, to the Class I-A-6 and Class I-A-7
Certificates, pro rata, until the respective Class Principal
Balances of such Classes have each been reduced to zero; and
(d) fourth, to the Class I-A-3 Certificates, the portion of the
Group I Senior Principal Distribution Amount remaining after the
distributions described above, until the Class I-A-3 Principal Balance
has been reduced to zero;
(v) fifth, to the Class I-P Certificates, to the extent of amounts
otherwise available to pay the Class I-AM Principal Distribution Amount
(without regard to clause (I)(B) of the definition thereof) on such
Distribution Date, the amount payable to the Class I-P Certificates on
previous Distribution Dates pursuant to clause (I)(a)(vi) of this
definition of "REMIC II Distribution Amount" and remaining unpaid from such
previous Distribution Dates;
(vi) sixth, to the Class I-P Certificates, to the extent of amounts
otherwise available to pay the Class I-AM Principal Distribution Amount
(without regard to clause (I)(B) of the definition thereof) on such
Distribution Date, an amount equal to the Class I-P Fraction of any
Realized Loss on a Class I-P Mortgage Loan previously allocated to the
Class I-P Certificates (other than a Special Hazard Loss, Fraud Loss or
Bankruptcy or Extraordinary Hazard Loss not covered by the Mortgage Pool
Insurance Policy, the
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Special Hazard Insurance Policy or the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, respectively), provided that any amounts distributed
in respect of losses pursuant to paragraph (I)(a)(v) or this paragraph
(I)(a)(vi) of this definition of "REMIC II Distribution Amount" shall not
cause a further reduction in the Class I-P Principal Balance;
(vii) seventh, to the Class I-AM Certificates, the Interest
Distribution Amount for the Class I-AM Certificates remaining unpaid from
previous Distribution Dates;
(viii) eighth, to the Class I-AM Certificates, the Interest
Distribution Amount for the Class I-AM Certificates for the current
Distribution Date;
(ix) ninth, to the Class I-AM Certificates, the Class I-AM Principal
Distribution Amount, until the Class I-AM Principal Balance has been
reduced to zero;
(x) tenth, to the Class I-AM Certificates, the remaining portion, if
any, of the REMIC II Available Distribution Amount for the Group I
Certificates, up to the amount of unreimbursed Realized Losses previously
allocated to such Class, if any, provided that any amounts distributed
pursuant to this paragraph (I)(a)(x) of this definition of "REMIC II
Distribution Amount" shall not cause a further reduction in the Class I-AM
Principal Balance; and
(xi) eleventh, to the Class R-2 Certificates, the Residual
Distribution Amount for the Group I Certificates for such Distribution
Date;
(b) With respect to the Group II and Class R-2 Certificates on any
Distribution Date prior to the Group II Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the Group II
Certificates remaining following prior distributions, if any, on such
Distribution Date:
(i) to each Class of Group II Certificates, the amounts distributed to
its Corresponding Class on such Distribution Date; and
(ii) to the Class R-2 Certificates, the applicable Residual
Distribution Amount, if any; and
(c) With respect to the Group III and Class R-2 Certificates on any
Distribution Date prior to the Group III Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the Group III
Certificates remaining following prior distributions, if any, on such
Distribution Date:
(i) to each Class of Group III Certificates other than the Class
III-A-1 and Class III-A-2 Certificates, the amounts distributed to its
Corresponding Class on such Distribution Date;
(ii) (A) to the Class III-A-1 Certificates, the amount distributed as
principal to the Class III-A-1-L Regular Interests on such Distribution
Date and (B) to the Class III-
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A-1 and Class III-A-2 Certificates, the amount distributed as interest to
the Class III-A-1-L Regular Interests on such Distribution Date
concurrently as follows: (I) to the Class III-A-1 Certificates, an amount
equal to the product of 1/12 of the Class III-A-1 Remittance Rate and the
Class III-A-1 Principal Balance (before allocating Realized Losses of
principal and giving effect to distributions of principal, in each case, on
such Distribution Date) and (II) to the Class III-A-2 Certificates, an
amount equal to the product of 1/12 of the Class III-A-2 Remittance Rate
and the Class III-A-2 Notional Amount; and
(iii) to the Class R-2 Certificates, the applicable Residual
Distribution Amount, if any.
(II) For any Distribution Date on or after the Group I, Group II or Group
III Credit Support Depletion Date, as applicable, the REMIC II Available
Distribution Amount shall be distributed to the outstanding Classes of
Certificates (other than the Class R-1 Certificates) in the following amounts
and priority:
(a) With respect to the Group I and Class R-2 Certificates, on each
Distribution Date on or after the Group I Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the Group I
Certificates remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class I-P Certificates, principal in the amount that
would otherwise be distributed to such Class on such Distribution Date
pursuant to clause (I)(a)(i) of this definition of "REMIC II Distribution
Amount";
(ii) second, to the Group I-A Certificates entitled to interest and
the Class I-X and Class R-2 Certificates, the amount payable to each such
Class of Certificates on prior Distribution Dates pursuant to clause
(I)(a)(ii) or (II)(a)(iii) of this definition of "REMIC II Distribution
Amount", and remaining unpaid, pro rata according to such amount payable to
the extent of amounts available;
(iii) third, to the Group I-A Certificates entitled to interest and
the Class I-X and Class R-2 Certificates, the sum of the Interest
Distribution Amounts for such Classes of Certificates for the current
Distribution Date, pro rata according to their respective Interest
Distribution Amounts;
(iv) fourth, to the Class I-A-8 Certificates, the Class I-A-8
Principal Distribution Amount;
(v) fifth, to the Group I-A Certificates (other than the Class I-8
Certificates) and the Class R-2 Certificates, the Group I Senior Principal
Distribution Amount (reduced by the Class I-A-8 Principal Distribution
Amount), pro rata according to their respective Class Principal Balances;
and
(vi) sixth, to the Class R-2 Certificates, the Residual Distribution
Amount for the Group I Certificates for such Distribution Date;
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(b) With respect to the Group II and Class R-2 Certificates, on each
Distribution Date on or after the Group II Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the Group II
Certificates remaining following prior distributions, if any, on such
Distribution Date, to such Certificates in the amounts and priority set forth in
clauses (I)(b)(i) and (I)(b)(ii) of this definition of "REMIC II Distribution
Amount"; and
(c) With respect to the Group III and Class R-2 Certificates, on each
Distribution Date on or after the Group III Credit Support Depletion Date, to
the extent of the REMIC II Available Distribution Amount for the Group III
Certificates remaining following prior distributions, if any, on such
Distribution Date, to such Certificates in the amounts and priority set forth in
clauses (I)(c)(i) through (I)(c)(iii) of this definition of "REMIC II
Distribution Amount".
REMIC II Trust Fund: The REMIC II Trust Fund created pursuant to Section
2.05 of this Agreement. The REMIC II Trust Fund consists of the REMIC I Regular
Interests to be held by the Trustee for the benefit of the Holders from time to
time of the Certificates (other than the Class R-1 Certificates) issued
hereunder.
Remittance Rate: For each Class of Certificates and REMIC I Regular
Interests, the per annum rate set forth as the Remittance Rate for such Class in
the Preliminary Statement hereto.
Residual Certificates: With respect to REMIC I, the Class R-1
Certificates, which are being issued in a single class, and with respect to
REMIC II, the Class R-2 Certificates, which are being issued in a single class.
The Class R-1 and Class R-2 Certificates are hereby designated the sole Class of
"residual interests" in REMIC I and REMIC II, respectively, for purposes of
Section 860G(a)(2) of the Code.
Residual Distribution Amount: On any Distribution Date, with respect to the
Class R-1 Certificates and for Loan Group I, Loan Group II or Loan Group III,
any portion of the REMIC I Available Distribution Amount for such Loan Group
remaining after all distributions to the Group I-L Regular Interests and the
Class R-1 Certificates pursuant to clauses (I)(a)(i) through (I)(a)(v), to the
Group II-L Regular Interests pursuant to clauses (I)(b)(i) through (I)(b)(x) or
(II)(b)(i) through (II)(b)(iv), or to the Group III-L Regular Interests pursuant
to clauses (I)(c)(i) through (I)(c)(vii), as applicable, of the definition of
"REMIC I Distribution Amount"; and with respect to the Class R-2 Certificates
and for Loan Group I, Loan Group II or Loan Group III, any portion of the REMIC
II Available Distribution Amount for such Loan Group remaining after all
distributions to the Group I and Class R-2 Certificates pursuant to clauses
(I)(a)(i) through (I)(a)(x) or (II)(a)(i) through (II)(a)(v), to the Group II
Certificates pursuant to clause (I)(b)(i), or to the Group III Certificates
pursuant to clause (I)(c)(i) through (I)(c)(ii), as applicable, of the
definition of "REMIC II Distribution Amount". Upon termination of the
obligations created by this Agreement and the REMIC I Trust Fund and the REMIC
II Trust Fund created hereby, the amounts which remain on deposit in the
Certificate Account after payment to the Certificateholders of the amounts set
forth in Section 9.01 of this Agreement, and subject to the conditions set forth
therein, shall be distributed to the Class R-1 and Class R-2 Certificates in
accordance with the preceding sentence of this definition as if the date of such
distribution were a Distribution Date.
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Responsible Officer: When used with respect to the Trustee, any officer
assigned to and working in its Corporate Trust Department or similar group and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
Rounding Account: The Class I-A-2 Rounding Account or the Class I-A-7
Rounding Account, as applicable.
Rounding Amount: With respect to the Class I-A-2 Rounding Account, the
amount of funds, if any, needed to be withdrawn from such account and used to
round the amount of any distributions in reduction of the Class I-A-2 Principal
Balance on any Distribution Date upward to the next higher integral multiple of
$1,000.
With respect to the Class I-A-7 Rounding Account, the amount of funds, if
any, needed to be withdrawn from such account and used to round the amount of
any distributions in reduction of the Class I-A-7 Principal Balance on any
Distribution Date upward to the next higher integral multiple of $1,000.
S&P: Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., provided that at any time it be a Rating Agency.
Securities Act: The Securities Act of 1933, as amended.
Security Agreement: With respect to a Cooperative Loan, the agreement or
mortgage creating a security interest in favor of the originator of the
Cooperative Loan in the related Cooperative Stock.
Selling and Servicing Contract: (a) The contract (including the PNC
Mortgage Securities Corp. Selling Guide and PNC Mortgage Securities Corp.
Servicing Guide to the extent incorporated by reference therein) between the
Company and a Person relating to the sale of the Mortgage Loans to the Company
and the servicing of such Mortgage Loans for the benefit of the
Certificateholders, which contract is substantially in the form of Exhibit E
hereto, as such contract may be amended or modified from time to time; provided,
however, that any such amendment or modification shall not materially adversely
affect the interests and rights of Certificateholders and (b) any other similar
contract providing substantially similar rights and benefits as those provided
by the forms of contract attached as Exhibit E hereto.
Senior Certificates: The Group I Senior Certificates, the Group II Senior
Certificates, the Group III Senior Certificates and the Residual Certificates.
Servicer: A mortgage loan servicing institution to which the Master
Servicer has assigned servicing duties with respect to any Mortgage Loan under a
Selling and Servicing Contract; provided, however, the Master Servicer may
designate itself or one or more other mortgage loan servicing institutions as
Servicer upon termination of an initial Servicer's servicing duties.
Servicing Fee: For each Mortgage Loan, the fee paid to the Servicer thereof
to perform primary servicing functions for the Master Servicer with respect to
such Mortgage Loan, equal to
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the per annum rate set forth for each Mortgage Loan in the Mortgage Loan
Schedule on the outstanding Principal Balance of such Mortgage Loan.
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans or the
Certificates, as applicable, whose name and specimen signature appear on a list
of servicing officers furnished to the Trustee by the Master Servicer, as such
list may from time to time be amended.
Special Hazard Insurance Policy: The special hazard insurance policy, a
form of which is attached as Exhibit P to this Agreement, or any replacement
insurance policy obtained by the Master Servicer pursuant to Section 3.17, in
the total initial amount of $6,226,379. The initial Special Hazard Insurance
Policy shall be issued by Travelers.
Special Hazard Insurer: Initially, Travelers, or any successor thereto or
the named insurer in any replacement policy obtained by the Master Servicer
pursuant to Section 3.17.
Special Hazard Loss: The occurrence of any direct physical loss or damage
to a Mortgaged Property not covered by a standard hazard maintenance policy with
extended coverage which is caused by or results from any cause except: (i) fire,
lightning, windstorm, hail, explosion, riot, riot attending a strike, civil
commotion, vandalism, aircraft, vehicles, smoke, sprinkler leakage, except to
the extent of that portion of the loss which was uninsured because of the
application of a co-insurance clause of any insurance policy covering these
perils; (ii) normal wear and tear, gradual deterioration, inherent vice or
inadequate maintenance of all or part thereof; (iii) errors in design, faulty
workmanship or materials, unless the collapse of the property or a part thereof
ensues and then only for the ensuing loss; (iv) nuclear reaction or nuclear
radiation or radioactive contamination, all whether controlled or uncontrolled
and whether such loss be direct or indirect, proximate or remote or be in whole
or in part caused by, contributed to or aggravated by a peril covered by this
definition of Special Hazard Loss; (v) hostile or warlike action in time of
peace or war, including action in hindering, combating or defending against an
actual, impending or expected attack (a) by any government of sovereign power
(de jure or de facto), or by an authority maintaining or using military, naval
or air forces, (b) by military, naval or air forces, or (c) by an agent of any
such government, power, authority or forces; (vi) any weapon of war employing
atomic fission or radioactive force whether in time of peace or war; (vii)
insurrection, rebellion, revolution, civil war, usurped power or action taken by
governmental authority in hindering, combating or defending against such
occurrence; or (viii) seizure or destruction under quarantine or customs
regulations, or confiscation by order of any government or public authority.
Special Hazard Insurance Premium Sub-Account: An administrative subaccount
established and maintained by the Trustee within the Expense Account for the
payment of the Premiums with respect to the Special Hazard Insurance Policy.
Special Insurance Proceeds: Amounts paid or payable (i) by the Mortgage
Pool Insurer or the Special Hazard Insurer under the Mortgage Pool Insurance
Policy or the Special Hazard Insurance Policy, respectively, or (ii) from the
Bankruptcy and Extraordinary Hazard Expense
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Reserve Fund pursuant to Section 3.18 for the payment of Bankruptcy Losses and
Extraordinary Hazard Losses.
Special Retail Certificates: The Class I-A-2 and Class I-A-7 Certificates.
Standard Insurance Proceeds: Amounts paid or payable by the insurer
under any Primary Insurance Policy or any other insurance policy (including any
replacement policy permitted under this Agreement), covering any Mortgage Loan
or Mortgaged Property, including, without limitation, any hazard insurance
policy required pursuant to Section 3.07, any title insurance policy required
pursuant to Section 2.03, and any FHA insurance policy or VA guaranty, but
excluding Special Insurance Proceeds.
Step Down Percentage: For any Distribution Date, the percentage indicated
below:
Distribution Date Occurring In Step Down Percentage
------------------------------ --------------------
October 1998 through September 2003 0%
October 2003 through September 2004 30%
October 2004 through September 2005 40%
October 2005 through September 2006 60%
October 2006 through September 2007 80%
October 2007 and thereafter 100%
Stripped Interest Rate: For each Subgroup I-1 Loan, the excess, if any, of
the Pass-Through Rate for such Mortgage Loan over 6.375%. For each Subgroup I-2
Loan, the excess, if any, of the Pass-Through Rate for such Mortgage Loan over
6.500%. For each Subgroup I-3 Loan, the excess, if any, of the Pass-Through Rate
for such Mortgage Loan over 6.625%. For each Subgroup I-4 Loan, the excess, if
any, of the Pass-Through Rate for such Mortgage Loan over 6.750%. For each Group
II Loan, the excess, if any, of the Pass-Through Rate for such Mortgage Loan
over 6.3925%. For each Group III Loan, the excess, if any, of the Pass-Through
Rate for such Mortgage Loan over 6.750%.
Subgroup: Subgroup I-1, Subgroup I-2, Subgroup I-3 or Subgroup I-4, as
applicable.
Subgroup I-1: The subgroup of Mortgage Loans comprised of the Subgroup I-1
Loans.
Subgroup I-1 Class I-AM Component Balance: For any date of determination,
an amount equal to the then outstanding aggregate Principal Balance of the
Subgroup I-1 Loans reduced by (i) the Subgroup I-1 Senior Component Balance and
(ii) the Class I-P Fraction of any Class I-P Mortgage Loan.
Subgroup I-1 Class I-AM Percentage: For any Distribution Date, the excess
of 100% over the Subgroup I-1 Senior Percentage for such date.
Subgroup I-1 Initial Senior Component Balance: $38,250,503.
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Subgroup I-1 Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Subgroup I-1 Loans, which are all of the Group I Loans with
Pass-Through Rates less than 6.500% per annum.
Subgroup I-1 Senior Component Balance: For any date of determination, an
amount equal to the Subgroup I-1 Initial Senior Component Balance (i) reduced by
(a) all principal distributed previously to the Group I-A and Residual
Certificates derived from Subgroup I-1 and (b) all principal losses allocated to
such Certificates derived from Subgroup I-1 and (ii) reduced or increased, as
applicable, by any reduction or addition thereto made on any Distribution Date
in accordance with the fifth paragraph of the definition of "Realized Loss".
Subgroup I-1 Senior Liquidation Amount: The aggregate, for each Subgroup
I-1 Loan which became a Liquidated Mortgage Loan during the Prior Period, of the
lesser of: (i) the Subgroup I-1 Senior Percentage of the Principal Balance of
such Mortgage Loan (exclusive of the Class I-P Fraction thereof, with respect to
any Class I-P Mortgage Loan) and (ii) the Subgroup I-1 Senior Prepayment
Percentage of the Liquidation Principal with respect to such Mortgage Loan.
Subgroup I-1 Senior Percentage: For any Distribution Date, the Subgroup I-1
Senior Component Balance divided by the aggregate Principal Balance of the
Subgroup I-1 Loans (less the Class I-P Principal Balance) immediately prior to
the Distribution Date.
Subgroup I-1 Senior Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group I Senior Percentage for such Distribution Date exceeds the Group I
Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group I Loans which are 60 or
more days delinquent (including loans in foreclosure and property held
by the Trust Fund) for each of the immediately preceding six calendar
months is less than or equal to 50% of the sum of (1) the product of
(x) a fraction, the numerator of which is the aggregate Class
Principal Balance of the Group I Certificates and the denominator of
which is the aggregate Class Principal Balance of all of the
Certificates and (y) the remaining coverage available under the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy
and the Bankruptcy and Extraordinary Hazard Expense Reserve Fund and
(2) the Class I-AM Principal Balance as of such Distribution Date; and
(b) cumulative Realized Losses on the Group I Loans allocated to the Class
I-AM Certificates or covered under the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund are less than or equal to
(1) for any Distribution Date before the month of the sixth
anniversary of the month of the first Distribution Date, 30% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date and
(II) the
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product of (x) a fraction, the numerator of which is the aggregate
Class Principal Balance of the Group I Certificates as of the Cut-Off
Date and the denominator of which is the aggregate Class Principal
Balance of all of the Certificates as of the Cut-Off Date and (y) the
coverage available under the Mortgage Pool Insurance Policy, the
Special Hazard Insurance Policy and the Bankruptcy and Extraordinary
Hazard Expense Reserve Fund as of the Cut-Off Date, (2) for any
Distribution Date in or after the month of the sixth anniversary of
the month of the first Distribution Date but before the seventh
anniversary of the month of the first Distribution Date, 35% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date and
(II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (3)
for any Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the
eighth anniversary of the month of the first Distribution Date, 40% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (4)
for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the
ninth anniversary of the month of the first Distribution Date, 45% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, and
(5) for any Distribution Date in or after the month of the ninth
anniversary of the month of the first Distribution Date, 50% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date and
(II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date,
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in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Subgroup I-1 Senior Percentage for such Distribution Date plus 70% of the
Subgroup I-1 Class I-AM Percentage for such Distribution Date; (2) for any such
Distribution Date in or after the month of the sixth anniversary of the month of
the first Distribution Date but before the seventh anniversary of the month of
the first Distribution Date, the Subgroup I-1 Senior Percentage for such
Distribution Date plus 60% of the Subgroup I-1 Class I-AM Percentage for such
Distribution Date; (3) for any such Distribution Date in or after the month of
the seventh anniversary of the month of the first Distribution Date but before
the eighth anniversary of the month of the first Distribution Date, the Subgroup
I-1 Senior Percentage for such Distribution Date plus 40% of the Subgroup I-1
Class I-AM Percentage for such Distribution Date; (4) for any such Distribution
Date in or after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Subgroup I-1 Senior Percentage for such Distribution Date
plus 20% of the Subgroup I-1 Class I-AM Percentage for such Distribution Date;
and (5) for any such Distribution Date thereafter, the Subgroup I-1 Senior
Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Subgroup I-1 Senior
Component Balance of Principal Prepayments in the percentage required would
reduce the Subgroup I-1 Senior Component Balance below zero, the Subgroup I-1
Senior Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce the Subgroup I-1 Senior Component Balance to
zero. Notwithstanding the foregoing, however, on each Distribution Date, each of
the Class I-P-L Regular Interests and the Class I-P Certificates will receive
the Class I-P Fraction of all principal payments, including, without limitation,
Principal Prepayments, received in respect of each Class I-P Mortgage Loan.
Subgroup I-1 Senior Principal Distribution Amount: For any Distribution
Date, an amount equal to the sum of (a) the Subgroup I-1 Senior Percentage of
the Principal Payment Amount for Subgroup I-1 (exclusive of the portion thereof
attributable to principal distributions to the Class I-P Certificates pursuant
to clauses (I)(a)(i) and (II)(a)(i) of the definition of "REMIC II Distribution
Amount"), (b) the Subgroup I-1 Senior Prepayment Percentage of the Principal
Prepayment Amount for Subgroup I-1 (exclusive of the portion thereof
attributable to principal distributions to the Class I-P Certificates pursuant
to clauses (I)(a)(i) and (II)(a)(i) of the definition of "REMIC II Distribution
Amount"), (c) the Subgroup I-1 Senior Liquidation Amount and (d) the excess, if
any, of (i) the principal portion of Special Insurance Proceeds received with
respect to the Subgroup I-1 Loans which became Liquidated Mortgage Loans during
the Prior Period (exclusive of the portion thereof attributable to principal
distributions to the Class I-P Certificates pursuant to clauses (I)(a)(i) and
(II)(a)(i) of the definition of "REMIC II Distribution Amount") over (ii) the
Subgroup I-1 Class I-AM Component Balance on such date after giving effect to
all reductions and increases in the Subgroup I-1 Senior Component Balance on
such date pursuant to the definition of "Subgroup I-1 Senior Component Balance"
(without regard to this clause (d) of this definition of "Subgroup I-1 Senior
Principal Distribution Amount").
Subgroup I-2: The subgroup of Mortgage Loans comprised of the Subgroup I-2
Loans.
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Subgroup I-2 Class I-AM Component Balance: For any date of determination,
an amount equal to the then outstanding aggregate Principal Balance of the
Subgroup I-2 Loans reduced by the Subgroup I-2 Senior Component Balance.
Subgroup I-2 Class I-AM Percentage: For any Distribution Date, the excess
of 100% over the Subgroup I-2 Senior Percentage for such date.
Subgroup I-2 Initial Senior Component Balance: $40,360,512.
Subgroup I-2 Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Subgroup I-2 Loans, which are all of the Group I Loans with
Pass-Through Rates greater than or equal to 6.500% per annum but less than
6.625% per annum.
Subgroup I-2 Senior Component Balance: For any date of determination, an
amount equal to the Subgroup I-2 Initial Senior Component Balance (i) reduced by
(a) all principal distributed previously to the Group I-A and Residual
Certificates derived from Subgroup I-2 and (b) all principal losses allocated to
such Certificates derived from Subgroup I-2 and (ii) reduced or increased, as
applicable, by any reduction or addition thereto made on any Distribution Date
in accordance with the fifth paragraph of the definition of "Realized Loss".
Subgroup I-2 Senior Liquidation Amount: The aggregate, for each Subgroup
I-2 Loan which became a Liquidated Mortgage Loan during the Prior Period, of the
lesser of: (i) the Subgroup I-2 Senior Percentage of the Principal Balance of
such Mortgage Loan and (ii) the Subgroup I-2 Senior Prepayment Percentage of the
Liquidation Principal with respect to such Mortgage Loan.
Subgroup I-2 Senior Percentage: For any Distribution Date, the Subgroup I-2
Senior Component Balance divided by the aggregate Principal Balance of the
Subgroup I-2 Loans immediately prior to the Distribution Date.
Subgroup I-2 Senior Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group I Senior Percentage for such Distribution Date exceeds the Group I
Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group I Loans which are 60 or
more days delinquent (including loans in foreclosure and property held
by the Trust Fund) for each of the immediately preceding six calendar
months is less than or equal to 50% of the sum of (1) the product of
(x) a fraction, the numerator of which is the aggregate Class
Principal Balance of the Group I Certificates and the denominator of
which is the aggregate Class Principal Balance of all of the
Certificates and (y) the remaining coverage available under the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy
and the Bankruptcy and Extraordinary Hazard
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Expense Reserve Fund and (2) the Class I-AM Principal Balance as of
such Distribution Date; and
(b) cumulative Realized Losses on the Group I Loans allocated to the Class
I-AM Certificates or covered under the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund are less than or equal to
(1) for any Distribution Date before the month of the sixth
anniversary of the month of the first Distribution Date, 30% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date and
(II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (2)
for any Distribution Date in or after the month of the sixth
anniversary of the month of the first Distribution Date but before the
seventh anniversary of the month of the first Distribution Date, 35%
of the sum of (I) the Class I-AM Principal Balance as of the Cut-Off
Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (3)
for any Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the
eighth anniversary of the month of the first Distribution Date, 40% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (4)
for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the
ninth anniversary of the month of the first Distribution Date, 45% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, and
(5) for any Distribution Date in or after the month of the ninth
anniversary of the month of the first Distribution Date, 50% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off
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Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Subgroup I-2 Senior Percentage for such Distribution Date plus 70% of the
Subgroup I-2 Class I-AM Percentage for such Distribution Date; (2) for any such
Distribution Date in or after the month of the sixth anniversary of the month of
the first Distribution Date but before the seventh anniversary of the month of
the first Distribution Date, the Subgroup I-2 Senior Percentage for such
Distribution Date plus 60% of the Subgroup I-2 Class I-AM Percentage for such
Distribution Date; (3) for any such Distribution Date in or after the month of
the seventh anniversary of the month of the first Distribution Date but before
the eighth anniversary of the month of the first Distribution Date, the Subgroup
I-2 Senior Percentage for such Distribution Date plus 40% of the Subgroup I-2
Class I-AM Percentage for such Distribution Date; (4) for any such Distribution
Date in or after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Subgroup I-2 Senior Percentage for such Distribution Date
plus 20% of the Subgroup I-2 Class I-AM Percentage for such Distribution Date;
and (5) for any such Distribution Date thereafter, the Subgroup I-2 Senior
Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Subgroup I-2 Senior
Component Balance of Principal Prepayments in the percentage required would
reduce the Subgroup I-2 Senior Component Balance below zero, the Subgroup I-2
Senior Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce the Subgroup I-2 Senior Component Balance to
zero.
Subgroup I-2 Senior Principal Distribution Amount: For any Distribution
Date, an amount equal to the sum of (a) the Subgroup I-2 Senior Percentage of
the Principal Payment Amount for Subgroup I-2, (b) the Subgroup I-2 Senior
Prepayment Percentage of the Principal Prepayment Amount for Subgroup I-2, (c)
the Subgroup I-2 Senior Liquidation Amount and (d) the excess, if any, of (i)
the principal portion of Special Insurance Proceeds received with respect to the
Subgroup I-2 Loans which became Liquidated Mortgage Loans during the Prior
Period over (ii) the Subgroup I-2 Class I-AM Component Balance on such date
after giving effect to all reductions and increases in the Subgroup I-2 Senior
Component Balance on such date pursuant to the definition of "Subgroup I-2
Senior Component Balance" (without regard to this clause (d) of this definition
of "Subgroup I-2 Senior Principal Distribution Amount").
Subgroup I-3: The subgroup of Mortgage Loans comprised of the Subgroup I-3
Loans.
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Subgroup I-3 Class I-AM Component Balance: For any date of determination,
an amount equal to the then outstanding aggregate Principal Balance of the
Subgroup I-3 Loans reduced by the Subgroup I-3 Senior Component Balance.
Subgroup I-3 Class I-AM Percentage: For any Distribution Date, the excess
of 100% over the Subgroup I-3 Senior Percentage for such date.
Subgroup I-3 Initial Senior Component Balance: $42,110,463.
Subgroup I-3 Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Subgroup I-3 Loans, which are all of the Group I Loans with
Pass-Through Rates greater than or equal to 6.625% per annum but less than
6.750% per annum.
Subgroup I-3 Senior Component Balance: For any date of determination, an
amount equal to the Subgroup I-3 Initial Senior Component Balance (i) reduced by
(a) all principal distributed previously to the Group I-A and Residual
Certificates derived from Subgroup I-3 and (b) all principal losses allocated to
such Certificates derived from Subgroup I-3 and (ii) reduced or increased, as
applicable, by any reduction or addition thereto made on any Distribution Date
in accordance with the fifth paragraph of the definition of "Realized Loss".
Subgroup I-3 Senior Liquidation Amount: The aggregate, for each Subgroup
I-3 Loan which became a Liquidated Mortgage Loan during the Prior Period, of the
lesser of: (i) the Subgroup I-3 Senior Percentage of the Principal Balance of
such Mortgage Loan and (ii) the Subgroup I-3 Senior Prepayment Percentage of the
Liquidation Principal with respect to such Mortgage Loan.
Subgroup I-3 Senior Percentage: For any Distribution Date, the Subgroup I-3
Senior Component Balance divided by the aggregate Principal Balance of the
Subgroup I-3 Loans immediately prior to the Distribution Date.
Subgroup I-3 Senior Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group I Senior Percentage for such Distribution Date exceeds the Group I
Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group I Loans which are 60 or
more days delinquent (including loans in foreclosure and property held
by the Trust Fund) for each of the immediately preceding six calendar
months is less than or equal to 50% of the sum of (1) the product of
(x) a fraction, the numerator of which is the aggregate Class
Principal Balance of the Group I Certificates and the denominator of
which is the aggregate Class Principal Balance of all of the
Certificates and (y) the remaining coverage available under the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy
and the Bankruptcy and Extraordinary Hazard
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Expense Reserve Fund and (2) the Class I-AM Principal Balance as of
such Distribution Date; and
(b) cumulative Realized Losses on the Group I Loans allocated to the Class
I-AM Certificates or covered under the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund are less than or equal to
(1) for any Distribution Date before the month of the sixth
anniversary of the month of the first Distribution Date, 30% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date and
(II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (2)
for any Distribution Date in or after the month of the sixth
anniversary of the month of the first Distribution Date but before the
seventh anniversary of the month of the first Distribution Date, 35%
of the sum of (I) the Class I-AM Principal Balance as of the Cut-Off
Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (3)
for any Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the
eighth anniversary of the month of the first Distribution Date, 40% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (4)
for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the
ninth anniversary of the month of the first Distribution Date, 45% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, and
(5) for any Distribution Date in or after the month of the ninth
anniversary of the month of the first Distribution Date, 50% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off
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Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Subgroup I-3 Senior Percentage for such Distribution Date plus 70% of the
Subgroup I-3 Class I-AM Percentage for such Distribution Date; (2) for any such
Distribution Date in or after the month of the sixth anniversary of the month of
the first Distribution Date but before the seventh anniversary of the month of
the first Distribution Date, the Subgroup I-3 Senior Percentage for such
Distribution Date plus 60% of the Subgroup I-3 Class I-AM Percentage for such
Distribution Date; (3) for any such Distribution Date in or after the month of
the seventh anniversary of the month of the first Distribution Date but before
the eighth anniversary of the month of the first Distribution Date, the Subgroup
I-3 Senior Percentage for such Distribution Date plus 40% of the Subgroup I-3
Class I-AM Percentage for such Distribution Date; (4) for any such Distribution
Date in or after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Subgroup I-3 Senior Percentage for such Distribution Date
plus 20% of the Subgroup I-3 Class I-AM Percentage for such Distribution Date;
and (5) for any such Distribution Date thereafter, the Subgroup I-3 Senior
Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Subgroup I-3 Senior
Component Balance of Principal Prepayments in the percentage required would
reduce the Subgroup I-3 Senior Component Balance below zero, the Subgroup I-3
Senior Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce the Subgroup I-3 Senior Component Balance to
zero.
Subgroup I-3 Senior Principal Distribution Amount: For any Distribution
Date, an amount equal to the sum of (a) the Subgroup I-3 Senior Percentage of
the Principal Payment Amount for Subgroup I-3, (b) the Subgroup I-3 Senior
Prepayment Percentage of the Principal Prepayment Amount for Subgroup I-3, (c)
the Subgroup I-3 Senior Liquidation Amount and (d) the excess, if any, of (i)
the principal portion of Special Insurance Proceeds received with respect to the
Subgroup I-3 Loans which became Liquidated Mortgage Loans during the Prior
Period over (ii) the Subgroup I-3 Class I-AM Component Balance on such date
after giving effect to all reductions and increases in the Subgroup I-3 Senior
Component Balance on such date pursuant to the definition of "Subgroup I-3
Senior Component Balance" (without regard to this clause (d) of this definition
of "Subgroup I-3 Senior Principal Distribution Amount").
Subgroup I-4: The subgroup of Mortgage Loans comprised of the Subgroup I-4
Loans.
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Subgroup I-4 Class I-AM Component Balance: For any date of determination,
an amount equal to the then outstanding aggregate Principal Balance of the
Subgroup I-4 Loans reduced by the Subgroup I-4 Senior Component Balance.
Subgroup I-4 Class I-AM Percentage: For any Distribution Date, the excess
of 100% over the Subgroup I-4 Senior Percentage for such date.
Subgroup I-4 Initial Senior Component Balance: $62,530,439.
Subgroup I-4 Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Subgroup I-4 Loans, which are all of the Group I Loans with
Pass-Through Rates greater than or equal to 6.750% per annum.
Subgroup I-4 Senior Component Balance: For any date of determination, an
amount equal to the Subgroup I-4 Initial Senior Component Balance (i) reduced by
(a) all principal distributed previously to the Group I-A and Residual
Certificates derived from Subgroup I-4 and (b) all principal losses allocated to
such Certificates derived from Subgroup I-4 and (ii) reduced or increased, as
applicable, by any reduction or addition thereto made on any Distribution Date
in accordance with the fifth paragraph of the definition of "Realized Loss".
Subgroup I-4 Senior Liquidation Amount: The aggregate, for each Subgroup
I-4 Loan which became a Liquidated Mortgage Loan during the Prior Period, of the
lesser of: (i) the Subgroup I-4 Senior Percentage of the Principal Balance of
such Mortgage Loan and (ii) the Subgroup I-4 Senior Prepayment Percentage of the
Liquidation Principal with respect to such Mortgage Loan.
Subgroup I-4 Senior Percentage: For any Distribution Date, the Subgroup I-4
Senior Component Balance divided by the aggregate Principal Balance of the
Subgroup I-4 Loans immediately prior to the Distribution Date.
Subgroup I-4 Senior Prepayment Percentage: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary of
the first Distribution Date, 100%; (ii) on any other Distribution Date on which
the Group I Senior Percentage for such Distribution Date exceeds the Group I
Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group I Loans which are 60 or
more days delinquent (including loans in foreclosure and property held
by the Trust Fund) for each of the immediately preceding six calendar
months is less than or equal to 50% of the sum of (1) the product of
(x) a fraction, the numerator of which is the aggregate Class
Principal Balance of the Group I Certificates and the denominator of
which is the aggregate Class Principal Balance of all of the
Certificates and (y) the remaining coverage available under the
Mortgage Pool Insurance Policy, the Special Hazard Insurance Policy
and the Bankruptcy and Extraordinary Hazard
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Expense Reserve Fund and (2) the Class I-AM Principal Balance as of
such Distribution Date; and
(b) cumulative Realized Losses on the Group I Loans allocated to the Class
I-AM Certificates or covered under the Mortgage Pool Insurance Policy,
the Special Hazard Insurance Policy or the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund are less than or equal to
(1) for any Distribution Date before the month of the sixth
anniversary of the month of the first Distribution Date, 30% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date and
(II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (2)
for any Distribution Date in or after the month of the sixth
anniversary of the month of the first Distribution Date but before the
seventh anniversary of the month of the first Distribution Date, 35%
of the sum of (I) the Class I-AM Principal Balance as of the Cut-Off
Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (3)
for any Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the
eighth anniversary of the month of the first Distribution Date, 40% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, (4)
for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before the
ninth anniversary of the month of the first Distribution Date, 45% of
the sum of (I) the Class I-AM Principal Balance as of the Cut-Off Date
and (II) the product of (x) a fraction, the numerator of which is the
aggregate Class Principal Balance of the Group I Certificates as of
the Cut-Off Date and the denominator of which is the aggregate Class
Principal Balance of all of the Certificates as of the Cut-Off Date
and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date, and
(5) for any Distribution Date in or after the month of the ninth
anniversary of the month of the first Distribution Date, 50% of the
sum of (I) the Class I-AM Principal Balance as of the Cut-Off
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Date and (II) the product of (x) a fraction, the numerator of which is
the aggregate Class Principal Balance of the Group I Certificates as
of the Cut-Off Date and the denominator of which is the aggregate
Class Principal Balance of all of the Certificates as of the Cut-Off
Date and (y) the coverage available under the Mortgage Pool Insurance
Policy, the Special Hazard Insurance Policy and the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund as of the Cut-Off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Subgroup I-4 Senior Percentage for such Distribution Date plus 70% of the
Subgroup I-4 Class I-AM Percentage for such Distribution Date; (2) for any such
Distribution Date in or after the month of the sixth anniversary of the month of
the first Distribution Date but before the seventh anniversary of the month of
the first Distribution Date, the Subgroup I-4 Senior Percentage for such
Distribution Date plus 60% of the Subgroup I-4 Class I-AM Percentage for such
Distribution Date; (3) for any such Distribution Date in or after the month of
the seventh anniversary of the month of the first Distribution Date but before
the eighth anniversary of the month of the first Distribution Date, the Subgroup
I-4 Senior Percentage for such Distribution Date plus 40% of the Subgroup I-4
Class I-AM Percentage for such Distribution Date; (4) for any such Distribution
Date in or after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Subgroup I-4 Senior Percentage for such Distribution Date
plus 20% of the Subgroup I-4 Class I-AM Percentage for such Distribution Date;
and (5) for any such Distribution Date thereafter, the Subgroup I-4 Senior
Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Subgroup I-4 Senior
Component Balance of Principal Prepayments in the percentage required would
reduce the Subgroup I-4 Senior Component Balance below zero, the Subgroup I-4
Senior Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce the Subgroup I-4 Senior Component Balance to
zero.
Subgroup I-4 Senior Principal Distribution Amount: For any Distribution
Date, an amount equal to the sum of (a) the Subgroup I-4 Senior Percentage of
the Principal Payment Amount for Subgroup I-4, (b) the Subgroup I-4 Senior
Prepayment Percentage of the Principal Prepayment Amount for Subgroup I-4, (c)
the Subgroup I-4 Senior Liquidation Amount and (d) the excess, if any, of (i)
the principal portion of Special Insurance Proceeds received with respect to the
Subgroup I-4 Loans which became Liquidated Mortgage Loans during the Prior
Period over (ii) the Subgroup I-4 Class I-AM Component Balance on such date
after giving effect to all reductions and increases in the Subgroup I-4 Senior
Component Balance on such date pursuant to the definition of "Subgroup I-4
Senior Component Balance" (without regard to this clause (d) of this definition
of "Subgroup I-4 Senior Principal Distribution Amount").
Substitute Mortgage Loan: A Mortgage Loan which is substituted for another
Mortgage Loan pursuant to and in accordance with the provisions of Section 2.02.
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Tax Matters Person: A Holder of the Class R-1 Certificate, with respect to
REMIC I, and a Holder of the Class R-2 Certificate, with respect to REMIC II, in
each case holding a Certificate having an Authorized Denomination of at least
0.01% or any Permitted Transferee of such Class R-1 or Class R-2
Certificateholder designated as succeeding to the position of Tax Matters Person
with respect to the applicable trust fund in a notice to the Trustee signed by
authorized representatives of the transferor and transferee of such Class R-1 or
Class R-2 Certificate. If the Tax Matters Person for REMIC I or REMIC II becomes
a Disqualified Organization, the last preceding Holder of such Authorized
Denomination of the Class R-1 or Class R-2 Certificate, as applicable, that is
not a Disqualified Organization shall be Tax Matters Person for such trust
pursuant to Section 5.01(c). If any Person is appointed as tax matters person by
the Internal Revenue Service pursuant to the Code, such Person shall be Tax
Matters Person.
Termination Date: The date upon which final payment of the Certificates
will be made pursuant to the procedures set forth in Section 9.01(b).
Termination Payment: The final payment delivered to the Certificateholders
on the Termination Date pursuant to the procedures set forth in Section 9.01(b).
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Residual Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership Interest
in a Residual Certificate.
Transferee Affidavit and Agreement: An affidavit and agreement in the form
attached hereto as Exhibit J.
Travelers: Travelers Casualty and Surety Company.
Trust: The pool of assets consisting of the Trust Fund conveyed pursuant to
Section 2.01 of this Agreement.
Trust Fund: The corpus of the trust created pursuant to Section 2.01 of
this Agreement. The Trust Fund consists of (i) the Mortgage Loans and all rights
pertaining thereto; (ii) such assets as from time to time may be held by the
Trustee (or its duly appointed agent) in the Certificate Account or the
Investment Account (except amounts representing the Master Servicing Fee or the
Servicing Fee), or in the Expense Account or the Rounding Accounts; (iii) such
assets as from time to time may be held by Servicers in a Custodial Account for
P&I or Custodial Account for Reserves related to the Mortgage Loans (except
amounts representing the Master Servicing Fee or the Servicing Fee); (iv)
property which secured a Mortgage Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure or, in the case of a Cooperative
Loan, a similar form of conversion, after the Cut-Off Date; and (v) the Mortgage
Pool Insurance Policy (including the Fraud Waiver and the Ninety-Seven Percent
Loan-to-Value Program Endorsement), the Special Hazard Insurance Policy, the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund, amounts paid or
payable by the insurer under any FHA insurance
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policy or any Primary Insurance Policy and proceeds of any VA guaranty and any
other insurance policy related to any Mortgage Loan or the Mortgage Pool.
Trustee: State Street Bank and Trust Company, or its successor-in-interest
as provided in Section 8.09, or any successor trustee appointed as herein
provided.
Uncollected Interest: With respect to any Distribution Date for any
Mortgage Loan on which a Payoff was made by a Mortgagor during the related
Payoff Period, except for Payoffs received during the period from the first
through the 14th day of the month of such Distribution Date, an amount equal to
one month's interest at the applicable Pass-Through Rate on such Mortgage Loan
less the amount of interest actually paid by the Mortgagor with respect to such
Payoff.
Uncompensated Interest Shortfall: With respect to a Loan Group or Subgroup,
for any Distribution Date, the excess, if any, of (i) the sum of (a) aggregate
Uncollected Interest with respect to the Mortgage Loans in the related Loan
Group or Subgroup and (b) aggregate Curtailment Shortfall with respect to the
Mortgage Loans in the related Loan Group or Subgroup over (ii) Compensating
Interest with respect to such Loan Group or Subgroup.
Uncompensated Interest Shortfall for Loan Group I shall be allocated to the
Group I and Class R-2 Certificates pro rata according to the amount of the
Interest Distribution Amount to which each such Class would otherwise be
entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group II shall be allocated to
the Group II-L Regular Interests pro rata according to the amount of the
Interest Distribution Amount to which each such Class would otherwise be
entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group III shall be allocated to
the Group III-L Regular Interests pro rata according to the amount of the
Interest Distribution Amount to which each such Class would otherwise be
entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group I shall be allocated among
the Class Z and Class Y Regular Interests related to such Subgroup (i.e. the
"related" Subgroup for the Class Z-1 and Class Y-1 Regular Interests is Subgroup
I-1) and the Class I-X-L Regular Interests, pro rata according to (i) in the
case of the Class Z and Class Y Regular Interests, the amount of the Interest
Distribution Amount to which each such Class would otherwise be entitled and
(ii) in the case of the Class I-X-L Regular Interests, the portion of the
Interest Distribution Amount to which such Class would otherwise be entitled
attributable to such Subgroup, in each case in reduction thereof.
Underwriting Standards: The underwriting standards of the Company, Impac
Funding Corporation, Citicorp Mortgage Inc., FT Mortgage Company, Old Kent
Mortgage Company, Flagstar Bank, Headlands Mortgage Company, Washington Mutual
Savings Bank, Prism Mortgage Company, Commerce Security Bank, Homeside Mortgage
Corporation and PNC Mortgage Corp. of America.
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Uninsured Cause: Any cause of damage to a Mortgaged Property, the cost of
the complete restoration of which is not fully reimbursable under the hazard
insurance policies required to be maintained pursuant to Section 3.07.
U.S. Person: A citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, or an estate or
trust that is subject to U.S. federal income tax regardless of the source of its
income.
VA: The Department of Veterans Affairs, formerly known as the Veterans
Administration, or any successor thereto.
Withdrawal Date: Any day during the period commencing on the 18th day of
the month of the related Distribution Date (or if such day is not a Business
Day, the immediately preceding Business Day) and ending on the last Business Day
prior to the 21st day of the month of such Distribution Date.
ARTICLE II
CONVEYANCE OF THE TRUST FUNDS; REMIC ELECTION AND DESIGNATIONS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Trust Fund; REMIC Elections and
Designations. The Trust of which the Trustee is the trustee is hereby
created under the laws of the State of New York for the benefit of the Holders
of the REMIC I Regular Interests and the Class R-1 Certificates. The purpose of
Trust is to hold the Trust Fund and provide for the issuance, execution and
delivery of the Class R-1 Certificates. The assets of the Trust shall consist of
the Trust Fund. The Trust shall be irrevocable.
The assets of the Trust shall remain in the custody of the Trustee, on
behalf of the Trust, and shall be kept in the Trust. Moneys to the credit of the
Trust shall be held by the Trustee and invested as provided herein. All assets
received and held in the Trust will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of State Street Bank and
Trust Company in its own right, or any Person claiming through it. The Trustee,
on behalf of the Trust, shall not have the power or authority to transfer,
assign, hypothecate, pledge or otherwise dispose of any of the assets of the
Trust to any Person, except as permitted herein. No creditor of a beneficiary of
the Trust, of the Trustee, of the Master Servicer or of the Company shall have
any right to obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the property of the Trust, except in accordance with
the terms of this Agreement.
Concurrently with the execution and delivery hereof, the Company does
hereby irrevocably sell, transfer, assign, set over and otherwise convey to the
Trustee, in trust for the benefit of the Holders of REMIC I Regular Interests
and the Class R-1 Certificates and the owners of the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund and the Expense Account, without
recourse, all the Company's right, title and interest in and to the Trust Fund,
including but not limited to all scheduled payments of principal and interest
due after the Cut-Off
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Date and received by the Company with respect to the Mortgage Loans at any time,
and all Principal Prepayments received by the Company after the Cut-Off Date
with respect to the Mortgage Loans (such transfer and assignment by the Company
to be referred to herein as the "Conveyance"). The Trustee hereby accepts the
Trust created hereby and accepts delivery of the Trust Fund on behalf of the
Trust and acknowledges that it holds the Mortgage Loans for the benefit of the
Holders of the REMIC I Regular Interests and the Class R-1 Certificates issued
pursuant to this Agreement. It is the express intent of the parties hereto that
the Conveyance of the Trust Fund to the Trustee by the Company as provided in
this Section 2.01 be, and be construed as, an absolute sale of the Trust Fund.
It is, further, not the intention of the parties that such Conveyance be deemed
a pledge of the Trust Fund by the Company to the Trustee to secure a debt or
other obligation of the Company. However, in the event that, notwithstanding the
intent of the parties, the Trust Fund is held to be the property of the Company,
or if for any other reason this Agreement is held or deemed to create a security
interest in the Trust Fund, then
(a) this Agreement shall be deemed to be a security agreement;
(b) the Conveyance provided for in this Section 2.01 shall be deemed to be
a grant by the Company to the Trustee of a security interest in all of the
Company's right, title, and interest, whether now owned or hereafter acquired,
in and to:
(I) All accounts, general intangibles, chattel paper, instruments,
documents, money, deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and investment property consisting of, arising from or
relating to any of the property described in (i), (ii) and (iii) below: (i) the
Mortgage Loans identified on the Mortgage Loan Schedule, including the related
Mortgage Notes, Mortgages, Cooperative Stock Certificates, and Cooperative
Leases, all Substitute Mortgage Loans and all distributions with respect to such
Mortgage Loans and Substitute Mortgage Loans payable on and after the Cut-Off
Date; (ii) the Certificate Account, the Investment Account, the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund, the Expense Account and the Rounding
Accounts, and all money or other property held therein, and the Custodial
Accounts for P&I and the Custodial Accounts for Reserves (to the extent of the
amounts on deposit or other property therein attributable to the Mortgage
Loans); and (iii) the Mortgage Pool Insurance Policy (including the Fraud Waiver
and the Ninety-Seven Percent Loan-to-Value Program Endorsement), the Special
Hazard Insurance Policy, amounts paid or payable by the insurer under any FHA
insurance policy or any Primary Insurance Policy and proceeds of any VA guaranty
and any other insurance policy related to any Mortgage Loan or the Mortgage
Pool;
(II) All accounts, general intangibles, chattel paper, instruments,
documents, money, deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, investment property, and other rights arising from or
by virtue of the disposition of, or collections with respect to, or insurance
proceeds payable with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (I) above (including any
accrued discount realized on liquidation of any investment purchased at a
discount); and
(III) All cash and non-cash proceeds of the collateral described in (I) and
(II) above;
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(c) the possession by the Trustee of the Mortgage Notes, the Mortgages, the
Security Agreements, Assignments of Proprietary Lease, Cooperative Stock
Certificates, Cooperative Leases and such other goods, letters of credit,
advices of credit, instruments, money, documents, chattel paper or certificated
securities shall be deemed to be possession by the secured party or possession
by a purchaser for purposes of perfecting the security interest pursuant to the
Uniform Commercial Code (including, without limitation, Sections 9-305 and 9-115
thereof) as in force in the relevant jurisdiction; and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed to
be notifications to, or acknowledgments, receipts or confirmations from,
securities intermediaries, bailees or agents of, or persons holding for, the
Trustee, as applicable for the purpose of perfecting such security interest
under applicable law.
The Company and the Trustee at the direction of the Company shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Trust Fund, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of the Agreement. In connection herewith, the Trustee shall
have all of the rights and remedies of a secured party and creditor under the
Uniform Commercial Code as in force in the relevant jurisdiction.
In connection with the sale, transfer and assignment referred to in the
first paragraph of this Section 2.01, the Company, concurrently with the
execution and delivery hereof, does deliver to, and deposit with, or cause to be
delivered to and deposited with, the Trustee or Custodian the Mortgage Files for
the Mortgage Loans, which shall on original issuance thereof and at all times be
registered in the name of the Trustee.
Concurrently with the execution and delivery hereof, the Company shall
cause assignments of the Mortgage Loans to the Trustee to be recorded or filed,
except in states where, in the opinion of counsel admitted to practice in such
state acceptable to the Company, the Trustee and the Rating Agencies submitted
in lieu of such recording or filing, such recording or filing is not required to
protect the Trustee's interest in such Mortgage Loans against creditors of, or
against sale, further assignments, satisfaction or discharge by the Lender, a
Servicer, the Company or the Master Servicer, and the Company shall cause to be
filed the Form UCC-3 assignment and Form UCC-1 financing statement referred to
in clause (Y)(vii) and (ix), respectively, of the definition of "Mortgage File."
In connection with its servicing of Cooperative Loans, the Master Servicer will
use its best efforts to file timely continuation statements, if necessary, with
regard to each financing statement and assignment relating to Cooperative Loans.
In instances where the original recorded Mortgage or any intervening
assignment thereof (recorded or in recordable form) relating to a Mortgage Loan
cannot be delivered by the Company to the Trustee prior to or concurrently with
the execution and delivery hereof (due to a delay on the part of the recording
office), the Company may, in lieu of delivering such original documents, deliver
to the Trustee a fully legible reproduction of the original Mortgage or
intervening assignment provided that the related Lender or originator certifies
on the face of such
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reproduction(s) or copy as follows: "Certified true and correct copy of original
which has been transmitted for recordation." For purposes hereof, transmitted
for recordation means having been mailed or otherwise delivered for recordation
to the appropriate authority. In all such instances, the Company shall transmit
the original recorded Mortgage and any intervening assignments with evidence of
recording thereon (or a copy of such original Mortgage or intervening assignment
certified by the applicable recording office)(collectively, "Recording
Documents") to the Trustee within 270 days after the execution and delivery
hereof. In instances where, due to a delay on the part of the recording office
where any such Recording Documents have been delivered for recordation, the
Recording Documents cannot be delivered to the Trustee within 270 days after
execution and delivery hereof, the Company shall deliver to the Trustee within
such time period a certificate (a "Company Officer's Certificate") signed by the
Chairman of the Board, President, any Vice President or Treasurer of the Company
stating the date by which the Company expects to receive such Recording
Documents from the applicable recording office. In the event that Recording
Documents have still not been received by the Company and delivered to the
Trustee by the date specified in its previous Company Officer's Certificate
delivered to the Trustee, the Company shall deliver to the Trustee by such date
an additional Company Officer's Certificate stating a revised date by which the
Company expects to receive the applicable Recording Documents. This procedure
shall be repeated until the Recording Documents have been received by the
Company and delivered to the Trustee.
In instances where, due to a delay on the part of the title insurer, a copy
of the title insurance policy for a particular Mortgage Loan cannot be delivered
to the Trustee prior to or concurrently with the execution and delivery hereof,
the Company shall provide a copy of such title insurance policy to the Trustee
within 90 days after the Company's receipt of the Recording Documents necessary
to issue such title insurance policy. In addition, the Company shall, subject to
the limitations set forth in the preceding sentence, provide to the Trustee upon
request therefor a duplicate title insurance policy for any Mortgage Loan.
For Mortgage Loans for which the Company has received a Payoff after the
Cut-Off Date and prior to the date of execution and delivery hereof, the
Company, in lieu of delivering the above documents, herewith delivers to the
Trustee a certification of a Servicing Officer of the nature set forth in
Section 3.10.
The Trustee is authorized, with the Master Servicer's consent, to appoint
any bank or trust company approved by and unaffiliated with each of the Company
and the Master Servicer as Custodian of the documents or instruments referred to
above in this Section 2.01, and to enter into a Custodial Agreement for such
purpose, provided, however, that the Trustee shall be and remain liable for the
acts of any such Custodian only to the extent that it is responsible for its own
acts hereunder.
The Company and the Trustee agree that the Company, as agent for the Tax
Matters Person, shall, on behalf of the REMIC I Trust Fund, elect to treat the
REMIC I Trust Fund as a REMIC within the meaning of Section 860D of the Code
and, if necessary, under applicable state laws. Such election shall be included
in the Form 1066 and any appropriate state return to be filed on behalf of REMIC
I for its first taxable year.
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The Closing Date is hereby designated as the "startup day" of REMIC I
within the meaning of Section 860G(a)(9) of the Code.
The regular interests (as set forth in the table contained in the
Preliminary Statement hereto) relating to the REMIC I Trust Fund are hereby
designated as "regular interests" for purposes of Section 860G(a)(1) of the
Code. The Class R-1 Certificates are being issued in a single Class, which is
hereby designated as the sole class of "residual interest" in the REMIC I Trust
Fund for purposes of Section 860G(a)(2) of the Code.
The parties intend that the affairs of the REMIC I Trust Fund formed
hereunder shall constitute, and that the affairs of the REMIC I Trust Fund shall
be conducted so as to qualify the REMIC I Trust Fund as a REMIC. In furtherance
of such intention, the Company covenants and agrees that it shall act as agent
for the Tax Matters Person (and the Company is hereby appointed to act as agent
for such Tax Matters Person) on behalf of the REMIC I Trust Fund and that in
such capacity it shall: (a) prepare and file, or cause to be prepared and filed,
a federal tax return using a calendar year as the taxable year and using an
accrual method of accounting for the REMIC I Trust Fund when and as required by
the REMIC Provisions and other applicable federal income tax laws; (b) make an
election, on behalf of the trust, for the REMIC I Trust Fund to be treated as a
REMIC on the federal tax return of the REMIC I Trust Fund for its first taxable
year, in accordance with the REMIC Provisions; (c) prepare and forward, or cause
to be prepared and forwarded, to the Holders of the REMIC I Regular Interests
and the Class R-1 Certificates and the Trustee, all information reports as and
when required to be provided to them in accordance with the REMIC Provisions,
and make available the information necessary for the application of Section
860E(e) of the Code; (d) conduct the affairs of the REMIC I Trust Fund at all
times that any REMIC I Regular Interests are outstanding so as to maintain the
status of the REMIC I Trust Fund as a REMIC under the REMIC Provisions; (e) not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of the REMIC I Trust Fund; and (f) pay
the amount of any federal prohibited transaction penalty taxes imposed on the
REMIC I Trust Fund when and as the same shall be due and payable (but such
obligation shall not prevent the Company or any other appropriate person from
contesting any such tax in appropriate proceedings and shall not prevent the
Company from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings); provided, that the Company shall be entitled to be
indemnified by the REMIC I Trust Fund for any such prohibited transaction
penalty taxes if the Company's failure to exercise reasonable care was not the
primary cause of the imposition of such prohibited transaction penalty taxes.
The Trustee and the Master Servicer shall promptly provide the Company with
such information as the Company may from time to time request for the purpose of
enabling the Company to prepare tax returns.
In the event that a Mortgage Loan is discovered to have a defect which, had
such defect been discovered before the startup day, would have prevented such
Mortgage Loan from being a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, and the Company does not repurchase such Mortgage Loan
within 90 days of such date, the Master Servicer, on behalf of the Trustee,
shall within 90 days of the date such defect is discovered sell such Mortgage
Loan at such price as the Master Servicer in its sole discretion, determines to
be the greatest price
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that will result in the purchase thereof within 90 days of such date, unless the
Master Servicer delivers to the Trustee an Opinion of Counsel to the effect that
continuing to hold such Mortgage Loan will not adversely affect the status of
the electing portion of the REMIC I Trust Fund as a REMIC for federal income tax
purposes.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC I Trust Fund as defined in Section 860F of the Code and not paid by the
Company pursuant to clause (f) of the third preceding paragraph, such tax shall
be charged against amounts otherwise distributable to the Class R-1
Certificateholders. Notwithstanding anything to the contrary contained herein,
the Trustee is hereby authorized to retain from amounts otherwise distributable
to the Class R-1 Certificateholders on any Distribution Date sufficient funds to
reimburse the Company in its capacity as agent for the Tax Matters Person for
the payment of such tax (upon the written request of the Company, to the extent
reimbursable, and to the extent that the Company has not been previously
reimbursed therefor).
Section 2.02. Acceptance by Trustee. The Trustee acknowledges receipt (or
with respect to any Mortgage Loan subject to a Custodial Agreement, receipt by
the Custodian thereunder) of the documents (or certified copies thereof as
specified in Section 2.01) referred to in Section 2.01 above, but without having
made the review required to be made within 45 days pursuant to this Section
2.02, and declares that as of the Closing Date it holds and will hold such
documents and the other documents constituting a part of the Mortgage Files
delivered to it, and the Trust Fund, as Trustee in trust, upon the trusts herein
set forth, for the use and benefit of the Holders from time to time of the
REMIC I Regular Interests and Class R-1 Certificates. The Trustee agrees, for
the benefit of the Holders of the REMIC I Regular Interests and Class R-1
Certificates, to review or cause the Custodian to review each Mortgage File
within 45 days after the Closing Date and deliver to the Company a certification
in the form attached as Exhibit M hereto, to the effect that all documents
required (in the case of instruments described in clauses (X)(v) and (Y)(x) of
the definition of "Mortgage File", known by the Trustee to be required)
pursuant to the third paragraph of Section 2.01 have been executed and received,
and that such documents relate to the Mortgage Loans identified in the Mortgage
Loan Schedule. In performing such review, the Trustee may rely upon the
purported genuineness and due execution of any such document, and on the
purported genuineness of any signature thereon. The Trustee shall not be
required to make any independent examination of any documents contained in each
Mortgage File beyond the review specifically required herein. The Trustee makes
no representations as to: (i) the validity, legality, enforceability or
genuineness of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any Mortgage Loan. If the Trustee finds any document or documents
constituting a part of a Mortgage File not to have been executed or received,
or to be unrelated to the Mortgage Loans identified in the Mortgage Loan
Schedule, the Trustee shall promptly so notify the Company. The Company hereby
covenants and agrees that, if any such defect cannot be corrected or cured, the
Company shall, not later than 60 days after the Trustee's notice to it
respecting such defect, within the three-month period commencing on the Closing
Date (or within the two-year period commencing on the Closing Date if the
related Mortgage Loan is a "defective obligation" within the meaning of
Section 860G(a)(4)(B)(ii) of the Code and Treasury Regulation Section
1.860G-2(f)), either (i) repurchase the related Mortgage Loan from the Trustee
at the Purchase Price, or (ii) substitute for any Mortgage Loan to which such
defect relates a different mortgage loan (a "Substitute
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Mortgage Loan") which is a "qualified replacement mortgage" (as defined in the
Code) and, (iii) after such three-month or two-year period, as applicable, the
Company shall repurchase the Mortgage Loan from the Trustee at the Purchase
Price but only if the Mortgage Loan is in default or default is, in the judgment
of the Company, reasonably imminent. If such defect would cause the Mortgage
Loan to be other than a "qualified mortgage" (as defined in the Code), then
notwithstanding the previous sentence, repurchase or substitution must occur
within the sooner of (i) 90 days from the date the defect was discovered or (ii)
in the case of substitution, two years from the Closing Date.
Such Substitute Mortgage Loan shall mature no later than, and not more than
two years earlier than, have a principal balance and Loan-to-Value Ratio equal
to or less than, and have a Pass-Through Rate on the date of substitution equal
to or no more than 1% greater than the Mortgage Loan being substituted for. If
the aggregate of the principal balances of the Substitute Mortgage Loans
substituted for a Mortgage Loan is less than the Principal Balance of such
Mortgage Loan, the Company shall pay the difference in cash to the Trustee for
deposit into the Certificate Account, and such payment by the Company shall be
treated in the same manner as proceeds of the repurchase by the Company of a
Mortgage Loan pursuant to this Section 2.02. Furthermore, such Substitute
Mortgage Loan shall otherwise have such characteristics so that the
representations and warranties of the Company set forth in Section 2.03 hereof
would not have been incorrect had such Substitute Mortgage Loan originally been
a Mortgage Loan, and the Company shall be deemed to have made such
representations and warranties as to such Substitute Mortgage Loan. A Substitute
Mortgage Loan may be substituted for a defective Mortgage Loan whether or not
such defective Mortgage Loan is itself a Substitute Mortgage Loan.
The Purchase Price for each repurchased Mortgage Loan shall be deposited by
the Company in the Certificate Account and, upon receipt by the Trustee of
written notification of such deposit signed by a Servicing Officer, the Trustee
shall release to the Company the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Company or its designee or
assignee title to any Mortgage Loan released pursuant hereto. The obligation of
the Company to repurchase or substitute any Mortgage Loan as to which such a
defect in a constituent document exists shall constitute the sole remedy
respecting such defect available to the Holders of the REMIC I Regular Interests
or the Class R-1 Certificateholders or the Trustee on behalf of the Holders of
the REMIC I Regular Interests or the Class R-1 Certificateholders.
Section 2.03. Representations and Warranties of the Company Concerning the
Mortgage. With respect to the conveyance of the Mortgage Loans provided for in
Section 2.01 herein, the Company hereby represents and warrants to the Trustee
that as of the Cut-Off Date unless otherwise indicated:
(i) The information set forth in the Mortgage Loan Schedule was true
and correct in all material respects at the date or dates respecting which
such information is furnished;
(ii) As of the Closing Date, each Mortgage relating to a Mortgage Loan
that is not a Cooperative Loan is a valid and enforceable (subject to
Section 2.03(xvi)) first lien
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on an unencumbered estate in fee simple or leasehold estate in the related
Mortgaged Property subject only to (a) liens for current real property
taxes and special assessments; (b) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date
of recording such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the appraisal obtained in connection with the origination of
the Mortgage Loan; (c) exceptions set forth in the title insurance policy
relating to such Mortgage, such exceptions being acceptable to mortgage
lending institutions generally; and (d) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage;
(iii) As of the Closing Date, the Company had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any encumbrance or
lien, and immediately upon the transfer and assignment herein contemplated,
the Trustee shall have good title to, and will be the sole legal owner of,
each Mortgage Loan, free and clear of any encumbrance or lien (other than
any lien under this Agreement);
(iv) As of the day prior to the Cut-Off Date, all payments due on each
Mortgage Loan had been made and no Mortgage Loan had been delinquent (i.e.,
was more than 30 days past due) more than once in the preceding 12 months
and any such delinquency lasted for no more than 30 days;
(v) As of the Closing Date, there is no late assessment for delinquent
taxes outstanding against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the
Mortgagor to pay the unpaid principal or interest on such Mortgage Note
except to the extent that the Buydown Agreement for a Buydown Loan forgives
certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, each Mortgaged Property is free of
damage and in good repair, ordinary wear and tear excepted;
(viii) Each Mortgage Loan at the time it was made complied with all
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, disclosure and recording laws;
(ix) Each Mortgage Loan was originated by a savings association,
savings bank, credit union, insurance company, or similar institution which
is supervised and examined by a federal or state authority or by a
mortgagee approved by the FHA and will be serviced by an institution which
meets the servicer eligibility requirements established by the Company;
(x) As of the Closing Date, each Mortgage Loan which is not a
Cooperative Loan is covered by an ALTA form or CLTA form of mortgagee title
insurance policy or other form of policy of insurance which, as of the
origination date of such Mortgage Loan,
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was acceptable to FNMA or FHLMC, and has been issued by, and is the valid
and binding obligation of, a title insurer which, as of the origination
date of such Mortgage Loan, was acceptable to FNMA or FHLMC and qualified
to do business in the state in which the related Mortgaged Property is
located. Such policy insures the originator of the Mortgage Loan, its
successors and assigns as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan subject to the exceptions
set forth in such policy. Such policy is in full force and effect and will
be in full force and effect and inure to the benefit of the Holders of the
REMIC I Regular Interests and the Class R-1 Certificateholders upon the
consummation of the transactions contemplated by this Agreement and no
claims have been made under such policy, and no prior holder of the related
Mortgage, including the Company, has done, by act or omission, anything
which would impair the coverage of such policy;
(xi) Not less than approximately 97.4% (by Principal Balance) of the
Group I Loans, all of the Group II Loans and all of the Group III Loans
with Loan-to-Value Ratios as of the Cut-Off Date in excess of 80% were
covered by a Primary Insurance Policy or an FHA insurance policy or a VA
guaranty, and such policy or guaranty is valid and remains in full force
and effect;
(xii) As of the Closing Date, all policies of insurance required by
this Agreement or by a Selling and Servicing Contract have been validly
issued and remain in full force and effect, including such policies
covering the Company, the Master Servicer or any Servicer;
(xiii) As of the Closing Date, each insurer issuing a Primary
Insurance Policy holds a rating acceptable to the Rating Agencies;
(xiv) Each Mortgage was documented by appropriate FNMA/FHLMC mortgage
instruments in effect at the time of origination, or other instruments
approved by the Company;
(xv) As of the Closing Date, the Mortgaged Property securing each
Mortgage relating to a Mortgage Loan that is not a Cooperative Loan is
improved with a one- to four-family dwelling unit, including units in a
duplex, condominium project, townhouse, a planned unit development or a de
minimis planned unit development;
(xvi) As of the Closing Date, each Mortgage and Mortgage Note is the
legal, valid and binding obligation of the maker thereof and is enforceable
in accordance with its terms, except only as such enforcement may be
limited by laws affecting the enforcement of creditors' rights generally
and principles of equity;
(xvii) As of the date of origination, as to Mortgaged Properties which
are units in condominiums or planned unit developments, all of such units
met FNMA or FHLMC requirements, are located in a condominium or planned
unit development projects which have received FNMA or FHLMC approval, are
approvable by FNMA or FHLMC or are otherwise acceptable to the Company;
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(xviii) None of the Group I Loans, eight of Group II Loans and none of
the Group III Loans are Buydown Loans;
(xix) Based solely on representations of the Mortgagors obtained at
the origination of the related Mortgage Loans, approximately 98.6% (by
Principal Balance) of the Group I Loans will be secured by owner occupied
Mortgaged Properties which are the primary residences of the related
Mortgagors, approximately 1.2% (by Principal Balance) of the Group I Loans
will be secured by owner occupied Mortgaged Properties which were second or
vacation homes of the Mortgagors and approximately 0.2% (by Principal
Balance) of the Group I Loans will be secured by Mortgaged Properties which
were investor properties of the related Mortgagors; approximately 96.3% (by
Principal Balance) of the Group II Loans will be secured by owner occupied
Mortgaged Properties which are the primary residences of the related
Mortgagors, approximately 3.3% (by Principal Balance) of the Group II Loans
will be secured by owner occupied Mortgaged Properties which were second or
vacation homes of the Mortgagors and approximately 0.4% (by Principal
Balance) of the Group II Loans will be secured by Mortgaged Properties
which were investor properties of the related Mortgagors; approximately
98.2% (by Principal Balance) of the Group III Loans will be secured by
owner occupied Mortgaged Properties which are the primary residences of the
related Mortgagors, approximately 0.9% (by Principal Balance) of the Group
III Loans will be secured by owner occupied Mortgaged Properties which were
second or vacation homes of the Mortgagors and approximately 0.9% (by
Principal Balance) of the Group III Loans will be secured by Mortgaged
Properties which were investor properties of the related Mortgagors; and
none of the Group I Loans, two Group II Loans representing approximately
0.4% (by Principal Balance) of the Group II Loans, and none of the Group
III Loans will be secured by interests in Cooperative Apartments;
(xx) Prior to origination or refinancing, an appraisal of each
Mortgaged Property was made by an appraiser on a form satisfactory to FNMA
or FHLMC;
(xxi) The Mortgage Loans have been underwritten substantially in
accordance with the applicable Underwriting Standards;
(xxii) All of the Mortgage Loans have due-on-sale clauses; by the
terms of the Mortgage Notes, however, the due on sale provisions may not be
exercised at the time of a transfer if prohibited by law;
(xxiii) The Company used no adverse selection procedures in selecting
the Mortgage Loans from among the outstanding fixed-rate conventional
mortgage loans purchased by it which were available for inclusion in the
Mortgage Pool and as to which the representations and warranties in this
Section 2.03 could be made;
(xxiv) With respect to each Cooperative Loan, the Cooperative Stock
that is pledged as security for the Cooperative Loan is held by a person as
a tenant-stockholder (as defined in Section 216 of the Code) in a
cooperative housing corporation (as defined in Section 216 of the Code);
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(xxv) Each Cooperative Loan is secured by a valid, subsisting and
enforceable (except as such enforcement may be limited by laws affecting
the enforcement of creditors' rights generally and principles of equity)
perfected first lien and security interest in the related Cooperative Stock
securing the related Mortgage Note, subject only to (a) liens of the
Cooperative for unpaid assessments representing the Mortgagor's pro rata
share of the Cooperative's payments for its blanket mortgage, current and
future real property taxes, insurance premiums, maintenance fees and other
assessments to which like collateral is commonly subject, and (b) other
matters to which like collateral is commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by the Security Agreement;
(xxvi) With respect to any Mortgage Loan as to which an affidavit has
been delivered to the Trustee certifying that the original Mortgage Note is
a Destroyed Mortgage Note, if such Mortgage Loan is subsequently in
default, the enforcement of such Mortgage Loan or of the related Mortgage
by or on behalf of the Trustee will not be materially adversely affected by
the absence of the original Mortgage Note;
(xxvii) Based upon an appraisal of the Mortgaged Property securing
each Mortgage Loan, approximately 89.8% (by Principal Balance) of the Group
I Loans had a current Loan-to-Value Ratio less than or equal to 80%,
approximately 10.2% (by Principal Balance) of the Group I Loans had a
current Loan-to-Value Ratio greater than 80% but less than or equal to 95%
and no Group I Loan had a current Loan-to-Value Ratio greater than 95%;
approximately 96.9% (by Principal Balance) of the Group II Loans had a
current Loan-to-Value Ratio less than or equal to 80%, approximately 3.1%
(by Principal Balance) of the Group II Loans had a current Loan-to-Value
Ratio greater than 80% but less than or equal to 95% and no Group II Loan
had a current Loan-to-Value Ratio greater than 95%; and approximately 52.5%
(by Principal Balance) of the Group III Loans had a current Loan-to-Value
Ratio less than or equal to 80%, approximately 47.5% (by Principal Balance)
of the Group III Loans had a current Loan-to-Value Ratio greater than 80%
but less than or equal to 95% and no Group III Loan had a current
Loan-to-Value Ratio greater than 95%;
(xxviii)Approximately 52.2% (by Principal Balance) of the Group I
Loans, approximately 82.5% (by Principal Balance) of the Group II Loans and
approximately 40.8% (by Principal Balance) of the Group III Loans were
originated for the purpose of refinancing existing mortgage debt, including
cash-out refinancings; and approximately 47.7% (by Principal Balance) of
the Group I Loans, approximately 17.5% (by Principal Balance) of the Group
II Loans and approximately 59.2% (by Principal Balance) of the Group III
Loans were originated for the purpose of purchasing the Mortgaged Property;
(xxix) Not less than approximately 89.0%, 75.3% and 8.04% (by
Principal Balance) of the Group I Loans, Group II Loans and Group III
Loans, respectively, were originated under full documentation programs; and
(xxx) Each Mortgage Loan constitutes a qualified mortgage under
Section 860G(a)(3)(A) of the Code and Treasury Regulations Section
1.860G-2(a)(1).
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It is understood and agreed that the representations and warranties set
forth in this Section 2.03 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian, as the case may be, and shall continue
throughout the term of this Agreement. Upon discovery by any of the Company, the
Master Servicer, the Trustee or the Custodian of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the value of the related Mortgage Loans or the interests of the
Certificateholders in the related Mortgage Loans, the Company, the Master
Servicer, the Trustee or the Custodian, as the case may be, discovering such
breach shall give prompt written notice to the others. Within 90 days of its
discovery or its receipt of notice of breach, the Company shall repurchase,
subject to the limitations set forth in the definition of "Purchase Price", or
substitute for the affected Mortgage Loan or Mortgage Loans or any property
acquired in respect thereof from the Trustee, unless it has cured such breach in
all material respects. After the end of the three-month period beginning on the
"start-up day", any such substitution shall be made only if the Company provides
to the Trustee an Opinion of Counsel reasonably satisfactory to the Trustee that
each Substitute Mortgage Loan will be a "qualified replacement mortgage" within
the meaning of Section 860G(a)(4) of the Code. Such substitution shall be made
in the manner and within the time limits set forth in Section 2.02. Any such
repurchase by the Company shall be accomplished in the manner and at the
Purchase Price, if applicable, but shall not be subject to the time limits, set
forth in Section 2.02. It is understood and agreed that the obligation of the
Company to provide such substitution or to make such repurchase of any affected
Mortgage Loan or Mortgage Loans or any property acquired in respect thereof as
to which a breach has occurred and is continuing shall constitute the sole
remedy respecting such breach available to the Holders of the REMIC I Regular
Interests and the Class R-1 Certificateholders or the Trustee on behalf of the
Holders of the REMIC I Regular Interests and the Class R-1 Certificateholders.
Section 2.04. Acknowledgment of Transfer of Trust Fund; Authentication of
the Class R-1 Certificates. The Trustee acknowledges the transfer and assignment
to it of the property constituting the Trust Fund, but without having made the
review required to be made within 45 days pursuant to Section 2.02, and, as of
the Closing Date, shall cause to be authenticated and delivered to or upon the
order of the Company, the Class R-1 Certificates in Authorized Denominations
evidencing the residual beneficial ownership interest in the REMIC I Trust Fund.
Section 2.05. Conveyance of REMIC II; REMIC Election and Designations. A
trust ("REMIC II") of which the Trustee is the trustee is hereby created under
the laws of the State of New York for the benefit of the Holders of the
Certificates (other than the Class R-1 Certificates). The purpose of REMIC II is
to hold the REMIC II Trust Fund and provide for the issuance, execution and
delivery of the Certificates (other than the Class R-1 Certificates). The assets
of REMIC II shall consist of the REMIC II Trust Fund. REMIC II shall be
irrevocable.
The assets of REMIC II shall remain in the custody of the Trustee, on
behalf of REMIC II, and shall be kept in REMIC II. Moneys to the credit of REMIC
II shall be held by the Trustee and invested as provided herein. All assets
received and held in REMIC II will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of State Street Bank and Trust
Company in its own right, or any Person claiming through it. The Trustee, on
behalf of REMIC II, shall not have the power or authority to transfer, assign,
hypothecate, pledge or otherwise dispose of any of the assets of REMIC II to any
Person, except as permitted herein.
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No creditor of a beneficiary of REMIC II, of the Trustee, of the Master Servicer
or of the Company shall have any right to obtain possession of, or otherwise
exercise legal or equitable remedies with respect to, the property of REMIC II,
except in accordance with the terms of this Agreement.
Concurrently with the execution and delivery hereof, the Company does
hereby agree to irrevocably sell, transfer, assign, set over, and otherwise
convey to the Trustee in trust for the benefit of the Holders of the
Certificates (other than the Class R-1 Certificates), without recourse, all the
Company's right, title and interest in and to the REMIC II Trust Fund, including
all interest and principal received by the Company on or with respect to the
REMIC I Regular Interests after the Cut-Off Date. The Trustee hereby accepts
REMIC II created hereby and accepts delivery of the REMIC II Trust Fund on
behalf of REMIC II and acknowledges that it holds the REMIC I Regular Interests
for the benefit of the Holders of the Certificates (other than the Class R-1
Certificates) issued pursuant to this Agreement. It is the express intent of the
parties hereto that the conveyance of the REMIC II Trust Fund to the Trustee by
the Company as provided in this Section 2.05 be, and be construed as, an
absolute sale of the REMIC II Trust Fund. It is, further, not the intention of
the parties that such conveyance be deemed a pledge of the REMIC II Trust Fund
by the Company to the Trustee to secure a debt or other obligation of the
Company. However, in the event that, notwithstanding the intent of the parties,
the REMIC II Trust Fund is held to be the property of the Company, or if for any
other reason this Agreement is held or deemed to create a security interest in
the REMIC II Trust Fund, then
(a) this Agreement shall be deemed to be a security agreement;
(b) the conveyance provided for in this Section 2.05 shall be deemed to be
a grant by the Company to the Trustee of a security interest in all of the
Company's right, title, and interest, whether now owned or hereafter acquired,
in and to:
(I) All accounts, contract rights, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, advices of credit and investment property
consisting of, arising from or relating to any of the property described
below: The uncertificated REMIC I Regular Interests, including without
limitation all rights represented thereby in and to (i) the Mortgage Loans
identified on the Mortgage Loan Schedule, including the related Mortgage
Notes, Mortgages, Cooperative Stock Certificates, and Cooperative Leases,
all Substitute Mortgage Loans and all distributions with respect to such
Mortgage Loans and Substitute Mortgage Loans payable on and after the
Cut-Off Date, (ii) the Certificate Account, the Investment Account, the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund, the Expense
Account and the Rounding Accounts, and all money or other property held
therein, and the Custodial Accounts for P&I and the Custodial Accounts for
Reserves (to the extent of the amounts on deposit or other property therein
attributable to the Mortgage Loans); and (iii) the Mortgage Pool Insurance
Policy (including the Fraud Waiver and the Ninety-Seven Percent
Loan-to-Value Program Endorsement), the Special Hazard Insurance Policy,
amounts paid or payable by the insurer under any FHA insurance policy or
any Primary Insurance Policy and proceeds of any VA guaranty and any other
insurance policy related to any Mortgage Loan or the Mortgage Pool; (iv)
all property or
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rights arising from or by virtue of the disposition of, or collections with
respect to, or insurance proceeds payable with respect to, or claims
against other persons with respect to, all or any part of the collateral
described in (i)-(iii) above (including any accrued discount realized on
liquidation of any investment purchased at a discount), and (v) all cash
and non-cash proceeds of the collateral described in (i)-(iv) above;
(II) All accounts, general intangibles, chattel paper, instruments,
documents, money, deposit accounts, certificates of deposit, goods, letters
of credit, advices of credit, investment property and other rights arising
from or by virtue of the disposition of, or collections with respect to, or
insurance proceeds payable with respect to, or claims against other persons
with respect to, all or any part of the collateral described in (I) above
(including any accrued discount realized on liquidation of any investment
purchased at a discount); and
(III) All cash and non-cash proceeds of the collateral described in
(I) and (II) above;
(c) the possession by the Trustee of the Mortgage Notes, the Mortgages and
such other goods, letters of credit, advices of credit, instruments, money,
documents, chattel paper or certificated securities shall be deemed to be
possession by the secured party or possession by a purchaser for purposes of
perfecting the security interest pursuant to the Uniform Commercial Code
(including, without limitation, Sections 9-305 and 9-115 thereof) as in force in
the relevant jurisdiction; and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, securities
intermediaries, bailees or agents of, or persons holding for, the Trustee, as
applicable for the purpose of perfecting such security interest under applicable
law.
The Company and the Trustee shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the REMIC II Trust Fund,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of this Agreement. In connection herewith, the Trustee shall have all
of the rights and remedies of a secured party and creditor under the Uniform
Commercial Code as in force in the relevant jurisdiction.
The Trustee is authorized, with the Master Servicer's consent, to appoint
any bank or trust company approved by and unaffiliated with each of the Company
and the Master Servicer as Custodian of the documents or instruments referred to
above in this Section 2.05, and to enter into a Custodial Agreement for such
purpose; provided, however, that the Trustee shall be and remain liable for
actions of any such Custodian only to the extent it would otherwise be
responsible for such acts hereunder.
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The Company and the Trustee agree that the Company, on behalf of the REMIC
II Trust Fund, shall elect to treat the REMIC II Trust Fund as a REMIC within
the meaning of Section 860D of the Code and, if necessary, under applicable
state laws. Such election shall be included in the Form 1066 and any appropriate
state return to be filed on behalf of the REMIC constituted by the REMIC II
Trust Fund for its first taxable year.
The Closing Date is hereby designated as the "startup day" of the REMIC
constituted by the REMIC II Trust Fund within the meaning of Section 860G(a)(9)
of the Code.
The regular interests (as set forth in the table contained in the
Preliminary Statement hereto) relating to the REMIC II Trust Fund are hereby
designated as "regular interests" for purposes of Section 860G(a)(1) of the
Code. The Class R-2 Certificates are being issued in a single Class, which is
hereby designated as the sole class of "residual interest" in the REMIC II Trust
Fund for purposes of Section 860G(a)(2) of the Code.
The parties intend that the affairs of the REMIC II Trust Fund formed
hereunder shall constitute, and that the affairs of the REMIC II Trust Fund
shall be conducted so as to qualify it as, a REMIC. In furtherance of such
intention, the Company covenants and agrees that it shall act as agent for the
Tax Matters Person (and the Company is hereby appointed to act as Tax Matters
Person) on behalf of the REMIC II Trust Fund and that in such capacity it shall:
(a) prepare and file, or cause to be prepared and filed, a federal tax return
using a calendar year as the taxable year for the REMIC II Trust Fund when and
as required by the REMIC provisions and other applicable federal income tax
laws; (b) make an election, on behalf of the REMIC II Trust Fund, to be treated
as a REMIC on the federal tax return of the REMIC II Trust Fund for its first
taxable year, in accordance with the REMIC provisions; (c) prepare and forward,
or cause to be prepared and forwarded, to the Holders of the Certificates (other
than the Class R-1 Certificates) all information reports as and when required to
be provided to them in accordance with the REMIC provisions; (d) conduct the
affairs of the REMIC II Trust Fund at all times that any of the Certificates
(other than the Class R-1 Certificates) are outstanding so as to maintain the
status of the REMIC II Trust Fund as a REMIC under the REMIC provisions; (e) not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of the REMIC II Trust Fund; and (f)
pay the amount of any federal prohibited transaction penalty taxes imposed on
the REMIC II Trust Fund when and as the same shall be due and payable (but such
obligation shall not prevent the Company or any other appropriate person from
contesting any such tax in appropriate proceedings and shall not prevent the
Company from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings); provided, that the Company shall be entitled to be
indemnified from the REMIC II Trust Fund for any such prohibited transaction
penalty taxes if the Company's failure to exercise reasonable care was not the
primary cause of the imposition of such prohibited transaction penalty taxes.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC II Trust Fund as defined in Section 860F of the Code and not paid by the
Company pursuant to clause (f) of the preceding paragraph, such tax shall be
charged against amounts otherwise distributable to the Holders of the Class R-2
Certificates. Notwithstanding anything to the contrary contained herein, the
Company is hereby authorized to retain from amounts otherwise distributable to
the Holders of the Class R-2 Certificates on any Distribution Date sufficient
funds to reimburse the
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Company for the payment of such tax (to the extent that the Company has not been
previously reimbursed therefor and is entitled to such reimbursement).
Section 2.06. Acceptance by Trustee; Authentication of Certificates. The
Trustee acknowledges and accepts the assignment to it of the property
constituting the REMIC II Trust Fund and declares that as of the Closing Date it
holds and shall hold any documents constituting a part of the REMIC II Trust
Fund, and the REMIC II Trust Fund, as Trustee in trust, upon the trusts herein
set forth, for the use and benefit of all present and future Holders of the
Certificates (other than the Class R-1 Certificates). In connection therewith,
as of the Closing Date, the Trustee shall cause to be authenticated and
delivered to or upon the order of the Company, in exchange for the property
constituting the REMIC II Trust Fund, the Certificates (other than the Class R-1
Certificates) in Authorized Denominations evidencing the ownership interest in
the REMIC II Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Company to Act as Master Servicer. The Company shall act
as Master Servicer to service and administer the Mortgage Loans on behalf of the
Trustee and for the benefit of the Certificateholders in accordance with the
terms hereof and in the same manner in which, and with the same care, skill,
prudence and diligence with which, it services and administers similar mortgage
loans for other portfolios, and shall have full power and authority 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, including, without
limitation, the power and authority to bring actions and defend the Trust Fund
on behalf of the Trustee in order to enforce the terms of the Mortgage Notes.
The Master Servicer may perform its master servicing responsibilities through
agents or independent contractors, but shall not thereby be released from any of
its responsibilities hereunder and the Master Servicer shall diligently pursue
all of its rights against such agents or independent contractors.
The Master Servicer shall make reasonable efforts to collect or cause to be
collected all payments called for under the terms and provisions of the Mortgage
Loans and shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any Primary Insurance Policy, any FHA
insurance policy or VA guaranty, any hazard insurance policy, the Mortgage Pool
Insurance Policy (including the Fraud Waiver and the Ninety-Seven Percent
Loan-to-Value Program Endorsement), the Special Hazard Insurance Policy, and
federal flood insurance, cause to be followed such collection procedures as are
followed with respect to mortgage loans comparable to the Mortgage Loans and
held in portfolios of responsible mortgage lenders in the local areas where each
Mortgaged Property is located. The Master Servicer shall enforce "due-on-sale"
clauses with respect to the related Mortgage Loans, to the extent permitted by
law, subject to the provisions set forth in Section 3.08.
Consistent with the foregoing, the Master Servicer may in its discretion
(i) waive or cause to be waived any assumption fee or late payment charge in
connection with the prepayment of any Mortgage Loan and (ii) only upon
determining that the coverage of any applicable insurance
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policy or guaranty related to a Mortgage Loan will not be materially adversely
affected, arrange a schedule, running for no more than 180 days after the first
delinquent Due Date, for payment of any delinquent installment on any Mortgage
Note or for the liquidation of delinquent items. The Master Servicer shall have
the right, but not the obligation, to repurchase any related delinquent Mortgage
Loan 90 days after the first delinquent Due Date for an amount equal to its
Purchase Price; provided, however, that the aggregate Purchase Price of Mortgage
Loans so repurchased shall not exceed one-half of one percent (0.50%) of the
aggregate Principal Balance, as of the Cut-Off Date, of all Mortgage Loans.
The Master Servicer is hereby authorized and empowered by the Trustee to
execute and deliver or cause to be executed and delivered on behalf of the
Holders of the REMIC I Regular Interests and the Class R-1 Certificateholders,
and the Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release, discharge or modification,
assignments of Mortgages and endorsements of Mortgage Notes in connection with
refinancings (in jurisdictions where such assignments are the customary and
usual standard of practice of mortgage lenders) and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. The Trustee shall execute and furnish to the Master
Servicer, at the Master Servicer's direction, any powers of attorney and other
documents prepared by the Master Servicer and determined by the Master Servicer
to be necessary or appropriate to enable the Master Servicer to carry out its
supervisory, servicing and administrative duties under this Agreement.
The Master Servicer and each Servicer shall obtain (to the extent generally
commercially available from time to time) and maintain fidelity bond and errors
and omissions coverage acceptable to FNMA or FHLMC with respect to their
obligations under this Agreement and the applicable Selling and Servicing
Contract, respectively. The Master Servicer or each Servicer, as applicable,
shall establish escrow accounts for, or pay when due (by means of an advance),
any tax liens in connection with the Mortgaged Properties that are not paid by
the Mortgagors when due to the extent that any such payment would not constitute
a Nonrecoverable Advance when made. Notwithstanding the foregoing, the Master
Servicer shall not permit any modification with respect to any Mortgage Loan
that would both constitute a sale or exchange of such Mortgage Loan within the
meaning of Section 1001 of the Code (including any proposed, temporary or final
regulations promulgated thereunder) (other than in connection with a proposed
conveyance or assumption of such Mortgage Loan that is treated as a Principal
Prepayment or in a default situation) and cause either REMIC to fail to qualify
as such under the Code. The Master Servicer shall be entitled to approve a
request from a Mortgagor for a partial release of the related Mortgaged
Property, the granting of an easement thereon in favor of another Person, any
alteration or demolition of the related Mortgaged Property or other similar
matters if it has determined, exercising its good faith business judgment in the
same manner as it would if it were the owner of the related Mortgage Loan, that
the security for, and the timely and full collectability of, such Mortgage Loan
would not be adversely affected thereby and that the applicable trust fund would
not fail to continue to qualify as a REMIC under the Code as a result thereof
and that no tax on "prohibited transactions" or "contributions" after the
startup day would be imposed on either REMIC as a result thereof.
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In connection with the servicing and administering of each Mortgage Loan,
the Master Servicer and any affiliate of the Master Servicer (i) may perform
services such as appraisals, default management and brokerage services that are
not customarily provided by servicers of mortgage loans, and shall be entitled
to reasonable compensation therefor and (ii) may, at its own discretion and on
behalf of the Trustee, obtain credit information in the form of a "credit score"
from a credit repository.
Section 3.02. Custodial Accounts. The Master Servicer shall cause to be
established and maintained by each Servicer under the Master Servicer's
supervision the Custodial Account for P&I, Buydown Fund Accounts (if any) and
special Custodial Account for Reserves and shall deposit or cause to be
deposited therein daily the amounts related to the Mortgage Loans required by
the Selling and Servicing Contracts to be so deposited. Proceeds received with
respect to individual Mortgage Loans from any title, hazard, or FHA insurance
policy, VA guaranty, Primary Insurance Policy, or other insurance policy
covering such Mortgage Loans shall be deposited first in the Custodial Account
for Reserves if required for the restoration or repair of the related Mortgaged
Property. Proceeds from such insurance policies not so deposited in the
Custodial Account for Reserves shall be deposited in the Custodial Account for
P&I, and shall be applied to the balances of the related Mortgage Loans as
payments of interest and principal.
The Master Servicer is hereby authorized to make withdrawals from and to
issue drafts against the Custodial Accounts for P&I and the Custodial Accounts
for Reserves for the purposes required or permitted by this Agreement. Each
Custodial Account for P&I and each Custodial Account for Reserves shall bear a
designation clearly showing the respective interests of the applicable Servicer,
as trustee, and of the Master Servicer, in substantially one of the following
forms:
(a) With respect to the Custodial Account for P&I: (i) [Servicer's
Name], as agent, trustee and/or bailee of principal and interest custodial
account for PNC Mortgage Securities Corp., its successors and assigns, for
various owners of interests in PNC Mortgage Securities Corp.
mortgage-backed pools or (ii) [Servicer's Name] in trust for PNC Mortgage
Securities Corp.;
(b) With respect to the Custodial Account for Reserves: (i)
[Servicer's Name], as agent, trustee and/or bailee of taxes and insurance
custodial account for PNC Mortgage Securities Corp., its successors and
assigns for various mortgagors and/or various owners of interests in PNC
Mortgage Securities Corp. mortgage-backed pools or (ii) [Servicer's Name]
in trust for PNC Mortgage Securities Corp. and various Mortgagors.
The Master Servicer hereby undertakes to assure remittance to the
Certificate Account of all amounts relating to the Mortgage Loans that have been
collected by any Servicer and are due to the Certificate Account pursuant to
Section 4.01 of this Agreement.
Section 3.03. The Investment Account; Eligible Investments. (a) Not later
than the Withdrawal Date, the Master Servicer shall withdraw or direct the
withdrawal of funds in the Custodial Accounts for P&I, for deposit in the
Investment Account, in an amount representing:
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(i) Scheduled installments of principal and interest on the Mortgage
Loans received or advanced by the applicable Servicers which were due on
the Due Date prior to such Withdrawal Date, net of Servicing Fees due the
applicable Servicers and less any amounts to be withdrawn later by the
applicable Servicers from the applicable Buydown Fund Accounts;
(ii) Payoffs and the proceeds of other types of liquidations of the
Mortgage Loans received by the applicable Servicer for such Mortgage Loans
during the applicable Payoff Period, with interest to the date of Payoff or
liquidation less any amounts to be withdrawn later by the applicable
Servicers from the applicable Buydown Fund Accounts; and
(iii) Curtailments received by the applicable Servicers in the Prior
Period.
At its option, the Master Servicer may invest funds withdrawn from the
Custodial Accounts for P&I, as well as any Buydown Funds, Insurance Proceeds and
Liquidation Proceeds previously received by the Master Servicer (including
amounts paid by the Company in respect of any Purchase Obligation or its
substitution obligations set forth in Section 2.02 or Section 2.03 or in
connection with the exercise of the option to terminate this Agreement pursuant
to Section 9.01) for its own account and at its own risk, during any period
prior to their deposit in the Certificate Account. Such funds, as well as any
funds which were withdrawn from the Custodial Accounts for P&I on or before the
Withdrawal Date, but not yet deposited into the Certificate Account, shall
immediately be deposited by the Master Servicer with the Investment Depository
in an Investment Account in the name of the Master Servicer and the Trustee for
investment only as set forth in this Section 3.03. The Master Servicer shall
bear any and all losses incurred on any investments made with such funds and
shall be entitled to retain all gains realized on such investments as additional
servicing compensation. Not later than the Business Day prior to the
Distribution Date, the Master Servicer shall deposit such funds, net of any
gains (except Payoff Earnings) earned thereon, in the Certificate Account.
(b) Funds held in the Investment Account shall be invested in (i) one or
more Eligible Investments which shall in no event mature later than the Business
Day prior to the related Distribution Date (except if such Eligible Investments
are obligations of the Trustee, such Eligible Investments may mature on the
Distribution Date), or (ii) such other instruments as shall be required to
maintain the Ratings.
Section 3.04. The Certificate Account.
(a) Not later than the Business Day prior to the related Distribution Date,
the Master Servicer shall direct the Investment Depository to deposit the
amounts previously deposited into the Investment Account (which may include a
deposit of Eligible Investments) to which the Holders of the REMIC I Regular
Interests and Class R-1 Certificateholders are entitled into the Certificate
Account. In addition, not later than the Business Day prior to the Distribution
Date, the Master Servicer shall deposit into the Certificate Account any Monthly
P&I Advances or other payments required to be made by the Master Servicer
pursuant to Section 4.02 of this Agreement and any Insurance Proceeds or
Liquidation Proceeds (including amounts paid by
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the Company in respect of any Purchase Obligation or in connection with the
exercise of its option to terminate this Agreement pursuant to Section 9.01) not
previously deposited in the Custodial Accounts for P&I or the Investment
Account.
(b) Funds held in the Certificate Account shall be invested at the
direction of the Master Servicer in (i) one or more Eligible Investments which
shall in no event mature later than the Business Day prior to the related
Distribution Date (except if such Eligible Investments are obligations of the
Trustee, such Eligible Investments may mature on the Distribution Date), or (ii)
such other instruments as shall be required to maintain the Ratings. The Master
Servicer shall be entitled to receive any gains earned on such Eligible
Investments and shall bear any losses suffered in connection therewith.
Section 3.05. Permitted Withdrawals from the Certificate Account, the
Investment Account and Custodial Accounts for P&I and of Buydown Funds from the
Buydown Fund Accounts.
(a) The Master Servicer is authorized to make withdrawals, from time to
time, from the Investment Account, the Certificate Account or the Custodial
Accounts for P&I established by the Servicers of amounts deposited therein in
respect of the Certificates, as follows:
(i) To reimburse itself or the applicable Servicer for Monthly P&I
Advances made pursuant to Section 4.02 or a Selling and Servicing Contract,
such right to reimbursement pursuant to this paragraph (i) being limited to
amounts received on particular Mortgage Loans (including, for this purpose,
Insurance Proceeds and Liquidation Proceeds) which represent late
recoveries of principal and/or interest respecting which any such Monthly
P&I Advance was made;
(ii) To reimburse itself or the applicable Servicer for amounts
expended by or for the account of the Master Servicer pursuant to Section
3.09 or amounts expended by such Servicer pursuant to the Selling and
Servicing Contracts in connection with the restoration of property damaged
by an Uninsured Cause or in connection with the liquidation of a Mortgage
Loan;
(iii) To pay to itself, with respect to the related Mortgage Loans,
the Master Servicing Fee (net of Compensating Interest reduced by Payoff
Earnings and Payoff Interest) as to which no prior withdrawals from funds
deposited by the Master Servicer have been made;
(iv) To reimburse itself or the applicable Servicer for advances made
with respect to related Mortgage Loans which the Master Servicer has
determined to be Nonrecoverable Advances;
(v) To pay to itself reinvestment earnings deposited or earned in the
Investment Account and the Certificate Account to which it is entitled and
to reimburse itself for expenses incurred by and reimbursable to it
pursuant to Section 6.03;
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(vi) To deposit to the Investment Account amounts in the Certificate
Account not required to be on deposit therein at the time of such
withdrawal;
(vii) To deposit in the Certificate Account, not later than the
Business Day prior to the related Distribution Date, the amounts specified
in Section 3.04(a);
(viii) To deposit in the Expense Account, on each Withdrawal Date, the
Premium Payment Amounts with respect to the Mortgage Pool Insurance Policy
and the Special Hazard Insurance Policy pursuant to Section 3.19; and
after making or providing for the above withdrawals
(ix) To clear and terminate the Investment Account and the Certificate
Account following termination of this Agreement pursuant to Section 9.01.
Since, in connection with withdrawals pursuant to paragraphs (i) and (ii),
the Master Servicer's entitlement thereto is limited to collections or other
recoveries on the related Mortgage Loan, the Master Servicer or the applicable
Servicer shall keep and maintain separate accounting for each Mortgage Loan, for
the purpose of justifying any such withdrawals.
(b) The Master Servicer (or the applicable Servicer, if such Servicer holds
and maintains a Buydown Fund Account) is authorized to make withdrawals, from
time to time, from the Buydown Fund Account or Custodial Account for P&I
established by any Servicer under its supervision of the following amounts of
Buydown Funds:
(i) To deposit each month in the Investment Account the amount
necessary to supplement payments received on Buydown Loans;
(ii) In the event of a Payoff of any Mortgage Loan having a related
Buydown Fund, to apply amounts remaining in Buydown Fund Accounts to reduce
the required amount of such principal Payoff (or, if the Mortgagor has made
a Payoff, to refund such remaining Buydown Fund amounts to the Person
entitled thereto);
(iii) In the event of foreclosure or liquidation of any Mortgage Loan
having a Buydown Fund, to deposit remaining Buydown Fund amounts in the
Investment Account as Liquidation Proceeds; and
(iv) To clear and terminate the portion of any account representing
Buydown Funds following termination of this Agreement pursuant to Section
9.01;
(c) The Trustee is authorized to make withdrawals from time to time from
the Certificate Account to reimburse itself for advances it has made pursuant to
Section 7.01(a) hereof that it has determined to be Nonrecoverable Advances.
Section 3.06. Maintenance of Primary Insurance Policies; Collections
Thereunder. The Master Servicer shall use commercially reasonable efforts to
keep, and to cause the Servicers to keep, in full force and effect each Primary
Insurance Policy required with respect to a Mortgage
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Loan, in the manner set forth in the applicable Selling and Servicing Contract,
until no longer required. Notwithstanding the foregoing, the Master Servicer
shall have no obligation to maintain such Primary Insurance Policy for a
Mortgage Loan for which the outstanding Principal Balance thereof at any time
subsequent to origination was 80% or less of the value of the related Mortgaged
Property (as determined by the appraisal obtained at the time of origination),
unless required by applicable law.
Unless required by applicable law, the Master Servicer shall not cancel or
refuse to renew, or allow any Servicer under its supervision to cancel or refuse
to renew, any such Primary Insurance Policy in effect at the date of the initial
issuance of the Certificates that is required to be kept in force hereunder;
provided, however, that neither the Master Servicer nor any Servicer shall
advance funds for the payment of any premium due under any Primary Insurance
Policy if it shall determine that such an advance would be a Nonrecoverable
Advance.
Section 3.07 Maintenance of Hazard Insurance. The Master Servicer shall
cause to be maintained for each Mortgage Loan (other than a Cooperative Loan)
fire insurance with extended coverage in an amount which is not less than the
original principal balance of such Mortgage Loan, except in cases approved by
the Master Servicer in which such amount exceeds the value of the improvements
to the Mortgaged Property. The Master Servicer shall also require fire insurance
with extended coverage in a comparable amount on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan (other than a
Cooperative Loan). Any amounts collected under any such policies (other than
amounts to be applied to the restoration or repair of the related Mortgaged
Property) shall be deposited into the Custodial Account for P&I, subject to
withdrawal pursuant to the applicable Selling and Servicing Contract and
pursuant to Section 3.03 and Section 3.05. Any unreimbursed costs incurred in
maintaining any insurance described in this Section 3.07 shall be recoverable as
an advance by the Master Servicer from the Investment Account or the Certificate
Account. Such insurance shall be with insurers approved by the Master Servicer
and FNMA or FHLMC. Other additional insurance may be required of a Mortgagor, in
addition to that required pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
Where any part of any improvement to the Mortgaged Property (other than a
Mortgaged Property secured by a Cooperative Loan) is located in a federally
designated special flood hazard area and in a community which participates in
the National Flood Insurance Program at the time of origination of the related
Mortgage Loan, the Master Servicer shall cause flood insurance to be provided.
The hazard insurance coverage required by this Section 3.07 may be met with
blanket policies providing protection equivalent to individual policies
otherwise required. The Master Servicer or the applicable Servicer shall be
responsible for paying any deductible amount on any such blanket policy. The
Master Servicer agrees to present, or cause to be presented, on behalf of and
for the benefit of the Trustee and Certificateholders, claims under the hazard
insurance policy respecting any Mortgage Loan, and in this regard to take such
reasonable actions as shall be necessary to permit recovery under such policy.
Section 3.08. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
When any Mortgaged Property is about to be conveyed by the Mortgagor, the Master
Servicer shall, to the extent it has knowledge of such prospective conveyance
and prior to the time of the consummation of such conveyance, exercise on behalf
of the Trustee the Trustee's rights to
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accelerate the maturity of such Mortgage Loan, to the extent that such
acceleration is permitted by the terms of the related Mortgage Note, under any
"due-on-sale" clause applicable thereto; provided, however, that the Master
Servicer shall not exercise any such right if the due-on-sale clause, in the
reasonable belief of the Master Servicer, is not enforceable under applicable
law or if such exercise would result in non-coverage of any resulting loss that
would otherwise be covered under any insurance policy. In the event the Master
Servicer is prohibited from exercising such right, the Master Servicer is
authorized to take or enter into an assumption and modification agreement from
or with the Person to whom a Mortgaged Property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Mortgage Note
and, unless prohibited by applicable state law or unless the Mortgage Note
contains a provision allowing a qualified borrower to assume the Mortgage Note,
the Mortgagor remains liable thereon; provided that the Mortgage Loan shall
continue to be covered (if so covered before the Master Servicer enters such
agreement) by any related Primary Insurance Policy and the Mortgage Pool
Insurance Policy. The Master Servicer is also 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 Mortgage Note. The Master Servicer shall
not enter into any substitution or assumption with respect to a Mortgage Loan if
such substitution or assumption shall (i) both constitute a "significant
modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code (or Treasury regulations promulgated thereunder) and cause the REMICs
to fail to qualify as a REMIC under the REMIC Provisions or (ii) cause the
imposition of any tax on "prohibited transactions" or "contributions" after the
startup day under the REMIC Provisions. The Master Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed by
forwarding to the Trustee the original copy of such substitution or assumption
agreement and other documents and instruments constituting a part thereof. In
connection with any such assumption or substitution agreement, the terms of the
related Mortgage Note shall not be changed. Any fee collected by the applicable
Servicer for entering into an assumption or substitution of liability agreement
shall be retained by such Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption which the Master Servicer
may be restricted by law from preventing, for any reason whatsoever.
Section 3.09. Realization Upon Defaulted Mortgage Loans. The Master
Servicer shall foreclose upon or otherwise comparably convert, or cause to be
foreclosed upon or comparably converted, the ownership of any Mortgaged Property
securing a Mortgage Loan which comes into and continues in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.01. In lieu of such foreclosure or other
conversion, and taking into consideration the desirability of maximizing net
Liquidation Proceeds after taking into account the effect of Insurance Proceeds
upon Liquidation Proceeds, the Master Servicer may, to the extent consistent
with prudent mortgage loan servicing practices, accept a payment of less than
the outstanding Principal Balance of a delinquent Mortgage Loan in full
satisfaction of the indebtedness evidenced by the related Mortgage Note and
release the lien of the related Mortgage upon receipt of such payment. The
Master Servicer shall not foreclose upon or
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otherwise comparably convert a Mortgaged Property if the Master Servicer is
aware of evidence of toxic waste, other hazardous substances or other evidence
of environmental contamination thereon and the Master Servicer determines that
it would be imprudent to do so. In connection with such foreclosure or other
conversion, the Master Servicer shall cause to be followed such practices and
procedures as it shall deem necessary or advisable and as shall be normal and
usual in general mortgage servicing activities. The foregoing is subject to the
provision that, in the case of damage to a Mortgaged Property from an Uninsured
Cause, the Master Servicer shall not be required to advance its own funds
towards the restoration of the property unless it shall be determined in the
sole judgment of the Master Servicer, (i) that such restoration will increase
the proceeds of liquidation of the Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds. The Master Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings or in connection with the preservation of the coverage of the
Mortgage Pool Insurance Policy (including the Fraud Waiver and the Ninety-Seven
Percent Loan-to-Value Program Endorsement) and the Special Hazard Insurance
Policy; provided, however, that it shall be entitled to reimbursement thereof
(as well as its normal servicing compensation) as an advance. The Master
Servicer shall maintain information required for tax reporting purposes
regarding any Mortgaged Property which is abandoned or which has been foreclosed
or otherwise comparably converted. The Master Servicer shall report such
information to the Internal Revenue Service and the Mortgagor in the manner
required by applicable law.
REMIC I shall not acquire any real property (or personal property incident
to such real property) except in connection with a default or imminent default
of a Mortgage Loan. In the event that REMIC I acquires any real property (or
personal property incident to such real property) in connection with a default
or imminent default of a Mortgage Loan, such property shall be disposed of by
the Master Servicer within two years after its acquisition by the Master
Servicer for REMIC I, unless the Master Servicer provides to the Trustee an
Opinion of Counsel to the effect that the holding by REMIC I of such Mortgaged
Property subsequent to two years after its acquisition will not result in the
imposition of taxes on "prohibited transactions" of REMIC I as defined in
Section 860F of the Code or under the law of any state in which real property
securing a Mortgage Loan owned by REMIC I is located or cause REMIC I to fail to
qualify as a REMIC for federal income tax purposes or for state tax purposes
under the laws of any state in which real property securing a Mortgage Loan
owned by REMIC I is located at any time that any Certificates are outstanding.
The Master Servicer shall manage, conserve, protect and operate each such
property for the Certificateholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) or
result in the receipt by the REMIC 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 property, the Master Servicer shall either
itself or through an agent selected by the Master Servicer protect and conserve
such property in the same manner and to such extent as is customary in the
locality where such property is located and may, incident to its conservation
and protection of the interests of the Certificateholders, rent the same, or any
part thereof, as the Master Servicer deems to be in the best interest of the
Master Servicer and the Certificateholders for the period prior to the sale of
such property. Additionally,
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the Master Servicer shall perform the tax withholding and shall file information
returns with respect to the receipt of mortgage interests received in a trade or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and the information returns relating to cancellation of indebtedness income with
respect to any Mortgaged Property required by Sections 6050H, 6050J and 6050P,
respectively, of the Code, and deliver to the Trustee an Officers' Certificate
on or before March 31 of each year stating that such reports have been filed.
Such reports shall be in form and substance sufficient to meet the reporting
requirements imposed by Sections 6050H, 6050J and 6050P of the Code.
Notwithstanding any other provision of this Agreement, the Master Servicer
and the Trustee, as applicable, shall comply with all federal withholding
requirements with respect to payments to Certificateholders of interest or
original issue discount that the Master Servicer or the Trustee reasonably
believes are applicable under the Code. The consent of Certificateholders shall
not be required for any such withholding. Without limiting the foregoing, the
Master Servicer agrees that it will not withhold with respect to payments of
interest or original issue discount in the case of a Certificateholder that has
furnished or caused to be furnished an effective Form W-8 or an acceptable
substitute form or a successor form and who is not a "10 percent shareholder"
within the meaning of Code Section 871(h)(3)(B) or a "controlled foreign
corporation" described in Code Section 881(c)(3)(C) with respect to REMIC I,
REMIC II or the Depositor. In the event the Trustee withholds any amount from
interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trustee
shall indicate the amount withheld to such Certificateholder.
Section 3.10. Trustee to Cooperate; Release of Mortgage Files. Upon the
Payoff or scheduled maturity of any Mortgage Loan, the Master Servicer shall
cause such final payment to be immediately deposited in the related Custodial
Account for P&I or the Investment Account. Upon notice thereof, the Master
Servicer shall promptly notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in either
such account have been so deposited) of a Servicing Officer and shall request
delivery to it of the Mortgage File. Upon receipt of such certification and
request, the Trustee shall, not later than the fifth succeeding Business Day,
release the related Mortgage File to the Master Servicer or the applicable
Servicer indicated in such request. With any such Payoff or other final payment,
the Master Servicer is authorized to prepare for and procure from the trustee or
mortgagee under the Mortgage which secured the Mortgage Note a deed of full
reconveyance or other form of satisfaction or assignment of Mortgage and
endorsement of Mortgage Note in connection with a refinancing covering the
Mortgaged Property, which satisfaction, endorsed Mortgage Note or assigning
document shall be delivered by the Master Servicer to the person or persons
entitled thereto. No expenses incurred in connection with such satisfaction or
assignment shall be payable to the Master Servicer by the Trustee or from the
Certificate Account, the related Investment Account or the related Custodial
Account for P&I. From time to time as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy, the Trustee shall, upon request of the Master
Servicer and delivery to it of a trust receipt signed by a Servicing Officer,
release not later than the fifth Business Day following the date of receipt of
such request the related Mortgage File to the Master Servicer or the related
Servicer as indicated by the Master Servicer and shall execute such documents as
shall be
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necessary to the prosecution of any such proceedings. Such trust receipt shall
obligate the Master Servicer to return the Mortgage File to the Trustee when the
need therefor by the Master Servicer no longer exists, unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that herein above specified, the trust receipt shall be
released by the Trustee to the Master Servicer.
Section 3.11. Compensation to the Master Servicer and the Servicers. As
compensation for its activities hereunder, the Master Servicer shall be entitled
to receive from the Investment Account or the Certificate Account the amounts
provided for by Section 3.05(a)(iii). The Master Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder and
shall not be entitled to reimbursement therefor, except as specifically provided
herein.
As compensation for its activities under the applicable Selling and
Servicing Contract, the applicable Servicer shall be entitled to withhold or
withdraw from the related Custodial Account for P&I the amounts provided for in
such Selling and Servicing Contract. Each Servicer is required to pay all
expenses incurred by it in connection with its servicing activities under its
Selling and Servicing Contract (including payment of premiums for Primary
Insurance Policies, if required) and shall not be entitled to reimbursement
therefor except as specifically provided in such Selling and Servicing Contract
and not inconsistent with this Agreement.
Section 3.12. Reports to the Trustee; Certificate Account Statement. Not
later than 15 days after each Distribution Date, the Master Servicer shall
forward a statement, certified by a Servicing Officer, to the Trustee setting
forth the status of the Certificate Account as of the close of business on such
Distribution Date and showing, for the period covered by such statement, the
aggregate of deposits into and withdrawals from the Certificate Account for each
category of deposit specified in Section 3.04 and each category of withdrawal
specified in Section 3.05, and stating that all distributions required by this
Agreement have been made (or if any required distribution has not been made,
specifying the nature and amount thereof). The Trustee shall provide such
statements to any Certificateholder upon request at the expense of the Master
Servicer. Such statement shall also, to the extent available, include
information regarding delinquencies on the Mortgage Loans, indicating the number
and aggregate Principal Balance of Mortgage Loans which are one, two, three or
more months delinquent, the number and aggregate Principal Balance of Mortgage
Loans with respect to which foreclosure proceedings have been initiated and the
book value of any Mortgaged Property acquired by the Trust Fund through
foreclosure, deed in lieu of foreclosure or other exercise of the Trust Fund's
security interest in the Mortgaged Property.
Section 3.13 Annual Statement as to Compliance. The Master Servicer shall
deliver to the Trustee, on or before April 30 of each year, beginning with the
first April 30 succeeding the Cut-Off Date by at least six months, an Officer's
Certificate stating as to the signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year and
performance under this Agreement has been made under such officer's supervision,
and (ii) to the best of such officer's knowledge, based on such review, the
Master Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
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nature and status thereof. Copies of such statement shall be provided by the
Master Servicer to Certificateholders upon request or by the Trustee (solely to
the extent that such copies are available to the Trustee) at the expense of the
Master Servicer, should the Master Servicer fail to so provide such copies.
Section 3.14. Access to Certain Documentation and Information Regarding the
Mortgage. In the event that the Certificates are legal for investment by
federally-insured savings associations, the Master Servicer shall provide to the
OTS, the FDIC and the supervisory agents and examiners of the OTS and the FDIC
access to the documentation regarding the related Mortgage Loans required by
applicable regulations of the OTS or the FDIC, as applicable, and shall in any
event provide such access to the documentation regarding such Mortgage Loans to
the Trustee and its representatives, such access being afforded without charge,
but only upon reasonable request and during normal business hours at the offices
of the Master Servicer designated by it.
Section 3.15. Annual Independent Public Accountants' Servicing Report. On
or before April 30 of each year, beginning with the first April 30 succeeding
the Cut-Off Date by at least six months, the Master Servicer, at its expense,
shall cause a firm of independent public accountants to furnish a statement to
the Trustee to the effect that, in connection with the firm's examination of the
financial statements as of the previous December 31 of the Master Servicer's
parent corporation (which shall include a limited examination of the Master
Servicer's financial statements), nothing came to their attention that indicated
that the Master Servicer was not in compliance with Section 3.02, Section 3.03,
Section 3.04, Section 3.05, Section 3.11, Section 3.12 and Section 3.13 of this
Agreement, except for (i) such exceptions as such firm believes to be
immaterial, and (ii) such other exceptions as are set forth in such statement.
Section 3.16. Mortgage Pool Insurance Policy. The Master Servicer agrees to
exercise commercially reasonable efforts to maintain and keep the Mortgage Pool
Insurance Policy (including the Fraud Waiver and the Ninety-Seven Percent
Loan-to-Value Program Endorsement) in full force and effect throughout the term
of this Agreement, unless coverage thereunder has been exhausted through the
payment of claims; provided, however, that in no case shall the Master Servicer
be required to (i) expend its own funds to maintain such policy or (ii) make a
Nonrecoverable Advance. In the event that (i) the claims paying ability rating
of the Mortgage Pool Insurer, and consequently, each of the Ratings are reduced
below the level of the Ratings originally given, (ii) the Mortgage Pool Insurer
ceases to be a qualified mortgage insurer duly qualified as such under
applicable laws or (iii) the Mortgage Pool Insurance Policy is cancelled for any
reason other than the exhaustion of coverage thereunder, the Master Servicer
acting on behalf of the Trustee shall exercise commercially reasonable efforts
to obtain from another insurer acceptable to the Rating Agencies a replacement
policy comparable to the initial Mortgage Pool Insurance Policy; provided,
however, that if the cost of any such replacement policy shall be greater than
the cost of the initial Mortgage Pool Insurance Policy, the amount of coverage
of such replacement policy shall be reduced to a level such that the premium
rate therefor shall not exceed 100% of the premium rate on the initial Mortgage
Pool Insurance Policy.
In connection with its activities hereunder, the Master Servicer agrees
to present, on behalf of the Trustee and Certificateholders, claims to the
Mortgage Pool Insurer under the
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Mortgage Pool Insurance Policy, and, in this regard, to take such commercially
reasonable action (other than the making of Nonrecoverable Advances) as shall be
necessary to permit recovery under the Mortgage Pool Insurance Policy. The
Master Servicer shall collect all amounts relating to the Certificates under the
Mortgage Pool Insurance Policy and shall deposit such amounts in the related
Custodial Account for P&I or in the Certificate Account until distributed in
accordance with Section 4.01 or Section 4.04 or withdrawn in accordance with
Section 3.03 or Section 3.05 of this Agreement.
Section 3.17. Special Hazard Insurance Policy. The Master Servicer agrees
to exercise commercially reasonable efforts to maintain and keep the Special
Hazard Insurance Policy in full force and effect throughout the term of this
Agreement, unless coverage thereunder has been exhausted through the payment of
claims; provided, however, that in no case shall the Master Servicer be required
to (i) expend its own funds to maintain such policy or (ii) make a
Nonrecoverable Advance. In the event that (i) the claims paying ability rating
of the Special Hazard Insurer, and consequently, each of the Ratings are reduced
below the level of the Ratings originally given to the Certificates, (ii) the
Special Hazard Insurer ceases to be a qualified mortgage insurer duly qualified
as such under applicable laws or (iii) the Special Hazard Insurance Policy is
cancelled for any reason other than the exhaustion of coverage thereunder, the
Master Servicer acting on behalf of the Trustee shall exercise commercially
reasonable efforts to obtain from another insurer acceptable to the Rating
Agencies a replacement policy comparable to the initial Special Hazard Insurance
Policy; provided, however, that if the cost of any such replacement policy shall
be greater than the cost of the initial Special Hazard Insurance Policy, the
amount of coverage of such replacement policy shall be reduced to a level such
that the premium rate therefor shall not exceed 100% of the premium rate on the
initial Special Hazard Insurance Policy.
In connection with its activities hereunder, the Master Servicer agrees to
present, on behalf of the Trustee and Certificateholders, claims to the Special
Hazard Insurer under the Special Hazard Insurance Policy, and, in this regard,
to take such commercially reasonable action (other than the making of
Nonrecoverable Advances) as shall be necessary to permit recovery under the
Special Hazard Insurance Policy. The Master Servicer shall collect all amounts
relating to the Certificates under the Special Hazard Insurance Policy and shall
deposit such amounts in the related Custodial Account for P&I or in the
Certificate Account until distributed in accordance with Section 4.01 or Section
4.04 or withdrawn in accordance with Section 3.03 or 3.05 of this Agreement.
Section 3.18. Bankruptcy and Extraordinary Hazard Expense Reserve Fund. On
or prior to the Closing Date, the Trustee shall establish and thereafter
maintain the Bankruptcy and Extraordinary Hazard Expense Reserve Fund. On or
prior to the Closing Date, DLJ shall deposit an amount equal to $151,154.04 to
provide coverage for Bankruptcy and Extraordinary Hazard Losses. For each
Distribution Date, the Master Servicer shall determine the amount of Bankruptcy
and Extraordinary Hazard Losses as of the related Due Date for such Distribution
Date and shall notify the Trustee by noon New York City time two Business Days
prior to such Distribution Date of such amount. On each such Distribution Date,
the Trustee shall then withdraw from the Bankruptcy and Extraordinary Hazard
Expense Reserve Fund, to the extent
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funds are available therein, the amount needed to cover any such Bankruptcy
Losses and Extraordinary Hazard Losses and deposit such amount in the
Certificate Account.
Upon (i) termination of the Trust Fund and the REMIC II Trust Fund, (ii)
the cancellation of the Bankruptcy and Extraordinary Hazard Expense Reserve Fund
or (iii) the substitution by DLJ of an alternative form of credit enhancement
therefor, the Trustee shall remit to DLJ any amounts at the time remaining in
the Bankruptcy and Extraordinary Hazard Expense Reserve Fund; provided however,
that the Trustee shall not remit any such amounts to the extent that any such
action would result in the downgrading of the Ratings of the Certificates
originally assigned by the Rating Agencies. Upon any reduction of the amounts
required by the Rating Agencies to be on deposit in the Bankruptcy and
Extraordinary Hazard Expense Reserve Fund, any amounts on deposit in excess of
such required amount shall be remitted to DLJ; provided however, that the
Trustee shall not remit any such amounts to the extent that any such action
would result in the downgrading of the Ratings of the Certificates originally
assigned by the Rating Agencies.
Funds held in the Bankruptcy and Extraordinary Hazard Expense Reserve Fund
may be invested at the direction of DLJ in one or more Eligible Investments
which shall in no event mature later than the date on which any funds so
invested are needed to make payments from the Bankruptcy and Extraordinary
Hazard Expense Reserve Fund.
To the extent that it constitutes a "reserve fund" for purposes of the
REMIC Provisions, the Bankruptcy and Extraordinary Hazard Expense Reserve Fund
established hereunder shall be an "outside reserve fund" as defined in Treasury
Regulation 1.860G-2(h), and in that regard (i) such fund shall be an outside
reserve fund and not an asset of either REMIC, (ii) such fund shall be owned for
federal tax purposes by DLJ and DLJ shall report all amounts of income,
deduction, gain or loss accruing therefrom, and (iii) amounts transferred by the
REMIC to the fund shall be treated as distributed by the REMIC to DLJ.
Section 3.19. Expense Account.
(a) On or prior to the Closing Date, the Trustee shall cause to be
established and maintained the Expense Account in which the Master Servicer
shall deposit, on each Withdrawal Date, that portion of the payments received
with respect to the Mortgage Loans constituting the Excess Amount. The Master
Servicer shall deposit the portion of the Excess Amount attributable to the
Premium Payment Rate for the Mortgage Pool Insurance Policy to the Mortgage Pool
Insurance Premium Sub-Account and the portion of the Excess Amount attributable
to the Premium Payment Rate for the Special Hazard Insurance Policy to the
Special Hazard Insurance Premium Sub-Account. The Master Servicer shall, from
time to time, make withdrawals from the Mortgage Pool Insurance Premium
Sub-Account to pay the Premium due and owing with respect to the Mortgage Pool
Insurance Policy in accordance with Section 3.16. The Master Servicer shall,
from time to time, make withdrawals from the Special Hazard Insurance Premium
Sub-Account to pay the Premium due and owing with respect to the Special Hazard
Insurance Policy in accordance with Section 3.17. If the Master Servicer fails
to pay any such Premium that is due and owing from amounts on deposit in such
accounts, and funds are at the time on deposit in the applicable account, the
Trustee shall be entitled to withdraw, by written notification to the
institution maintaining the Expense Account (if other than the Trustee), amounts
from the
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applicable account to the extent necessary to pay such Premium and apply such
amounts to the payment thereof. In no event shall the Master Servicer be
obligated for the payment of the Premiums with respect to the Special Hazard
Insurance Policy and the Mortgage Pool Insurance Policy other than from amounts
on deposit in the Special Hazard Insurance Premium Sub-Account and the Mortgage
Pool Insurance Premium Sub-Account, respectively.
(b) To the extent that it constitutes a "reserve fund" for purposes of the
REMIC Provisions, the Expense Account established hereunder shall be an "outside
reserve fund" as defined in Treasury Regulation 1.860G-2(h), and in that regard
(i) such fund shall be an outside reserve fund and not an asset of either REMIC,
(ii) such fund shall be owned for federal tax purposes by the owner specified in
the Certificate Register and such owner shall report all amounts of income,
deduction, gain or loss accruing therefrom, and (iii) amounts transferred by the
REMIC to the Expense Account shall be treated as distributed by the REMIC to the
such owner.
(c) To the extent that on any Distribution Date, amounts on deposit in the
Special Hazard Insurance Premium Sub-Account are in excess of the amounts
necessary to pay any and all Premiums due prior to the third succeeding
Distribution Date with respect to the Special Hazard Insurance Policy, the
Master Servicer shall direct the Trustee to withdraw such amounts from the
Special Hazard Insurance Premium Sub-Account and remit such amounts to the owner
of the Excess Amount. To the extent that on any Distribution Date, amounts on
deposit in the Mortgage Pool Insurance Premium Sub-Account are in excess of the
amounts necessary to pay any and all Premiums due prior to the next Distribution
Date with respect to the Mortgage Pool Insurance Policy, the Master Servicer
shall direct the Trustee to withdraw such amounts from the Mortgage Pool
Insurance Premium Sub-Account and remit such amounts to the owner of the Excess
Amount. If the Master Servicer fails to direct the Trustee to withdraw such
excess amounts, the Trustee shall be entitled to withdraw, by written
notification to the institution maintaining the applicable account (if other
than the Trustee), amounts from such account and remit such amounts to the owner
of the Excess Amount.
(d) The owner of the Excess Amount as of the Closing Date shall be
reflected in the Certificate Register. The Excess Amount shall not be
transferable. The Excess Amount shall be entitled to the benefits of this
Agreement and shall be valid for all purposes, upon receipt by the Trustee of a
written instruction of the Company to register such interest in the name
specified in such instruction and the entry of such information in the
Certificate Register by the Certificate Registrar. The Excess Amount shall be
deemed dated the date of the making of an entry relating to the registration
thereof in the Certificate Register.
(e) Funds held in the Expense Account may be invested at the direction of
the owner of the Excess Amount in one or more Eligible Investments which shall
in no event mature later than the date on which any funds so invested are needed
to make payments from the Expense Account.
Section 3.20. Assumption or Termination of Selling and Servicing Contracts
by Trustee. In the event the Master Servicer, or any successor Master Servicer,
shall for any ee reason no longer be the Master Servicer (including by reason of
an Event of Default), the Trustee as trustee hereunder or its designee shall
thereupon assume all of the rights and obligations of the Master
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Servicer under the Selling and Servicing Contracts with respect to the related
Mortgage Loans unless the Trustee elects to terminate the Selling and Servicing
Contracts with respect to such Mortgage Loans in accordance with the terms
thereof. The Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of the Master Servicer's interest therein
with respect to the related Mortgage Loans and to have replaced the Master
Servicer as a party to the Selling and Servicing Contracts to the same extent as
if the rights and duties under the Selling and Servicing Contracts relating to
such Mortgage Loans had been assigned to the assuming party, except that the
Master Servicer shall not thereby be relieved of any liability or obligations
under the Selling and Servicing Contracts with respect to the Master Servicer's
duties to be performed prior to its termination hereunder.
The Master Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to the Selling
and Servicing Contracts and the Mortgage Loans then being master serviced by the
Master Servicer and an accounting of amounts collected and held by the Master
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of the rights and duties under the related Selling and Servicing
Contracts relating to such Mortgage Loans to the assuming party.
Section 3.21. Maintenance of the Class I-A-2 Rounding Account and the Class
I-A-7 Rounding; Collections Thereunder. On or prior to the Closing Date, the
Trustee shall establish the Class I-A-2 Rounding Account and the Class I-A-7
Rounding Account, and DLJ shall deposit $999.99 in each such Rounding Account.
The Master Servicer shall maintain such accounts to provide, if needed, the
applicable Rounding Amount on any Distribution Date. On the first Distribution
Date with respect to which the Master Servicer determines that amounts are
available out of the REMIC II Available Distribution Amount for distributions
of principal on either Class of the Special Retail Certificates, and the
aggregate amount allocable to such distributions of principal is not an amount
equal to an integral multiple of $1,000, the Master Servicer shall notify the
Trustee by Noon New York City time two Business Days prior to such Distribution
Date of the applicable Rounding Amount, and the Trustee shall withdraw from the
applicable Rounding Account the applicable Rounding Amount. On each succeeding
Distribution Date, prior to the earlier of (i) the Group I Credit Support
Depletion Date and (ii) the date on which any loss is allocated to either
Class of the Special Retail Certificates by Pro Rata Allocation, with respect
to which the Master Servicer determines that amounts are available out of the
REMIC II Available Distribution Amount for distributions of principal on such
Class, the aggregate amount allocable to such Class will be applied first to
repay any funds withdrawn from the applicable Rounding Account on prior
Distribution Dates which have not been repaid. If the remainder of the aggregate
amount allocable to distributions of principal on such Class is not an amount
equal to an integral multiple of $1,000, the Master Servicer shall notify the
Trustee by Noon New York City time two Business Days prior to such Distribution
Date of the applicable Rounding Amount, and the Trustee shall withdraw from the
applicable Rounding Account, to the extent funds are available therein, the
amount so notified by the Master Servicer.
Any amounts withdrawn by the Trustee from either Rounding Account shall be
deposited in the Certificate Account for distribution to the Special Retail
Certificateholders as described in the immediately preceding paragraph.
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On or promptly after the earlier of (i) the Group I Credit Support
Depletion Date and (ii) the date on which any loss is allocated to either Class
of the Special Retail Certificates by Pro Rata Allocation, the Master Servicer
shall remit to DLJ any amounts remaining in the applicable Rounding Account.
Amounts on deposit in the Rounding Accounts shall not be invested.
Each Rounding Account established hereunder, to the extent that it
constitutes a "reserve fund" for purposes of the REMIC Provisions, shall be an
"outside reserve fund" as defined in Treasury Regulation 1.860G-2(h), and in
that regard (i) such fund shall be an outside reserve fund and not an asset of
either REMIC, (ii) such fund shall be owned for federal tax purposes by DLJ and
DLJ shall report all amounts of income, deduction, gain or loss accruing
therefrom, and (iii) amounts transferred by the REMIC to either Rounding Account
shall be treated as distributed by the REMIC to DLJ.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS; PAYMENT OF EXPENSES
Section 4.01. Distributions to Holders of REMIC I Regular Interests and
Class R-1 Certificateholders. On each Distribution Date, the Trustee (or any
duly appointed paying agent) (i) shall be deemed to have distributed from the
Certificate Account the REMIC I Distribution Amount to the Holders of the REMIC
I Regular Interests and to have deposited such amount for their benefit into the
Certificate Account and (ii) from the Certificate Account shall distribute to
the Class R-1 Certificateholders the sum of (a) the Excess Liquidation Proceeds
and (b) the amounts to be distributed to the Class R-1 Certificateholders
pursuant to the definition of "REMIC I Distribution Amount" for such
Distribution Date, all in accordance with written statements received from the
Master Servicer pursuant to Section 4.02(b), by wire transfer in immediately
available funds for the account of each such Holder and the Class R-1
Certificateholder, or by any other means of payment acceptable to each such
Holder and the Class R-1 Certificateholder of record on the immediately
preceding Record Date (other than as provided in Section 9.01 respecting the
final distribution), as specified by each such Certificateholder and at the
address of such Holder appearing in the Certificate Register. Notwithstanding
any other provision of this Agreement, no actual distributions pursuant to
clause (i) of this Section 4.01 shall be made on account of the deemed
distributions described in this paragraph except in the event of a liquidation
of REMIC II and not REMIC I.
Section 4.02. Advances by the Master Servicer; Distribution Reports to the
Trustee.
(a) To the extent described below, the Master Servicer is obligated to
advance its own funds to the Certificate Account to cover any shortfall between
(i) payments scheduled to be received in respect of Mortgage Loans, and (ii) the
amounts actually deposited in the Certificate Account on account of such
payments. The Master Servicer's obligation to make any advance or advances
described in this Section 4.02 is effective only to the extent that such advance
is, in the good faith judgment of the Master Servicer made on or before the
Business Day immediately following the Withdrawal Date, reimbursable from
Insurance Proceeds or Liquidation Proceeds of
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the related Mortgage Loans or recoverable as late Monthly Payments with respect
to the related Mortgage Loans or otherwise.
Prior to the close of business on the Business Day immediately following
each Withdrawal Date, the Master Servicer shall determine whether or not it will
make a Monthly P&I Advance on the Business Day prior to the next succeeding
Distribution Date (in the event that the applicable Servicer fails to make such
advances) and shall furnish a statement to the Trustee, the Paying Agent, if
any, and to any Certificateholder requesting the same, setting forth the
aggregate amount to be distributed on the next succeeding Distribution Date on
account of principal and interest in respect of the Mortgage Loans, stated
separately. In the event that full scheduled amounts of principal and interest
in respect of the Mortgage Loans shall not have been received by or on behalf of
the Master Servicer prior to such Determination Date and the Master Servicer
shall have determined that a Monthly P&I Advance shall be made in accordance
with this Section 4.02, the Master Servicer shall so specify and shall specify
the aggregate amount of such advance.
In the event that the Master Servicer shall be required to make a Monthly
P&I Advance, it shall on the Business Day prior to the related Distribution Date
either (i) deposit in the Certificate Account an amount equal to such Monthly
P&I Advance, (ii) make an appropriate entry in the records of the Certificate
Account that funds in such account being held for future distribution or
withdrawal have been, as permitted by this Section 4.02, used by the Master
Servicer to make such Monthly P&I Advance, or (iii) make advances in the form of
any combination of (i) and (ii) aggregating the amount of such Monthly P&I
Advance. Any funds being held for future distribution to Certificateholders and
so used shall be replaced by the Master Servicer by deposit in the Certificate
Account on the Business Day immediately preceding any future Distribution Date
to the extent that funds in the Certificate Account on such Distribution Date
with respect to the Mortgage Loans shall be less than payments to
Certificateholders required to be made on such date with respect to the Mortgage
Loans. Under each Selling and Servicing Contract, the Master Servicer is
entitled to receive from the Custodial Accounts for P&I established by the
Servicers amounts received by the applicable Servicers on particular Mortgage
Loans as late payments of principal and interest or as Liquidation or Insurance
Proceeds and respecting which the Master Servicer has made an unreimbursed
advance of principal and interest. The Master Servicer is also entitled to
receive other amounts from the related Custodial Accounts for P&I established by
the Servicers to reimburse itself for prior Nonrecoverable Advances respecting
Mortgage Loans serviced by such Servicers. The Master Servicer shall deposit
these amounts in the Investment Account prior to withdrawal pursuant to Section
3.05.
In accordance with Section 3.05, Monthly P&I Advances are reimbursable
to the Master Servicer from cash in the Investment Account or the Certificate
Account to the extent that the Master Servicer shall determine that any such
advances previously made are Nonrecoverable Advances pursuant to Section 4.03.
(b) Prior to Noon New York City time two Business Days prior to each
Distribution Date, the Master Servicer shall provide the Trustee with a
statement regarding the amounts, if any, to be withdrawn from the Bankruptcy and
Extraordinary Hazard Reserve Fund pursuant to Section 3.18 and from the Rounding
Accounts pursuant to Section 3.21, the amounts to be applied to repay any funds
withdrawn from the Rounding Accounts on prior Distribution Dates pursuant to
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Section 3.21, the amount, if any, to be drawn upon each of the Special Hazard
Insurance Policy and the Mortgage Pool Insurance Policy (specifying amounts
drawn pursuant to the Fraud Waiver and the Ninety-Seven Percent Loan-to-Value
Endorsement thereof) and the amount of principal and interest, the Residual
Distribution Amount and the Excess Liquidation Proceeds to be distributed to
each Class of REMIC I Regular Interests and each Class of Certificates on such
Distribution Date (such amounts to be determined in accordance with the
definitions of "REMIC I Distribution Amount" and "REMIC II Distribution Amount",
Section 4.01 and Section 4.04 hereof and other related definitions set forth in
Article I hereof).
Section 4.03. Nonrecoverable Advances. Any advance previously made by a
Servicer pursuant to its Selling and Servicing Contract with respect to a
Mortgage Loan or by the Master Servicer that the Master Servicer shall determine
in its good faith judgment not to be ultimately recoverable from Insurance
Proceeds or Liquidation Proceeds or otherwise with respect to such Mortgage Loan
or recoverable as late Monthly Payments with respect to such Mortgage Loan shall
be a Nonrecoverable Advance. The determination by the Master Servicer that it or
the applicable Servicer has made a Nonrecoverable Advance or that any advance
would constitute a Nonrecoverable Advance, shall be evidenced by an Officer's
Certificate of the Master Servicer delivered to the Trustee on the Determination
Date and detailing the reasons for such determination. Notwithstanding any other
provision of this Agreement, any insurance policy relating to the Mortgage
Loans, or any other agreement relating to the Mortgage Loans to which the
Company or the Master Servicer is a party, (a) the Company, the Master Servicer,
and each Servicer shall not be obligated to, and shall not, make any advance
that, after reasonable inquiry and in its sole discretion, the Company, the
Master Servicer, or such Servicer shall determine would be a Nonrecoverable
Advance, and (b) the Company, the Master Servicer, and each Servicer shall be
entitled to reimbursement for any advance as provided in Section 3.05(a)(i),
(ii) and (iv) of this Agreement.
Section 4.04. Distributions to Certificateholders (other than Class R-1
Certificateholders).
(a) On each Distribution Date, the Trustee (or any duly appointed paying
agent) shall (i) withdraw from the Certificate Account, the REMIC II Available
Distribution Amount for such Distribution Date and shall distribute, from the
amount so withdrawn, to the extent of the REMIC II Available Distribution
Amount, the REMIC II Distribution Amount to the Certificates (other than the
Class R-1 Certificates) (provided that any portion of such amount distributable
to either Class of the Special Retail Certificates shall be used first to pay
any amount payable to the applicable Rounding Account pursuant to Section 3.21)
and (ii) withdraw from the Certificate Account the applicable Rounding Amount or
Amounts deposited therein for distribution on such date pursuant to Section 3.21
and distribute the amounts so withdrawn to the applicable Class of the Special
Retail Certificates in accordance with such Section 3.21, all in accordance with
written statements received from the Master Servicer pursuant to Section
4.02(b), by wire transfer in immediately available funds for the account of, or
by check mailed to, each such Certificateholder of record on the immediately
preceding Record Date (other than as provided in Section 9.01 respecting the
final distribution), as specified by each such Certificateholder and at the
address of such Holder appearing in the Certificate Register.
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(b) All reductions in the Certificate Principal Balance of a Certificate
effected by distributions of principal and all allocations of Realized Losses
made on any Distribution Date shall be binding upon all Holders of such
Certificates and of any Certificates issued upon the registration of transfer or
exchange therefor or in lieu thereof, whether or not such distribution is noted
on such Certificate. The final distribution of principal of each Certificate
(and the final distribution upon the Class R-1 and Class R-2 Certificates upon
the termination of REMIC I and REMIC II) shall be payable in the manner provided
above only upon presentation and surrender thereof on or after the Distribution
Date therefor at the office or agency of the Certificate Registrar specified in
the notice delivered pursuant to Section 4.04(c)(ii) and Section 9.01(b).
(c) Whenever, on the basis of Curtailments, Payoffs and Monthly Payments on
the Mortgage Loans and Insurance Proceeds and Liquidation Proceeds received and
expected to be received during the Payoff Period, the Master Servicer has
notified the Trustee that it believes that the entire remaining unpaid Class
Principal Balance of any Class of Certificates will become distributable on the
next Distribution Date, the Trustee shall, no later than the 18th day of the
month of such Distribution Date, mail or cause to be mailed to each Person in
whose name a Certificate to be so retired is registered at the close of business
on the Record Date and to the Rating Agencies a notice to the effect that:
(i) it is expected that funds sufficient to make such final
distribution will be available in the Certificate Account on such
Distribution Date, and
(ii) if such funds are available, (A) such final distribution will be
payable on such Distribution Date, but only upon presentation and surrender
of such Certificate at the office or agency of the Certificate Registrar
maintained for such purpose (the address of which shall be set forth in
such notice), and (B) no interest shall accrue on such Certificate after
such Distribution Date.
Section 4.05. Statements to Certificateholders. With each distribution from
the Certificate Account on a Distribution Date, the Master Servicer shall
prepare and forward to the Trustee (and to the Company if the Company is no
longer acting as Master Servicer), and the Trustee shall forward to each
Certificateholder, a statement setting forth, to the extent applicable: the
amount of the distribution payable to the applicable Class that represents
principal and the amount that represents interest, and the applicable Class
Principal Balance after giving effect to such distribution.
Upon request by any Certificateholder or the Trustee, the Master Servicer
shall forward to such Certificateholder, the Trustee and the Company (if the
Company is no longer acting as Master Servicer) an additional report which sets
forth with respect to the Mortgage Loans:
(a) The number and aggregate Principal Balance of the Mortgage Loans
delinquent one, two and three months or more;
(b) The (i) number and aggregate Principal Balance of Mortgage Loans
with respect to which foreclosure proceedings have been initiated, and (ii)
the number and aggregate book value of Mortgaged Properties acquired
through foreclosure, deed in lieu
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of foreclosure or other exercise of rights respecting the Trustee's
security interest in the Mortgage Loans, in each case, by Loan Group;
(c) The amount of coverage available to the Certificates under the
Mortgage Pool Insurance Policy (and specifying the amount available under
each of the Fraud Endorsement and the Ninety-Seven Percent Loan-to-Value
Program Endorsement) as of the close of business on the applicable
Determination Date;
(d) The amount of coverage available to the Certificates under the
Special Hazard Insurance Policy as of the close of business on the
applicable Determination Date;
(e) The amount of coverage available to the Certificates under the
Bankruptcy and Extraordinary Hazard Expense Reserve Fund as of the close of
business on the applicable Determination Date; and
(f) The amount of Realized Losses incurred in respect of each Loan
Group allocable to the Certificates on the related Distribution Date and
the cumulative amount of Realized Losses incurred in respect of each Loan
Group allocated to such Certificates since the Cut-Off Date.
Upon request by any Certificateholder, the Master Servicer, as soon as
reasonably practicable, shall provide the requesting Certificateholder with such
information as is necessary and appropriate, in the Master Servicer's sole
discretion, for purposes of satisfying applicable reporting requirements under
Rule 144A of the Securities Act.
Section 4.06. Principal Distributions on the Special Retail Certificates.
Prior to the earlier of (i) the Group I Credit Support Depletion Date and (ii)
the date on which any loss is allocated to either Class of the Special Retail
Certificates by Pro Rata Allocation, distributions in reduction of the Class
Principal Balance of such Class will be made in integral multiples of $1,000 at
the request of the appropriate representatives of Deceased Holders of
Certificates of each such Class and at the request of Living Holders of
Certificates of each such Class or by mandatory distributions, pursuant to
Section 4.06(a) and Section 4.06(d). On and after the earlier of (i) the Group I
Credit Support Depletion Date and (ii) the date on which any loss is allocated
to either Class of the Special Retail Certificates by Pro Rata Allocation,
distributions in reduction of the Class Principal Balances of such Class will be
made on a pro rata basis pursuant to Section 4.06(e).
(a) On each Distribution Date on which principal distributions to either
Class of the Special Retail Certificates are made, such distributions will be
made in the following priority:
(i) first, to requesting Deceased Holders, in the order in which such
requests are received by DTC, but not exceeding an aggregate amount of
$25,000 for each requesting Deceased Holder; and
(ii) to requesting Living Holders, in the order in which such requests
are received by DTC, but not exceeding an aggregate amount of $10,000 for
each requesting Living Holder.
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Thereafter, distributions will be made, with respect to such Class of the
Special Retail Certificates, as provided in clauses (i) and (ii) above up to a
second $25,000 and $10,000, respectively. This sequence of priorities will be
repeated until all requests for principal distributions by Deceased Holders and
Living Holders of such Class have been honored, to the extent of amounts
available for principal distributions to such Class.
All requests for principal distributions to Special Retail Certificates
will be accepted in accordance with the provisions set forth in Section 4.06(c).
Requests for principal distributions that are received by the Trustee after the
related Record Date and requests for principal distributions received in a
timely manner but not accepted with respect to any Distribution Date, will be
treated as requests for principal distributions to the Special Retail
Certificates on the next succeeding Distribution Date, and each succeeding
Distribution Date thereafter, until each such request is accepted or is
withdrawn as provided in Section 4.06(c). Such requests as are not so withdrawn
shall retain their order of priority without the need for any further action on
the part of the appropriate Holder of the related Special Retail Certificate,
all in accordance with the procedures of DTC and the Trustee. Upon the transfer
of beneficial ownership of any Special Retail Certificate, any distribution
request previously submitted with respect to such Certificate will be deemed to
have been withdrawn only upon the receipt by the Trustee on or before the Record
Date for such Distribution Date of notification of such withdrawal in the manner
set forth in Section 4.06(c) using a form required by DTC.
Distributions in reduction of the Class Principal Balance of either Class
of the Special Retail Certificates will be applied in an amount equal to the
portion of the Group I Senior Principal Distribution Amount allocable to such
Class pursuant to Section 4.04, plus any amounts available for distribution from
the applicable Rounding Account established as provided in Section 3.21,
provided that the aggregate distribution of principal to such Class on any
Distribution Date shall be made in an integral multiple of $1,000.
To the extent that the portion of the Group I Senior Principal Distribution
Amount allocable to either Class of the Special Retail Certificates on any
Distribution Date exceeds the aggregate Certificate Principal Balance of Special
Retail Certificates with respect to which principal distribution requests, as
set forth above, have been received, principal distributions in reduction of the
Class Principal Balance of such Class will be made by mandatory distribution
pursuant to Section 4.06(d).
(b) A Special Retail Certificate shall be deemed to be held by a Deceased
Holder for purposes of this Section 4.06 if the death of the Holder thereof is
deemed to have occurred. Special Retail Certificates beneficially owned by
tenants by the entirety, joint tenants or tenants in common will be considered
to be beneficially owned by a single owner. The death of a tenant by the
entirety, joint tenant or tenant in common will be deemed to be the death of the
Holder, and the Special Retail Certificates so beneficially owned will be
eligible for priority with respect to principal distributions, subject to the
limitations stated above. Special Retail Certificates beneficially owned by a
trust will be considered to be beneficially owned by each beneficiary of the
trust to the extent of such beneficiary's beneficial interest therein, but in no
event will a trust's beneficiaries collectively be deemed to be Holders of a
number of Special Retail Certificates greater than the number of Special Retail
Certificates of which such trust is the owner. The death
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of a beneficiary of a trust will be deemed to be the death of a Holder of the
Special Retail Certificates beneficially owned by the trust to the extent of
such beneficiary's beneficial interest in such trust. The death of an individual
who was a tenant by the entirety, joint tenant or tenant in common in a tenancy
which is the beneficiary of a trust will be deemed to be the death of the
beneficiary of such trust. The death of a person who, during his or her
lifetime, was entitled to substantially all of the beneficial ownership
interests in a Special Retail Certificate will be deemed to be the death of the
Holder of such Special Retail Certificate regardless of the registration of
ownership, if such beneficial ownership interest can be established to the
satisfaction of the Trustee. Such beneficial interest will be deemed to exist in
typical cases of street name or nominee ownership, ownership by a trustee,
ownership under the Uniform Gifts to Minors Act and community property or other
joint ownership arrangements between a husband and wife. Beneficial interest
shall include the power to sell, transfer or otherwise dispose of a Special
Retail Certificate and the right to receive the proceeds therefrom, as well as
interest and principal distributions, as applicable, payable with respect
thereto. The Trustee shall not be under any duty to determine independently the
occurrence of the death of any deceased Holder. The Trustee may rely entirely
upon documentation delivered to it pursuant to Section 4.06(c) in establishing
the eligibility of any Holder to receive the priority accorded Deceased Holders
in Section 4.06(a).
(c) Requests for principal distributions to any Special Retail Certificate
must be made by delivering a written request therefor to the DTC Participant or
Indirect DTC Participant that maintains the account evidencing such Holder's
interest in such Certificate. In the case of a request on behalf of a Deceased
Holder, appropriate evidence of death and any tax waivers are required to be
forwarded to the Trustee under separate cover. The DTC Participant should in
turn make the request of DTC (or, in the case of an Indirect DTC Participant,
such Indirect DTC Participant must notify the related DTC Participant of such
request, which DTC Participant should make the request of DTC) on a form
required by DTC and provided to the DTC Participant. Upon receipt of such
request, DTC will date and time stamp such request and forward such request to
the Trustee. DTC may establish such procedures as it deems fair and equitable to
establish the order of receipt of requests for such distributions received by it
on the same day. None of the Company, the Master Servicer or the Trustee shall
be liable for any delay in delivery of requests for distributions or withdrawals
of such requests by DTC, a DTC Participant or any Indirect DTC Participant.
The Trustee shall maintain a list of those DTC Participants representing
the appropriate Holders of Special Retail Certificates that have submitted
requests for principal distributions, together with the order of receipt and the
amounts of such requests. Subject to the priorities described in Section 4.06(a)
above, DTC will honor requests for distributions in the order of their receipt.
The Trustee shall notify DTC as to which requests should be honored on each
Distribution Date at least two Business Days prior to such Distribution Date and
shall notify DTC as to the portion of the Group I Senior Principal Distribution
Amount (together with any amounts available for distribution from the applicable
Rounding Account) to be distributed to the Special Retail Certificates by
mandatory distribution pursuant to Section 4.06(d). Requests shall be honored by
DTC in accordance with the procedures, and subject to the priorities and
limitations, described in this Section 4.06. The exact procedures to be followed
by the Trustee and DTC for purposes of determining such priorities and
limitations will be those established from time to time
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by the Trustee or DTC, as the case may be. The decisions of the Trustee and DTC
concerning such matters will be final and binding on all affected persons.
Special Retail Certificates that have been accepted for a distribution
shall be due and payable on the applicable Distribution Date. Such Certificates
shall cease to bear interest after the last calendar day of the month preceding
the month in which such Distribution Date occurs.
Any Holder of a Special Retail Certificate that has requested a principal
distribution may withdraw its request by so notifying in writing the DTC
Participant or Indirect DTC Participant that maintains such Holder's account. In
the event that such account is maintained by an Indirect DTC Participant, such
Indirect DTC Participant must notify the related DTC Participant which in turn
must forward the withdrawal of such request, on a form required by DTC, to DTC
to be forwarded to the Trustee. If such notice of withdrawal of a request for
distribution has not been received by DTC and forwarded to the Trustee on or
before the Record Date for the next Distribution Date, the previously made
request for a principal distribution will be irrevocable with respect to the
making of principal distributions on such Distribution Date.
In the event any requests for principal distributions are rejected by the
Trustee for failure to comply with the requirements of this Section 4.06, the
Trustee shall return such request to the appropriate DTC Participant with a copy
to DTC with an explanation as to the reason for such rejection.
(d) To the extent, if any, that principal distributions to be made to
either Class of the Special Retail Certificates on a Distribution Date exceed
the aggregate amount of principal distribution requests for such Class which
have been received on or before the applicable Record Date, as provided in
Section 4.06(a) above, additional Special Retail Certificates will be selected
to receive mandatory principal distributions in lots equal to $1,000 in
accordance with the then-applicable Random Lot procedures of DTC, and the
then-applicable procedures of the DTC Participants and Indirect DTC Participants
representing the Holders (which procedures may or may not be by random lot). The
Trustee shall notify DTC of the aggregate amount of the mandatory principal
distribution to be made on the next Distribution Date. DTC shall then allocate
such aggregate amount among the DTC Participants on a Random Lot basis. Each DTC
Participant and, in turn, each Indirect DTC Participant will then select, in
accordance with its own procedures, Special Retail Certificates from among those
held in its accounts to receive mandatory principal distributions, such that the
total amount of principal distributed to the Special Retail Certificates so
selected is equal to the aggregate amount of such mandatory distributions
allocated to such DTC Participant by DTC and to such Indirect DTC Participant by
its related DTC Participant, as the case may be. DTC Participants and Indirect
DTC Participants that hold Special Retail Certificates selected for mandatory
principal distributions are required to provide notice of such mandatory
distributions to the affected Holders. The Master Servicer shall notify the
Trustee of the amount of principal distributions to be made on each Distribution
Date in a timely manner such that the Trustee may fulfill its obligations under
the Depositary Agreement.
(e) Notwithstanding any provisions herein to the contrary, on each
Distribution Date on and after the earlier of (i) the Group I Credit Support
Depletion Date and (ii) the date on which any loss is allocated to either Class
of the Special Retail Certificates by Pro Rata Allocation,
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distributions in reduction of the Class Principal Balance of such Class will be
made pro rata among the Holders of the Certificates of such Class and will not
be made in integral multiples of $1,000 nor pursuant to requests for
distribution as permitted by Section 4.06(a) or by mandatory distributions as
provided for by Section 4.06(d).
(f) In the event that Definitive Certificates representing the Special
Retail Certificates are issued pursuant to Section 5.09, an amendment to this
Agreement, which may be approved without the consent of any Certificateholders,
shall establish procedures relating to the manner in which distributions in
reduction of the Class Principal Balance of each Class of the Special Retail
Certificates are to be made; provided that such procedures shall be consistent,
to the extent practicable and customary for certificates similar to the Special
Retail Certificates, with the provisions of this Section 4.06.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Certificates shall be substantially in the forms set forth in
Exhibit A, B and C with the additional insertion from Exhibit H attached hereto,
and shall be executed by the Trustee, authenticated by the Trustee (or any duly
appointed Authenticating Agent) and delivered to or upon the order of the
Company upon receipt by the Trustee of the documents specified in Section 2.01.
The Certificates shall be issuable in Authorized Denominations evidencing
Percentage Interests. Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by authorized officers of the Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were
at the time of execution the proper officers of the Trustee shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the
Trustee or any Authenticating Agent by manual signature, and such certificate
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
(b) The following definitions apply for purposes of this Section 5.01:
"Disqualified Organization" means any Person which is not a Permitted
Transferee, but does not include any "Pass-Through Entity" which owns or holds a
Residual Certificate and of which a Disqualified Organization, directly or
indirectly, may be a stockholder, partner or beneficiary; "Pass-Through Entity"
means any regulated investment company, real estate investment trust, common
trust fund, partnership, trust or estate, and any organization to which Section
1381 of the Code applies; "Ownership Interest" means, with respect to any
Residual Certificate, any ownership or security interest in such Residual
Certificate, including any interest in a Residual Certificate as the Holder
thereof and any other interest therein whether direct or indirect, legal or
beneficial, as owner or as pledgee; "Transfer" means any direct or indirect
transfer or sale of, or directly or indirectly
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transferring or selling any Ownership Interest in a Residual Certificate; and
"Transferee" means any Person who is acquiring by Transfer any Ownership
Interest in a Residual Certificate.
(c) Restrictions on Transfers of the Residual Certificates to Disqualified
Organizations are set forth in this Section 5.01(c).
(i) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions and to have irrevocably authorized the Trustee or its designee
under clause (iii)(A) below to deliver payments to a Person other than such
Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all
other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are
expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate to a U.S. Person, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Residual Certificate until its receipt of (1) an affidavit and
agreement (a "Transferee Affidavit and Agreement") attached hereto as
Exhibit J from the proposed Transferee, in form and substance
satisfactory to the Company, representing and warranting, among other
things, that it is not a Non-U.S. Person, that such transferee is a
Permitted Transferee, that it is not acquiring its Ownership Interest
in the Residual Certificate that is the subject of the proposed
Transfer as a nominee, trustee or agent for any Person who is not a
Permitted Transferee, that for so long as it retains its Ownership
Interest in a Residual Certificate, it will endeavor to remain a
Permitted Transferee, and that it has reviewed the provisions of this
Section 5.01(c) and agrees to be bound by them, and (2) a certificate,
attached hereto as Exhibit I, from the Holder wishing to transfer the
Residual Certificate, in form and substance satisfactory to the
Company, representing and warranting, among other things, that no
purpose of the proposed Transfer is to allow such Holder to impede the
assessment or collection of tax.
(C) Notwithstanding the delivery of a Transferee Affidavit and
Agreement by a proposed Transferee under clause (B) above, if the
Trustee has actual knowledge that the proposed Transferee is not a
Permitted Transferee, no Transfer of an Ownership Interest in a
Residual Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate agrees by holding or acquiring such Ownership
Interest (i) to
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require a Transferee Affidavit and Agreement from any other Person to
whom such Person attempts to transfer its Ownership Interest and to
provide a certificate to the Trustee in the form attached hereto as
Exhibit J; (ii) to obtain the express written consent of the Company
prior to any transfer of such Ownership Interest, which consent may be
withheld in the Company's sole discretion; and (iii) to provide a
certificate to the Trustee in the form attached hereto as Exhibit I.
(ii) The Trustee shall register the Transfer of any Residual
Certificate only if it shall have received the Transferee Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the form
attached hereto as Exhibit J and all of such other documents as shall have
been reasonably required by the Trustee as a condition to such
registration.
(iii) (A) If any "disqualified organization" (as defined in Section
860E(e)(5) of the Code) shall become a holder of a Residual Certificate,
then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. If any Non-U.S. Person shall become a holder of a Residual
Certificate, then the last preceding holder which is a U.S. Person shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of the Transfer to
such Non-U.S. Person of such Residual Certificate. If a transfer of a
Residual Certificate is disregarded pursuant to the provisions of Treasury
Regulations Section 1.860E-1 or Section 1.860G-3, then the last preceding
Permitted Transferee shall be restored, to the extent permitted by law, to
all rights and obligations as Holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. The Trustee
shall be under no liability to any Person for any registration of Transfer
of a Residual Certificate that is in fact not permitted by this Section
5.01(c) or for making any payments due on such Certificate to the holder
thereof or for taking any other action with respect to such holder under
the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this Section
5.01(c) and to the extent that the retroactive restoration of the
rights of the Holder of such Residual Certificate as described in
clause (iii)(A) above shall be invalid, illegal or unenforceable, then
the Company shall have the right, without notice to the Holder or any
prior Holder of such Residual Certificate, to sell such Residual
Certificate to a purchaser selected by the Company on such terms as
the Company may choose. Such purported Transferee shall promptly
endorse and deliver each Residual Certificate in accordance with the
instructions of the Company. Such purchaser may be the Company itself
or any affiliate of the Company. The proceeds of such sale, net of the
commissions (which may include commissions payable to the Company or
its affiliates), expenses and taxes due, if any, shall be remitted by
the Company to such purported Transferee. The terms and conditions of
any sale under this clause (iii)(B) shall be determined in the sole
discretion of the Company, and the Company shall not be liable to any
Person having an Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
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(iv) The Company, on behalf of the Trustee, shall make available,
upon written request from the Trustee, all information necessary to
compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is not
a Permitted Transferee, including the information regarding "excess
inclusions" of such Residual Certificates required to be provided to
the Internal Revenue Service and certain Persons as described in
Treasury Regulation Section 1.860D-1(b)(5), and (B) as a result of any
regulated investment company, real estate investment trust, common
trust fund, partnership, trust, estate or organizations described in
Section 1381 of the Code having as among its record holders at any
time any Person who is not a Permitted Transferee. Reasonable
compensation for providing such information may be required by the
Company from such Person.
(v) The provisions of this Section 5.01 set forth prior to this
Section (v) may be modified, added to or eliminated by the Company and
the Trustee, provided that there shall have been delivered to the
Trustee the following:
(A) written notification from each Rating Agencies to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agencies to downgrade its
then-current Ratings of the Certificates; and
(B) an Opinion of Counsel, in form and substance
satisfactory to the Company (as evidenced by a certificate of the
Company), to the effect that such modification, addition to or
absence of such provisions will not cause REMIC I and REMIC II to
cease to qualify as a REMIC and will not create a risk that (1)
REMIC I and REMIC II may be subject to an entity-level tax caused
by the Transfer of any Residual Certificate to a Person which is
not a Permitted Transferee or (2) a Certificateholder or another
Person will be subject to a REMIC-related tax caused by the
Transfer of a Residual Certificate to a Person which is not a
Permitted Transferee.
(vi) The following legend shall appear on all Residual
Certificates:
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO
THE COMPANY AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT EITHER (A)
THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER
THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS
EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE,
(C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE
(ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), OR (C)
BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR
(D) AN AGENT OF A
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DISQUALIFIED ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO
ENABLE THE TRANSFEROR TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX.
SUCH AFFIDAVIT SHALL INCLUDE CERTAIN REPRESENTATIONS AS TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR
OTHER DISPOSITION OF THIS CLASS [R-1] [R-2] CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION,
SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT
WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT
LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH
HOLDER OF THE CLASS [R-1][R-2] CERTIFICATE BY ACCEPTANCE OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF
THIS PARAGRAPH.
(vii) The Tax Matters Person for each of REMIC I and REMIC II,
while not a Disqualified Organization, shall be the tax matters person
for the related REMIC within the meaning of Section 6231(a)(7) of the
Code and Treasury Regulation Section 1.860F-4(d).
(d) In the case of any Class AM or Residual Certificates presented for
registration in the name of any Person, the Trustee shall require either (i) an
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Company to the effect that the purchase or holding of a Class AM
or Residual Certificate is permissible under applicable law, will not constitute
or result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, and will not subject the Trustee, the Master Servicer
or the Company to any obligation or liability (including obligations or
liabilities under Section 406 of ERISA or Section 4975 of the Code) in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Master Servicer or the Company or (ii) only in the
case of a Class AM Certificate, an officer's certificate substantially in the
form of Exhibit N attached hereto acceptable to and in form and substance
satisfactory to the Trustee and the Company, which officer's certificate shall
not be an expense of the Trustee, the Master Servicer or the Company.
Section 5.02. Certificates Issuable in Classes; Distributions of Principal
and Interest; Authorized Denominations. The aggregate principal amount of the
Certificates that may be authenticated and delivered under this Agreement is
limited to the aggregate Principal Balance of the Mortgage Loans as of the
Cut-Off Date, as specified in the Preliminary Statement to this Agreement,
except for Certificates authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Certificates pursuant to
Section 5.03. Such aggregate principal amount shall be allocated among one or
more Classes having designations, types of interests, initial per annum
Remittance Rates, initial Class Principal Balances, initial Component Principal
Balances and Final Maturity Dates as specified in the Preliminary Statement to
this Agreement. The aggregate Percentage Interest of each Class of Certificates
of which the Class Principal
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Balance equals zero as of the Cut-Off Date that may be authenticated and
delivered under this Agreement is limited to 100%. Certificates shall be issued
in Authorized Denominations.
Section 5.03. Registration of Transfer and Exchange of Certificates.
The Trustee shall cause to be maintained at one of its offices or at its
designated agent, a Certificate Register in which there shall be recorded the
name and address of each Certificateholder. Subject to such reasonable rules and
regulations as the Trustee may prescribe, the Certificate Register shall be
amended from time to time by the Trustee or its agent to reflect notice of any
changes received by the Trustee or its agent pursuant to Section 10.06. The
Trustee hereby appoints itself as the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate to the
Trustee at the Corporate Trust Office of the Trustee or at the office of State
Street Bank and Trust Company, N.A., 61 Broadway, New York, NY 10006, Attention:
Corporate Trust Window, or such other address or agency as may hereafter be
provided to the Master Servicer in writing by the Trustee, the Trustee shall
execute, and the Trustee or any Authenticating Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of Authorized Denominations of like Percentage Interest. At the
option of the Certificateholders, Certificates may be exchanged for other
Certificates in Authorized Denominations of like Percentage Interest, upon
surrender of the Certificates to be exchanged at any such office or agency.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, and the Trustee, or any Authenticating Agent, shall authenticate and
deliver, the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for transfer
shall (if so required by the Trustee or any Authenticating Agent) be duly
endorsed by, or be accompanied by a written instrument of transfer in form
satisfactory to the Trustee or any Authenticating Agent and duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing.
A reasonable service charge may be made for any such exchange or
transfer of Certificates, and the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any exchange or transfer of Certificates.
All Certificates surrendered for exchange or transfer shall be cancelled
by the Trustee or any Authenticating Agent.
Section 5.04. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Trustee or any Authenticating
Agent, or (ii) the Trustee or any Authenticating Agent receives evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
there is delivered to the Trustee or any Authenticating Agent such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or any Authenticating Agent that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like Percentage Interest. Upon the
issuance of any new Certificate under this Section 5.04, the Trustee or any
Authenticating Agent may require the payment of a
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sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee or any Authenticating Agent) connected therewith. Any replacement
Certificate issued pursuant to this Section 5.04 shall constitute complete and
indefeasible evidence of ownership in the REMIC II Trust Fund (or with respect
to the Class R-1 Certificates, the residual ownership interests in the REMIC I
Trust Fund) as if originally issued, whether or not the lost or stolen
Certificate shall be found at any time.
Section 5.05. Persons Deemed Owners. The Company, the Master Servicer,
the Trustee and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and Section 4.04 and for all
other purposes whatsoever, and neither the Company, the Master Servicer, the
Trustee, the Certificate Registrar nor any agent of the Company, the Master
Servicer or the Trustee shall be affected by notice to the contrary.
Section 5.06. Temporary Certificates. Upon the initial issuance of the
Certificates, the Trustee may execute, and the Trustee or any Authenticating
Agent shall authenticate and deliver, temporary Certificates which are printed,
lithographed, typewritten or otherwise produced, in any Authorized Denomination,
of the tenor of the definitive Certificates in lieu of which they are issued and
with such variations in form from the forms of the Certificates set forth as
Exhibits A, B, C and H hereto as the Trustee's officers executing such
Certificates may determine, as evidenced by their execution of the Certificates.
Notwithstanding the foregoing, the Certificates may remain in the form set forth
in this definition of "Temporary Certificates."
If temporary Certificates are issued, the Trustee shall cause definitive
Certificates to be prepared within ten Business Days of the Closing Date or as
soon as practicable thereafter. After preparation of definitive Certificates,
the temporary Certificates shall be exchangeable for definitive Certificates
upon surrender of the temporary Certificates at the office or agency of the
Trustee to be maintained as provided in Section 5.10 hereof, without charge to
the holder. Any tax or governmental charge that may be imposed in connection
with any such exchange shall be borne by the Master Servicer. Upon surrender for
cancellation of any one or more temporary Certificates, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver in exchange therefor a like principal amount of definitive Certificates
of Authorized Denominations. Until so exchanged, the temporary Certificates
shall in all respects be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 5.07. Book-Entry for Book-Entry Certificates. Notwithstanding
the foregoing, the Book-Entry Certificates, upon original issuance, shall be
issued in the form of one or more typewritten Certificates of Authorized
Denomination representing the Book-Entry Certificates, to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Company. The Book-Entry
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of DTC, as the initial Clearing Agency, and no
Beneficial Holder shall receive a definitive certificate representing such
Beneficial Holder's interest in any Class of Book-Entry Certificate, except as
provided above and in Section 5.09. Each Book-Entry Certificate shall bear the
following legend:
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Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the
Trustee or its agent for registration of transfer, exchange, or payment,
and any Certificate issued is registered in the name of Cede & Co. or
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.
Unless and until definitive, fully registered Book-Entry Certificates (the
"Definitive Certificates") have been issued to the Beneficial Holders pursuant
to Section 5.09:
(a) the provisions of this Section 5.07 shall be in full
force and effect with respect to the Book-Entry Certificates;
(b) the Master Servicer and the Trustee may deal with the
Clearing Agency for all purposes with respect to the Book-Entry
Certificates (including the making of distributions on the Book-Entry
Certificates) as the sole Certificateholder;
(c) to the extent that the provisions of this Section 5.07
conflict with any other provisions of this Agreement, the provisions of
this Section 5.07 shall control; and
(d) the rights of the Beneficial Holders shall be exercised only
through the Clearing Agency and the DTC Participants and shall be
limited to those established by law and agreements between such
Beneficial Holders and the Clearing Agency and/or the DTC Participants.
Pursuant to the Depositary Agreement, unless and until Definitive
Certificates are issued pursuant to Section 5.09, the initial Clearing
Agency will make book-entry transfers among the DTC Participants and
receive and transmit distributions of principal and interest on the
related Class of Book-Entry Certificates to such DTC Participants.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Holders of Book-Entry
Certificates evidencing a specified Percentage Interest, such direction or
consent may be given by the Clearing Agency at the direction of Beneficial
Holders owning Book-Entry Certificates evidencing the requisite Percentage
Interest represented by the Book-Entry Certificates. The Clearing Agency may
take conflicting actions with respect to the Book-Entry Certificates to the
extent that such actions are taken on behalf of the Beneficial Holders.
Section 5.08. Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to the related
Certificateholders pursuant to Section 5.09, the Trustee shall give all such
notices and communications specified herein to be given to Holders of the
Book-Entry Certificates to the Clearing Agency which shall give such notices and
communications to the related DTC Participants in accordance with its applicable
rules, regulations and procedures.
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Section 5.09. Definitive Certificates. If (a) the Master Servicer
notifies the Trustee in writing that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities under the Depositary Agreement
with respect to the Book-Entry Certificates and the Trustee or the Master
Servicer is unable to locate a qualified successor, (b) the Master Servicer, at
its option, advises the Trustee in writing that it elects to terminate the
book-entry system with respect to the Book-Entry Certificates through the
Clearing Agency or (c) after the occurrence of an Event of Default,
Certificateholders holding Book-Entry Certificates evidencing Percentage
Interests aggregating not less than 66% of the aggregate Class Principal Balance
of such Certificates advise the Trustee and the Clearing Agency through DTC
Participants in writing that the continuation of a book-entry system with
respect to the Book-Entry Certificates through the Clearing Agency is no longer
in the best interests of the Certificateholders with respect to such
Certificates, the Trustee shall notify all Certificateholders of Book-Entry
Certificates of the occurrence of any such event and of the availability of
Definitive Certificates. Upon surrender to the Trustee of the Book-Entry
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall execute and the
Trustee or any Authenticating Agent shall authenticate and deliver the
Definitive Certificates. Neither the Company, the Master Servicer nor the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates for all of the Certificates all
references herein to obligations imposed upon or to be performed by the Clearing
Agency shall be deemed to be imposed upon and performed by the Trustee, to the
extent applicable with respect to such Definitive Certificates, and the Trustee
shall recognize the Holders of Definitive Certificates as Certificateholders
hereunder.
Section 5.10. Office for Transfer of Certificates. The Trustee shall
maintain in New York, New York and in Massachusetts an office or agency where
Certificates may be surrendered for registration of transfer or exchange. State
Street Bank and Trust Company, N.A., 61 Broadway, New York, NY 10006, Attention:
Corporate Trust Window, and the Corporate Trust Office are initially designated
for said purposes.
ARTICLE VI
The Company and the Master Servicer
Section 6.01. Liability of the Company and the Master Servicer. The
Company and the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the
Company or the Master Servicer, as applicable, herein.
Section 6.02. Merger or Consolidation of the Company, or the Master
Servicer. Any corporation into which the Company or the Master Servicer may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Company or the Master Servicer shall be a party,
or any corporation succeeding to the business of the Company or the Master
Servicer, shall be the successor of the Company or the Master Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
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Section 6.03. Limitation on Liability of the Company, the Master
Servicer and Others. Neither the Company nor the Master Servicer nor any of the
directors, officers, ers employees or agents of the Company or the Master
Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken by such Person or by a Servicer or for
such Person's or Servicer's 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 Company, the Master Servicer or any
such Person against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of duties and obligations hereunder. The
Company, the Master Servicer and any director, officer, employee or agent of the
Company or the Master Servicer may rely in good faith on any document of any
kind properly executed and submitted by any Person respecting any matters
arising hereunder. The Company, the Master Servicer and any director, officer,
employee or agent of the Company or the Master Servicer shall be indemnified by
the Trust Fund and held harmless against any loss, liability or expense incurred
in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense relating to any Mortgage
Loan (other than as otherwise permitted in this Agreement) or incurred by reason
of willful misfeasance, bad faith or gross negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. The Company and the Master Servicer shall not be under any obligation
to appear in, prosecute or defend any legal action which is not incidental to
its duties to service the Mortgage Loans in accordance with this Agreement and
which in its opinion may involve it in any expense or liability; provided,
however, that the Company or the Master Servicer may in its discretion undertake
any such action which it may deem necessary or desirable with respect to the
Mortgage Loans, this Agreement, the Certificates or the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund and the
Company and the Master Servicer shall be entitled to be reimbursed therefor out
of the Certificate Account, as provided by Section 3.05.
Section 6.04. The Company and the Master Servicer not to Resign. The
Company shall not resign from the obligations and duties (including, without
limitation, its obligations and duties as initial Master Servicer) hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any successor Master Servicer shall not resign
from the obligations and duties hereby imposed on it except upon determination
that its duties hereunder are no longer permissible under applicable law. Any
such determination permitting the resignation of the Company or any successor
Master Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee. No such resignation shall become effective until the
Trustee or a successor Master Servicer shall have assumed the Master Servicer's
responsibilities and obligations in accordance with Section 7.02 hereof.
If the Company is no longer acting as Master Servicer, then the
successor Master Servicer shall give prompt written notice to the Company of any
information received by such successor Master Servicer which affects or relates
to an ongoing obligation or right of the Company under this Agreement.
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ARTICLE VII
Default
Section 7.01. Events of Default. (a) In case one or more of the
following Events of Default by the Master Servicer or by a successor
Master Servicer shall occur and be continuing, that is to say:
(i) Any failure by the Master Servicer to deposit into
the Certificate Account any payment required to be deposited therein by
the Master Servicer under the terms of this Agreement which continues
unremedied for a period of ten days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Trustee or to the Master
Servicer and the Trustee by the Holders of Certificates evidencing
Percentage Interests aggregating not less than 25% of the REMIC II
Trust Fund; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Master Servicer contained in the
Certificates or in this Agreement which continues unremedied for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Master Servicer by the Trustee, or to the Master Servicer and the
Trustee by the Holders of Certificates evidencing Percentage Interests
aggregating not less than 25% of the REMIC II Trust Fund; or
(iii) A decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a trustee in bankruptcy, conservator or receiver or
liquidator in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or
(iv) The Master Servicer shall consent to the appointment
of a trustee in bankruptcy, conservator or receiver or liquidator in
any bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all of its property;
or
(v) The Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable bankruptcy, insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) Any failure of the Master Servicer to make any
Monthly P&I Advance (other than a Nonrecoverable Advance) which
continues unremedied at the
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opening of business on the Distribution Date in respect of which such
Monthly P&I Advance was to have been made;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, either the Trustee, or the Holders of Certificates
evidencing Percentage Interests aggregating not less than 25% of the REMIC II
Trust Fund, by notice in writing to the Company and the Master Servicer (and to
the Trustee if given by the Certificateholders, in which case such notice shall
set forth evidence reasonably satisfactory to the Trustee that such Event of
Default has occurred and shall not have been remedied) may terminate all of the
rights (other than its right to reimbursement for advances) and obligations of
the Master Servicer, including its right to the Master Servicing Fee, under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, if any.
Such determination shall be final and binding. On or after the receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Certificates or the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee pursuant
to and under this Section 7.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee for administration by it of all cash amounts which shall
at the time be credited by the Master Servicer to the Certificate Account or
thereafter be received with respect to the Mortgage Loans.
Notwithstanding the foregoing, if an Event of Default
described in clause (vi) of this Section 7.01(a) shall occur, the Trustee shall,
by notice in writing to the Master Servicer, which may be delivered by telecopy,
immediately suspend all of the rights and obligations of the Master Servicer
thereafter arising under this Agreement, but without prejudice to any rights it
may have as a Certificateholder or to reimbursement of Monthly P&I Advances and
other advances of its own funds, and the Trustee shall act as provided in
Section 7.02 to carry out the duties of the Master Servicer, including the
obligation to make any Monthly P&I Advance the nonpayment of which was an Event
of Default described in clause (vi) of this Section 7.01(a). Any such action
taken by the Trustee must be prior to the distribution on the relevant
Distribution Date. If the Master Servicer shall within two Business Days
following such suspension remit to the Trustee the amount of any Monthly P&I
Advance the nonpayment of which by the Master Servicer was an Event of Default
described in clause (vi) of this Section 7.01(a), the Trustee shall permit the
Master Servicer to resume its rights and obligations as Master Servicer
hereunder. The Master Servicer agrees that it will reimburse the Trustee for
actual, necessary and reasonable costs incurred by the Trustee because of action
taken pursuant to clause (vi) of this Section 7.01(a). The Master Servicer
agrees that if an Event of Default as described in clause (vi) of this Section
7.01(a) shall occur more than two times in any twelve month period, the Trustee
shall be under no obligation to permit the Master Servicer to resume its rights
and obligations as Master Servicer hereunder.
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(b) In case one or more of the following Events of Default by the
Company shall occur and be continuing, that is to say:
(i) Failure on the part of the Company duly to observe
or perform in any material respect any of the covenants or agreements
on the part of the Company contained in the Certificates or in this
Agreement which continues unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the Trustee, or to
the Company and the Trustee by the Holders of Certificates evidencing
Percentage Interests aggregating not less than 25% of the REMIC II
Trust Fund; or
(ii) A decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a trustee in bankruptcy, conservator or receiver or
liquidator in any bankruptcy, 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 Company and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(iii) The Company shall consent to the appointment of a
trustee in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Company or of
or relating to all or substantially all of its property; or
(iv) The Company shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization
statute, make an assignment for the benefit of creditors, or
voluntarily suspend payment of its obligations;
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Holders of Certificates evidencing Percentage
Interests aggregating not less than 25% of the REMIC II Trust Fund, by notice in
writing to the Company and the Trustee, may direct the Trustee in accordance
with Section 10.03 to institute an action, suit or proceeding in its own name as
Trustee hereunder to enforce the Company's obligations hereunder.
(c) In any circumstances in which this Agreement states that
Certificateholders owning Certificates evidencing a certain percentage
Percentage Interest in the REMIC II Trust Fund may take certain action, such
action shall be taken by the Trustee, but only if the requisite percentage of
Certificateholders required under this Agreement for taking like action or
giving like instruction to the Trustee under this Agreement shall have so
directed the Trustee in writing.
Section 7.02. Trustee to Act; Appointment of Successor. On and after the
time the Master Servicer receives a notice of termination pursuant to Section
7.01, the Trustee shall be the successor in all respects to the Master Servicer
under this Agreement and under the Selling and Servicing Contracts with respect
to the Mortgage Loans in the Mortgage Pool and with respect to the transactions
set forth or provided for herein and shall have all the rights and powers and be
subject to all the responsibilities, duties and liabilities relating thereto
arising after the Master
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Servicer receives such notice of termination placed on the Master Servicer by
the terms and provisions hereof and thereof, and shall have the same limitations
on liability herein granted to the Master Servicer; provided, that the Trustee
shall not under any circumstances be responsible for any representations and
warranties or any Purchase Obligation of the Company or any liability incurred
by the Master Servicer at or prior to the time the Master Servicer was
terminated as Master Servicer and the Trustee shall not be obligated to make a
Monthly P&I Advance if it is prohibited by law from so doing. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to retain or to
withdraw from the Certificate Account if the Master Servicer had continued to
act hereunder, except for those amounts due to the Master Servicer as
reimbursement for advances previously made or amounts previously expended and
are otherwise reimbursable hereunder. Notwithstanding the above, the Trustee
may, if it shall be unwilling to so act, or shall if it is unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution having a net worth of not less
than $10,000,000 as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder. Pending any such appointment, the Trustee is
obligated to act in such capacity. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall, together with the
compensation to the Trustee, be in excess of that permitted the Master Servicer
hereunder. The Trustee and such successor shall take such actions, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Section 7.03. Notification to Certificateholders. Upon any such termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register.
ARTICLE VIII
Concerning the Trustee
Section 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred (which 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 its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee
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shall not be responsible for the accuracy or content of any such certificate,
statement, opinion, report, or other order or instrument furnished by the
Company or Master Servicer to the Trustee pursuant to this Agreement.
(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; provided, however, that:
(i) Prior to the occurrence of an Event of Default and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee, and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement; and
(ii) The Trustee shall not be personally liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificateholders holding
Certificates which evidence Percentage Interests aggregating not less
than 25% of the REMIC II Trust Fund relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or relating to the exercise of any trust or power conferred
upon the Trustee under this Agreement.
(d) Within ten days after the occurrence of any Event of Default known
to the Trustee, the Trustee shall transmit by mail to the Rating Agencies notice
of each Event of Default. Within 90 days after the occurrence of any Event of
Default known to the Trustee, the Trustee shall transmit by mail to all
Certificateholders (with a copy to the Rating Agencies) notice of each Event of
Default, unless such Event of Default shall have been cured or waived; provided,
however, the Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Certificateholders;
and provided, further, that in the case of any Event of Default of the character
specified in Section 7.01(i) and Section 7.01(ii) no such notice to
Certificateholders or to the Rating Agencies shall be given until at least 30
days after the occurrence thereof.
(e) The Trustee acknowledges that it is named as the "insured" under
each of the Mortgage Pool Insurance Policy and the Special Hazard Insurance
Policy and acknowledges that the Master Servicer has agreed, pursuant to Section
3.16 and Section 3.17 hereof, to perform the obligations of the Trustee under
the Mortgage Pool Insurance Policy and under the Special Hazard Insurance
Policy, respectively, in each case, on behalf of the Trustee. Each of the
Trustee and the Master Servicer hereby covenant not to cancel either of the
Mortgage Pool Insurance Policy or the Special Hazard Insurance Policy until the
Trust is terminated in accordance with the provisions hereof.
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Section 8.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall not be personally liable for any
action taken or omitted by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(iv) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by the Holders of Certificates evidencing Percentage Interests
aggregating not less than 25% of the REMIC II Trust Fund; 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, if any, afforded to
it by the terms of this Agreement, the Trustee may require reasonable
indemnity against such expense or liability as a condition to
proceeding;
(v) The Trustee may execute the trust or any of the powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys; and
(vi) The Trustee shall not be deemed to have knowledge or
notice of any matter, including without limitation an Event of Default,
unless actually known by a Responsible Officer, or unless written
notice thereof referencing this Agreement or the Certificates is
received at the Corporate Trust Office at the address set forth in
Section 10.06.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein (other than those relating to the due
organization, power and authority of the Trustee) and in the Certificates (other
than the execution of, and certificate of authentication on, the Certificates)
shall be taken as the statements of the Company and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement or of the Certificates or any
Mortgage Loan. The Trustee shall not be accountable for the use or application
by the Company of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Master
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Servicer, the Servicers or the Company in respect of the Mortgage Loans or
deposited into the Custodial Accounts for P&I, any Buydown Fund Account, or the
Custodial Accounts for P&I by any Servicer or into the Investment Account, or
the Certificate Account by the Master Servicer or the Company.
Section 8.04. Trustee May Own Certificates. The Trustee or any agent
or affiliate of the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Certificates with the same rights it would have if it
were not Trustee.
Section 8.05. The Master Servicer to Pay Trustee's Fees and Expenses.
Subject to any separate written agreement with the Trustee, the Master Servicer
covenants and agrees to, and the Master Servicer shall, pay the Trustee from
time to time, and the Trustee shall be entitled to payment, for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties hereunder of the Trustee. Except
as otherwise expressly provided herein, the Master Servicer shall pay or
reimburse the Trustee upon its request for all reasonable expenses and
disbursements incurred or made by the Trustee in accordance with any of the
provisions of this Agreement and indemnify the Trustee from any loss, liability
or expense incurred by it hereunder (including the reasonable compensation and
the expenses and disbursements of its counsel and of all persons not regularly
in its employ) except any such expense or disbursement as may arise from its
negligence or bad faith. Such obligation shall survive the termination of this
Agreement or resignation or removal of the Trustee. The Company shall, at its
expense, prepare or cause to be prepared all federal and state income tax and
franchise tax and information returns relating to the REMIC I Trust Fund or the
REMIC II Trust Fund required to be prepared or filed by the Trustee and shall
indemnify the Trustee for any liability of the Trustee arising from any error in
such returns.
Section 8.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (i) an institution insured by the FDIC, (ii) 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 not less than
$50,000,000 and subject to supervision or examination by federal or state
authority and (iii) acceptable to the Rating Agencies. If such corporation or
association publishes reports of condition at least annually, pursuant to law or
to the requirements of any aforementioned supervising or examining authority,
then for the purposes of this Section 8.06, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07.
Section 8.07. Resignation and Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Master Servicer. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and shall have accepted
appointment within 30 days after the giving
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of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master Servicer may remove the Trustee and appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed, one copy to the successor.
The Holders of Certificates evidencing Percentage Interests aggregating
more than 50% of the REMIC II Trust Fund may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys in-fact duly authorized, one complete
set of which instruments shall be delivered to the Master Servicer, one complete
set to the Trustee so removed and one complete set to the successor so
appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08. Any expenses associated with the resignation of the
Trustee shall be borne by the Trustee, and any expenses associated with the
removal of the Trustee shall be borne by the Master Servicer.
Section 8.08. Successor Trustee. Any successor trustee appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the Master
Servicer and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor shall deliver to the successor trustee
all Mortgage Files, related documents, statements and all other property held by
it hereunder, and the Master Servicer and the predecessor trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such appointment such successor trustee shall
be eligible under the provisions of Section 8.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Master Servicer shall mail notice of the succession of
such trustee hereunder to (i) all Certificateholders at their addresses as shown
in the Certificate Register and (ii) the Rating Agencies. If the Master Servicer
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.
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Section 8.09. Merger or Consolidation of Trustee. Any corporation or
association into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such resulting or successor
corporation shall be eligible under the provisions of Section 8.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund may at the time be located, the Master Servicer and the Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund or the REMIC II Trust
Fund and to vest in such Person or Persons, in such capacity, such title to the
Trust Fund or the REMIC II Trust Fund, or any part thereof, and, subject to the
other provisions of this Section 8.10, such powers, duties, obligations, rights
and trusts as the Master Servicer and the Trustee may consider necessary or
desirable; provided, that the Trustee shall remain liable for all of its
obligations and duties under this Agreement. If the Master Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment;
provided, that the Trustee shall remain liable for all of its obligations and
duties under this Agreement. No co-trustee or separate trustee hereunder shall
be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, 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 and severally, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed by the
Trustee (whether as Trustee hereunder or as successor to the Master 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 Fund or the REMIC II Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustee(s) and
co-trustee(s), as effectively as if given to each of them. Every instrument
appointing any separate trustee(s) or co-trustee(s) shall refer to this
Agreement and the conditions of this Article VIII. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
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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.
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 the trust 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 8.11. Authenticating Agents. The Trustee may appoint one or
more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be acceptable to the Master
Servicer and must be a corporation or banking association organized and doing
business under the laws of the United States of America or of any state, having
a principal office and place of business in New York, New York, having a
combined capital and surplus of at least $15,000,000, authorized under such laws
to do a trust business and subject to supervision or examination by federal or
state authorities.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the Authenticating Agent so
long as it shall be eligible in accordance with the provisions of the first
paragraph of this Section 8.11 without the execution or filing of any paper or
any further act on the part of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Master Servicer. The Trustee
may, upon prior written approval of the Master Servicer, at any time terminate
the agency of any Authenticating Agent by giving written notice of termination
to such Authenticating Agent and to the Master Servicer. Upon receiving a notice
of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible in accordance with the
provisions of the first paragraph of this Section 8.11, the Trustee may appoint,
upon prior written approval of the Master Servicer, a successor Authenticating
Agent, shall give written notice of such appointment to the Master Servicer and
shall mail notice of such appointment to all Certificateholders. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as Authenticating
Agent. Any reasonable compensation paid to an Authenticating Agent shall be a
reimbursable expense pursuant to Section 8.05 if paid by the Trustee.
Section 8.12. Paying Agents. The Trustee may appoint one or more
Paying Agents which shall be authorized to act on behalf of the Trustee in
making withdrawals from the
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Certificate Account, and distributions to Certificateholders as provided in
Section 4.01, Section 4.04(a) and Section 9.01(b) to the extent directed to do
so by the Master Servicer. Wherever reference is made in this Agreement to the
withdrawal from the Certificate Account by the Trustee, such reference shall be
deemed to include such a withdrawal on behalf of the Trustee by a Paying Agent.
Whenever reference is made in this Agreement to a distribution by the Trustee or
the furnishing of a statement to Certificateholders by the Trustee, such
reference shall be deemed to include such a distribution or furnishing on behalf
of the Trustee by a Paying Agent. Each Paying Agent shall provide to the Trustee
such information concerning the Certificate Account as the Trustee shall request
from time to time. Each Paying Agent must be reasonably acceptable to the Master
Servicer and must be a corporation or banking association organized and doing
business under the laws of the United States of America or of any state, having
a principal office and place of business in New York, New York, having a
combined capital and surplus of at least $15,000,000, authorized under such laws
to do a trust business and subject to supervision or examination by federal or
state authorities.
Any corporation into which any Paying Agent may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which any Paying Agent shall be a party,
or any corporation succeeding to the corporate agency business of any Paying
Agent, shall continue to be the Paying Agent provided that such corporation
after the consummation of such merger, conversion, consolidation or succession
meets the eligibility requirements of this Section 8.12.
Any Paying Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Master Servicer; provided, that the Paying
Agent has returned to the Certificate Account or otherwise accounted, to the
reasonable satisfaction of the Master Servicer, for all amounts it has withdrawn
from the Certificate Account. The Trustee may, upon prior written approval of
the Master Servicer, at any time terminate the agency of any Paying Agent by
giving written notice of termination to such Paying Agent and to the Master
Servicer. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Paying Agent shall cease to be eligible in accordance
with the provisions of the first paragraph of this Section 8.12, the Trustee may
appoint, upon prior written approval of the Master Servicer, a successor Paying
Agent, shall give written notice of such appointment to the Master Servicer and
shall mail notice of such appointment to all Certificateholders. Any successor
Paying Agent upon acceptance of its appointment hereunder shall become vested
with all the rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Paying Agent. Any
reasonable compensation paid to any Paying Agent shall be a reimbursable expense
pursuant to Section 8.05 if paid by the Trustee.
ARTICLE IX
Termination
Section 9.01. Termination Upon Repurchase by the Company or
Liquidation of All Mortgage Loans.
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(a) Except as otherwise set forth in this Article IX, including,
without limitation, the obligation of the Master Servicer to make payments to
Certificateholders as hereafter set forth, the respective obligations and
responsibilities of the Company, the Master Servicer and the Trustee created
hereby shall terminate upon (i) the repurchase by the Company pursuant to the
following paragraph of this Section 9.01(a) of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust Fund at
a price equal, after the deduction of related advances, to the sum of (x) the
excess of (A) 100% of the aggregate outstanding Principal Balance of such
Mortgage Loans (other than Liquidated Mortgage Loans) plus accrued interest at
the applicable Pass-Through Rate with respect to such Mortgage Loan (other than
a Liquidated Mortgage Loan) through the last day of the month of such
repurchase, over (B) with respect to any Mortgage Loan which is not a Liquidated
Mortgage Loan, the amount of the Bankruptcy Loss incurred with respect to such
Mortgage Loan as of the date of such repurchase by the Company (and not covered
by payments from the Bankruptcy and Extraordinary Hazard Expense Reserve Fund)
to the extent that the Principal Balance of such Mortgage Loan has not been
previously reduced by such Bankruptcy Loss, and (y) the appraised fair market
value as of the effective date of the termination of the trust created hereby of
(A) all property in the Trust Fund which secured a Mortgage Loan and which was
acquired by foreclosure or deed in lieu of foreclosure after the Cut-Off Date,
including related Insurance Proceeds, and (B) all other property in the Trust
Fund, any such appraisal to be conducted by an appraiser mutually agreed upon by
the Company and the Trustee, or (ii) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all property acquired upon
foreclosure in respect of any Mortgage Loan, and the payment to
Certificateholders of all amounts required to be paid to them hereunder;
provided, however, that in no event shall the trusts created hereby continue
beyond the expiration of 21 years from the death of the survivor of the issue of
Joseph P. Kennedy, the late ambassador of the United States to the Court of St.
James, living on the date hereof.
The Company may repurchase the outstanding Mortgage Loans and any
Mortgaged Properties acquired by the Trust Fund at the price stated in clause
(i) of the preceding paragraph provided that the aggregate Principal Balance of
the Mortgage Loans at the time of any such repurchase aggregates less than five
percent of the aggregate Principal Balance of the Mortgage Loans as of the
Cut-Off Date. If such right is exercised, the Company shall provide to the
Trustee (and to the Master Servicer, if the Company is no longer acting as
Master Servicer) the written certification of an officer of the Company (which
certification shall include a statement to the effect that all amounts required
to be paid in order to repurchase the Mortgage Loans have been deposited in the
Certificate Account) and the Trustee shall promptly execute all instruments as
may be necessary to release and assign to the Company the Mortgage Files and any
foreclosed Mortgaged Property pertaining to the Trust Fund.
In no event shall the Company be required to expend any amounts other
than those described in the first paragraph of this Section 9.01(a) in order to
terminate the Trust Fund or repurchase the Mortgage Loans under this Section
9.01.
(b) Notice of any termination, specifying the date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
and cancellation, shall be given promptly by letter from the Trustee to
Certificateholders mailed not less than 30 days prior to such final
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distribution, specifying (i) the date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at the
office of the Certificate Registrar therein designated (the "Termination Date"),
(ii) the amount of such final payment (the "Termination Payment") and (iii) that
the Record Date otherwise applicable to the Distribution Date upon which the
Termination Date occurs is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Certificate
Registrar therein specified. Upon any such notice, the Certificate Account shall
terminate subject to the Master Servicer's obligation to hold all amounts
payable to Certificateholders in trust without interest pending such payment.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the Termination
Date, the Company shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the Termination Payment with respect thereto. If within one year after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Company may take appropriate steps to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain in trust
hereunder.
Section 9.02. Additional Termination Requirements.
(a) In the event the Company exercises its purchase option as provided
in Section 9.01, the REMIC I Trust Fund and the REMIC II Trust Fund shall be
terminated in accordance with the following additional requirements, unless the
Company, at its own expense, obtains for the Trustee an Opinion of Counsel to
the effect that the failure of the REMIC I Trust Fund and the REMIC II Trust
Fund to comply with the requirements of this Section 9.02 will not (i) result in
the imposition of taxes on "prohibited transactions" of the REMIC I Trust Fund
and the REMIC II Trust Fund as described in Section 860F of the Code, or (ii)
cause the REMIC I Trust Fund or the REMIC II Trust Fund to fail to qualify as a
REMIC at any time that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date set
forth in the notice given by the Trustee under Section 9.01, the
Company, in its capacity as agent of the Tax Matters Person shall
prepare the documentation required and adopt a plan of complete
liquidation on behalf of the REMIC I Trust Fund and the REMIC II Trust
Fund meeting the requirements of a qualified liquidation under Section
860F of the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Company, on behalf of
the REMIC I Trust Fund and the REMIC II Trust Fund; and
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Master Servicer as agent of the Trustee shall sell all of the
assets of the REMIC I Trust Fund and the REMIC II Trust Fund to the
Company for cash in the amount specified in Section 9.01.
(b) By its acceptance of any Residual Certificate, the Holder thereof
hereby agrees to authorize the Company to adopt such a plan of complete
liquidation upon the written request of
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the Company and to take such other action in connection therewith as may be
reasonably requested by the Company.
Section 9.03. Trusts Irrevocable. Except as expressly provided herein,
the trusts created hereby are irrevocable.
ARTICLE X
Miscellaneous Provisions
Section 10.01. Amendment.
(a) This Agreement may be amended from time to time by the Master
Servicer, the Company and the Trustee, without the consent of any of the
Certificateholders, (i) to cure any ambiguity; (ii) to correct or supplement any
provision herein which may be defective or inconsistent with any other
provisions herein; (iii) to comply with any requirements imposed by the Code or
any regulations thereunder; (iv) to correct the description of any property at
any time included in the Trust Fund or the REMIC II Trust Fund, or to assure the
conveyance to the Trustee of any property included in the Trust Fund or the
REMIC II Trust Fund; and (v) pursuant to Section 5.01(c)(v). No such amendment
(other than one entered into pursuant to clause (iii) of the preceding sentence)
shall adversely affect in any material respect the interest of any
Certificateholder. Prior to entering into any amendment without the consent of
Certificateholders pursuant to this paragraph, the Trustee may require an
Opinion of Counsel to the effect that such amendment is permitted under this
paragraph. The placement of an "original issue discount" legend on, or any
change required to correct any such legend previously placed on, a Certificate
shall not be deemed any amendment to this Agreement.
(b) This Agreement may also be amended from time to time by the Master
Servicer, the Company and the Trustee with the consent of the Holders of
Certificates evidencing Percentage Interests aggregating not less than 66% of
the REMIC II Trust Fund for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, this Agreement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall, without the consent of the Holder of each
Certificate affected thereby (i) reduce in any manner the amount of, or delay
the timing of, distributions of principal or interest required to be made
hereunder or reduce the Certificateholder's Percentage Interest, the Remittance
Rate or the Termination Payment with respect to any of the Certificates, (ii)
reduce the percentage of Percentage Interests specified in this Section 10.01
which are required to amend this Agreement, (iii) create or permit the creation
of any lien against any part of the Trust Fund or the REMIC II Trust Fund, or
(iv) modify any provision in any way which would permit an earlier retirement of
the Certificates.
Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder. Any failure to provide such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment.
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It shall not be necessary for the consent of Certificateholders under
this Section 10.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 10.02. Recordation of Agreemeent. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or the comparable
jurisdictions in which any Mortgaged Property is situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Company and at its expense on direction by the Trustee, but only
upon direction accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
Section 10.03. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust Fund or the REMIC II Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding-up of the
Trust Fund or the REMIC II Trust Fund, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote or in any manner
otherwise to control the operation and management of the Trust Fund or the REMIC
II Trust Fund or the obligations of the parties hereto (except as provided in
Section 5.09, Section 7.01, Section 8.01, Section 8.02, Section 8.07, Section
10.01 and this Section 10.03), nor shall anything herein set forth, or contained
in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder shall have any right by virtue or by availing of
any provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 25% of the REMIC II Trust Fund shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding. However, the Trustee is under no obligation to
exercise any of the extraordinary trusts or powers vested in it by this
Agreement or to make any investigation of matters arising hereunder or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Certificateholders unless such
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby. It is understood and intended, and expressly
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covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue or by availing of any provision of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 10.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 10.04. Access to List of Certificateholders. The Certificate
Registrar shall furnish or cause to be furnished to the Trustee, within 30 days
after receipt of a request by the Trustee in writing, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date for payment of
distributions to such Certificateholders.
If three or more Certificateholders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and such application states that
the applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such list from the Certificate Registrar, afford such applicants access during
normal business hours to the most recent list of Certificateholders held by the
Trustee. If such a list is as of a date more than 90 days prior to the date of
receipt of such applicants' request, the Trustee shall promptly request from the
Certificate Registrar a current list as provided above, and shall afford such
applicants access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding the same, agrees with
the Master Servicer and the Trustee that neither the Master Servicer nor the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders hereunder,
regardless of the source from which such information was derived.
Section 10.05. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 10.06. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered or certified mail to (a) in the
case of the Company, 75 North Fairway Drive, Vernon Hills, Illinois 60061,
Attention: General Counsel (with a copy directed to the attention of the Master
Servicing Department) or such other address as may hereafter be furnished to the
Trustee in writing by the Company, (b) in the case of the Trustee, at its
Corporate Trust Office, or such other address as may hereafter be furnished to
the Master Servicer in writing by the Trustee, (c) in the case of the
Certificate Registrar, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the Trustee in writing by the Certificate
Registrar, (d) in the case of
151
<PAGE>
<PAGE>
S&P, 26 Broadway, 15th Floor, New York, New York 10004, Attention: Frank Raiter,
or such other address as may hereafter be furnished to the Trustee and Master
Servicer in writing by S&P and (e) in the case of Fitch, 1 State Street Plaza,
New York, New York, Attention: George Massim, or such other address as may
hereafter be furnished to the Trustee and Master Servicer in writing by Fitch.
Notices to the Rating Agencies shall also be deemed to have been duly given if
mailed by first class mail, postage prepaid, to the above listed addresses of
the Rating Agencies. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 10.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 10.08. Counterpart Signatures. For the purpose of facilitating
the recordation of this Agreement as herein provided and for other purposes,
this Agreement may be executed simultaneously in any number of counterparts,
each of which counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
Section 10.09. Benefits of Agreement. Nothing in this Agreement or in
any Certificate, expressed or implied, shall give to any Person, other than the
parties hereto and their respective successors hereunder, any separate trustee
or co-trustee appointed under Section 8.10 and the Certificateholders, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Section 10.10. Notices and Copies to Rating Agencies.
(a) The Trustee shall notify the Rating Agencies of the occurrence of
any of the following events, in the manner provided in Section 10.06:
(i) the occurrence of an Event of Default pursuant
to Section 7.01, subject to the provisions of Section 8.01(d);
(ii) the appointment of a successor Master Servicer
pursuant to Section 7.02;
(b) The Master Servicer shall notify the Rating Agencies of the
occurrence of any of the following events, or in the case of clauses (iii),
(iv), (vii) and (viii) promptly upon receiving notice thereof, in the manner
provided in Section 10.06:
(i) any amendment of this Agreement pursuant to
Section 10.01;
(ii) the appointment of a successor Trustee pursuant to
Section 8.08;
152
<PAGE>
<PAGE>
(iii) the filing of any claim under or the cancellation or
modification of any fidelity bond and errors and omissions coverage
pursuant to Section 3.01 and Section 3.06 with respect to the Master
Servicer or any Servicer;
(iv) any change in the location of the Certificate Account,
any Custodial Account for P&I or any Custodial Account for Reserves;
(v) the repurchase of any Mortgage Loan pursuant to a Purchase
Obligation or the repurchase of the outstanding Mortgage Loans pursuant
to Section 9.01;
(vi) the occurrence of the final Distribution Date or the
termination of the trust pursuant to Section 9.01(a)(ii);
(vii) the failure of the Master Servicer to make a Monthly P&I
Advance following a determination on the Determination Date that the
Master Servicer would make such advance pursuant to Section 4.02; and
(viii) the failure of the Master Servicer to make a
determination on the Determination Date regarding whether it would make
a Monthly P&I Advance when a shortfall exists between (x) payments
scheduled to be received in respect of the Mortgage Loans and (y) the
amounts actually deposited in the Certificate Account on account of
such payments, pursuant to Section 4.02.
The Master Servicer shall provide copies of the statements pursuant to Section
4.02, Section 4.05, Section 3.12, Section 3.13 or Section 3.15 or any other
statements or reports to the Rating Agencies in such time and manner that such
statements or determinations are required to be provided to Certificateholders.
With respect to the reports described in the second paragraph of Section 4.05,
the Master Servicer shall provide such reports to the Rating Agencies in respect
of each Distribution Date, without regard to whether any Certificateholder or
the Trustee has requested such report for such Distribution Date.
153
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused their names
to be signed hereto by their respective officers, thereunto duly authorized, and
their respective seals, duly attested, to be hereunto affixed, all as of the day
and year first above written.
PNC MORTGAGE SECURITIES CORP.
(SEAL)
MICHAEL A. AAKNES
By:_______________________________________
Michael A. Aaknes
Its: Assistant Vice President
STATE STREET BANK AND TRUST COMPANY,
as TRUSTEE
(SEAL)
DAVID DUCLOS
By:_______________________________________
Its: Assistant Vice President
<PAGE>
<PAGE>
ACKNOWLEDGEMENT OF CORPORATION
STATE OF ILLINOIS )
) SS.
COUNTY OF LAKE )
On this 29th day of September 1998 before me, a Notary Public in and
for said State personally appeared Michael A. Aaknes, known to me to be the
Assistant Vice President of PNC MORTGAGE SECURITIES CORP., one of the
corporations that executed the within interest, and also known to me to be the
person who executed it on behalf of said Corporation, and acknowledged to me
that such corporation executed the within instrument pursuant to its By-Laws or
a resolution of its Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in the certificate first above written.
LAURA A. KELSEY
----------------------------------------
Notary Public
(SEAL)
OFFICIAL SEAL
LAURA A. CLELAND
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES: 02/01/98
<PAGE>
<PAGE>
CERTIFICATE OF ACKNOWLEDGEMENT
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
On this 28th day of September 1998 before me, a Notary Public in and
for said State, personally appeared DAVID DUCLOS, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature KIM R. HOLLAND (SEAL)
_________________________________________
Kim R. Holland
Notary Public
My Commission Expires June 1, 2001
<PAGE>
<PAGE>
Exhibit A-I-A-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-1
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans
will prepay at a rate based on the Standard Prepayment Assumption or any other
rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-1
Principal Balance as of the Cut-Off
Date Evidenced by this Certificate:
$-------------------------------------
Class I-A-1 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-1 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-1
<PAGE>
<PAGE>
Exhibit A-I-A-2
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-2
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is
not more than $ per $100,000 of initial Certificate Principal Balance,
computed under the exact method. No representation is made that the Mortgage
Loans will prepay at a rate based on the Standard Prepayment Assumption or any
other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-2
Principal Balance as of the Cut-Off
Date Evidenced by this Certificate:
$--------------------------------
Class I-A-2 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-2 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-2
<PAGE>
<PAGE>
Exhibit A-I-A-3
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-3
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-3
Principal Balance as of the Cut-Off
Date Evidenced by this Certificate:
$----------------------------------
Class I-A-3 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-3 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-3
<PAGE>
<PAGE>
Exhibit A-I-A-4
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-4
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-4
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$---------------------------
Class I-A-4 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-4 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-4
<PAGE>
<PAGE>
Exhibit A-I-A-5
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-5
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-5
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$-------------------------------
Class I-A-5 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-5 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-5
<PAGE>
<PAGE>
Exhibit A-I-A-6
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-6
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-6
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$------------------------
Class I-A-6 Remittance Rate: 7.000%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-6 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-6
<PAGE>
<PAGE>
Exhibit A-I-A-7
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-7
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other
rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-7
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$---------------------------
Class I-A-7 Remittance Rate: 6.500%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-7 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-7
<PAGE>
<PAGE>
Exhibit A-I-A-8
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-8
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. Interest is
not payable with respect to this Certificate. [Assuming that the Mortgage Loans
underlying the Certificates prepay at the prepayment assumption used by the
issuer in pricing this Certificate (i.e., 275% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $ per $100,000
of initial Certificate Principal Balance, the yield to maturity is %, and
the amount of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-A-8
Principal Balance as of the Cut-Off
Date Evidenced by this Certificate:
$---------------------------------
Class I-A-8 Remittance Rate: 0.000%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-A-8 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-8
<PAGE>
<PAGE>
Exhibit A-II-A-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-1
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class II-A-1
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$-------------------------
Class II-A-1 Remittance Rate: 6.500%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class II-A-1 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-9
<PAGE>
<PAGE>
Exhibit A-II-A-2
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-2
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. Interest is
not payable with respect to this Certificate. [Assuming that the Mortgage Loans
underlying the Certificates prepay at the prepayment assumption used by the
issuer in pricing this Certificate (i.e., 275% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $ per $100,000
of initial Certificate Principal Balance, the yield to maturity is %, and the
amount of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a
rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class II-A-2
Principal Balance as of the Cut-Off
Date Evidenced by this Certificate:
$-------------------------------
Class II-A-2 Remittance Rate: 0.000%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class II-A-2 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-10
<PAGE>
<PAGE>
Exhibit A-III-A-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-A-1
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 25% of the
Constant Prepayment Rate as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Constant Prepayment Rate or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class III-A-1
Principal Balance as of the Cut-Off
Date Evidenced by this
Certificate:
$--------------------------
Class III-A-1 Remittance Rate: 6.350%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class III-A-1 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-11
<PAGE>
<PAGE>
Exhibit A-III-A-2
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-A-2
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 25% of the
Constant Prepayment Rate as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Constant Prepayment Rate or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class III-A-2
Notional Amount as of the
Cut-Off Date Evidenced by
this Certificate:
$-----------------------------
Class III-A-2 Remittance Rate:6.750% applied to the
Class III-A-2 Notional Amount
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class III-A-2 Principal Balance
as of the Cut-Off Date: $0.00
Class III-A-2 Notional Amount
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-12
<PAGE>
<PAGE>
Exhibit A-III-A-3
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-A-3
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 25% of the
Constant Prepayment Rate as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more
than $ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Constant Prepayment Rate or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class III-A-3
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$------------------------------
Class III-A-3 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class III-A-3 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-13
<PAGE>
<PAGE>
Exhibit A-III-A-4
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-A-4
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 25% of the
Constant Prepayment Rate as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Constant Prepayment Rate or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class III-A-4
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$-----------------------------
Class III-A-4 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class III-A-4 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-14
<PAGE>
<PAGE>
Exhibit A-III-A-5
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-A-5
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 25% of the
Constant Prepayment Rate as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Constant Prepayment Rate or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class III-A-5
Principal Balance as of the Cut-Off
Date Evidenced by this Certificate:
$------------------------------------
Class III-A-5 Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class III-A-5 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-15
<PAGE>
<PAGE>
Exhibit A-I-X
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-X
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class I-X
Notional Amount as of the
Cut-Off Date Evidenced by
this Certificate:
$---------------------------
Class I-X Remittance Rate: 6.750% applied to the
Class I-X Notional Amount
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-X Principal Balance
as of the Cut-Off Date: $0.00
Class I-X Notional Amount
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-16
<PAGE>
<PAGE>
Exhibit A-II-X
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-X
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 275% of the
Standard Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class II-X
Notional Amount as of the Cut-Off
Date Evidenced by this Certificate:
$---------------------------------------
Class II-X Remittance Rate: 6.500% applied to the
Class II-X Notional Amount
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class II-X Principal Balance
as of the Cut-Off Date: $0.00
Class II-X Notional Amount
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-17
<PAGE>
<PAGE>
Exhibit A-III-X
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-X
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. [Assuming
that the Mortgage Loans underlying the Certificates prepay at the prepayment
assumption used by the issuer in pricing this Certificate (i.e., 25% of the
Constant Prepayment Rate as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more than
$ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Constant Prepayment Rate or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class III-X
Notional Amount as of the
Cut-Off Date Evidenced by
this Certificate:
$---------------------------
Class III-X Remittance Rate: 6.750% applied to
the Class III-X Notional Amount
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class III-X Principal Balance
as of the Cut-Off Date: $0.00
Class III-X Notional Amount
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-18
<PAGE>
<PAGE>
Exhibit A-I-P
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-P
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. Interest is
not payable with respect to this Certificate. [Assuming that the Mortgage Loans
underlying the Certificates prepay at the prepayment assumption used by the
issuer in pricing this Certificate (i.e., 275% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $ per $100,000
of initial Certificate Principal Balance, the yield to maturity is %, and
the amount of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class
I-P Principal Balance as of
the Cut-Off Date evidenced
by this Certificate:
Class I-P Remittance Rate: 0.000% $------------------------------
Cut-Off Date: September 1, 1998
First Distribution Date: September 25, 1998
Last Scheduled Distribution Date:
Class I-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-19
<PAGE>
<PAGE>
Exhibit A-II-P
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-P
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended. The issue
date (the "Issue Date") of this Certificate is September 29, 1998. Interest is
not payable with respect to this Certificate. [Assuming that the Mortgage Loans
underlying the Certificates prepay at the prepayment assumption used by the
issuer in pricing this Certificate (i.e., 275% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $ per $100,000
of initial Certificate Principal Balance, the yield to maturity is %, and the
amount of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any Certificate
issued is registered in the name of Cede & Co. or 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.
Series 1998-9 Portion of the Class
II-P Principal Balance as
of the Cut-Off Date
evidenced by this
Certificate:
Class II-P Remittance Rate: 0.000% $-----------------------------
Cut-Off Date: September 1, 1998
First Distribution Date: September 25, 1998
Last Scheduled Distribution Date:
Class II-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-20
<PAGE>
<PAGE>
Exhibit A-I-AM
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-AM
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"). The issue date (the "Issue Date") of this Certificate is September 29,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate (i.e.,
275% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID attributable to the
short period is not more than $ per $100,000 of initial Certificate Principal
Balance, computed under the exact method. No representation is made that the
Mortgage Loans will prepay at a rate based on the Standard Prepayment
Assumption or any other rate.]
IN THE CASE OF ANY CLASS I-AM CERTIFICATE PRESENTED FOR REGISTRATION IN THE
NAME OF ANY PERSON, THE TRUSTEE SHALL REQUIRE, EXCEPT AS OTHERWISE SET
FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN OPINION OF COUNSEL
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS I-AM
CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE MASTER
SERVICER OR THE COMPANY TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING AGREEMENT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE MASTER
SERVICER OR THE COMPANY.
The Class I-AM Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-9 Portion of the Class I-AM
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$--------------------------
Class I-AM Remittance Rate: Variable
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class I-AM Principal Balance
as of the Cut-Off Date: $[ ]
------------------
Registered Owner
Certificate No. ---------
A-21
<PAGE>
<PAGE>
Exhibit A-II-AM
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-AM
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"). The issue date (the "Issue Date") of this Certificate is September 29,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate (i.e.,
275% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID attributable to
the short period is not more than $ per $100,000 of initial Certificate
Principal Balance, computed under the exact method. No representation is made
that the Mortgage Loans will prepay at a rate based on the Standard Prepayment
Assumption or any other rate.]
IN THE CASE OF ANY CLASS II-AM CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF ANY PERSON, THE TRUSTEE SHALL REQUIRE, EXCEPT AS OTHERWISE SET
FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN OPINION OF COUNSEL
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS II-AM
CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE MASTER
SERVICER OR THE COMPANY TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING AGREEMENT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE MASTER
SERVICER OR THE COMPANY.
The Class II-AM Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-9 Portion of the Class II-AM
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$----------------------------
Class II-AM Remittance Rate: 6.3925%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class II-AM Principal Balance
as of the Cut-Off Date: $[ ]
------------------
Registered Owner
Certificate No. -----------
A-22
<PAGE>
<PAGE>
Exhibit A-III-AM
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-AM
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real estate
mortgage investment conduit," as those terms are defined in Sections 860G and
860D, respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"). The issue date (the "Issue Date") of this Certificate is September 29,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate (i.e.,
25% of the Constant Prepayment Rate as described in the Prospectus Supplement),
this Certificate has been issued with original issue discount ("OID") of no more
than $ per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short period is not
more than $ per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Constant Prepayment Rate or any other rate.]
IN THE CASE OF ANY CLASS III-AM CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF ANY PERSON, THE TRUSTEE SHALL REQUIRE, EXCEPT AS OTHERWISE SET
FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN OPINION OF COUNSEL
ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS III-AM
CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE MASTER
SERVICER OR THE COMPANY TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING AGREEMENT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE MASTER
SERVICER OR THE COMPANY.
The Class III-AM Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-9 Portion of the Class III-AM
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$------------------------------
Class III-AM Remittance Rate: 6.750%
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class III-AM Principal Balance
as of the Cut-Off Date: $[ ]
------------------
Registered Owner
Certificate No. -----------
A-23
<PAGE>
<PAGE>
Exhibit B
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-2
Evidencing a Percentage Interest in a trust fund whose assets consist of, among
other things, interests in another trust fund whose assets consist of, among
other things, a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE COMPANY AND THE
CERTIFICATE REGISTRAR THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE UNITED
STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), OR (C) BEING
HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A
DISQUALIFIED ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO ENABLE THE
TRANSFER TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX. SUCH AFFIDAVIT SHALL
INCLUDE CERTAIN REPRESENTATIONS AS TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS R-2 CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND
SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF A CLASS R-3 CERTIFICATE BY ACCEPTANCE OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
IN THE CASE OF ANY CLASS R-2 CERTIFICATE PRESENTED FOR REGISTRATION IN THE NAME
OF ANY PERSON, THE TRUSTEE SHALL REQUIRE AN OPINION OF COUNSEL ACCEPTABLE TO AND
IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE COMPANY TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF A CLASS R-2 CERTIFICATE IS PERMISSIBLE UNDER
APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR LIABILITY
(INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING AGREEMENT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE MASTER SERVICER,
THE REMIC I TRUST FUND, THE REMIC II TRUST FUND OR THE COMPANY.
Solely for U.S. federal income tax purposes, this Certificate represents a
"residual interest" in a "real estate mortgage investment conduit," as those
terms are defined in Sections 860G and 860D, respectively, of the Internal
Revenue Code of 1986, as amended.
Series 1998-9 Percentage Interest evidenced by this
Class R-2 Certificate in the
distributions to be made with respect
to the Class R-2 Certificates: %
Class R-2 Remittance Rate: 6.750%.
Additionally the Class R-2 Certificates are
entitled to the Residual Distribution Amount as
defined in the Pooling Agreement.
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class R-2 Principal Balance as of the Cut-Off Date: $50.00
------------------
Registered Owner
Certificate No. ----------
B-1
<PAGE>
<PAGE>
Exhibit C-R-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-1
Evidencing a Percentage Interest in certain distributions with respect to a pool
of conventional one- to four-family mortgage loans formed and administered by
PNC MORTGAGE SECURITIES CORP.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE COMPANY AND THE
CERTIFICATE REGISTRAR THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE UNITED
STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), OR (C) BEING
HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A
DISQUALIFIED ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO ENABLE THE
TRANSFER TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX. SUCH AFFIDAVIT SHALL
INCLUDE CERTAIN REPRESENTATIONS AS TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS R-1 CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND
SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF A CLASS R-1 CERTIFICATE BY ACCEPTANCE OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
IN THE CASE OF ANY CLASS R-1 CERTIFICATE PRESENTED FOR REGISTRATION IN THE NAME
OF ANY PERSON, THE TRUSTEE SHALL REQUIRE AN OPINION OF COUNSEL ACCEPTABLE TO AND
IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE COMPANY TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF A CLASS R-1 CERTIFICATE IS PERMISSIBLE UNDER
APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR LIABILITY
(INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING AGREEMENT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE MASTER SERVICER,
THE REMIC I TRUST FUND, THE REMIC II TRUST FUND OR THE COMPANY.
Solely for U.S. federal income tax purposes, this Certificate represents a
"residual interest" in a "real estate mortgage investment conduit," as those
terms are defined in Sections 860G and 860D, respectively, of the Internal
Revenue Code of 1986, as amended.
Series 1998-9 Percentage Interest evidenced by
this Class R-1 Certificate in the
distributions to be made with
respect to the Class R-1
Certificates: %
Class R-1 Remittance Rate: 6.750%.
Additionally the Class R-1 Certificates are
entitled to Excess Liquidation Proceeds and the
Residual Distribution Amount as defined in the
Pooling Agreement.
Cut-Off Date: September 1, 1998
First Distribution Date: October 26, 1998
Last Scheduled Distribution Date:
Class R-1 Principal Balance as of the Cut-Off Date: $50.00
------------------
Registered Owner
Certificate No. ------------
C-1
<PAGE>
<PAGE>
This Certificate does not represent an obligation of or interest in PNC
Mortgage Securities Corp. or any of its affiliates, including PNC Bank Corp.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed by any
agency or instrumentality of the United States.
This certifies that the above-named Registered Owner is the registered
owner of certain interests in a trust fund (the "Trust Fund") whose assets
consist of, among other things, a pool (the "Mortgage Pool") of conventional
one- to four-family mortgage loans (the "Mortgage Loans"), formed and
administered by PNC Mortgage Securities Corp. (the "Company"), which term
includes any successor entity under the Pooling Agreement referred to below. The
Mortgage Pool was created pursuant to a Pooling and Servicing Agreement, dated
as of the Cut-Off Date stated above (the "Pooling Agreement"), between the
Company and State Street Bank and Trust Company, as Trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Pooling Agreement. Nothing herein shall be deemed
inconsistent with such meanings, and in the event of any conflict between the
Pooling Agreement and the terms of this Certificate, the Pooling Agreement shall
control. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling Agreement, to which Pooling Agreement
the Holder of this Certificate, by virtue of the acceptance hereof, assents and
by which such Holder is bound.
Distributions will be made, pursuant to the Pooling Agreement, on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
month immediately preceding the month of such distribution (the "Record Date"),
to the extent of such Certificateholder's Percentage Interest represented by
this Certificate in the portion of the REMIC I Available Distribution Amount for
such Distribution Date then distributable on the Certificates of this Class, as
specified in Section 4.01 of the Pooling Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer or check mailed to the address of the Person entitled thereto, as such
name and address shall appear on the Certificate Register. Notwithstanding the
above, the final distribution on this Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate to the Certificate Registrar.
Reference is hereby made to the further provisions of this Certificate
set forth below, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling Agreement or be valid for any purpose.
C-2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
STATE STREET BANK AND TRUST COMPANY, as
Trustee
By:---------------------------------------
(TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Certificates referred to in the
within-mentioned Pooling Agreement.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:-------------------------------
Dated:-----------------------------
C-3
<PAGE>
<PAGE>
PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series and Class
specified hereon (herein called the "Certificates") and representing certain
interests in the Trust Fund.
The Certificates do not represent an obligation of, or an interest in,
the Company or any of its affiliates and are not insured or guaranteed by any
governmental agency. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Pooling Agreement. In the event funds
are advanced with respect to any Mortgage Loan, such advance is reimbursable to
the Master Servicer from the related recoveries on such Mortgage Loan or from
other cash deposited in the Certificate Account to the extent that such advance
is not otherwise recoverable.
As provided in the Pooling Agreement, withdrawals from the Certificate
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Master Servicer
of advances made, or certain expenses incurred, by it.
The Pooling Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Pooling Agreement at any time by the Company, the Master Servicer and the
Trustee with the consent of the Holders of the Certificates evidencing
Percentage Interests aggregating not less than 66% of the REMIC II Trust Fund.
For the purposes of such provision and except as provided below, voting rights
relating to 100% of the Aggregate Certificate Principal Balance will be
allocated pro rata (by Certificate Principal Balance) among such Certificates.
The Pooling Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Pooling Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices of the Certificate Registrar or the office maintained by
the Trustee in the City and State of New York, duly endorsed by, or accompanied
by an assignment in the form below or other written instrument of transfer in
form satisfactory to the Trustee or any Authenticating Agent duly executed by,
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of Authorized Denominations evidencing
the same Percentage Interest set forth hereinabove will be issued to the
designated transferee or transferees.
No transfer of a Certificate will be made unless such transfer is
exempt from or is made in accordance with the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and any applicable
state securities laws. Neither the Company nor the Trustee will register the
Certificate under the Securities Act, qualify the Certificate under any state
securities law or provide registration rights to any purchaser. Any Holder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Company and the Master Servicer 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.
The Certificates are issuable only as registered Certificates without
coupons in Authorized Denominations specified in the Pooling Agreement. As
provided in the Pooling Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of Authorized
C-4
<PAGE>
<PAGE>
Denominations evidencing the same aggregate interest in the portion of the REMIC
I Available Distribution Amount distributable on this Class of Certificate, as
requested by the Holder surrendering the same.
A reasonable service charge may be made for any such registration of
transfer or exchange, and the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and the Certificate Registrar and any agent of
the Company, the Trustee or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Trustee, the Certificate Registrar nor any such
agent shall be affected by notice to the contrary.
The obligations created by the Pooling Agreement and the trust funds
created thereby shall terminate upon (i) the later of the maturity or other
liquidation (including repurchase by the Company) of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan, and (ii) the
payment to Certificateholders of all amounts held by the Trustee and required to
be paid to them pursuant to the Pooling Agreement. In the event that the Company
repurchases any Mortgage Loan pursuant to the Pooling Agreement, such Pooling
Agreement generally requires that the Trustee distribute to the
Certificateholders in the aggregate an amount equal to 100% of the unpaid
Principal Balance of such Mortgage Loan, plus accrued interest at the applicable
Pass-Through Rate to the next scheduled Due Date for the Mortgage Loan. The
Pooling Agreement permits, but does not require, the Company to repurchase from
the Trust Fund all Mortgage Loans at the time subject thereto and all property
acquired in respect of any Mortgage Loan upon payment to the Certificateholders
of the amounts specified in the Pooling Agreement. The exercise of such right
will effect early retirement of the Certificates, the Company's right to
repurchase being subject to the aggregate unpaid Principal Balance of the
Mortgage Loans at the time of repurchase being less than five percent (5%) of
the aggregate unpaid Principal Balance of the Mortgage Loans as of the Cut-Off
Date.
C-5
<PAGE>
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and
transfer(s) unto---------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code of
assignee. Please insert social security or other identifying number of
assignee.)
the within Mortgage Pass-Through Certificate and hereby irrevocably constitutes
and appoints
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the Certificate Register, with full
power of substitution in the premises.
Dated:------------------ ----------------------------------------
Signature Guaranteed
-----------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon
the face of the within instrument in every
particular, without alteration or
enlargement or any change whatever. This
Certificate does not represent an
obligation of or an interest in PNC
Mortgage Securities Corp. or any of its
affiliates, including PNC Bank Corp.
Neither this Certificate nor the
underlying Mortgage Loans are guaranteed
by any agency or instrumentality of the
United States.
C-6
<PAGE>
<PAGE>
Exhibit D
MORTGAGE LOAN SCHEDULE
Copies of the Mortgage Loan Schedules (which have been intentionally
omitted from this filing) may be obtained from PNC Mortgage Securities Corp. or
State Street Bank and Trust Company by contacting,
in the case of PNC Mortgage Securities Corp.,
Richie Moore
Master Servicing Department
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
Telephone: (847) 549-3683
Facsimile: (847) 549-3681
in the case of State Street Bank and Trust Company,
David Duclos
Corporate Trust Department
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02102
Telephone: (617) 664-5436
Facsimile: (617) 664-5368
D-1
<PAGE>
<PAGE>
Exhibit E
SELLING AND SERVICING
CONTRACT
This Selling and Servicing Contract (this "Agreement") is made and entered into
by PNC Mortgage Securities Corp. and its successors and assigns ("PNC Mortgage")
and the entity identified below and its successors and assigns (the "Company").
WITNESSETH:
WHEREAS, this Company wishes to sell first lien residential mortgage
loans to, and service first lien residential mortgage loans on behalf of, PNC
Mortgage; and
WHEREAS, the Company has submitted a Seller Application to PNC Mortgage
and has been approved by PNC Mortgage for participation in the PNC Mortgage
Purchase Programs; and
WHEREAS, the Company has received and reviewed the PNC Mortgage
Purchase Programs Seller Guide (the "Seller Guide"), as well as the PNC Mortgage
Servicing Guide (the "Servicing Guide" and, together with the Seller Guide, the
"Guides"), and understands each and every provision thereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, PNC Mortgage and the Company hereby agree as
follows:
1. Guides. The Guides, which set forth the terms and conditions under
which PNC Mortgage may elect to purchase mortgage loans from the Company, and
the Company shall service mortgage loans on behalf of PNC Mortgage, are a
supplement to this Agreement and such Guides, as may be amended or supplemented
from time to time by PNC Mortgage, are incorporated into this Agreement in full
by reference and made a part hereof as fully as if set forth at length herein.
All capitalized terms used and not defined herein have the meanings ascribed to
them in the Guides.
2. Company's Duties. The Company shall diligently perform all duties
incident to the origination, sale and servicing of the mortgage loans subject to
this Agreement. In the performance of its servicing duties, the Company shall
exercise the same degree of care it exercises when servicing mortgage loans for
its own account, but in no event shall the Company exercise less care than a
reasonable prudent servicer would exercise under similar circumstances. In
addition, the Company shall comply with all of the provisions of the Guides and
with all other requirements and instructions of PNC Mortgage. The Company shall
perform such duties at its sole expense, except as otherwise expressly provided
in the Guides.
3. Representations, Warranties and Covenants of the Company; Remedies
of PNC Mortgage. With respect to each mortgage loan sold by the Company to PNC
Mortgage pursuant to the terms of this Agreement, the Company shall make all of
the representations, warranties and covenants set forth in the Guide and, in the
event of the breach of any of such representations, warranties and covenants,
PNC Mortgage shall have all of the remedies available at law or in equity, as
well as all of the remedies set forth in the Guide, including, but not limited
to, repurchase and indemnification. The representations and warranties made by
the Company with respect to any mortgage loan subject to this Agreement, as well
as the remedies available to PNC Mortgage upon the breach thereof, shall
survive: (a) any investigation regarding the mortgage loan conducted by PNC
Mortgage, its assignees or designees, (b) the liquidation of
E-1
<PAGE>
<PAGE>
the mortgage loan, (c) the purchase of the mortgage loan by PNC Mortgage, its
assignee or designee, (d) the repurchase of the mortgage loan by the Company and
(e) the termination of this Agreement.
4. Compensation. The Company shall be compensated for its services
hereunder as specified in the Guides.
5. No Assignment. This Agreement may not be assigned by the Company
without the prior written consent of PNC Mortgage. The Company hereby consents
to the assignment by PNC Mortgage of all or any part of its rights and
obligations under this Agreement to any affiliate designated by PNC Mortgage.
Any other transfer by PNC Mortgage will be allowed and be effective upon written
notice by PNC Mortgage to the Company.
6. Prior Agreements. This Agreement supersedes any prior agreements and
understandings between PNC Mortgage and the Company governing the subject matter
hereof; provided, however, the Company shall not be released from any
responsibility or liability that may have arisen under such agreements and
understanding.
7. Effective Date of Agreement. This Agreement is not effective
until it is executed and accepted by PNC Mortgage at its home office in
Illinois.
8. Notices. All notices, requests, demands or other communications that
are to be given under this Agreement shall be in writing, addressed to the
appropriate parties, and shall be sent by certified mail, return receipt
requested, postage prepaid, if to the Company, at the address below and, if to
PNC Mortgage, to the appropriate address or facsimile number specified in the
Guides. Any such notice, request, demand or other communication shall be deemed
effective upon receipt.
9. Independent Contractor. At no time shall the Company represent that
it is acting as an agent, partner or joint venturer of PNC Mortgage. The Company
shall at all times act as an independent contracting party.
10. Amendment. This Agreement may not be amended or modified orally,
and no provision of this Agreement may be waived or amended, except in writing
signed by the party against whom enforcement is sought. Such a written waiver or
amendment must expressly reference this Agreement. However, by their terms the
Guides may be amended or supplemented by PNC Mortgage from time to time. Any
such amendment(s) to the Guides shall be in writing and be binding upon the
parties hereto on and after the effective date specified therein.
11. Miscellaneous. This Agreement, including all documents incorporated
by reference herein, constitutes the entire understanding between the parties
hereto and supersedes all other agreements, covenants, representations,
warranties, understandings and communications between the parties, whether
written or oral, with respect to the transactions contemplated by this
Agreement. All section headings contained herein are for convenience only and
shall not be construed as part of this Agreement. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall as to
such jurisdiction be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction, and
to this end, the provisions hereof are severable. This Agreement shall be
governed by, and construed and enforced in accordance with, applicable federal
laws and laws of the State of Illinois, without reference to conflict of laws
principles. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original and all of which shall constitute the same
Agreement.
E-2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by proper
officials duly authorized on the dates hereinafter set forth. This Agreement
shall take effect as of the date of its execution in original or facsimile
signature by a duly authorized officer of PNC Mortgage.
- ------------------------------------ -----------------------------------
Name of the Company Company I.D. Number
- ------------------------------------ -----------------------------------
Type of organization Organized under laws of
- -------------------------------------------------------------------------------
Principal place of business: street address, city, state, zip code
- -------------------------------------------------------------------------------
Typed name and title of the Company's authorized officer
- ------------------------------------------------------- --------------------
Signature of the Company's authorized officer Date
Agreed to and accepted by PNC Mortgage Securities Corp.
- --------------------------------------------------------------------------------
Typed name and title of authorized representative
- ------------------------------------------------------- --------------------
Signature of authorized representative Date
E-3
<PAGE>
<PAGE>
Exhibit F
[RESERVED]
F-1
<PAGE>
<PAGE>
Exhibit G
[RESERVED]
G-1
<PAGE>
<PAGE>
Exhibit H
FORM OF ADDITIONAL MATTER INCORPORATED INTO
THE FORM OF THE CERTIFICATES (OTHER THAN THE CLASS R-1 CERTIFICATES)
This Certificate does not represent an obligation of or interest in PNC
Mortgage Securities Corp. or any of its affiliates, including PNC Bank Corp.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed by any
agency or instrumentality of the United States.
This certifies that the above-named Registered Owner is the registered
owner of certain interests in a trust fund (the "REMIC II Trust Fund") whose
assets consist of interests in a trust fund (the "Trust Fund") whose assets
consist of, among other things, a pool (the "Mortgage Pool") of conventional
one- to four-family mortgage loans (the "Mortgage Loans"), formed and
administered by PNC Mortgage Securities Corp. (the "Company"), which term
includes any successor entity under the Pooling Agreement referred to below. The
Mortgage Pool was created pursuant to a Pooling and Servicing Agreement, dated
as of the Cut-Off Date stated above (the "Pooling Agreement"), between the
Company and State Street Bank and Trust Company, as Trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Pooling Agreement. Nothing herein shall be deemed
inconsistent with such meanings, and in the event of any conflict between the
Pooling Agreement and the terms of this Certificate, the Pooling Agreement shall
control. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling Agreement, to which Pooling Agreement
the Holder of this Certificate, by virtue of the acceptance hereof, assents and
by which such Holder is bound.
Distributions will be made, pursuant to the Pooling Agreement, on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
month immediately preceding the month of such distribution (the "Record Date"),
to the extent of such Certificateholder's Percentage Interest represented by
this Certificate in the portion of the REMIC II Available Distribution Amount
for such Distribution Date then distributable on the Certificates of this Class,
as specified in Section 4.04 of the Pooling Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer or check mailed to the address of the Person entitled thereto, as such
name and address shall appear on the Certificate Register. Notwithstanding the
above, the final distribution on this Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate to the Certificate Registrar.
Reference is hereby made to the further provisions of this Certificate
set forth below, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling Agreement or be valid for any purpose.
H-1
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
STATE STREET BANK AND TRUST COMPANY, as
Trustee
By:_____________________________________
(TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Certificates referred to in the
within-mentioned Pooling Agreement.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:___________________________
Dated:________________________
H-2
<PAGE>
<PAGE>
PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series and Class
specified hereon (herein called the "Certificates") and representing certain
interests in the REMIC II Trust Fund.
The Certificates do not represent an obligation of, or an interest in,
the Company or any of its affiliates and are not insured or guaranteed by any
governmental agency. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Pooling Agreement. In the event funds
are advanced with respect to any Mortgage Loan, such advance is reimbursable to
the Master Servicer from the related recoveries on such Mortgage Loan or from
other cash deposited in the Certificate Account to the extent that such advance
is not otherwise recoverable.
As provided in the Pooling Agreement, withdrawals from the Certificate
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Master Servicer
of advances made, or certain expenses incurred, by it.
The Pooling Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Pooling Agreement at any time by the Company, the Master Servicer and the
Trustee with the consent of the Holders of the Certificates evidencing
Percentage Interests aggregating not less than 66% of the REMIC II Trust Fund.
For the purposes of such provision and except as provided below, voting rights
relating to 100% of the Aggregate Certificate Principal Balance will be
allocated pro rata (by Certificate Principal Balance) among such Certificates.
Any such consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and upon all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Pooling Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Pooling Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices of the Certificate Registrar or the office maintained by
the Trustee in the City and State of New York, duly endorsed by, or accompanied
by an assignment in the form below or other written instrument of transfer in
form satisfactory to the Trustee or any Authenticating Agent duly executed by,
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of Authorized Denominations evidencing
the same Percentage Interest set forth hereinabove will be issued to the
designated transferee or transferees.
No transfer of a Certificate will be made unless such transfer is
exempt from or is made in accordance with the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and any applicable
state securities laws. Neither the Company nor the Trustee will register the
Certificate under the Securities Act, qualify the Certificate under any state
securities law or provide registration rights to any purchaser. Any Holder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Company and the Master Servicer 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.
H-3
<PAGE>
<PAGE>
The Certificates are issuable only as registered Certificates without
coupons in Authorized Denominations specified in the Pooling Agreement. As
provided in the Pooling Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of Authorized
Denominations evidencing the same aggregate interest in the portion of the REMIC
II Available Distribution Amount distributable on this Class of Certificate, as
requested by the Holder surrendering the same.
A reasonable service charge may be made for any such registration of
transfer or exchange, and the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and the Certificate Registrar and any agent of
the Company, the Trustee or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Trustee, the Certificate Registrar nor any such
agent shall be affected by notice to the contrary.
The obligations created by the Pooling Agreement and the trust funds
created thereby shall terminate upon (i) the later of the maturity or other
liquidation (including repurchase by the Company) of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan, and (ii) the
payment to Certificateholders of all amounts held by the Trustee and required to
be paid to them pursuant to the Pooling Agreement. In the event that the Company
repurchases any Mortgage Loan pursuant to the Pooling Agreement, such Pooling
Agreement generally requires that the Trustee distribute to the
Certificateholders in the aggregate an amount equal to 100% of the unpaid
Principal Balance of such Mortgage Loan, plus accrued interest at the applicable
Pass-Through Rate to the next scheduled Due Date for the Mortgage Loan. The
Pooling Agreement permits, but does not require, the Company to repurchase from
the Trust Fund all Mortgage Loans at the time subject thereto and all property
acquired in respect of any Mortgage Loan upon payment to the Certificateholders
of the amounts specified in the Pooling Agreement. The exercise of such right
will effect early retirement of the Certificates, the Company's right to
repurchase being subject to the aggregate unpaid Principal Balance of the
Mortgage Loans at the time of repurchase being less than five percent (5%) of
the aggregate unpaid Principal Balance of the Mortgage Loans as of the Cut-Off
Date.
H-4
<PAGE>
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code of
assignee. Please insert social security or other identifying number of
assignee.)
the within Mortgage Pass-Through Certificate and hereby irrevocably constitutes
and appoints
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the Certificate Register, with full
power of substitution in the premises.
Dated:------------------- ----------------------------------------
Signature Guaranteed
NOTICE:The signature to this assignment must
correspond with the name as written upon the
face of the within instrument in every
particular, without alteration or enlargement
or any change whatever. This Certificate does
not represent an obligation of or an interest
in PNC Mortgage Securities Corp. or any of
its affiliates, including PNC Bank Corp.
Neither this Certificate nor the underlying
Mortgage Loans are guaranteed by any agency
or instrumentality of the United States.
H-5
<PAGE>
<PAGE>
Exhibit I
TRANSFEROR CERTIFICATE
[Date]
State Street Bank and Trust Company, as Trustee
Two International Place
Boston, MA 02102
Attn: Structured Finance
Re: PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 1998-9, Class [R-1] [R-2]
Ladies and Gentlemen:
This letter is delivered to you in connection with the sale from ----
- -------------------(the "Seller") to ---------------------------(the
"Purchaser") of $-------------------- initial Certificate Principal Balance
of Mortgage Pass-Through Certificates, Series 1998-9, Class [R-1][R-2]
(the "Certificate"), pursuant to Section 5.01 of the Pooling and Servicing
Agreement (the "Pooling Agreement"), dated as of September 1, 1998 among
PNC Mortgage Securities Corp., as depositor and master servicer (the
"Company") and State Street Bank and Trust Company, as trustee (the "Trustee").
All terms used herein and not otherwise defined shall have the meanings set
forth in the Pooling Agreement. The Seller hereby certifies, represents and
warrants to, and covenants with, the Company and the Trustee that:
1. No purpose of the Seller relating to the sale of the Certificate by
the Seller to the Purchaser is or will be to enable the Seller to impede the
assessment or collection of tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee and the Company a transferee affidavit and agreement in the form
attached to the Pooling Agreement as Exhibit J. The Seller does not know or
believe that any representation contained therein is false.
3. The Seller has no actual knowledge that the proposed Transferee is
not a Permitted Transferee.
4. The Seller has no actual knowledge that the Purchaser would be
unwilling or unable to pay taxes due on its share of the taxable income
attributable to the Certificates.
5. The Seller has conducted a reasonable investigation of the financial
condition of the Purchaser and, as a result of the investigation, found that the
Purchaser has historically paid its debts as they came due, and found no
significant evidence to indicate that the Purchaser will not continue to pay its
debts as they come due in the future.
I-1
<PAGE>
<PAGE>
6. The Purchaser has represented to the Seller that, if the
Certificates constitute a noneconomic residual interest, it (i) understands that
as holder of a noneconomic residual interest it may incur tax liabilities in
excess of any cash flows generated by the interest, and (ii) intends to pay
taxes associated with its holding of the Certificates as they become due.
Very truly yours,
[Seller]
By:---------------------------------
Name:----------------------------
Title:---------------------------
I-2
<PAGE>
<PAGE>
Exhibit J
TRANSFEREE AFFIDAVIT AND AGREEMENT
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 Owner] (record or
beneficial owner of the Class [R-1][R-2] Certificate (the "Owner")), 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 and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code") and will endeavor
to remain other than a disqualified organization for so long as it retains its
ownership interest in the Class [R-1][R-2] Certificates, and (ii) is acquiring
the Class [R-1][R-2] Certificates for its own account or for the account of
another Owner from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this purpose,
a disqualified organization" means the United States, any state or political
subdivision thereof, or any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity, or any
foreign government or international organization, or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of the Class [R-1][R-2] Certificates after March 31, 1988;
(ii) that such tax would be on the transferor, or, if such transfer is through
an agent (which person includes a broker, nominee or middle-man) for a
disqualified organization, on the agent; (iii) that the person other-wise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is not a disqualified
organization and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Class [R-1][R-2]
Certificates may be a "noneconomic residual interest" within the meaning of
Treasury regulations promulgated pursuant to the Code and that the transferor of
a noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, if a significant purpose of the
transfer was to enable the transferor to impede the assessment or collection of
tax.
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding the Class [R-1][R-2] Certificates if at any time
during the taxable year of the pass-through entity a disqualified
J-1
<PAGE>
<PAGE>
organization is the record holder of an interest in such entity. (For this
purpose, a "pass through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register
the Transfer of the Class [R-1][R-2] Certificates unless the transferee, or the
transferees' agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
6. That the Owner has reviewed the restrictions set forth on
the face of the Class [R-1][R-2] Certificates and the provisions of Section 5.01
of the Pooling Agreement under which the Class [R-1][R-2] Certificates were
issued (in particular, clauses (iii)(A) and (iii)(B) of Section 5.01(c) which
authorize the Trustee to deliver payments to a person other than the Owner and
negotiate a mandatory sale by the Trustee in the event the Owner holds such
Certificates in violation of Section 5.01). The Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class [R-1][R-2] Certificates will
only be owned, directly or indirectly, by an Owner that is not a disqualified
organization.
8. The Owner's Taxpayer Identification Number is ---------- .
9. That no purpose of the Owner relating to the purchase of
the Class [R-1][R-2] Certificates by the Owner is or will be to enable the
transferor to impede the assessment or collection of tax.
10. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding.
11. That the Owner has no present knowledge or expectation
that it will become insolvent or subject to a bankruptcy proceeding for so long
as any of the Certificates remain outstanding.
12. That no purpose of the Owner relating to any sale of the
Class [R-1][R-2] Certificates by the Owner will be to impede the assessment or
collection of tax.
13. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
14. The Owner hereby agrees to cooperate with the Company and
to take any action required of it by the Code or Treasury regulations thereunder
(whether now or hereafter promulgated) in order to create or maintain the REMIC
status of the REMIC I Trust Fund and the REMIC II Trust Fund (the "Trust
Funds").
15. The Owner hereby agrees that it will not take any action
that could endanger the REMIC status of the Trust Funds or result in the
imposition of tax on the Trust Funds unless counsel for,
J-2
<PAGE>
<PAGE>
or acceptable to, the Company has provided an opinion that such action will not
result in the loss of such REMIC status or the imposition of such tax, as
applicable.
16. The Owner as transferee of the Class [R-1][R-2]
Certificates has represented to their transferor that, if the Class [R-1][R-2]
Certificates constitute a noneconomic residual interest, the Owner (i)
understands that as holder of a noneconomic residual interest it may incur tax
liabilities in excess of any cash flows generated by the interest, and (ii)
intends to pay taxes associated with its holding of the Class [R-1][R-2]
Certificates as they become due.
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the 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 -----, 19--- .
[Name of Owner]
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 me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Owner, and Acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Owner.
Subscribed and sworn before me this ------ day of -------------, 19--.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the day
of ----------------, 19 ---
J-3
<PAGE>
<PAGE>
Exhibit K
[RESERVED]
K-1
<PAGE>
<PAGE>
Exhibit L
[RESERVED]
L-2-1
<PAGE>
<PAGE>
Exhibit M
[Date]
[Company]
Re: Pooling and Servicing Agreement dated as of September 1, 1998 by
and between PNC Mortgage Securities Corp., as Depositor and Master
Servicer, and State Street Bank and Trust Company, as Trustee,
relating to PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 1998-9
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it or the Custodian on its behalf has reviewed the
documents delivered to it or to the Custodian on its behalf pursuant to Section
2.01 of the Pooling and Servicing Agreement and has determined that (i) all
documents required (in the case of instruments described in clauses (X)(vi) and
(Y)(x) of the definition of "Mortgage File," known by the Trustee to be
required) pursuant to the third paragraph of Section 2.01 of the Pooling and
Servicing Agreement have been executed and received as of the date hereof are in
its possession or in the possession of the Custodian on its behalf and (ii) all
such documents have been executed and relate to the Mortgage Loans identified in
the Mortgage Loan Schedule. The Trustee has made no independent examination of
such documents beyond the review specifically required in the above referenced
Pooling and Servicing Agreement and has relied upon the purported genuineness
and due execution of any such documents and upon the purported genuineness of
any signature thereon. The Trustee makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any of the documents
contained in each Mortgage File or any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
------------------------------
as Trustee
By:---------------------------
Name:
Title:
M-1
<PAGE>
<PAGE>
EXHIBIT N
BENEFIT PLAN AFFIDAVIT
State Street Bank and Trust Company, as Trustee
Two International Place
Boston, MA 02102
Attn: Structured Finance
PNC Mortgage Securities Corp.
75 North Fairway Drive
Vernon Hills, IL 60061
RE: PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-9
(THE "TRUST") CLASS [_-AM] CERTIFICATES
(THE "PURCHASED CERTIFICATES")
Under penalties of perjury, I, --------------------, declare that, to
the best of my knowledge and belief, the following representations are true,
correct and complete; and
1. That I am the --------------- of ------------------- (the
"Purchaser"), whose taxpayer identification number is ----------- and on behalf
of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Purchased Certificate
representing an interest in the Trust Funds.
3. That the Purchaser is either:
(a) not an employee benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (a "Plan") or any other person (including an
investment manager, a named fiduciary or a trustee of any Plan) acting directly
or indirectly on behalf of, or purchasing any of the Purchased Certificates with
"plan assets" of, any Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. Section 2510.3-101; or
(b) an insurance company, the source of funds to be used by it to
purchase the Purchased Certificates is an "insurance company general account"
(within the meaning of DOL Prohibited Transaction Class Exemption ("PTCE")
95-60), and the purchase is being made in reliance upon the availability of the
exemptive relief afforded under Sections I and III of PTCE 95-60.
IN WITNESS WHEREOF, the Purchaser has caused this instrument
to be duly executed on its behalf, by its duly authorized officer this ---- day
of --------------------, 199---.
[Purchaser]
By:------------------------
Its:
N-1
<PAGE>
<PAGE>
Personally appeared before me ----------------------, known or proved to me to
be the same person who executed the foregoing instrument and to be a
- --------------- of the Purchaser, and acknowledged to me that (s)he executed
the same as his/her free act and deed and as the free act and deed of the
Purchaser.
SUBSCRIBED and SWORN to before me this day of-------------,
19----.
----------------------------------
Notary Public
N-2
<PAGE>
<PAGE>
Exhibit O
FORM OF MORTGAGE POOL INSURANCE POLICY
Copies of the Mortgage Pool Insurance Policy (which has been intentionally
omitted from this filing) may be obtained from PNC Mortgage Securities Corp. or
State Street Bank and Trust Company by contacting,
in the case of PNC Mortgage Securities Corp.,
Richie Moore
Master Servicing Department
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
Telephone: (847) 549-3683
Facsimile: (847) 549-3681
in the case of State Street Bank and Trust Company,
David Duclos
Corporate Trust Department
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02102
Telephone: (617) 664-5436
Facsimile: (617) 664-5368
<PAGE>
<PAGE>
Exhibit P
FORM OF SPECIAL HAZARD INSURANCE POLICY
Copies of the Special Hazard Insurance Policy (which has been intentionally
omitted from this filing) may be obtained from PNC Mortgage Securities Corp. or
State Street Bank and Trust Company by contacting,
in the case of PNC Mortgage Securities Corp.,
Richie Moore
Master Servicing Department
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
Telephone: (847) 549-3683
Facsimile: (847) 549-3681
in the case of State Street Bank and Trust Company,
David Duclos
Corporate Trust Department
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02102
Telephone: (617) 664-5436
Facsimile: (617) 664-5368
