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
November 30, 1998
(date of earliest event reported)
PNC MORTGAGE SECURITIES CORP.
as Depositor and Master Servicer under a
Pooling and Servicing Agreement
dated as of November 1, 1998
providing for the issuance of
$1,943,884,499
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-12
Delaware 333-65911 36-4261435
(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
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 November 1, 1998.
Item 8. Change in Fiscal Year. Not applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not applicable.
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: December 14, 1998.
PNC MORTGAGE SECURITIES CORP.
(Registrant)
By: /s/ Thomas G. Lehmann
-----------------------------------
Thomas G. Lehmann
Vice President
(Authorized Officer)
<PAGE> 1
EXHIBIT 7.1
EXECUTION VERSION
PNC MORTGAGE SECURITIES CORP.,
as Depositor and Master Servicer
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
POOLING AND SERVICING AGREEMENT
$1,967,029,084.27
PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates
Series 1998-12
Cut-Off Date: November 1, 1998
This Pooling and Servicing Agreement, dated and
effective as of November 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 REMIC I
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 REMIC II Regular Interests and the
Class R-2 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 REMIC II Regular Interests and
the Class R-2 Certificates. Thereafter on the Closing Date,
the Company will acquire the Certificates (other than the
Class R-1 and Class R-2 Certificates) from REMIC III as
<PAGE>
<PAGE> 2
consideration for its transfer to REMIC III of the REMIC II
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, (ii) the conveyance to the
Trustee of the REMIC I Regular Interests and the issuance to
the Company of the REMIC II Regular Interests and the Class
R-2 Certificates representing in the aggregate the entire
beneficial interest of REMIC II and (iii) the conveyance to
the Trustee of the REMIC II Regular Interests and the
issuance to the Company of the Certificates (other than the
Class R-1 and Class R-2 Certificates) representing in the
aggregate the entire beneficial interest of REMIC III. 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 REMIC II
Regular Interests and the Class R-2 Certificates. All
covenants and agreements made by the Company and the Trustee
herein with respect to the REMIC II Regular Interests are
for the benefit of the Holders from time to time of the
Certificates (other than the Class R-1 and Class R-2
Certificates). The Company is entering into this Agreement,
and the Trustee is accepting the three separate trusts
created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
The Certificates issued hereunder, other than the
Junior Subordinate Certificates, have been offered for sale
pursuant to a Prospectus, dated November 25, 1998, and a
Prospectus Supplement, dated November 25, 1998, of the
Company (together, the "Prospectus"). The Junior Subordinate
Certificates have been offered for sale pursuant to a
Private Placement Memorandum, dated November 30, 1998. The
Trust Fund, the REMIC II Trust Fund and the REMIC III Trust
Fund created hereunder are collectively intended to be the
"Trust" described in the Prospectus and the Private
Placement Memorandum and the Certificates are intended to be
the "Certificates" described therein. The following tables
set forth the designation, type of interest, initial
Certificate Interest Rate, initial Class Principal Balance,
initial Class Notional Amount and Final Maturity Date for
the REMIC I Regular Interests, the REMIC II Regular
Interests and the Certificates:
<PAGE>
<PAGE> 3
<TABLE>
<CAPTION>
REMIC I
Class Designation
for each REMIC I
Regular Interest
and the Class R-1 Type of Remittance Initial Class Final Maturity
Certificates Interest Rate (1) Principal Balance Date*
<S> <C> <C> <C> <C>
Class Y-1 Regular 7.00% 351,071.67 January 2029
Class Y-2 Regular 6.00% 54,656.39 January 2029
Class Y-3 Regular 7.00% 26,159.04 January 2029
Class Y-4 Regular 6.50% 206,984.72 January 2029
Class Z-1 Regular 7.00% 701,792,260.33 January 2029
Class Z-2 Regular 6.00% 109,842,826.61 January 2029
Class Z-3 Regular 7.00% 52,291,911.96 January 2029
Class Z-4 Regular 6.50% 415,976,743.28 January 2029
Class W Regular 6.25% 681,907,802.00 December 2028
Class I-X-M Regular (2) -------- December 2028
Class II-X-1-M Regular (2) -------- January 2029
Class II-X-2-M Regular (2) -------- January 2029
Class III-X-1-M Regular (2) -------- January 2029
Class C-X-M Regular (2) -------- January 2029
Class IV-X-1-M Regular (2) -------- January 2029
Class IV-X-2-M Regular (2) -------- January 2029
Class I-P-M Regular (3) 154,340.00 December 2028
Class II-P-M Regular (3) 3,718,727.00 January 2029
Class III-P-M Regular (3) 513,104.00 January 2029
Class IV-P-M Regular (3) 192,497.00 January 2029
Class R-1+ Residual 6.50% 50.00 January 2029
</TABLE>
* The Distribution Date in the month following the month
the latest maturing Mortgage Loan in the related Loan
Group (or Loan Groups, as applicable) matures.
+ The Class R-1 Certificates are entitled to receive the
applicable Residual Distribution Amount and any Excess
Liquidation Proceeds.
(1) Interest distributed to the REMIC I Regular Interests
(other than the Class P-M 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 Certificate Interest Rate on the Class
Principal Balance outstanding following the immediately
prior Distribution Date (or with respect to the first
Distribution Date, as of the Closing Date).
(2) Each Class of the Class X-M Regular Interests will
accrue interest on the related Class Notional Amount.
The Class X-M Regular Interests will not be entitled to
<PAGE>
<PAGE> 4
receive any distributions of principal.
(3) The Class P-M Regular Interests will not be entitled to
receive any distributions of interest.
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.
<TABLE>
<CAPTION>
REMIC II
Class Designation
for each REMIC II
Regular Interest
and the Class R-2 Type of Remittance Initial Class Final Maturity
Certificates Interest Rate (1) Principal Balance Date*
<S> <C> <C> <C> <C>
Class I-A-1-L Regular 6.250% 366,069,132.00 December 2028
Class I-A-2-L Regular 5.750% 45,685,500.00 December 2028
Class I-A-3-L Regular 6.250% 64,981,300.00 December 2028
Class I-A-4-L Regular 7.000% 10,319,000.00 December 2028
Class I-A-5-L Regular 7.000% 8,666,000.00 December 2028
Class I-A-6-L Regular 7.000% 5,548,000.00 December 2028
Class I-A-7-L Regular 7.000% 6,685,000.00 December 2028
Class I-A-8-L Regular 7.000% 3,184,000.00 December 2028
Class I-A-9-L Regular 6.250% 81,849,736.00 December 2028
Class I-A-10-L Regular (2) 2,201,280.00 December 2028
Class I-A-11-L Regular 7.000% 3,775,000.00 December 2028
Class I-A-12-L Regular 7.000% 5,903,000.00 December 2028
Class I-A-13-L Regular 6.250% 43,332,213.00 December 2028
Class I-A-14-L Regular 7.000% 4,721,000.00 December 2028
Class II-A-1-L Regular 7.000% 740,336,980.00 January 2029
Class II-A-2-L Regular (2) 14,600,666.00 January 2029
Class III-A-1-L Regular 7.000% 48,619,888.00 January 2029
Class IV-A-1-L Regular 6.500% 68,590,100.00 January 2029
Class IV-A-2-L Regular 6.750% 976,000.00 January 2029
Class IV-A-3-L Regular 6.500% 10,959,100.00 January 2029
Class IV-A-4-L Regular 6.500% 52,250,100.00 January 2029
Class IV-A-5-L Regular 6.475% 227,861,534.00 January 2029
Class IV-A-7-L Regular 6.500% 23,750,100.00 January 2029
Class IV-A-8-L Regular (2) 134,308.00 January 2029
Class IV-A-9-L Regular 6.750% 2,516,000.00 January 2029
Class I-X-L Regular 6.250% (3) ---- December 2028
<PAGE>
<PAGE> 5
Class II-X-1-L Regular 7.000% (3) ---- January 2029
Class II-X-2-L Regular 7.000% (3) ---- January 2029
Class III-X-1-L Regular 7.000% (3) ---- January 2029
Class C-X-L Regular 7.000% (3) ---- January 2029
Class IV-X-1-L Regular 6.500% (3) ---- January 2029
Class IV-X-2-L Regular 6.500% (3) ---- January 2029
Class I-P-L Regular (2) 154,340.00 December 2028
Class II-P-L Regular (2) 3,718,727.00 January 2029
Class III-P-L Regular (2) 513,104.00 January 2029
Class IV-P-L Regular (2) 192,497.00 January 2029
Class I-B-1-L Regular 6.250% 14,323,305.00 December 2028
Class I-B-2-L Regular 6.250% 6,138,559.00 December 2028
Class I-B-3-L Regular 6.250% 2,728,249.00 December 2028
Class I-B-4-L Regular 6.250% 2,387,217.00 December 2028
Class I-B-5-L Regular 6.250% 1,364,125.00 December 2028
Class I-B-6-L Regular 6.250% 2,046,186.00 December 2028
Class C-B-1-L Regular Variable (4) 41,761,425.00 January 2029
Class C-B-2-L Regular Variable (4) 19,916,987.00 January 2029
Class C-B-3-L Regular Variable (4) 10,922,219.00 January 2029
Class C-B-4-L Regular Variable (4) 7,067,318.00 January 2029
Class C-B-5-L Regular Variable (4) 3,854,900.00 January 2029
Class C-B-6-L Regular Variable (4) 6,424,839.46 January 2029
Class R-2+ Residual 6.500% 50.00 January 2029
</TABLE>
* The Distribution Date in the month following the month
the latest maturing Mortgage Loan in the related Loan
Group (or Loan Groups) matures.
+ The Class R-2 Certificates are entitled to receive the
applicable Residual Distribution Amount.
(1) Interest distributed to the REMIC II Regular Interests
(other than the Class I-A-10-L, Class II-A-2-L, Class
IV-A-8-L and Class P-L Regular Interests, which will
not be entitled to receive any distributions of
interest) and the Class R-2 Certificates on each
Distribution Date will have accrued at the applicable
per annum Certificate Interest 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-10-L, Class II-A-2-L, Class IV-A-8-L and
Class P-L Regular Interests shall not be entitled to
receive any distributions of interest.
(3) Each of the Class X-L Regular Interests shall accrue
interest on the related Class Notional Amount. The
Class X-L Regular Interests shall not be entitled to
receive any distributions of principal.
(4) The Certificate Interest Rate on the Group C-B-L
Regular Interests shall equal, on any Distribution
Date, the weighted average of the Certificate Interest
Rates on the Class Y-1, Class Y-2, Class Y-3 and Class
Y-4 Regular Interests.
<PAGE>
<PAGE> 6
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 REMIC II Regular Interests 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.
<TABLE>
<CAPTION>
REMIC III
Class Designation
for each REMIC III
Regular Interest
and the Class R-3 Type of Remittance Initial Class Final Maturity
Certificates Interest Rate (1) Principal Balance Date*
<S> <C> <C> <C> <C>
Class I-A-1 Regular 6.250% 366,069,132.00 December 2028
Class I-A-2 Regular 5.750% 45,685,500.00 December 2028
Class I-A-3 Regular 6.250% 64,981,300.00 December 2028
Class I-A-4 Regular 7.000% 10,319,000.00 December 2028
Class I-A-5 Regular 7.000% 8,666,000.00 December 2028
Class I-A-6 Regular 7.000% 5,548,000.00 December 2028
Class I-A-7 Regular 7.000% 6,685,000.00 December 2028
Class I-A-8 Regular 7.000% 3,184,000.00 December 2028
Class I-A-9 Regular 6.250% 81,849,736.00 December 2028
Class I-A-10 Regular (2) 2,201,280.00 December 2028
Class I-A-11 Regular 7.000% 3,775,000.00 December 2028
Class I-A-12 Regular 7.000% 5,903,000.00 December 2028
Class I-A-13 Regular 6.250% 43,332,213.00 December 2028
Class I-A-14 Regular 7.000% 4,721,000.00 December 2028
Class II-A-1 Regular 7.000% 740,336,980.00 January 2029
Class II-A-2 Regular (2) 14,600,666.00 January 2029
Class III-A-1 Regular 7.000% 48,619,888.00 January 2029
Class IV-A-1 Regular 6.500% 68,590,100.00 January 2029
Class IV-A-2 Regular 6.750% 976,000.00 January 2029
Class IV-A-3 Regular 6.500% 10,959,100.00 January 2029
Class IV-A-4 Regular 6.500% 52,250,100.00 January 2029
Class IV-A-5 Regular 6.475% 227,861,534.00 January 2029
Class IV-A-6 Regular 6.500% (3) -- January 2029
Class IV-A-7 Regular 6.100% 23,750,100.00 January 2029
Class IV-A-8 Regular (2) 134,308.00 January 2029
Class IV-A-9 Regular 6.750% 2,516,000.00 January 2029
Class I-X Regular 6.250% (3) -- December 2028
Class II-X-1 Regular 7.000% (3) -- January 2029
<PAGE>
<PAGE> 7
Class II-X-2 Regular 7.000% (3) -- January 2029
Class III-X-1 Regular 7.000% (3) -- January 2029
Class C-X Regular 7.000% (3) -- January 2029
Class IV-X-1 Regular 6.500% (3) -- January 2029
Class IV-X-2 Regular 6.500% (3) -- January 2029
Class I-P Regular (2) 154,340.00 December 2028
Class II-P Regular (2) 3,718,727.00 January 2029
Class III-P Regular (2) 513,104.00 January 2029
Class IV-P Regular (2) 192,497.00 January 2029
Class I-B-1 Regular 6.250% 14,323,305.00 December 2028
Class I-B-2 Regular 6.250% 6,138,559.00 December 2028
Class I-B-3 Regular 6.250% 2,728,249.00 December 2028
Class I-B-4 Regular 6.250% 2,387,217.00 December 2028
Class I-B-5 Regular 6.250% 1,364,125.00 December 2028
Class I-B-6 Regular 6.250% 2,046,186.00 December 2028
Class C-B-1 Regular Variable (4) 41,761,425.00 January 2029
Class C-B-2 Regular Variable (4) 19,916,987.00 January 2029
Class C-B-3 Regular Variable (4) 10,922,219.00 January 2029
Class C-B-4 Regular Variable (4) 7,067,318.00 January 2029
Class C-B-5 Regular Variable (4) 3,854,900.00 January 2029
Class C-B-6 Regular Variable (4) 6,424,839.46 January 2029
Class R-3+ Residual 6.500% 50.00 January 2029
</TABLE>
* The Distribution Date in the month following the month
the latest maturing Mortgage Loan in the related Loan
Group (or Loan Groups) matures.
+ The Class R-3 Certificates are entitled to receive the
applicable Residual Distribution Amount.
(1) Interest distributed to the Certificates (other than
the Class I-A-10, Class II-A-2, Class IV-A-8 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
Certificate Interest 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-10, Class II-A-2, Class IV-A-8 and Class
P Certificates shall not be entitled to receive any
distributions of interest.
(3) Each of the Class X Certificates and the Class IV-A-6
Certificates shall accrue interest on the related
Class Notional Amount. The Class X and Class IV-A-6
Certificates shall not be entitled to receive any
distributions of principal.
(4) The Certificate Interest Rate on each Class of the
Group C-B Certificates shall equal the Certificate
Interest Rate on the Corresponding Class of Group C-B-L
Regular Interests.
<PAGE>
<PAGE> 8
As provided herein, with respect to REMIC III, the
Company will cause an election to be made on behalf of REMIC
III to be treated for federal income tax purposes as a
REMIC. The Certificates (other than the Class R-1, Class R-2
and Class R-3 Certificates) will be designated regular
interests in REMIC III, and the Class R-3 Certificates will
be designated the sole class of residual interest in REMIC
III, for purposes of the REMIC Provisions. As of the Cut-
Off Date, the Mortgage Loans have an aggregate Principal
Balance of $1,967,029,087.14 and the Certificates have an
Aggregate Certificate Principal Balance of
$1,967,029,084.27.
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
REMIC II Regular Interests issued hereunder as hereinafter
provided;
WHEREAS, the Company has been duly authorized to (i)
create a trust ("REMIC III") to hold the REMIC II Regular
Interests and (ii) sell undivided beneficial ownership
interests in REMIC III 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
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<PAGE> 9
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:
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 X, Class I-A-4, Class I-A-
5, Class I-A-6, Class I-A-7, Class I-A-8, Class I-A-11,
Class I-A-12, Class I-A-14, Class IV-A-2, Class IV-A-6,
Class IV-A-9 and Residual Certificates), an initial
Certificate Principal Balance equal to $25,000 and integral
multiples of $1 in excess thereof. With respect to the
Class I-A-4, Class I-A-5, Class I-A-6, Class I-A-7, Class I-
A-8, Class I-A-11, Class I-A-12, Class I-A-14, Class IV-A-2
and Class IV-A-9 Certificates, an initial Certificate
Principal Balance equal to $1,000 and integral multiples of
$1 in excess thereof. With respect to the Class X and Class
IV-A-6 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
<PAGE>
<PAGE> 10
Interest equal to 99.99%.
Balloon Loan: Any Mortgage Loan which, by its terms,
does not fully amortize the principal balance thereof by its
stated maturity and thus requires a payment at the stated
maturity larger than the monthly payments due thereunder.
Bankruptcy Coverage: The Group I Bankruptcy Coverage
and/or the Combined Bankruptcy Coverage, as applicable.
Bankruptcy Coverage Initial Amount: With respect to
Loan Group I, $230,001 and with respect to Loan Group II,
Loan Group III and Loan Group IV, $473,987.
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.
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 the Certificate Insurer (with respect to
matters hereunder affecting the Certificate Insurer) or
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
<PAGE>
<PAGE> 11
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, Group IV, Group C-B, Class C-X 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 and B hereto. The additional matter appearing in
Exhibit H shall be deemed incorporated into Exhibit A as
though set forth at the end of such Exhibit.
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
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<PAGE> 12
to each of such Loan Groups and Subgroups shall be accounted
for separately. Funds in the Certificate Account may be
invested in Eligible Investments pursuant to Section 3.04(b)
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, Section 4.04
and Section 4.05.
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. For so long as no Certificate Insurer Default
exists (and whether or not any payments with respect to
Deficiency Amounts or Preference Amounts have been made),
the Certificate Insurer shall be deemed to be the sole
Holder of all outstanding Insured Certificates, subject to
Section 3.22; provided, that the Certificate Insurer shall
have no power without the consent of the Owner of each
Certificate affected thereby to: (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 Insured Certificateholder's Percentage Interest,
the Certificate Interest Rate or the Termination Payment
with respect to any of the Insured Certificates; (ii) reduce
the percentage of Percentage Interests specified in Section
10.01 which are required to amend this Agreement; (iii)
create or permit the creation of any lien against any part
of the REMIC I Trust Fund, the REMIC II Trust Fund or the
REMIC III Trust Fund; (iv) modify any provision in any way
which would permit an earlier retirement of the
Certificates; or (v) amend this definition of
"Certificateholder" or "Holder". 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. With respect to the REMIC II Regular Interests, the
owner of the REMIC II Regular Interests, which as of the
Closing Date shall be the Trustee.
Certificate Group: The Group I, Group II, Group III,
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<PAGE> 13
Group IV and Group C-B Certificates.
Certificate Insurance Policy: The Certificate Guaranty
Insurance Policy No. 28048 issued by the Certificate Insurer
in respect of the Class IV-A-5 Certificates, a copy of which
is attached hereto as Exhibit K.
Certificate Insurer: MBIA Insurance Corporation or its
successors in interest.
Certificate Insurer Default: The existence and
continuance of any of the following: (a) a failure by the
Certificate Insurer to make a payment required under the
Certificate Insurance Policy in accordance with its terms;
(b) the entry of a decree or order of a court or agency
having jurisdiction in respect of the Certificate Insurer in
an involuntary case under any present or future Federal or
state bankruptcy, insolvency or similar law appointing a
conservator or receiver or liquidator or other similar
official of the Certificate Insurer or of any substantial
part of its property, or the entering of an order for the
winding up or liquidation of the affairs of the Certificate
Insurer and the continuance of any such decree or order
undischarged or unstayed and in force for a period of 90
consecutive days; (c) the Certificate Insurer shall consent
to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency,
readjustment of debt, marshaling of assets and liabilities
or similar proceedings of or relating to the Certificate
Insurer or of or relating to all or substantially all of its
property; or (d) the Certificate Insurer shall admit in
writing its inability to pay its debts generally as they
become due, file a petition to take advantage of or
otherwise voluntarily commence a case or proceeding under
any applicable bankruptcy, insolvency, reorganization or
other similar statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its
obligations.
Certificate Insurer Premium: The meaning set forth in
the Insurance Agreement.
Certificate Interest Rate: For each Class of
Certificates, REMIC I Regular Interests and REMIC II Regular
Interests, the per annum rate set forth as the Certificate
Interest Rate for such Class in the Preliminary Statement
hereto.
Certificate Principal Balance: For each Certificate of
any Class, the portion of the related Class Principal
Balance, if any, represented by such Certificate.
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<PAGE> 14
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, all REMIC II Regular Interests or the
Class R-2 Certificates having the same priority and rights
to payments on the REMIC I Regular Interests from the REMIC
II Available Distribution Amount and all REMIC III Regular
Interests or the Class R-3 Certificates having the same
priority and rights to payments on the REMIC II Regular
Interests from the REMIC III Available Distribution Amount,
as applicable, which REMIC I Regular Interests, REMIC II
Regular Interests, REMIC III Regular Interests and Residual
Certificates, 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 and B. 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", each Class of
REMIC II Regular Interests and the Class R-2 Certificates
shall be entitled to receive the amounts allocated to such
Class pursuant to the definition of "REMIC II Distribution
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" and each Class
of Certificates (other than the Class R-1 and Class R-2
Certificates) shall be entitled to receive the amounts
allocated to such Class pursuant to the definition of "REMIC
III Distribution Amount" only to the extent of the REMIC III
Available Distribution Amount for such Distribution Date
remaining after distributions in accordance with prior
clauses of the definition of "REMIC III Distribution
Amount".
Class A Certificates: The Group I-A, Group II-A, Class
III-A-1 and Group IV-A Certificates.
Class A-L Regular Interests: The Group I-A-L, Group II-
A-L, Class III-A-1-L and Group IV-A-L Regular Interests.
Class B Certificates: The Group I-B and Group C-B
Certificates.
<PAGE>
<PAGE> 15
Class B-L Regular Interests: The Group I-B-L and Group
C-B-L Regular Interests.
Class C-B-1 Certificates: The Certificates designated
as "Class C-B-1" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class C-B-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as specified herein.
Class C-B-2 Certificates: The Certificates designated
as "Class C-B-2" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class C-B-2-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as specified herein.
Class C-B-3 Certificates: The Certificates designated
as "Class C-B-3" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class C-B-3-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as specified herein.
Class C-B-4 Certificates: The Certificates designated
as "Class C-B-4" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class C-B-4-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as specified herein.
Class C-B-5 Certificates: The Certificates designated
as "Class C-B-5" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class C-B-5-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as specified herein.
Class C-B-6 Certificates: The Certificates designated
as "Class C-B-6" on the face thereof in substantially the
form attached hereto as Exhibit A.
<PAGE>
<PAGE> 16
Class C-B-6-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as specified herein.
Class C-X Certificates: The Certificates designated as
"Class C-X" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class C-X Group II 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 Class C-X 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
Class C-X Group II Premium Rate Mortgage Loans as of such
Due Date and the denominator of which is 7.000%.
Class C-X Group II Premium Rate Mortgage Loans: The
Subgroup II-3 Loans having Pass-Through Rates in excess of
6.000% per annum.
Class C-X Group III 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 Class C-X 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
Class C-X Group III Premium Rate Mortgage Loans as of such
Due Date and the denominator of which is 7.000%.
Class C-X Group III Premium Rate Mortgage Loans: The
Subgroup III-2 Loans having Pass-Through Rates in excess of
7.000% per annum.
Class C-X Notional Amount: With respect to any
Distribution Date, the sum of the Class C-X Group II
Notional Amount and the Class C-X Group III Notional Amount.
Class C-X-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class C-X-M Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC I
<PAGE>
<PAGE> 17
which constitutes a REMIC I Regular Interest and is entitled
to distributions as set forth herein.
Class P Certificates: The Class I-P, Class II-P, Class
III-P and Class IV-P Certificates.
Class P-L Regular Interests: The Class I-P-L, Class II-
P-L, Class III-P-L and Class IV-P-L Regular Interests.
Class P-M Regular Interests: The Class I-P-M, Class II-
P-M, Class III-P-M and Class IV-P-M Regular Interests.
Class P Fraction: Any of the Class I-P, Class II-P,
Class III-P or Class IV-P Fractions, as applicable.
Class P Mortgage Loan: Any of the Class I-P, Class II-
P, Class III-P or the Class IV-P Mortgage Loans.
Class X Certificates: The Class I-X, Class II-X, Class
III-X, Class C-X and Class IV-X Certificates.
Class X-L Regular Interests: The Class I-X-L, Class II-
X-L, Class III-X-L, Class C-X-L and Class IV-X-L Regular
Interests.
Class X-M Regular Interests: The Class I-X-M, Class II-
X-M, Class III-X-M, Class C-X-M and Class IV-X-M Regular
Interests.
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.
Class I-A-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
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.
Class I-A-2-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-3 Adjusted Percentage: For any Distribution
Date occurring prior to the Distribution Date in December
2003, 0%, and for the December 2003 Distribution Date and
any Distribution Date thereafter, the Class I-A-3
Percentage.
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<PAGE> 18
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.
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 Liquidation Principal with respect to such
Mortgage Loan.
Class I-A-3 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-L Regular Interests 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-L Regular Interests 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), 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-3-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
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.
Class I-A-4-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
<PAGE>
<PAGE> 19
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
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.
Class I-A-5-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
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.
Class I-A-6-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
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.
Class I-A-7-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
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.
Class I-A-8-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-9 Certificates: The Certificates designated
as "Class I-A-9" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-A-9-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-10 Certificates: The Certificates designated
as "Class I-A-10" on the face thereof in substantially the
form attached hereto as Exhibit A.
<PAGE>
<PAGE> 20
Class I-A-10-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-11 Certificates: The Certificates designated
as "Class I-A-11" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-A-11-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-12 Certificates: The Certificates designated
as "Class I-A-12" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-A-12-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-13 Certificates: The Certificates designated
as "Class I-A-13" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-A-13-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-14 Certificates: The Certificates designated
as "Class I-A-14" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-A-14-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-A-14 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-14 Certificateholders or
any other account serving a similar function acceptable to
<PAGE>
<PAGE> 21
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.
Class I-B-1 Certificates: The Certificates designated
as "Class I-B-1" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-B-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-B-2 Certificates: The Certificates designated
as "Class I-B-2" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-B-2-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-B-3 Certificates: The Certificates designated
as "Class I-B-3" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-B-3-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-B-4 Certificates: The Certificates designated
as "Class I-B-4" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-B-4-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-B-5 Certificates: The Certificates designated
as "Class I-B-5" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class I-B-5-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-B-6 Certificates: The Certificates designated
as "Class I-B-6" on the face thereof in substantially the
form attached hereto as Exhibit A.
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<PAGE> 22
Class I-B-6-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-P Certificates: The Certificates designated as
"Class I-P" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class I-P Fraction: For each Class I-P Mortgage Loan, a
fraction, the numerator of which is 6.250% less the Pass-
Through Rate on such Class I-P Mortgage Loan and the
denominator of which is 6.250%.
Class I-P-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-P-M 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 6.250% 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.
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 6.250%.
Class I-X-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class I-X-M 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.
<PAGE>
<PAGE> 23
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.
Class II-A-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II 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.
Class II-A-2 Fraction: With respect to any Subgroup II-
3 Loan, 1/7.
Class II-A-2 Principal Distribution Amount: For any
Distribution Date, the Subgroup II-3 Senior Principal
Distribution Amount multiplied by 1/7.
Notwithstanding the foregoing,
(X) for any Distribution Date on which there has been
an increase (a "Component Increase") in the Senior Component
Balance for a Subgroup (each, an "Overcollateralized
Subgroup") in respect of Realized Losses in another Subgroup
(an "Undercollateralized Subgroup") pursuant to the seventh
paragraph of the definition of "Realized Loss", the Class II-
A-2 Principal Distribution Amount calculated in accordance
with the first paragraph of this definition shall be
adjusted as follows: (A) if the Overcollateralized Subgroup
is Subgroup II-3, then the Class II-A-2 Principal
Distribution Amount shall be reduced by the product of (x)
the Class II-A-2 Fraction and (y) the amount of the
applicable Component Increase, and (B) if the
Overcollateralized Subgroup is Subgroup II-1 or Subgroup II-
2, then the Class II-A-2 Principal Distribution Amount shall
be increased by the product of (x) the Class II-A-2 Fraction
and (y) the amount of the applicable Component Increase (the
net reduction or net increase in the Class II-A-2 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 II-A-2 Principal
Distribution Amount calculated in accordance with the first
paragraph of this definition, then the Class II-A-2
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 II
Senior Principal Distribution Amount (less the Class II-A-2
<PAGE>
<PAGE> 24
Principal Distribution Amount calculated in accordance with
the first paragraph of this definition), then the Class II-A-
2 Principal Distribution Amount shall equal the Group II
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, and
(Y) for any Distribution Date upon which the REMIC II
Available Distribution Amount for Loan Group II is increased
by (A) the Principal Transfer Amount pursuant to the
definition of "REMIC II Distribution Amount" herein or (B)
any payment of principal from the Loan Group related to the
Class A-L Regular Interests that have been paid in full as
set forth in clause (X) of the last sentence of paragraph
(I) of the definition of "REMIC II Distribution Amount"
herein, the Class II-A-2 Principal Distribution Amount
shall be increased by an amount equal to the product of (i)
the sum of the Principal Transfer Amount and the amount
specified in clause (B) above, in each case payable to Loan
Group II on such Distribution Date and (ii) a fraction, the
numerator of which is 1/7 of the Subgroup II-3 Senior
Component Balance and the denominator of which is the sum of
the Subgroup II-1 Senior Component Balance, the Subgroup II-
2 Senior Component Balance and the Subgroup II-3 Senior
Component Balance.
Class II-A-2-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II 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.
Class II-P Fraction: For each Class II-P Mortgage Loan,
a fraction, the numerator of which is 7.000% less the Pass-
Through Rate on such Class II-P Mortgage Loan and the
denominator of which is 7.000%.
Class II-P Mortgage Loan: Any Group II Loan with a Pass-
Through Rate of less than 7.000% per annum.
Class II-P-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class II-P-M 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.
<PAGE>
<PAGE> 25
Class II-X Certificates: The Class II-X-1 and Class II-
X-2 Certificates.
Class II-X-L Regular Interests: The Class II-X-1-L and
Class II-X-2-L Regular Interests.
Class II-X-M Regular Interests: The Class II-X-1-M and
Class II-X-2-M Regular Interests.
Class II-X-1 Certificates: The Certificates designated
as "Class II-X-1" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class II-X-1 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 Class II-X-1 Premium Rate Mortgage Loans
and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Class II-X-1
Premium Rate Mortgage Loans as of such Due Date and the
denominator of which is 7.000%.
Class II-X-1 Premium Rate Mortgage Loans: The Subgroup
II-1 Loans having Pass-Through Rates in excess of 7.000% per
annum.
Class II-X-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class II-X-1-M 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-2 Certificates: The Certificates designated
as "Class II-X-2" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class II-X-2 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 Class II-X-2 Premium Rate Mortgage Loans
and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Class II-X-2
<PAGE>
<PAGE> 26
Premium Rate Mortgage Loans as of such Due Date and the
denominator of which is 7.000%.
Class II-X-2 Premium Rate Mortgage Loans: The Subgroup
II-2 Loans having Pass-Through Rates in excess of 7.000% per
annum.
Class II-X-2-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class II-X-2-M 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.
Class III-A-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class III-P Certificates: The Certificates designated
as "Class III-P" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class III-P Fraction: For each Class III-P Mortgage
Loan, a fraction, the numerator of which is 7.000% less the
Pass-Through Rate on such Class III-P Mortgage Loan and the
denominator of which is 7.000%.
Class III-P Mortgage Loan: Any Group III Loan with a
Pass-Through Rate of less than 7.000% per annum.
Class III-P-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class III-P-M 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 Class III-X-1
Certificates.
Class III-X-L Regular Interests: The Class III-X-1-L
<PAGE>
<PAGE> 27
Regular Interests.
Class III-X-M Regular Interests: The Class III-X-1-M
Regular Interests.
Class III-X-1 Certificates: The Certificates designated
as "Class III-X-1" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class III-X-1 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 Class III-X-1 Premium Rate Mortgage Loans
and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Class III-X-1
Premium Rate Mortgage Loans as of such Due Date and the
denominator of which is 7.000%.
Class III-X-1 Premium Rate Mortgage Loans: The Subgroup
III-1 Loans having Pass-Through Rates in excess of 7.000%
per annum.
Class III-X-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class III-X-1-M 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 IV-A-1 Certificates: The Certificates designated
as "Class IV-A-1" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-A-2 Certificates: The Certificates designated
as "Class IV-A-2" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-2-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
<PAGE>
<PAGE> 28
Class IV-A-3 Adjusted Percentage: For any Distribution
Date occurring prior to the Distribution Date in December
2003, 0%, and for the December 2003 Distribution Date and
any Distribution Date thereafter, the Class IV-A-3
Percentage.
Class IV-A-3 Certificates: The Certificates designated
as "Class IV-A-3" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-3 Liquidation Amount: The aggregate, for
each Group IV 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 IV-A-3
Percentage of the Principal Balance of such Mortgage Loan
(exclusive of the Class IV-P Fraction thereof, with respect
to any Class IV-P Mortgage Loan) and (ii) the Class IV-A-3
Percentage on any Distribution Date occurring prior to the
fifth anniversary of the first Distribution Date, and the
Class IV-A-3 Prepayment Percentage on the fifth anniversary
of the first Distribution Date and each Distribution Date
thereafter, in each case, of the Liquidation Principal with
respect to such Mortgage Loan.
Class IV-A-3 Priority Amount: For any Distribution
Date, the sum of (i) the Class IV-A-3 Adjusted Percentage of
the Principal Payment Amount for Loan Group IV (exclusive of
the portion thereof attributable to principal distributions
to the Class IV-P-L Regular Interests pursuant to clause
(I)(d)(i) of the definition of "REMIC II Distribution
Amount"), (ii) the Class IV-A-3 Prepayment Percentage of the
Principal Prepayment Amount for Loan Group IV (exclusive of
the portion thereof attributable to principal distributions
to the Class IV-P-L Regular Interests pursuant to clause
(I)(d)(i) of the definition of "REMIC II Distribution
Amount") and (iii) the Class IV-A-3 Liquidation Amount.
Class IV-A-3 Percentage: For any Distribution Date, the
lesser of (i) 100% and (ii) the Class IV-A-3 Principal
Balance divided by the aggregate Principal Balance of the
Group IV Loans (less the Class IV-P Principal Balance), in
each case immediately prior to such Distribution Date.
Class IV-A-3 Prepayment Percentage: For any
Distribution Date, the product of the Class IV-A-3
Percentage and the Step Down Percentage.
Class IV-A-3-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
<PAGE>
<PAGE> 29
Class IV-A-4 Certificates: The Certificates designated
as "Class IV-A-4" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-4-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-A-5 Certificates: The Certificates designated
as "Class IV-A-5" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-5-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-A-5 Reimbursement Amount: The sum of (a) all
amounts previously paid by the Certificate Insurer under the
Certificate Insurance Policy which have not been previously
reimbursed and (b) interest on the foregoing at the Late
Payment Rate from the date such amount was paid by the
Certificate Insurer until paid in full.
Class IV-A-6 Certificates: The Certificates designated
as "Class IV-A-6" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-6 Notional Amount: For any Distribution
Date, the Class I-A-7 Principal Balance immediately prior to
such Distribution Date multiplied by 40/650.
Class IV-A-7 Certificates: The Certificates designated
as "Class IV-A-7" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-7-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-A-8 Certificates: The Certificates designated
as "Class IV-A-8" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-8-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-A-9 Certificates: The Certificates designated
<PAGE>
<PAGE> 30
as "Class IV-A-9" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-A-9-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-P Certificates: The Certificates designated as
"Class IV-P" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class IV-P Fraction: For each Class IV-P Mortgage Loan,
a fraction, the numerator of which is 6.500% less the Pass-
Through Rate on such Class IV-P Mortgage Loan and the
denominator of which is 6.500%.
Class IV-P Mortgage Loan: Any Group IV Loan with a Pass-
Through Rate of less than 6.500% per annum.
Class IV-P-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-P-M 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 IV-X Certificates: The Class IV-X-1 and Class IV-
X-2 Certificates.
Class IV-X-L Regular Interests: The Class IV-X-1-L and
Class IV-X-2-L Regular Interests.
Class IV-X-M Regular Interests: The Class IV-X-1-M and
Class IV-X-2-M Regular Interests.
Class IV-X-1 Certificates: The Certificates designated
as "Class IV-X-1" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-X-1 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 Class IV-X-1 Premium Rate Mortgage Loans
and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Class IV-X-1
<PAGE>
<PAGE> 31
Premium Rate Mortgage Loans as of such Due Date and the
denominator of which is 6.500%.
Class IV-X-1 Premium Rate Mortgage Loans: The Subgroup
IV-1 Loans having Pass-Through Rates in excess of 6.500% per
annum.
Class IV-X-1-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-X-1-M 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 IV-X-2 Certificates: The Certificates designated
as "Class IV-X-2" on the face thereof in substantially the
form attached hereto as Exhibit A.
Class IV-X-2 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 Class IV-X-2 Premium Rate Mortgage Loans
and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Class IV-X-2
Premium Rate Mortgage Loans as of such Due Date and the
denominator of which is 6.500%.
Class IV-X-2 Premium Rate Mortgage Loans: The Subgroup
IV-2 Loans having Pass-Through Rates in excess of 6.500% per
annum.
Class IV-X-2-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class IV-X-2-M 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 Notional Amount: With respect to any of the
Class X Certificates, the Class X-L Regular Interests, the
Class X-M Regular Interest and the Class IV-A-6
Certificates, the related notional amount for any such
Class, as specified herein (i.e. the "Class Notional Amount"
<PAGE>
<PAGE> 32
for the Class I-X Certificates, the Class I-X-L Regular
Interests and the Class I-X-M Regular Interests is the Class
I-X Notional Amount).
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, the
REMIC I Regular Interests or the REMIC II 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
definitions of "REMIC I Distribution Amount", "REMIC II
Distribution Amount" and "REMIC III Distribution Amount".
Notwithstanding the foregoing, any amounts distributed in
respect of losses pursuant to paragraph (I)(a)(vi) or
(I)(e)(ii) of the definition of "REMIC II Distribution
Amount" shall not cause a further reduction in the Class
Principal Balances of the Class P-L Regular Interests and
any amounts distributed in respect of losses pursuant to
paragraph (I)(a)(xxv) or (I)(e)(xxii) of the definition of
"REMIC II Distribution Amount" shall not cause a further
reduction in the Class Principal Balances of the Group I-B-L
Regular Interests or the Group C-B-L Regular Interests, as
applicable. 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 I-A-1-L Regular Interests shall be referred to as the
"Class I-A-1-L Principal Balance" and so on. The Class
Principal Balances for the Class X Certificates, the Class X-
L Regular Interests, the Class X-M Regular Interests and the
Class IV-A-6 Certificates shall each be zero. Exclusively
for the purpose of determining any subrogation rights of the
Certificate Insurer arising under Section 3.22 hereof,
"Class Principal Balance" of the Class IV-A-5 Certificates
shall not be reduced by the amount of any payments made by
the Certificate Insurer in respect of principal on such
Certificates under the Certificate Insurance Policy, except
to the extent such payments have been reimbursed to the
Certificate Insurer pursuant to the provisions of this
Agreement.
<PAGE>
<PAGE> 33
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 B, which have been designated as
the single class of "residual interest" in REMIC II pursuant
to Section 2.05.
Class R-3 Certificates: The Certificates designated as
"Class R-3" on the face thereof in substantially the form
attached hereto as Exhibit A, which have been designated as
the single class of "residual interest" in REMIC III
pursuant to Section 2.07.
Class R-3-L Regular Interest: The uncertificated
partial undivided beneficial ownership interest in REMIC II
which constitutes a REMIC II Regular Interest and is
entitled to distributions as set forth herein.
Class W 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 Regular Interests: The Class Y-1, Class Y-2 and
Class Y-3 Regular Interests.
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-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-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-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.
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<PAGE> 34
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-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-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 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 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:
PIIB = the Subgroup II-3 Subordinate Component Balance
after the allocation of Realized Losses and
distributions of principal on such Distribution Date.
PIIIB = the sum of the Subgroup II-1 Subordinate Component
Balance, the Subgroup II-2 Subordinate Component
Balance and the Group III Subordinate Balance after
the allocation of Realized Losses and distributions of
principal on such Distribution Date.
PIVB = the Group IV Subordinate Balance after the
allocation of Realized Losses and distributions of
principal on such Distribution Date.
R = the Certificate Interest Rate on the Group C-B
Certificates = (6.0%PIIB + 7%PIIIB + 6.5%PIVB)/(PIIB + PIIIB
+ PIVB)
R1 = the weighted average of the Subgroup II-3 and Group IV
Pass-Through Rates
<PAGE>
<PAGE> 35
= (6.0% (P2 - P2) + 6.5%
(P4 - DeltaP4))/(P2 - DeltaP2 + P4 - DeltaP4)
R2 = the weighted average of the Subgroup II-1, Subgroup II-
2, Group III and Group IV Pass-Through Rates
= (7% (P1 + P3 - DeltaP1 - DeltaP3) + 6.5%
(P4 - DeltaP4))/(P1 - DeltaP1 + P3 - DeltaP3 + P4
- - DeltaP4)
r1 = the weighted average of the Class Y-2 and Class Y-4
Certificate Interest Rates
= (6.0% Y2 + 6.5% Y4)/(Y2 + Y4)
r2 = the weighted average of the Class Y-1, Class Y-3 and
Class Y-4 Certificate Interest Rates
= (7% (Y1 + Y3)+ 6.5% Y4)/(Y1 + Y3 + Y4)
Y1 = the principal balance of the Class Y-1 Regular
Interests after distributions on the prior Distribution
Date.
Y2 = the principal balance of the Class Y-2 Regular
Interests after distributions on the prior Distribution
Date.
Y3 = the principal balance of the Class Y-3 Regular
Interests after distributions on the prior Distribution
Date.
Y4 = the principal balance of the Class Y-4 Regular
Interests after distributions on the prior Distribution
Date.
DeltaY1 = the Class Y-1 Principal Reduction Amount.
DeltaY2 = the Class Y-2 Principal Reduction Amount.
DeltaY3 = the Class Y-3 Principal Reduction Amount.
DeltaY4 = the Class Y-4 Principal Reduction Amount.
P1 = the aggregate principal balance of the Class Y-1
and Class Z-1 Regular Interests after distributions on
the prior Distribution Date.
P2 = the aggregate principal balance of the Class Y-2
and Class Z-2 Regular Interests after distributions on
the prior Distribution Date.
P3 = the aggregate principal balance of the Class Y-3
and Class Z-3 Regular Interests after distributions on
the prior Distribution Date.
<PAGE>
<PAGE> 36
P4 = the aggregate principal balance of the Class Y-4
and Class Z-4 Regular Interests after distributions on
the prior Distribution Date.
DeltaP1 = the aggregate of the Class Y-1 and Class Z-1
Principal Reduction Amounts.
DeltaP2= the aggregate of the Class Y-2 and Class Z-2
Principal Reduction Amounts.
DeltaP3 = the aggregate of the Class Y-3 and Class Z-3
Principal Reduction Amounts.
DeltaP4 = the aggregate of the Class Y-4 and Class Z-4
Principal Reduction Amounts.
P9 = DIFF_P1 + P3
P9 = DIFF_P1 + DIFF_P3.
Y9 = Y1 + Y3
DIFF_Y9 = DIFF_Y1 + DIFF_Y3.
If DIFF_P1 = P1, DIFF_Y1 = Y1 and DIFF_Y3 = DIFF_Y9 -
DIFF_Y1.
If DIFF_P3 = P3, DIFF_Y3 = Y3 and DIFF_Y1 = DIFF_Y9 -
DIFF_Y3.
Otherwise, DIFF_Y1 = DIFF_Y9 (DIFF_P1 /DIFF_P9) and DIFF_Y3
= DIFF_Y9 (DIFF_P3 /DIFF_P9).
alpha= .0005
gamma1 = (R - R1)/(7% - R). If R6.5%, gamma1 is a non-
negative number unless its denominator is zero, in
which event it is undefined.
gamma2 = (R - 6.0%)/( R2 - R). If R<6.5%, gamma2 is a non-
negative number.
If gamma1 is undefined, DeltaY2 = Y2, DeltaY9 =
(Y9/P9)DeltaP9, and DeltaY4 = Y4.
If gamma2 is zero, DeltaY9 = Y9, DeltaY2 = (Y2/P2)DeltaP2,
and DeltaY4 = Y4.
In the remaining situations, DeltaY2, DeltaY9 and DeltaY4
shall be defined as follows:
I. If R6.5% and r1 R1, make the following additional
<PAGE>
<PAGE> 37
definitions:
kDeltaY4 = ((6.0% - R1)/(6.5% - R1))Y2 + Y4
kDeltaY4 is a number between Y4 and 0 such that (6.0%Y2 +
6.5%( Y4.- kDeltaY4))/(Y2 + Y4.- kDeltaY4) = R1.
Y8 = Y2 + Y4.- kDeltaY4
P8 = P2 + P4.
DIFF_Y8 = DIFF_Y2 + DIFF_Y4.- kDeltaY4
1. If Y9 - alpha(P9 - DeltaP9) 0, Y8- alpha(P8 - DeltaP8)
0, and gamma1(P8 - DeltaP8) < (P9 - DeltaP9), DeltaY9 = Y9 -
alphagamma1(P8 - DeltaP8) and DeltaY8 = Y8 - alpha(P8 -
DeltaP8).
2. If Y9 - alpha(P9 - DeltaP9) 0,
Y8 - alpha(P8 - DeltaP8) 0, and gamma1(P8 - DeltaP8)
(P9 - DeltaP9), DeltaY9 = Y9 - alpha(P9 - DeltaP9) and
DeltaY8 = Y8 - (alpha/gamma1)(P9 - DeltaP9).
3. If Y9 - alpha(P9 - DeltaP9) < 0,
Y8 - alpha(P8 - DeltaP8) 0, and Y8 - alpha(P8 - DeltaP8)
Y8 - (Y9/gamma1), DeltaY9 = Y9 - alphagamma1(P8 - DeltaP8)
and DeltaY8 = Y8 - alpha(P8 - DeltaP8).
4. If Y9 - alpha(P9 - DeltaP9) < 0, Y8 - (Y9/gamma1) 0,
and Y8 - alpha(P8 - DeltaP8) Y8 - (Y9/gamma1), DeltaY9 = 0
and DeltaY8 = Y8 - (Y9/gamma1).
5. If Y8 - alpha(P8 - DeltaP8) < 0, Y8 - (Y9/gamma1) < 0,
and Y9 - alpha(P9 - DeltaP9) Y9 - (gamma1Y8),
DeltaY9 = Y9 - (gamma1Y8) and DeltaY8 = 0.
6. If Y8 - alpha(P8 - DeltaP8) < 0,
Y9 - alpha(P9 - DeltaP9) 0, and Y9 - alpha(P9 - DeltaP9)
Y9 - (gamma1Y8), DeltaY9 = Y9 - alpha(P9 - DeltaP9) and
DeltaY8 = Y8 - (alpha/gamma1)(P9 - DeltaP9).
DIFF_Y2 = [Y2/(Y2 + Y4 - kDeltaY4)]DIFF_Y8
DIFF_Y4 = kDeltaY4 + [Y4/(Y2 + Y4 - kDeltaY4)]DIFF_Y8
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 Y9 to Y8 equal to gamma1 after
taking account of the allocation Realized Losses and the
distributions that will be made through end of the
<PAGE>
<PAGE> 38
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-3 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 Y9 and whose denominator is the sum of Y9, the Class Z-1
Principal Balance and the Class Z-3 Principal Balance and
(b) the fraction whose numerator is Y8 and whose denominator
is the sum of Y8, the Class Z-2 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 Loan Group remaining after
the allocation of such Realized Losses to the related Class
P-M Regular Interests and (b) the remainder of the REMIC I
Available Distribution Amount for the related Loan Group or
after reduction thereof by the distributions to be made on
such Distribution Date (i) to the related Class P-M Regular
Interests, (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 DIFF_Y8 between DIFF_Y2 and
DIFF_Y4 cannot be achieved because either DIFF_Y2 as so
defined is greater than DIFF_P2 or DIFF_Y4 as so defined is
greater than DIFF_P4, such an allocation shall be made as
<PAGE>
<PAGE> 39
close as possible to the formula allocation within the
requirement that DIFF_Y2 < DIFF_P2 and DIFF_Y4 < DIFF_P4.
II. If R6.5% and r1<R1, make the following additional
definitions:
kDeltaY2 = Y2 + ((R1 - 6.5%)/(R1 - 6.0%))Y4
kDeltaY2 is a number between Y2 and 0 such that (6.0%(Y2 -
kDeltaY2) + 6.5%Y4)/(Y2 - kDeltaY2 + Y4.) = R1.
Y5 = Y2 - kDeltaY2 + Y4.
P5 = P2 + P4.
DIFF_Y5 = DIFF_Y2 - kDeltaY2 + DIFF_Y4.
1. If Y9 - alpha(P9 - DeltaP9) 0, Y5- alpha(P5 - DeltaP5)
0, and gamma1(P5 - DeltaP5) < (P9 - DeltaP9), DeltaY9 = Y9 -
alphagamma1(P5 - DeltaP5) and DeltaY5 = Y5 - alpha(P5 -
DeltaP5).
2. If Y9 - alpha(P9 - DeltaP9) 0,
Y5 - alpha(P5 - DeltaP5) 0, and gamma1(P5 - DeltaP5)
(P9 - DeltaP9), DeltaY9 = Y9 - alpha(P9 - DeltaP9) and
DeltaY5 = Y5 - (alpha/gamma1)(P9 - DeltaP9).
3. If Y9 - alpha(P9 - DeltaP9) < 0,
Y5 - alpha(P5 - DeltaP5) 0, and Y5 - alpha(P5 - DeltaP5)
Y5 - (Y9/gamma1), DeltaY9 = Y9 - alphagamma1(P5 - DeltaP5)
and DeltaY5 = Y5 - alpha(P5 - DeltaP5).
4. If Y9 - alpha(P9 - DeltaP9) < 0, Y5 - (Y9/gamma1) 0,
and Y5 - alpha(P5 - DeltaP5) Y5 - (Y9/gamma1), DeltaY9 = 0
and DeltaY5 = Y5 - (Y9/gamma1).
5. If Y5 - alpha(P5 - DeltaP5) < 0, Y5 - (Y9/gamma1) < 0,
and Y9 - alpha(P9 - DeltaP9) Y9 - (gamma1Y5),
DeltaY9 = Y9 - (gamma1Y5) and DeltaY5 = 0.
6. If Y5 - alpha(P5 - DeltaP5) < 0,
Y9 - alpha(P9 - DeltaP9) 0, and Y9 - alpha(P9 - DeltaP9)
Y9 - (gamma1Y5), DeltaY9 = Y9 - alpha(P9 - DeltaP9) and
DeltaY5 = Y5 - (alpha/gamma1)(P9 - DeltaP9).
DIFF_Y2 = kDeltaY2 + [(Y2 - kDeltaY2)/(Y2 - kDeltaY2 +
Y4)]DIFF_Y5
DIFF_Y4 = [Y4/(Y2 - kDeltaY2 + Y4)]DIFF_Y5
The purpose of the foregoing definitional provisions
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<PAGE> 40
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 Y9 to Y5 equal to gamma1 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-3 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 Y9 and whose denominator is the sum of Y9, the Class Z-1
Principal Balance and the Class Z-3 Principal Balance and
(b) the fraction whose numerator is Y5 and whose denominator
is the sum of Y5, the Class Z-2 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 Loan Group remaining after
the allocation of such Realized Losses to the related Class
P-M Regular Interests and (b) the remainder of the REMIC I
Available Distribution Amount for the related Loan Group or
after reduction thereof by the distributions to be made on
such Distribution Date (i) to the related Class P-M Regular
Interests, (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
<PAGE>
<PAGE> 41
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 DIFF_Y5 between DIFF_Y2 and
DIFF_Y4 cannot be achieved because either DIFF_Y2 as so
defined is greater than DIFF_P2 or DIFF_Y4 as so defined is
greater than DIFF_P4, such an allocation shall be made as
close as possible to the formula allocation within the
requirement that DIFF_Y2 < DIFF_P2 and DIFF_Y4 < DIFF_P4.
III. If R6.5% and r2 R2, make the following additional
definitions:
kDeltaY9 = ((6.5% - R2)/(7% - R2))Y4 + Y9
kDeltaY9 is a number between Y9 and 0 such that (6.5%Y4 +
7%( Y9.- kDeltaY9))/(Y4 + Y9.- kDeltaY9) = R2.
Make the following additional definitions:
Y6 = Y9 - kDeltaY9 + Y4.
P6 = P9 + P4.
DIFF_Y6 = DIFF_Y9 - kDeltaY9 + DIFF_Y4.
1. If Y6 - alpha(P6 - DeltaP6) 0, Y2- alpha(P2 - DeltaP2)
0, and gamma2(P2 - DeltaP2) < (P6 - DeltaP6), DeltaY6 = Y6 -
alphagamma2(P2 - DeltaP2) and DeltaY2 = Y2 - alpha(P2 -
DeltaP2).
2. If Y6 - alpha(P6 - DeltaP6) 0,
Y2 - alpha(P2 - DeltaP2) 0, and gamma2(P2 - DeltaP2)
(P6 - DeltaP6), DeltaY6 = Y6 - alpha(P6 - DeltaP6) and
DeltaY2 = Y2 - (alpha/gamma2)(P6 - DeltaP6).
3. If Y6 - alpha(P6 - DeltaP6) < 0,
Y2 - alpha(P2 - DeltaP2) 0, and Y2 - alpha(P2 - DeltaP2)
Y2 - (Y6/gamma2), DeltaY6 = Y6 - alphagamma2(P2 - DeltaP2)
and DeltaY2 = Y2 - alpha(P2 - DeltaP2).
4. If Y6 - alpha(P6 - DeltaP6) < 0, Y2 - (Y6/gamma2) 0,
and Y2 - alpha(P2 - DeltaP2) Y2 - (Y6/gamma2), DeltaY6 = 0
and DeltaY2 = Y2 - (Y6/gamma2).
5. If Y2 - alpha(P2 - DeltaP2) < 0, Y2 - (Y6/gamma2) < 0,
and Y6 - alpha(P6 - DeltaP6) Y6 - (gamma2Y2),
DeltaY6 = Y6 - (gamma2Y2) and DeltaY2 = 0.
<PAGE>
<PAGE> 42
6. If Y2 - alpha(P2 - DeltaP2) < 0,
Y6 - alpha(P6 - DeltaP6) 0, and Y6 - alpha(P6 - DeltaP6)
Y6 - (gamma2Y2), DeltaY6 = Y6 - alpha(P6 - DeltaP6) and
DeltaY2 = Y2 - (alpha/gamma2)(P6 - DeltaP6).
DIFF_Y9 = kDeltaY9 + [(Y9 - kDeltaY9)/(Y9 - kDeltaY9 +
Y4)]DIFF_Y6
DIFF_Y4 = [Y4/(Y9 - kDeltaY9 + Y4)]DIFF_Y6
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 Y1 to Y6 equal to gamma2 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-3 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 Y2 and whose denominator is the sum of Y2 and Class Z-2
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
<PAGE>
<PAGE> 43
portion of Realized Losses to be allocated on the related
Distribution Date for the related Loan Group remaining after
the allocation of such Realized Losses to the related Class
P-M Regular Interests and (b) the remainder of the REMIC I
Available Distribution Amount for the related Loan Group or
after reduction thereof by the distributions to be made on
such Distribution Date (i) to the related Class P-M Regular
Interests, (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 DIFF_Y6 between DIFF_Y9 and
DIFF_Y4 cannot be achieved because either DIFF_Y9 as so
defined is greater than DIFF_P9 or DIFF_Y4 as so defined is
greater than DIFF_P4, such an allocation shall be made as
close as possible to the formula allocation within the
requirement that DIFF_Y9 < DIFF_P9 and DIFF_Y4 < DIFF_P4.
IV. If R<6.5% and r2<R2, make the following additional
definitions:
kDeltaY4 = Y4 + ((R2 - 7%)/(R2 - 6.5%))Y9
kDeltaY4 is a number between Y4 and 0 such that (6.5%(Y4 -
kDeltaY4) + 7%Y9)/(Y4 - kDeltaY4 + Y9.) = R2.
Y7 = Y4 - kDeltaY4 + Y9.
P7 = P4 + P9.
DIFF_Y7 = DIFF_Y4 - kDeltaY4 + DIFF_Y9.
1. If Y7 - alpha(P7 - DeltaP7) 0, Y2- alpha(P2 - DeltaP2)
0, and gamma2(P2 - DeltaP2) < (P7 - DeltaP7), DeltaY7 = Y7 -
alphagamma2(P2 - DeltaP2) and DeltaY2 = Y2 - alpha(P2 -
DeltaP2).
2. If Y7 - alpha(P7 - DeltaP7) 0,
Y2 - alpha(P2 - DeltaP2) 0, and gamma2(P2 - DeltaP2)
(P7 - DeltaP7), DeltaY7 = Y7 - alpha(P7 - DeltaP7) and
DeltaY2 = Y2 - (alpha/gamma2)(P7 - DeltaP7).
3. If Y7 - alpha(P7 - DeltaP7) < 0,
Y2 - alpha(P2 - DeltaP2) 0, and Y2 - alpha(P2 - DeltaP2)
Y2 - (Y7/gamma2), DeltaY7 = Y7 - alphagamma2(P2 - DeltaP2)
<PAGE>
<PAGE> 44
and DeltaY2 = Y2 - alpha(P2 - DeltaP2).
4. If Y7 - alpha(P7 - DeltaP7) < 0, Y2 - (Y7/gamma2) 0,
and Y2 - alpha(P2 - DeltaP2) Y2 - (Y7/gamma2), DeltaY7 = 0
and DeltaY2 = Y2 - (Y7/gamma2).
5. If Y2 - alpha(P2 - DeltaP2) < 0, Y2 - (Y7/gamma2) < 0,
and Y7 - alpha(P7 - DeltaP7) Y7 - (gamma2Y2),
DeltaY7 = Y7 - (gamma2Y2) and DeltaY2 = 0.
6. If Y2 - alpha(P2 - DeltaP2) < 0,
Y7 - alpha(P7 - DeltaP7) 0, and Y7 - alpha(P7 - DeltaP7)
Y7 - (gamma2Y2), DeltaY7 = Y7 - alpha(P7 - DeltaP7) and
DeltaY2 = Y2 - (alpha/gamma2)(P7 - DeltaP7).
DIFF_Y9 = [(Y9/(Y9 + Y4 - kDeltaY4)]DIFF_Y7
DIFF_Y4 = kDeltaY4 + [(Y4 - kDeltaY4)/(Y9 + Y4 -
kDeltaY4)]DIFF_Y7
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 Y2 to Y7 equal to gamma2 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-3 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 Y2 and whose denominator is the sum of Y2 and Class Z-2
Principal Balance and (b) the fraction whose numerator is Y7
and whose denominator is the sum of Y7, the Class Z-2
Principal Balance, the Class Z-3 Principal Balance and the
<PAGE>
<PAGE> 45
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 Loan Group remaining after
the allocation of such Realized Losses to the related Class
P-M Regular Interests and (b) the remainder of the REMIC I
Available Distribution Amount for the related Loan Group or
after reduction thereof by the distributions to be made on
such Distribution Date (i) to the related Class P-M Regular
Interests, (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 DIFF_Y7 between DIFF_Y9 and
DIFF_Y4 cannot be achieved because either DIFF_Y9 as so
defined is greater than DIFF_P9 or DIFF_Y4 as so defined is
greater than DIFF_P4, such an allocation shall be made as
close as possible to the formula allocation within the
requirement that DIFF_Y9 < DIFF_P9 and DIFF_Y4 < DIFF_P4.
Class Z Regular Interests: The Class Z-1, Class Z-2,
Class Z-3 and Class Z-4 Regular Interests.
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 Loan Group or
Subgroup (i.e. the "related Subgroup" for the Class Z-1
Regular Interests is Subgroup II-1 and Subgroup II-2, the
"related Subgroup" for the Class Z-2 Regular Interests is
Subgroup II-3, the "related Loan Group" for the Class Z-3
Regular Interests is Loan Group III and the "related Loan
Group" for the Class Z-4 Regular Interests is Loan Group IV)
over the sum of the amounts thereof distributable (i) to the
related Class P-M Regular Interests, (ii) to the related
<PAGE>
<PAGE> 46
Class X-M Regular Interests, (iii) in respect of interest on
the related Class Y and Class Z Regular Interests and (iv)
to the Class R-1 Certificates (in the case of Loan Group IV)
and (y) the excess of the Realized Losses allocable to
principal for the related Loan Group over the portion of
such Realized Losses allocable to the related Class P-M
Regular Interests over (B) the Class Y Principal Reduction
Amount for the related Loan Group.
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-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-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-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-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-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-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.
Class Z-4 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.
<PAGE>
<PAGE> 47
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: November 30, 1998, which is the date of
settlement of the sale of the Certificates to the original
purchasers thereof.
CMAC Policy: A mortgage pool insurance policy issued
by Commonwealth Mortgage Assurance Company.
Code: The Internal Revenue Code of 1986, as amended.
Combined Bankruptcy Coverage: With respect to Loan
Group II, Loan Group III and Loan Group IV, the Bankruptcy
Coverage Initial Amount for such Loan Groups less (a) any
scheduled or permissible reduction in the amount of Combined
Bankruptcy Coverage pursuant to this definition and (b)
Bankruptcy Losses allocated to the Group II-L, Group III-L,
Group IV-L and Group C-B-L Regular Interests and the Class C-
X-L Regular Interests. The Combined Bankruptcy Coverage may
be reduced upon written confirmation from the Rating
Agencies that such reduction will not adversely affect the
then current ratings assigned to the Certificates by the
Rating Agencies (determined in the case of the Insured
Certificates, without giving effect to the Certificate
Insurance Policy).
Combined Credit Support Depletion Date: The first
Distribution Date on which the aggregate of the Class
Principal Balances of the Group C-B Certificates 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.
Combined Fraud Coverage: During the period prior to
the first anniversary of the Cut-Off Date and with respect
to Loan Group II, Loan Group III and Loan Group IV, the
Fraud Coverage Initial Amount for such Loan Groups reduced
by Fraud Losses allocated to the Group II-L, Group III-L,
Group IV-L and Group C-B-L Regular Interests and the Class C-
X-L Regular Interests; during the period from the first
anniversary of the Cut-Off Date to (but not including) the
fifth anniversary of the Cut-Off Date, the amount of the
Combined Fraud Coverage on the most recent previous
anniversary of the Cut-Off Date (calculated in accordance
with the second sentence of this definition) reduced by
Fraud Losses allocated to the Group II-L, Group III-L, Group
IV-L and Group C-B-L Regular Interests and the Class C-X-L
Regular Interests since such anniversary; and during the
period on and after the fifth anniversary of the Cut-Off
<PAGE>
<PAGE> 48
Date, the Combined Fraud Coverage shall be zero. On each
anniversary of the Cut-Off Date, the Combined Fraud Coverage
shall be reduced to the lesser of (i) on the first, second,
third and fourth anniversaries of the Cut-Off Date, 1.00% of
the aggregate principal balance of the Mortgage Loans in
Loan Group II, Loan Group III and Loan Group IV as of the
Due Date in the preceding month and (ii) the excess of the
Fraud Coverage Initial Amount for Loan Group II, Loan Group
III and Loan Group IV over cumulative Fraud Losses allocated
to the Group II-L, Group III-L, Group IV-L and Group C-B-L
Regular Interests and the Class C-X-L Regular Interests to
date. The Combined Fraud Coverage may be reduced upon
written confirmation from the Rating Agencies that such
reduction will not adversely affect the then current ratings
assigned to the Group II, Group III, Group IV and Group C-B
Certificates and the Class C-X-L Regular Interests by the
Rating Agencies (determined in the case of the Insured
Certificates, without giving effect to the Certificate
Insurance Policy).
Combined Special Hazard Coverage: With respect to Loan
Group II, Loan Group III and Loan Group IV, the Special
Hazard Coverage Initial Amount for such Loan Groups less
Special Hazard Losses allocated to the Group II-L, Group III-
L, Group IV-L and Group C-B-L Regular Interests and the
Class C-X-L Regular Interests and the amount of any
scheduled reduction in the amount of Combined Special Hazard
Coverage as follows: on each anniversary of the Cut-Off
Date, the Combined Special Hazard Coverage shall be reduced,
but not increased, to an amount equal to the lesser of (1)
the greatest of (a) the aggregate principal balance of the
Mortgage Loans in Loan Group II, Loan Group III and Loan
Group IV located in the single California zip code area
containing the largest aggregate principal balance of the
Mortgage Loans, (b) 1.0% of the aggregate unpaid principal
balance of the Mortgage Loans in Loan Group II, Loan Group
III and Loan Group IV and (c) twice the unpaid principal
balance of the largest single Mortgage Loan in Loan Group
II, Loan Group III, and Loan Group IV, in each case
calculated as of the Due Date in the immediately preceding
month, and (2) the Special Hazard Coverage Initial Amount as
reduced by the Special Hazard Losses allocated to the Group
II-L, Group III-L, Group IV-L and Group C-B-L Regular
Interests and the Class C-X-L Regular Interests since the
Cut-Off Date. The Combined Special Hazard Coverage may be
reduced upon written confirmation from the Rating Agencies
that such reduction will not adversely affect the then
current ratings assigned to the Certificates by the Rating
Agencies (determined in the case of the Insured
Certificates, without giving effect to the Certificate
Insurance Policy).
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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, New Jersey, North Carolina,
Washington, Virginia and Hawaii 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
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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 1998-12.
Corresponding Class: With respect to the Group I
Certificates and the Group I-L Regular Interests, the
"Corresponding Class" shall be as indicated in the following
table.
Class I-A-1-L Class I-A-1
Class I-A-2-L Class I-A-2
Class I-A-3-L Class I-A-3
Class I-A-4-L Class I-A-4
Class I-A-5-L Class I-A-5
Class I-A-6-L Class I-A-6
Class I-A-7-L Class I-A-7
Class I-A-8-L Class I-A-8
Class I-A-9-L Class I-A-9
Class I-A-10-L Class I-A-10
Class I-A-11-L Class I-A-11
Class I-A-12-L Class I-A-12
Class I-A-13-L Class I-A-13
Class I-A-14-L Class I-A-14
Class I-X-L Class I-X
Class I-P-L Class I-P
Class I-B-1-L Class I-B-1
Class I-B-2-L Class I-B-2
Class I-B-3-L Class I-B-3
Class I-B-4-L Class I-B-4
Class I-B-5-L Class I-B-5
Class I-B-6-L Class I-B-6
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.
Class II-A-1-L Class II-A-1
Class II-A-2-L Class II-A-2
Class II-X-1-L Class II-X-1
Class II-X-2-L Class II-X-2
Class II-P-L Class II-P
With respect to the Group III Certificates and the
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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-X-1-L Class III-X-1
Class III-P-L Class III-P
With respect to the Group IV and Class R-3 Certificates
and the Group IV-L Regular Interests, the "Corresponding
Class" shall be as indicated in the following table.
Class IV-A-1-L Class IV-A-1
Class IV-A-2-L Class IV-A-2
Class IV-A-3-L Class IV-A-3
Class IV-A-4-L Class IV-A-4
Class IV-A-5-L Class IV-A-5
Class IV-A-7-L Class IV-A-7
Class IV-A-8-L Class IV-A-8
Class IV-A-9-L Class IV-A-9
Class IV-X-1-L Class IV-X-1
Class IV-X-2-L Class IV-X-2
Class IV-P-L Class IV-P
Class R-3-L Class R-3
With respect to the Group C-B Certificates and the
Group C-B-L Regular Interests, the "Corresponding Class"
shall be as indicated in the following table.
Class C-B-1-L Class C-B-1
Class C-B-2-L Class C-B-2
Class C-B-3-L Class C-B-3
Class C-B-4-L Class C-B-4
Class C-B-5-L Class C-B-5
Class C-B-6-L Class C-B-6
With respect to the Class C-X Certificates, the
"Corresponding Class" shall be the Class C-X-L Regular
Interests.
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
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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 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
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<PAGE> 53
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: November 1, 1998.
DCR: Duff and Phelps Credit Rating Co., provided that
at any time it be a Rating Agency.
Deceased Holder: A Beneficial Holder of a Class I-A-14
Certificate who was living at the time such Class I-A-14
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.
Deficiency Amount: With respect to any Distribution
Date, the sum of (i) the amount, if any, by which the
Interest Distribution Amount available to be paid to the
Class IV-A-5 Certificates, pursuant to the priority of
payment set forth in the definition of "REMIC III
Distribution Amount", is less than (A) the product of (1)
1/12 of the Class IV-A-5 Certificate Interest Rate and (2)
the Class IV-A-5 Principal Balance immediately prior to such
Distribution Date, minus (B) the sum of (1) the portion of
Uncompensated Interest Shortfall attributable to Curtailment
Shortfalls which is allocable to the Class IV-A-5
Certificates, (2) any interest shortfalls related to the
Relief Act allocable to the Class IV-A-5 Certificates and
(3) the portion of Uncompensated Interest Shortfall
attributable to the failure of the Master Servicer to pay
Compensating Interest which is allocable to the Class IV-A-5
Certificates, (ii) the principal portion of any Realized
Losses allocable to the Class IV-A-5 Certificates on such
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Distribution Date and (iii) to the extent unpaid on the
Distribution Date in January 2029, after payment of all
other amounts due to the Class IV-A-5 Certificates, any
remaining Class IV-A-5 Principal Balance.
Definitive Certificates: Certificates in definitive,
fully registered and certificated form.
Depositary Agreement: The Letter of Representations,
dated November 24, 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, the REMIC II Regular Interests
and the Certificates, the 25th day (or, if such 25th day is
not a Business Day, the Business Day immediately succeeding
such 25th day) of each month, with the first such date being
December 28, 1998. The "related Due Date" for any
Distribution Date is the Due Date immediately preceding such
Distribution Date.
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 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
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<PAGE> 55
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 and the Custodial
Account for Reserves 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
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
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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 and with notice to the Certificate Insurer, result
in the downgrading or withdrawal of the Ratings (determined
in the case of the Insured Certificates, without giving
effect to the Certificate Insurance Policy);
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.
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
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made with respect to such Mortgage Loans on the date such
Liquidation Proceeds were received.
FDIC: Federal Deposit Insurance Corporation, or any
successor thereto.
FHA: Federal Housing Administration, 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.
FNMA: Federal National Mortgage Association, or any
successor thereto.
Fraud Coverage Initial Amount: With respect to Loan
Group I, $13,641,243 and with respect to Loan Group II, Loan
Group III and Loan Group IV, $25,699,339.
Fraud Loss: The occurrence of a loss on a Mortgage Loan
arising from any action, event or state of facts with
respect to such Mortgage Loan which, because it involved or
arose out of any dishonest, fraudulent, criminal, negligent
or knowingly wrongful act, error or omission by the
Mortgagor, originator (or assignee thereof) of such Mortgage
Loan, Lender, a Servicer or the Master Servicer, would
result in an exclusion from, denial of, or defense to
coverage which otherwise would be provided by a Primary
Insurance Policy previously issued with respect to such
Mortgage Loan.
Group C-B Certificates: The Class C-B-1, Class C-B-2,
Class C-B-3, Class C-B-4, Class C-B-5 and Class C-B-6
Certificates.
Group C-B-L Regular Interests: The Class C-B-1-L, Class
C-B-2-L, Class C-B-3-L, Class C-B-4-L, Class C-B-5-L and
Class C-B-6-L Regular Interests.
Group C-B Component Balance: With respect to any of
Loan Group II, Loan Group III or Loan Group IV at any time,
the outstanding aggregate Principal Balance of the Mortgage
Loans in the applicable Loan Group minus the then
outstanding Class Principal Balance of the Group II, Group
III or Group IV Certificates, as applicable.
Group C-B Percentage: At any time, the aggregate Class
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Principal Balance of the Group C-B Certificates divided by
the then outstanding aggregate Principal Balance of the
Group II, Group III and Group IV Loans.
Group C-B Subordinate Liquidation Amount: The excess,
if any, of the aggregate of Liquidation Principal for all
Group II Loans, Group III Loans and Group IV Loans which
became Liquidated Mortgage Loans during the Prior Period,
over the sum of the Group II Senior Liquidation Amount, the
Group III Senior Liquidation Amount and the Group IV Senior
Liquidation Amount for such Distribution Date.
Group C-B Subordinate Principal Distribution Amount: On
any Distribution Date, the excess of (A) the sum of (i) the
Group II Subordinate 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 II Distribution Amount"), (ii) the
Group III Subordinate Percentage of the Principal Payment
Amount for Loan Group III (exclusive of the portion thereof
attributable to principal distributions to the Class III-P-L
Regular Interests pursuant to clause (I)(c)(i) of the
definition of "REMIC II Distribution Amount"), (iii) the
Group IV Subordinate Percentage of the Principal Payment
Amount for Loan Group IV (exclusive of the portion thereof
attributable to principal distributions to the Class IV-P-L
Regular Interests pursuant to clause (I)(d)(i) of the
definition of "REMIC II Distribution Amount"), (iv) the
Group II Subordinate Principal Prepayments Distribution
Amount, (v) the Group III Subordinate Principal Prepayments
Distribution Amount, (vi) the Group IV Subordinate Principal
Prepayments Distribution Amount and (vii) the Group C-B
Subordinate Liquidation Amount over (B) the sum of (x) the
amounts required to be distributed to the Class II-P-L,
Class III-P-L and Class IV-P-L Regular Interests pursuant to
clauses (I)(e)(i) and (I)(e)(ii) of the definition of "REMIC
II Distribution Amount" on such Distribution Date, (y) in
the event that the aggregate Class Principal Balance of any
one or more of the Group II-A-L, Class III-A-1-L or Group IV-
A-L Regular Interests has been reduced to zero, principal
paid from the REMIC II Available Distribution Amount of the
Regular Interest Group or Groups related to such Class A-L
Regular Interests to the remaining Class A-L Regular
Interests as set forth in clause (X) of the last sentence of
paragraph (I)(e) of the definition of "REMIC II Distribution
Amount", and (z) the amounts in respect of principal paid
from the REMIC II Available Distribution Amount of an
Overcollateralized Group to an Undercollateralized Group
pursuant to clause (Y) of the last sentence of paragraph
(I)(e) and the last sentence of paragraph (II) of the
definition of "REMIC II Distribution Amount". Any reduction
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in the Group C-B Subordinate Principal Distribution Amount
pursuant to clause (B) of this definition shall offset: (i)
first, the amount calculated pursuant to clause (A)(i),
clause (A)(ii) and clause (A)(iii) of this definition, pro
rata, (ii) second, the amount calculated pursuant to clause
(A)(vii) of this definition and (iii) third, the amount
calculated pursuant to clause (A)(iv), clause (A)(v) and
clause (A)(vi) of this definition, pro rata. On any
Distribution Date, the Group C-B Subordinate Principal
Distribution Amount shall be allocated pro rata, by Class
Principal Balance, among the Classes of Group C-B-L Regular
Interests and paid in the order of distribution to such
Classes pursuant to clause (I)(e) of the definition of
"REMIC II Distribution Amount" except as otherwise stated in
such definition. Notwithstanding the foregoing, on any
Distribution Date prior to distributions on such date, if
the Subordination Level for any Class of Group C-B-L Regular
Interests is less than such percentage as of the Closing
Date, the pro rata portion of the sum of the Group II
Subordinate Principal Prepayments Distribution Amount, the
Group III Subordinate Principal Prepayments Distribution
Amount and the Group IV Subordinate Principal Prepayments
Distribution Amount otherwise allocable to the Class or
Classes junior to such Class will be distributed to the most
senior Class of the Group C-B-L Regular Interests for which
the Subordination Level is less than such percentage as of
the Closing Date, and to the Classes of Group C-B-L Regular
Interests senior thereto, pro rata according to the Class
Principal Balances of such Classes. For purposes of this
definition and the definition of "Subordination Level", the
relative seniority, from highest to lowest, of the Group C-B-
L Regular Interests shall be as follows: Class C-B-1-L,
Class C-B-2-L, Class C-B-3-L, Class C-B-4-L, Class C-B-5-L
and Class C-B-6-L.
Group I Bankruptcy Coverage: With respect to Loan Group
I, the Bankruptcy Coverage Initial Amount for Loan Group I
less (a) any scheduled or permissible reduction in the
amount of the Group I Bankruptcy Coverage pursuant to this
definition and (b) Bankruptcy Losses allocated to the Group
I Certificates. The Group I Bankruptcy Coverage may be
reduced upon written confirmation from the Rating Agencies
that such reduction will not adversely affect the then
current ratings assigned to the Certificates by the Rating
Agencies.
Group I Certificates: The Group I-A, Class I-P, Class I-
X and Group I-B Certificates.
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, Class I-A-8, Class I-A-9, Class I-A-10, Class I-A-11,
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Class I-A-12, Class I-A-13 and Class I-A-14 Certificates.
Group I-A-L Regular Interests: The Class I-A-1-L, Class
I-A-2-L, Class I-A-3-L, Class I-A-4-L, Class I-A-5-L, Class
I-A-6-L, Class I-A-7-L, Class I-A-8-L, Class I-A-9-L, Class
I-A-10-L, Class I-A-11-L, Class I-A-12-L, Class I-A-13-L and
Class I-A-14-L Regular Interests.
Group I-B Certificates: The Class I-B-1, Class I-B-2,
Class I-B-3, Class I-B-4, Class I-B-5 and Class I-B-6
Certificates.
Group I-B-L Regular Interests: The Class I-B-1-L, Class
I-B-2-L, Class I-B-3-L, Class I-B-4-L, Class I-B-5-L and
Class I-B-6-L Regular Interests.
Group I-L Regular Interests: The Group I-A-L, Class I-P-
L, Class I-X-L and Group I-B-L Regular Interests.
Group I Credit Support Depletion Date: The first
Distribution Date on which the aggregate Class Principal
Balance of the Group I-B Certificates 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.
Group I Fraud Coverage: During the period prior to the
first anniversary of the Cut-Off Date and with respect to
Loan Group I, the Fraud Coverage Initial Amount for Loan
Group I reduced by Fraud Losses allocated to the Group I
Certificates, and during the period from the first
anniversary of the Cut-Off Date to (but not including) the
fifth anniversary of the Cut-Off Date, the amount of the
Group I Fraud Coverage on the most recent previous
anniversary of the Cut-Off Date (calculated in accordance
with the second sentence of this definition) reduced by
Fraud Losses allocated to the Group I Certificates since
such anniversary; and during the period on and after the
fifth anniversary of the Cut-Off Date, the Group I Fraud
Coverage shall be zero. On each anniversary of the Cut-Off
Date, the Group I Fraud Coverage shall be reduced to the
lesser of (i) on the first, second, third and fourth
anniversaries of the Cut-Off Date, 1.00% of the aggregate
principal balance of the Group I Loans as of the Due Date in
the preceding month and (ii) the Fraud Coverage Initial
Amount for Loan Group I as reduced by cumulative Fraud
Losses allocated to the Group I Certificates to date. The
Group I Fraud Coverage may be reduced upon written
confirmation from the Rating Agencies that such reduction
will not adversely affect the then current ratings assigned
to the Group I Certificates by the Rating Agencies.
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Group I Junior Subordinate Certificates: The Class I-B-
4, Class I-B-5 and Class I-B-6 Certificates.
Group I-L Junior Subordinate Regular Interests: The
Class I-B-4-L, Class I-B-5-L and Class I-B-6-L Regular
Interests.
Group I Senior Certificates: The Group I-A, Class I-X
and Class I-P Certificates.
Group I Senior Subordinate Certificates: The Class I-B-
1, Class I-B-2 and Class I-B-3 Certificates.
Group I-L Senior Subordinate Regular Interests: The
Class I-B-1-L, Class I-B-2-L and Class I-B-3-L Regular
Interests.
Group I Loans: The Mortgage Loans designated on the
Mortgage Loan Schedule as Group I Loans.
Group I Premium Rate Mortgage Loans: The Group I Loans
having Pass-Through Rates in excess of 6.250% per annum.
Group I Senior Liquidation Amount: The aggregate, for
each Group I Loan which became a Liquidated Mortgage Loan
during the Prior Period, of the lesser of: (i) the Group I
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 Group I
Senior Prepayment Percentage of the Liquidation Principal
with respect to such Mortgage Loan.
Group I Senior Percentage: With respect to any
Distribution Date, the aggregate Class Principal Balance of
the Group I-A Certificates divided by the aggregate Class
Principal Balance of the Group I Certificates (less the
Class I-P Principal Balance), 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
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<PAGE> 62
by the Trust Fund) for each of the immediately
preceding six calendar months is less than or
equal to 50% of the aggregate Class Principal
Balances of the Group I-B Certificates as of such
Distribution Date; and
(b) cumulative Realized Losses on the Group I Loans
allocated to the Group I-B Certificates 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 the Class Principal Balances of the Group I-
B Certificates 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 the Class Principal
Balances of the Group I-B Certificates 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 the Class
Principal Balances of the Group I-B Certificates
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
the Class Principal Balances of the Group I-B
Certificates 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 the Class
Principal Balances of the Group I-B Certificates
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 Group I Subordinate 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
Group I Subordinate 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
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<PAGE> 63
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 Group
I Subordinate 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 Group I Subordinate
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-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 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-L Regular Interests
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, an amount equal to the sum of (a) the
Group I Senior Percentage of the Principal Payment Amount
for Loan Group I (exclusive of the portion thereof
attributable to principal distributions to the Class I-P-L
Regular Interests pursuant to clauses (I)(a)(i) and
(II)(a)(i) of the definition of "REMIC I Distribution
Amount"), (b) the Group I Senior 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-L Regular Interests pursuant
to clauses (I)(a)(i) and (II)(a)(i) of the definition of
"REMIC I Distribution Amount") and (c) the Group I Senior
Liquidation Amount.
Group I Special Hazard Coverage: With respect to Loan
Group I, Special Hazard Coverage Initial Amount for such
Loan Group less Special Hazard Losses allocated to the
Group I Certificates, and the amount of any scheduled
reduction in the amount of Group I Special Hazard Coverage
as follows: on each anniversary of the Cut-Off Date, the
Group I Special Hazard Coverage shall be reduced, but not
increased, to an amount equal to the lesser of (1) the
greatest of (a) the aggregate principal balance of the
Mortgage Loans in Loan Group I located in the single
California zip code area containing the largest aggregate
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<PAGE> 64
principal balance of such Mortgage Loans, (b) 1% of the
aggregate unpaid principal balance of the Mortgage Loans in
Loan Group I and (c) twice the unpaid principal balance of
the largest single Mortgage Loan in Loan Group I, in each
case calculated as of the Due Date in the immediately
preceding month, and (2) the Special Hazard Coverage Initial
Amount for such Loan Group as reduced by the Special Hazard
Losses allocated to the Group I-L Regular Interests since
the Cut-Off Date. The Group I Special Hazard Coverage may be
reduced upon written confirmation from the Rating Agencies
that such reduction will not adversely affect the then
current ratings assigned to the Certificates by the Rating
Agencies.
Group I Subordinate 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 related Group I Senior Liquidation
Amount for such Distribution Date.
Group I Subordinate Percentage: With respect to any
Distribution Date, the excess of 100% over the Group I
Senior Percentage for such date.
Group I Subordinate Prepayment Percentage: On any
Distribution Date for Loan Group I, the excess of 100% over
the Group I Senior Prepayment Percentage for such
Distribution Date; provided, however, that if the aggregate
Class Principal Balance of the Group I-A Certificates has
been reduced to zero, then the Group I Subordinate
Prepayment Percentage shall equal 100%.
Group I Subordinate Principal Distribution Amount: On
any Distribution Date, the excess of (A) the sum of (i) the
Group I Subordinate Percentage of the Principal Payment
Amount for Loan Group I (exclusive of the portion thereof
attributable to principal distributions to the Class I-P-L
Regular Interests pursuant to clause (I)(a)(i) of the
definition of "REMIC II Distribution Amount"), (ii) the
Group I Subordinate Principal Prepayments Distribution
Amount and (iii) the Group I Subordinate Liquidation Amount
over (B) the amounts required to be distributed to the Class
I-P-L Regular Interests pursuant to clauses (I)(a)(v) and
(I)(a)(vi) of the definition of "REMIC II Distribution
Amount" on such Distribution Date, as applicable. Any
reduction in the Group I Subordinate Principal Distribution
Amount pursuant to clause (B) of this definition shall
offset: (i) first, the amount calculated pursuant to clause
(A)(i) of this definition, (ii) second, the amount
calculated pursuant to clause (A)(iii) of this definition
and (iii) third, the amount calculated pursuant to clause
(A)(ii) of this definition. On any Distribution Date, the
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<PAGE> 65
Group I Subordinate Principal Distribution Amount shall be
allocated pro rata, by Class Principal Balance, among the
Classes of Group I-B-L Regular Interests, and paid in the
order of distribution to such Classes pursuant to clause
(I)(a) of the definition of "REMIC II Distribution Amount",
except as otherwise stated in such definition.
Notwithstanding the foregoing, on any Distribution Date
prior to distributions on such date, if the Subordination
Level for any Class of Group I-B-L Regular Interests is less
than such percentage as of the Closing Date, the pro rata
portion of the Group I Subordinate Principal Prepayments
Distribution Amount otherwise allocable to the Class or
Classes junior to such Class will be distributed to the most
senior Class of the Group I-B-L Regular Interests for which
the Subordination Level is less than such percentage as of
the Closing Date, and to the Classes of Group I-B-L Regular
Interests senior thereto, pro rata according to the Class
Principal Balances of such Classes. For purposes of this
definition and the definition of "Subordination Level", the
relative seniority, from highest to lowest, of the Group I-B-
L Regular Interests shall be as follows: Class I-B-1-L,
Class I-B-2-L, Class I-B-3-L, Class I-B-4-L, Class I-B-5-L
and Class I-B-6-L.
Group I Subordinate Principal Prepayments Distribution
Amount: On any Distribution Date, the Group I Subordinate
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-L Regular
Interests pursuant to clause (I)(a)(i) of the definition of
"REMIC II Distribution Amount").
Group II Certificates: The Group II-A, Class II-P and
Class II-X Certificates.
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.
Group II-L Regular Interests: The Group II-A-L, Class
II-P-L and Class II-X-L Regular Interests.
Group II Loans: The Mortgage Loans designated on the
Mortgage Loan Schedule as Group II Loans.
Group II Senior Certificates: The Group II-A, Class II-
X and Class II-P Certificates.
Group II Senior Liquidation Amount: For any
Distribution Date, the sum of (i) the Subgroup II-1 Senior
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<PAGE> 66
Liquidation Amount, (ii) the Subgroup II-2 Senior
Liquidation Amount and (iii) the Subgroup II-3 Senior
Liquidation Amount.
Group II Senior Percentage: With respect to any
Distribution Date, the lesser of (a) 100% and (b) the
aggregate Class Principal Balance of the Group II-A
Certificates divided by the aggregate Principal Balance of
the Group II Loans (less the Class II-P Principal Balance),
in each case immediately prior to the Distribution Date.
Group II Senior Prepayment Percentage, Subgroup II-1
Senior Prepayment Percentage, Subgroup II-2 Senior
Prepayment Percentage, Subgroup II-3 Senior Prepayment
Percentage, Group III Senior Prepayment Percentage or Group
IV 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, each
of the Group II Senior Prepayment Percentage, the Subgroup
II-1 Senior Prepayment Percentage, the Subgroup II-2 Senior
Prepayment Percentage, the Subgroup II-3 Senior Prepayment
Percentage, the Group III Senior Prepayment Percentage and
the Group IV Senior Prepayment Percentage shall equal 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, the Group
III Senior Percentage for such Distribution Date exceeds the
Group III Senior Percentage as of the Closing Date or the
Group IV Senior Percentage for such Distribution Date
exceeds the Group IV Senior Percentage as of the Closing
Date, then each of the Group II Senior Prepayment
Percentage, the Subgroup II-1 Senior Prepayment Percentage,
the Subgroup II-2 Senior Prepayment Percentage, the Subgroup
II-3 Senior Prepayment Percentage, the Group III Senior
Prepayment Percentage and the Group IV Senior Prepayment
Percentage shall equal 100%; and (iii) on any other
Distribution Date in each of the months of the fifth
anniversary of the first Distribution Date and thereafter,
each of the Group II Senior Prepayment Percentage, the
Subgroup II-1 Senior Prepayment Percentage, the Subgroup II-
2 Senior Prepayment Percentage, the Subgroup II-3 Senior
Prepayment Percentage, the Group III Senior Prepayment
Percentage and the Group IV Senior Prepayment Percentage
shall equal 100%, unless the following tests specified in
clauses (a) through (f) are met with respect to each of Loan
Group II, Loan Group III and Loan Group IV:
(a) the mean aggregate Principal Balance of the Group
II Loans which are 60 or more days delinquent
(including loans in foreclosure and property held
by REMIC I) for each of the immediately preceding
six calendar months is less than or equal to 50%
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<PAGE> 67
of the Group C-B Component Balance for Loan Group
II as of such Distribution Date,
(b) the mean aggregate Principal Balance of the Group
III Loans which are 60 or more days delinquent
(including loans in foreclosure and property held
by REMIC I) for each of the immediately preceding
six calendar months is less than or equal to 50%
of the Group C-B Component Balance for Loan Group
III as of such Distribution Date,
(c) the mean aggregate Principal Balance of the Group
IV Loans which are 60 or more days delinquent
(including loans in foreclosure and property held
by REMIC I) for each of the immediately preceding
six calendar months is less than or equal to 50%
of the Group C-B Component Balance for Loan Group
IV as of such Distribution Date,
(d) cumulative Realized Losses on the Group II Loans
allocated to the Group C-B Certificates is 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
Group C-B Component Balance for Loan Group II as
of the Closing 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 Group C-B
Component Balance for Loan Group II as of the
Closing 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 Group C-B Component
Balance for Loan Group II as of the Closing 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 Group C-B Component Balance for
Loan Group II as of the Closing 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 Group C-B Component
Balance for Loan Group II as of the Closing Date,
(e) cumulative Realized Losses on the Group III Loans
allocated to the Group C-B Certificates is less
than or equal to (1) for any Distribution Date
before the month of the sixth anniversary of the
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<PAGE> 68
month of the first Distribution Date, 30% of the
Group C-B Component Balance for Loan Group III as
of the Closing 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 Group C-B
Component Balance for Loan Group III as of the
Closing 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 Group C-B Component
Balance for Loan Group III as of the Closing 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 Group C-B Component Balance for
Loan Group III as of the Closing 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 Group C-B Component
Balance for Loan Group III as of the Closing Date,
and
(f) cumulative Realized Losses on the Group IV Loans
allocated to the Group C-B Certificates is 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
Group C-B Component Balance for Loan Group IV as
of the Closing 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 Group C-B
Component Balance for Loan Group IV as of the
Closing 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 Group C-B Component
Balance for Loan Group IV as of the Closing 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 Group C-B Component Balance for
Loan Group IV as of the Closing Date, and (5) for
any Distribution Date in or after the month of the
ninth anniversary of the month of the first
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<PAGE> 69
Distribution Date, 50% of the Group C-B Component
Balance for Loan Group IV as of the Closing 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, the Subgroup II-1 Senior
Percentage, the Subgroup II-2 Senior Percentage, the
Subgroup II-3 Senior Percentage, the Group III Senior
Percentage or the Group IV Senior Percentage, as applicable,
for such Distribution Date plus 70% of the Subordinate
Percentage for the related Loan Group (or Subgroup) 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, the Subgroup II-1 Senior Percentage, the
Subgroup II-2 Senior Percentage, the Subgroup II-3 Senior
Percentage, the Group III Senior Percentage or the Group IV
Senior Percentage, as applicable, for such Distribution Date
plus 60% of the Subordinate Percentage for the related Loan
Group (or Subgroup) 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, the
Subgroup II-1 Senior Percentage, the Subgroup II-2 Senior
Percentage, the Subgroup II-3 Senior Percentage, the Group
III Senior Percentage or the Group IV Senior Percentage, as
applicable, for such Distribution Date plus 40% of the
Subordinate Percentage for the related Loan Group (or
Subgroup) 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, the
Subgroup II-1 Senior Percentage, the Subgroup II-2 Senior
Percentage, the Subgroup II-3 Senior Percentage, the Group
III Senior Percentage or the Group IV Senior Percentage, as
applicable, for such Distribution Date plus 20% of the
Subordinate Percentage for the related Loan Group (or
Subgroup) for such Distribution Date; and (5) for any such
Distribution Date thereafter, the Group II Senior
Percentage, the Subgroup II-1 Senior Percentage, the
Subgroup II-2 Senior Percentage, the Subgroup II-3 Senior
Percentage, the Group III Senior Percentage or the Group IV
Senior Percentage, as applicable, for such Distribution
Date.
If on any Distribution Date the allocation to the
Subgroup II-1 Senior Component Balance, the Subgroup II-2
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<PAGE> 70
Senior Component Balance or the Subgroup II-3 Senior
Component Balance of Principal Prepayments in the percentage
required would reduce the Subgroup II-1 Senior Component
Balance, the Subgroup II-2 Senior Component Balance or the
Subgroup II-3 Senior Component Balance below zero, the
Subgroup II-1 Senior Prepayment Percentage, the Subgroup II-
2 Senior Prepayment Percentage or the Subgroup II-3 Senior
Prepayment Percentage, as applicable, for such Distribution
Date shall be limited to the percentage necessary to reduce
such sum to zero. Likewise, if on any Distribution Date the
allocation to the Group III-L or the Group IV-L Regular
Interests (other than the related Class P-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 or the Group IV Senior
Percentage, as applicable, 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 P-L Regular Interests will
receive the applicable Class P Fraction of all principal
payments, including, without limitation, Principal
Prepayments, received in respect of the related Class P
Mortgage Loan.
Group II Senior Principal Distribution Amount: For any
Distribution Date, the sum of the Subgroup II-1 Senior
Principal Distribution Amount, (ii) the Subgroup II-2 Senior
Principal Distribution Amount and (iii) the Subgroup II-3
Senior Principal Distribution Amount.
Group II Subordinate Percentage: With respect to any
Distribution Date, the excess of 100% over the Group II
Senior Percentage for such date.
Group II Subordinate Prepayment Percentage: On any
Distribution Date for Loan Group II, 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 Group II Subordinate
Prepayment Percentage shall equal 100%.
Group II Subordinate Principal Prepayments Distribution
Amount: On any Distribution Date, the Group II Subordinate
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 II Distribution Amount").
Group III Certificates: The Class III-A-1, Class III-P
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<PAGE> 71
and Class III-X Certificates.
Group III-L Regular Interests: The Class III-A-1-L,
Class III-P-L and Class III-X-L Regular Interests.
Group III Loans: The Mortgage Loans designated on the
Mortgage Loan Schedule as Group III Loans.
Group III Senior Certificates: The Class III-A-1, Class
III-X and Class III-P 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 (exclusive of the Class III-P Fraction thereof, with
respect to any Class III-P 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 lesser of (i) 100% and (ii) Class III-
A-1 Principal Balance divided by the aggregate Principal
Balance of the Group III Loans (less the Class III-P
Principal Balance), in each case immediately prior to the
Distribution Date.
Group III Senior Prepayment Percentage: See the
definition of "Group III Senior Prepayment Percentage"
herein.
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 (exclusive of the portion thereof
attributable to principal distributions to the Class III-P-L
Regular Interests pursuant to clauses (I)(c)(i) and
(II)(c)(i) of the definition of "REMIC II Distribution
Amount"), (b) the Group III Senior Prepayment Percentage of
the Principal Prepayment Amount for Loan Group III
(exclusive of the portion thereof attributable to principal
distributions to the Class III-P-L Regular Interests
pursuant to clauses (I)(c)(i) and (II)(c)(i) of the
definition of "REMIC II Distribution Amount") and (c) the
Group III Senior Liquidation Amount.
Group III Subordinate Balance: For any date of
determination, an amount equal to the then outstanding
aggregate Principal Balance of the Group III Loans reduced
by the sum of the Class III-A-1 Principal Balance and the
Class III-P Principal Balance.
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<PAGE> 72
Group III Subordinate Percentage: With respect to any
Distribution Date, the excess of 100% over the Group III
Senior Percentage for such date.
Group III Subordinate Prepayment Percentage: On any
Distribution Date for Loan Group III, the excess of 100%
over the Group III Senior Prepayment Percentage for such
Distribution Date; provided, however, that if the Class III-
A-1 Principal Balance has been reduced to zero, then the
Group III Subordinate Prepayment Percentage shall equal
100%.
Group III Subordinate Principal Prepayments
Distribution Amount: On any Distribution Date, the Group III
Subordinate Prepayment Percentage of the Principal
Prepayment Amount for Loan Group III (exclusive of the
portion thereof attributable to principal distributions to
the Class III-P-L Regular Interests pursuant to clause
(I)(c)(i) of the definition of "REMIC II Distribution
Amount").
Group IV Certificates: The Group IV-A, Class IV-P and
Class IV-X Certificates.
Group IV-A Certificates: The Class IV-A-1, Class IV-A-
2, Class IV-A-3, Class IV-A-4, Class IV-A-5, Class IV-A-6,
Class IV-A-7, Class IV-A-8 and Class IV-A-9 Certificates.
Group IV-A-L Regular Interests: The Class IV-A-1-L,
Class IV-A-2-L, Class IV-A-3-L, Class IV-A-4-L, Class IV-A-5-
L, Class IV-A-7-L, Class IV-A-8-L and Class IV-A-9-L Regular
Interests.
Group IV-L Regular Interests: The Group IV-A-L, Class
IV-P-L, Class IV-X-L and Class R-3-L Regular Interests.
Group IV Loans: The Mortgage Loans designated on the
Mortgage Loan Schedule as Group IV Loans.
Group IV Senior Certificates: The Group IV-A, Class IV-
X and Class IV-P Certificates.
Group IV Senior Liquidation Amount: The aggregate, for
each Group IV Loan which became a Liquidated Mortgage Loan
during the Prior Period, of the lesser of: (i) the Group IV
Senior Percentage of the Principal Balance of such Mortgage
Loan (exclusive of the Class IV-P Fraction thereof, with
respect to any Class IV-P Mortgage Loan), and (ii) the Group
IV Senior Prepayment Percentage of the Liquidation Principal
with respect to such Mortgage Loan.
Group IV Senior Percentage: With respect to any
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<PAGE> 73
Distribution Date, the lesser of (i) 100% and (ii) the
aggregate Class Principal Balance of the Group IV-A
Certificates and the Residual Certificates divided by the
aggregate Principal Balances of the Group IV Loans (less the
Class IV-P Principal Balance), in each case immediately
prior to the Distribution Date.
Group IV Senior Prepayment Percentage: See the
definition of "Group II Senior Prepayment Percentage"
herein.
Group IV Senior Principal Distribution Amount: For any
Distribution Date, an amount equal to the sum of (a) the
Group IV Senior Percentage of the Principal Payment Amount
for Loan Group IV (exclusive of the portion thereof
attributable to principal distributions to the Class IV-P-L
Regular Interests pursuant to clauses (I)(d)(i) and
(II)(d)(i) of the definition of "REMIC II Distribution
Amount"), (b) the Group IV Senior Prepayment Percentage of
the Principal Prepayment Amount for Loan Group IV (exclusive
of the portion thereof attributable to principal
distributions to the Class IV-P-L Regular Interests pursuant
to clauses (I)(d)(i) and (II)(d)(i) of the definition of
"REMIC II Distribution Amount") and (c) the Group IV Senior
Liquidation Amount.
Group IV Subordinate Balance: For any date of
determination, an amount equal to the then outstanding
aggregate Principal Balance of the Group IV Loans reduced by
the sum of the aggregate principal balance of the Class IV-A
Certificates, the Residual Certificates and the Class IV-P
Certificates.
Group IV Subordinate Percentage: With respect to any
Distribution Date, the excess of 100% over the Group IV
Senior Percentage for such date.
Group IV Subordinate Prepayment Percentage: On any
Distribution Date for Loan Group IV, the excess of 100% over
the Group IV Senior Prepayment Percentage for such
Distribution Date; provided, however, that if the aggregate
Class Principal Balance of the Group IV-A Certificates has
been reduced to zero, then the Group IV Subordinate
Prepayment Percentage shall equal 100%.
Group IV Subordinate Principal Prepayments Distribution
Amount: On any Distribution Date, the Group IV Subordinate
Prepayment Percentage of the Principal Prepayment Amount for
Loan Group IV (exclusive of the portion thereof attributable
to principal distributions to the Class IV-P-L Regular
Interests pursuant to clause (I)(d)(i) of the definition of
"REMIC II Distribution Amount").
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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: 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, any FHA insurance policy or VA guaranty and the CMAC
Policy.
Insured Certificates: The Class IV-A-5 Certificates.
Insured Payment: With respect to the Insured
Certificates, (i) as of any Distribution Date, any
Deficiency Amount and (ii) any Preference Amount.
Insurance Agreement: The Insurance Agreement, dated as
of November 1, 1998, among the Certificate Insurer, the
Trustee and the Company.
Interest Distribution Amount: On any Distribution Date,
for any Class of the REMIC I Regular Interests, the REMIC II
Regular Interests, the Class R-1 Certificates and the Class
R-2 Certificates, the amount of interest accrued on the
respective Class Principal Balance or Class Notional Amount,
as applicable, at the related Certificate Interest Rate
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-10-L, Class II-A-2-L,
Class IV-A-8-L and Class P-L Regular Interests and their
Corresponding Classes shall equal zero.
Interest Transfer Amount: On any Distribution Date for
each Undercollateralized Group, an amount equal to one
month's interest on the applicable Principal Transfer Amount
at 7.000% per annum if the Undercollateralized Group is Loan
Group II or Loan Group III and at 6.500% per annum if the
Undercollateralized Group is Loan Group IV, plus any
shortfall of interest on the Group II-L Regular Interests
(if the Undercollateralized Group is Loan Group II), the
Group III-L Regular Interests (if the Undercollateralized
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Group is Loan Group III) or the Group IV-L Regular Interests
(if the Undercollateralized Group is Loan Group IV) from
prior Distribution Dates.
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.
Junior Subordinate Certificates: The Class I-B-4, Class
I-B-5, Class I-B-6, Class C-B-4, Class C-B-5 and Class C-B-6
Certificates.
Late Payment Rate: The rate of interest publicly
announced by Citibank, N.A. at its principal office in New
York, New York as its prime rate (any change in such prime
rate of interest to be effective on the date such change is
announced by Citibank, N.A.) plus two (2) percentage points.
The Late Payment Rate shall be computed on the basis of a
year of 365 days calculating the actual number of days
elapsed. In no event shall the Late Payment Rate exceed the
maximum rate permissible under law applicable to the
Insurance Agreement limiting interest rates.
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 Class I-A-14
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
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thereof attributable to distributions to the Class P-L
Regular Interests pursuant to clauses (I)(a)(i), (I)(b)(i),
(I)(c)(i), (I)(d)(i), (II)(a)(i), (II)(b)(i), (II)(c)(i) and
(II)(d)(i) of the definition of "REMIC II Distribution
Amount") 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.
Loan Group: Loan Group I, Loan Group II, Loan Group III
or Loan Group IV, 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 Group IV: The group of Mortgage Loans comprised of
the Group IV 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.
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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:
(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 1998-12, 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 are endorsed in blank as of the Closing Date, the
Company shall, within 45 days of the Closing Date,
cause such Mortgage Notes to be endorsed 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 in blank and the
Company shall not be required to endorse such Mortgage
Notes pursuant to the terms otherwise 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
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Mortgaged Property is located and 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
1998-12" 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
1998-12" 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 in the event the assignments are executed in
blank as of the Closing Date, the Company shall, within 45
days of the Closing Date, cause such assignments to be
executed pursuant to the terms set forth herein; 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)(1) or clause (iii)(2);
(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 1998-12" and
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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;
(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;
(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
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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 Subgroup, if applicable.
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.
Mortgagor: The obligor on a Mortgage Note.
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.
Notice: The telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form
of Exhibit A attached to the Certificate Insurance Policy,
the original of which is subsequently delivered by
registered or certified mail, from the Trustee specifying
the Insured Payment which shall be due and owing on the
applicable Distribution Date.
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 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.
Overcollateralized Group: Loan Group II, if on any
Distribution Date such Loan Group is not an
Undercollateralized Group, Loan Group III, if on any
Distribution Date such Loan Group is not an
Undercollateralized Group and Loan Group IV, if on any
Distribution Date such Loan Group is not an
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Undercollateralized Group.
Owner: Each Holder of an Insured Certificate who, on
the applicable Distribution Date, is entitled under the
terms of the Insured Certificates to payment thereunder.
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 and (ii) the Master Servicing Fee. 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
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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.
Payoff Period: With respect to the first Distribution
Date, the period from the Cut-Off Date through December 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 IV-A-6 and Class X Certificates),
its Certificate Principal Balance divided by the
applicable Class Principal Balance;
(ii) with respect to the Class X and Class IV-A-6
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
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the Class X, Class IV-A-6 and Class R-2 Certificates),
the product of (x) ninety-two (92%) 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
Certificates and the Class IV-A-6 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
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, REMIC II or REMIC III, 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.
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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.
Preference Amount: Any amount previously distributed to
an Insured Certificateholder on the Insured Certificates
that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United
States Bankruptcy Code (11 U.S.C.), as amended from time to
time in accordance with a final nonappealable order of a
court having competent jurisdiction.
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.
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, 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
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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 and (iii) any other unscheduled payments of
principal which were received with respect to any Mortgage
Loan during the Prior Period, other than Payoffs,
Curtailments and Liquidation Principal.
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.
Principal Transfer Amount: On any Distribution Date for
each Undercollateralized Group, the excess, if any, of the
aggregate Class Principal Balance of the Class A-L Regular
Interests of such Undercollateralized Group over the
aggregate Principal Balance of the Mortgage Loans in the
related Loan Group (less the applicable Class P Fraction of
any Class P Mortgage Loans in such Loan Group).
Prior Period: The calendar month immediately preceding
any Distribution Date.
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Pro Rata Allocation: (i) With respect to losses on
Group I Loans, the allocation of the principal portion of
Realized Losses to the outstanding Group I-L Regular
Interests (other than the Class I-P-L Regular Interests),
pro rata according to their respective Class Principal
Balances, in reduction of their respective Class Principal
Balances (except if the loss is recognized with respect to a
Class I-P Mortgage Loan, in which case the Class I-P
Fraction of such loss will first be allocated to the Class I-
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 Group
I-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 respective Class
Principal Balances (other than the Class I-A-10-L and Class
I-P-L Regular Interests); and (ii) with respect to losses on
Group II Loans, Group III Loans and Group IV Loans, the
allocation of the principal portion of Realized Losses
relating to a Group II Loan, Group III Loan or Group IV Loan
to all Classes of the Group II-L, Group III-L, Group IV-L
and Group C-B-L Regular Interests (other than the related
Class P-L and Class II-A-2-L Regular Interests) pro rata
according to their respective Class Principal Balances
(except (A) if the loss is recognized with respect to a
Class P Mortgage Loan, in which case the applicable Class P
Fraction of such loss will first be allocated to the related
Class P-L Regular Interests, and the remainder of such loss
will be allocated as set forth above or (B) if the loss is
recognized with respect to a Subgroup II-3 Loan, in which
case the applicable Class II-A-2 Fraction of such loss will
first be allocated to the Class II-A-2-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 all Classes of the Group II-L, Group III-
L, Group IV-L and Group C-B-L Regular Interests and the
Class C-X-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 (other than the Class II-A-2-L,
Class IV-A-8-L and Class P-L Regular Interests). Any losses
allocated among the outstanding Classes of REMIC II Regular
Interests pursuant to this definition of "Pro Rata
Allocation" shall also be allocated to the Corresponding
Classes of Certificates in the same manner and amounts as
they reduce such attributes of such Classes of REMIC I
Regular Interests; provided, however, that the interest
portion of such losses allocated to the Class IV-A-7-L
Regular Interests and applied to reduce the Interest
Distribution Amount thereof shall be allocated to the Class
IV-A-6 and Class IV-A-7 Certificates in reduction of the
distribution of interest to such Certificates pursuant to
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the distributions set forth in clause (d)(ii) of the
definition of "REMIC III Distribution Amount", pro rata
according to the allocation set forth in such clause.
Prospectus: The Prospectus, dated November 25, 1998,
and the Prospectus Supplement, dated November 25, 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.
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 the Class I-
A-14 Certificates (as described in Section 4.06), the method
by which DTC will determine which Class I-A-14 Certificates
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 DCR and
thereafter, each nationally recognized statistical rating
organization that has rated the Certificates at the request
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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 (determined in the case of the Insured
Certificates, without regard to the Certificate Insurance
Policy).
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, Special Hazard Losses, Fraud Losses
and Bankruptcy Losses on Group I, Group III and Group IV
Loans shall be allocated to the REMIC I Regular Interests as
follows: The interest portion of Realized Losses, if any,
shall be allocated among the Classes of REMIC I Regular
Interests related to such Loan Groups pro rata according to
the amount of interest accrued but unpaid thereon, in
reduction thereof (i.e. the "related" Loan Group for the
Class Z-3, Class Y-3 and Class III-X-M Regular Interests and
the portion of the Class C-X Regular Interests that derives
its interest from the Class C-X Group III Notional Amount is
Loan Group III, the "related" Loan Group for the Class Z-4,
Class Y-4 and Class IV-X-M Regular Interests is Loan Group
IV and the "related" Loan Group for the Class W and Class I-
X-M Regular Interests is Loan Group I). Any interest portion
of Realized Losses 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 Mortgage Loan in such Loan Group and allocated
pursuant to the succeeding sentences. The applicable Class P
Fraction of any principal portion of Realized Losses
attributable to a Class P Mortgage Loan in the Loan Group
shall be allocated to the related Class P-M Regular
Interests in reduction of the principal balance thereof. The
remainder of the principal portion of Realized Losses shall
be allocated, first, to the Class Y Regular Interests
related to the Loan Group to the extent of the applicable
Class Y Principal Reduction Amount in reduction of the Class
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Principal Balance of such Regular Interests and, second, the
remainder, if any, of such principal portion of Realized
Losses shall be allocated to the related Class Z Regular
Interests in reduction of the Class Principal Balance
thereof.
Realized Losses with respect to each of the Subgroup II-
1, Subgroup II-2 and Subgroup II-3 Loans shall be allocated
to the REMIC I 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" Subgroups for the Class Z-
1 and Class Y-1 Regular Interests are Subgroup II-1 and
Subgroup II-2 and the "related" Subgroup for the Class Z-2
and Class Y-2 Regular Interests is Subgroup II-3) and the
Class II-X-M and Class C-X-M 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 II-X-M and Class
C-X-M Regular Interests, the portion of the amount of
interest accrued but unpaid thereon attributable to such
Subgroup (which, for purposes of accrued and unpaid interest
on the Class C-X-L Regular Interests, includes only the
portion thereof that derives its interest from the Class C-X
Group II Notional Amount), in each case in reduction
thereof. Any interest portion of such Realized Losses with
respect to the Group II 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 II Loan and allocated
pursuant to the succeeding sentences. The applicable Class
II-P Fraction of any principal portion of such Realized
Losses attributable to a Class II-P Mortgage Loan shall be
allocated to the Class II-P-M 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 II-1, Subgroup II-2 and Subgroup II-3 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, Special Hazard Losses, Fraud Losses
and Bankruptcy Losses allocated to any Class of REMIC II
Regular Interests shall also be allocated to the
Corresponding Class of Certificates thereof and applied to
reduce the Class Principal Balance of such Corresponding
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Class in the same manner and amounts as they reduce such
attributes of such Class of REMIC II 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 in excess of Group I
Special Hazard Coverage, Fraud Losses in excess of Group I
Fraud Coverage and Bankruptcy Losses in excess of Group I
Bankruptcy Coverage, Realized Losses with respect to the
Group I Loans shall be allocated among the Group I-L Regular
Interests (i) for Realized Losses allocable to principal (a)
first, to the Class I-B-6-L Regular Interests, until the
Class I-B-6-L Principal Balance has been reduced to zero,
(b) second, to the Class I-B-5-L Regular Interests, until
the Class I-B-5-L Principal Balance has been reduced to
zero, (c) third, to the Class I-B-4-L Regular Interests,
until the Class I-B-4-L Principal Balance has been reduced
to zero, (d) fourth, to the Class I-B-3-L Regular Interests,
until the Class I-B-3-L Principal Balance has been reduced
to zero, (e) fifth, to the Class I-B-2-L Regular Interests,
until the Class I-B-2-L Principal Balance has been reduced
to zero, (f) sixth, to the Class I-B-1-L Regular Interests,
until the Class I-B-1-L Principal Balance has been reduced
to zero, and (g) seventh, to the Group I-A-L Regular
Interests, pro rata according to their Class Principal
Balances in reduction of their respective Class Principal
Balances, as applicable; 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-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 I-B-6-L Regular Interests, in reduction
of accrued but unpaid interest thereon and then in reduction
of the Class I-B-6-L Principal Balance, (b) second, to the
Class I-B-5-L Regular Interests, in reduction of accrued but
unpaid interest thereon and then in reduction of the Class I-
B-5-L Principal Balance, (c) third, to the Class I-B-4-L
Regular Interests, in reduction of accrued but unpaid
interest thereon and then in reduction of the Class I-B-4-L
Principal Balance, (d) fourth, to the Class I-B-3-L Regular
Interests, in reduction of accrued but unpaid interest
thereon and then in reduction of the Class I-B-3-L Principal
Balance, (e) fifth, to the Class I-B-2-L Regular Interests,
in reduction of accrued but unpaid interest thereon and then
in reduction of the Class I-B-2-L Principal Balance, (f)
sixth, to the Class I-B-1-L Regular Interests, in reduction
of accrued but unpaid interest thereon and then in reduction
of the Class I-B-1-L Principal Balance, and (g) seventh, to
the Group I-A-L Regular Interests (other than the Class I-A-
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10-L Regular Interests) and the Class I-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 of their respective Class
Principal Balances.
Except for Special Hazard Losses in excess of the
Combined Special Hazard Coverage, Fraud Losses in excess of
the Combined Fraud Coverage and Bankruptcy Losses in excess
of the Combined Bankruptcy Coverage, Realized Losses with
respect to the Group II Loans, the Group III Loans and the
Group IV Loans shall be allocated among the Group II-L,
Group III-L, Group IV-L and Group C-B-L Regular Interests
and the Class C-X-L Regular Interests (i) for Realized
Losses allocable to principal (a) first, to the Class C-B-6-
L Regular Interests, until the Class C-B-6-L Principal
Balance has been reduced to zero, (b) second, to the Class C-
B-5-L Regular Interests, until the Class C-B-5-L Principal
Balance has been reduced to zero, (c) third, to the Class C-
B-4-L Regular Interests, until the Class C-B-4-L Principal
Balance has been reduced to zero, (d) fourth, to the Class C-
B-3-L Regular Interests, until the Class C-B-3-L Principal
Balance has been reduced to zero, (e) fifth, to the Class C-
B-2-L Regular Interests, until the Class C-B-2-L Principal
Balance has been reduced to zero, (f) sixth, to the Class C-
B-1-L Regular Interests, until the Class C-B-1-L Principal
Balance has been reduced to zero, (g) seventh, if the
Realized Loss is recognized with respect to a Subgroup II-3
Loan, to the Class II-A-2-L Regular Interests, the
applicable Class II-A-2 Fraction of such loss, until the
Class II-A-2-L Principal Balance has been reduced to zero
and (h) eighth, to (I) the Class II-A-1-L Regular Interests,
(II) the Class III-A-1-L Regular Interests or (III) the
Group IV-A-L Regular Interests, as applicable, pro rata,
according to their respective Class Principal Balances in
reduction thereof; provided, however, that if the loss is
recognized with respect to a Class P Mortgage Loan, the
applicable Class P Fraction of such loss will first be
allocated to the related Class 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 C-B-6-L
Regular Interests, in reduction of accrued but unpaid
interest thereon and then in reduction of the Class C-B-6-L
Principal Balance, (b) second, to the Class C-B-5-L Regular
Interests, in reduction of accrued but unpaid interest
thereon and then in reduction of the Class C-B-5-L Principal
Balance, (c) third, to the Class C-B-4-L Regular Interests,
in reduction of accrued but unpaid interest thereon and then
in reduction of the Class C-B-4-L Principal Balance, (d)
fourth, to the Class C-B-3-L Regular Interests, in reduction
of accrued but unpaid interest thereon and then in reduction
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of the Class C-B-3-L Principal Balance, (e) fifth, to the
Class C-B-2-L Regular Interests, in reduction of accrued but
unpaid interest thereon and then in reduction of the Class C-
B-2-L Principal Balance, (f) sixth, to the Class C-B-1-L
Regular Interests, in reduction of accrued but unpaid
interest thereon and then in reduction of the Class C-B-1-L
Principal Balance, and (g) seventh, to (I) the Class II-A-1-
L Regular Interests, the Class II-X-L Regular Interests and
the portion of the Class C-X-L Regular Interests that
derives its interest from the Class C-X Group II Notional
Amount, (II) the Class III-A-1-L Regular Interests, the
Class III-X-L Regular Interests and the portion of the Class
C-X-L Regular Interests that derives its interest from the
Class C-X Group III Notional Amount or (III) the Group IV-A-
L Regular Interests and the Class IV-X-L Regular Interests,
as applicable, pro rata according to accrued but unpaid
interest on such Classes of REMIC II Regular Interests and
then in reduction of the Class Principal Balances of the
Class II-A-1-L, the Class III-A-1-L Regular Interests or the
Group IV-A-L Regular Interests (other than the Class IV-A-8-
L Regular Interests), as applicable. If on any Distribution
Date multiple losses are to be allocated both to the Group C-
B-L Regular Interests pursuant to clause (i)(a) through (f)
and to other Regular Interests pursuant to clauses (i)(g)
and (i)(h), then each such loss shall be so allocated, in
the same proportions as such losses in the aggregate. In the
case of clause (i)(h) and (ii)(g) of this paragraph, losses
on Group II Loans will only be allocated to the Group II-L
Regular Interests, losses on Group III Loans will only be
allocated to the Group III-L Regular Interests and losses on
Group IV Loans will only be allocated to the Group IV-L
Regular Interests. In the case of clause (ii)(g) and with
respect to the Class C-X Certificates, Realized Losses on
Group II Loans will only be allocated to the portion of the
accrued and unpaid interest on the Class C-X Certificates
attributable to the Class C-X Group II Notional Amount and
Realized Losses on Group III Loans will only be allocated to
the portion of the accrued and unpaid interest on the Class
C-X Certificates attributable to the Class C-X Group III
Notional Amount.
If, as a result of the allocation of losses pursuant to
the immediately preceding paragraph, the Senior Component
Balance for a Subgroup becomes greater than the aggregate
Principal Balance of the Mortgage Loans in such Subgroup,
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 Subordinate Component Balances
for such Subgroups.
Special Hazard Losses on Group I Loans in excess of the
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Group I Special Hazard Coverage, Fraud Losses on Group I
Loans in excess of the Group I Fraud Coverage, and
Bankruptcy Losses on Group I Loans in excess of the Group I
Bankruptcy Coverage shall be allocated among the Group I
Certificates by Pro Rata Allocation.
Special Hazard Losses on Group II Loans, Group III
Loans and Group IV Loans in excess of the Combined Special
Hazard Coverage, Fraud Losses on Group II Loans, Group III
Loans and Group IV Loans in excess of the Combined Fraud
Coverage, and Bankruptcy Losses on Group II Loans, Group III
Loans and Group IV Loans in excess of the Combined
Bankruptcy Coverage shall be allocated among the Group II-L,
Group III-L, Group IV-L and Group C-B-L Regular Interests
and the Class C-X-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-L Regular Interests 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 I Available
Distribution Amount for the Group I Loans, and all losses in
respect of each such Mortgage Loans that have been allocated
to the Group I-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 most junior
Class of Group I-B-L Regular Interests, in reduction of the
Class Principal Balance thereof.
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, Group III-L, Group IV-L and Group C-
B-L Regular Interests exceeds the aggregate principal
balance of the Group II Loans, the Group III Loans and the
Group IV 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 II-L,
Group III-L and Group IV-L Regular Interests, and all losses
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in respect of each such Mortgage Loan that have been
allocated to the REMIC II 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 most junior Class of Group C-B-L Regular Interests,
in reduction of the Class Principal Balance thereof.
Record Date: The last Business Day of the month
immediately preceding the month of the related Distribution
Date.
Regular Interest Group: Any of the Group I-L, Group II-
L, Group III-L, Group IV-L and Group C-B-L Regular
Interests.
Regular Interests: (i) With respect to REMIC I, the
REMIC I Regular Interests and (ii) with respect to REMIC II,
the REMIC II Regular Interests.
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-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
Subgroup II-1, Subgroup II-2 and Subgroup II-3 shall be
allocated among the Group II-L Regular Interests and the
Class C-X-L Regular Interests, pro rata according to the
Interest Distribution Amount (or, in the case of the Class C-
X-L Regular Interests, only the portion of its Interest
Distribution Amount derived from the Class C-X Group II
Notional Amount) to which each such Class would otherwise be
entitled, in each case in reduction thereof.
Interest shortfalls related to the Relief Act for Loan
Group III shall be allocated to the Group III-L Regular
Interests and the Class C-X-L Regular pro rata according to
the amount of the Interest Distribution Amount (or, in the
case of the Class C-X-L Regular Interests, only the portion
of its Interest Distribution Amount derived from the Class C-
X Group III Notional Amount) to which each such Class would
otherwise be entitled in reduction thereof.
Interest shortfalls related to the Relief Act for Loan
Group IV shall be allocated to the Group IV-L Regular
Interests and the Class R-1 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
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<PAGE> 96
in reduction thereof.
Interest shortfalls related to the Relief Act for each
of Subgroup II-1, Subgroup II-2 and Subgroup II-3 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 II-
1 and Subgroup II-2 and the "related" Subgroup for the Class
Z-2 and Class Y-2 Regular Interests is Subgroup II-3) and
the Class II-X-L and Class C-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 II-X-L Regular Interests
and the Class C-X-L Regular Interests, the portion of the
Interest Distribution Amount to which such Class would
otherwise be entitled attributable to such Subgroup (which,
in the case of the Class C-X-L Regular Interests, includes
only the portion of its Interest Distribution Amount derived
from the Class C-X Group II Notional Amount), in each case
in reduction thereof.
Interest shortfalls related to the Relief Act for Loan
Group III shall be allocated to the Class III-X-M, Class C-X-
M, Class Y-3 and Class Z-3 Regular Interests, pro rata
according to the amount of the Interest Distribution Amount
(or, in the case of the Class C-X-M Regular Interests, only
the portion of its Interest Distribution Amount derived from
the Class C-X Group III Notional Amount) to which each such
Class of Regular Interests would otherwise be entitled in
reduction thereof.
Interest shortfalls related to the Relief Act for Loan
Group IV shall be allocated to the Class IV-X-M, Class Y-4
and Class Z-4 Regular Interests, pro rata according to the
amount of the Interest Distribution Amount to which each
such Class of Regular Interests would otherwise be entitled
in reduction thereof.
Interest shortfalls related to the Relief Act for Loan
Group I shall be allocated to the Class W, Class I-X-M and
Class I-P-M Regular Interests, pro rata according to the
amount of the Interest Distribution Amount to which each
such Class of Regular Interests would otherwise be entitled
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
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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: With respect to
each Loan Group or Subgroup on any Distribution Date, 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,
Liquidation Proceeds 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 or subsequent to
such Distribution 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;
(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
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Agreement;
(f) the sum of the Master Servicing Fee and
the Servicing Fee for each Mortgage Loan and, with
respect to Loan Group IV, the Certificate Insurer
Premium; 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: For any Distribution Date,
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) To the extent of the REMIC I Available
Distribution Amount for Loan Group I:
(i) first, to the Class I-P-M 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
<PAGE>
<PAGE> 99
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 Class W and Class I-X-M
Regular Interests, concurrently, the Interest
Distribution Amounts for such Classes of Regular
Interests remaining unpaid from previous Distribution
Dates;
(iii) third, to the Class W and Class I-X-M
Regular Interests, concurrently, the Interest
Distribution Amounts for such Classes of Regular
Interests for the current Distribution Date;
(iv) fourth, to the Class W Regular Interests,
until the Class W Principal Balance has been reduced to
zero; and
(v) fifth, to the Class R-1 Certificates, the
Residual Distribution Amount for Loan Group I for such
Distribution Date.
(b) To the extent of the REMIC I Available
Distribution Amount for Loan Group II:
(i) first, to the Class II-P-M Regular
Interests, the aggregate for all of the 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-X-M, Class C-X-
M, Class Y-1, Class Y-2, Class Z-1 and Class Z-2
Regular Interests, concurrently, the sum of the
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<PAGE> 100
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;
(iii) third, to the Class II-X-M, Class C-X-
M, Class Y-1, Class Y-2, Class Z-1 and Class Z-2
Regular Interests, concurrently, 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; provided, however, that for
purposes of the Interest Distribution Amount payable
to the Class C-X-M Regular Interests pursuant to
clause (b)(ii) or this clause (b)(iii), only the
portion thereof derived from the Class C-X Group II
Notional Amount shall be payable pursuant to clause
(b)(ii) or this clause (b)(iii);
(iv) fourth, to the Class Y-1, Class Y-2, Class
Z-1 and Class Z-2 Regular Interests, the Class Y-1
Principal Distribution Amount, the Class Y-2 Principal
Distribution Amount, the Class Z-1 Principal
Distribution Amount and the Class Z-2 Principal
Distribution Amount, respectively; and
(v) fifth, to the Class R-1 Certificates, the
Residual Distribution Amount for Loan Group II for such
Distribution Date.
(c) To the extent of the REMIC I Available Distribution
Amount for Loan Group III:
(i) first, to the Class III-P-M Regular
Interests, the aggregate for all of the Class III-P
Mortgage Loans of the product for each Class III-P
Mortgage Loan of the applicable Class III-P Fraction
and the sum of (x) scheduled payments of principal
on such Class III-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 III-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
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<PAGE> 101
of Payoffs received in respect of such Class III-P
Mortgage Loan during the Payoff Period;
(ii) second, to the Class III-X-M, Class C-X-
M, Class Y-3 and Class Z-3 Regular Interests,
concurrently, 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;
(iii) third, to the Class III-X-M, Class C-X-
M, Class Y-3 and Class Z-3 Regular Interests,
concurrently, 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;
provided, however, that for purposes of the Interest
Distribution Amount payable to the Class C-X-M
Regular Interests pursuant to clause (c)(ii) or this
clause (c)(iii), only the portion thereof derived
from the Class C-X Group III Notional Amount shall
be payable pursuant to clause (c)(ii) or this clause
(c)(iii);
(iv) fourth, to the Class Y-3 and Class Z-3
Regular Interests, the Class Y-3 Principal
Distribution Amount and the Class Z-3 Principal
Distribution Amount, respectively; and
(iv) fifth, to the Class R-1 Certificates, the
Residual Distribution Amount for Loan Group III for
such Distribution Date.
(d) To the extent of the REMIC I Available Distribution
Amount for Loan Group IV:
(i) first, to the Class IV-P-M Regular
Interests, the aggregate for all of the Class IV-P
Mortgage Loans of the product for each Class III-P
Mortgage Loan of the applicable Class IV-P Fraction
and the sum of (x) scheduled payments of principal
on such Class IV-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 IV-P Mortgage Loan
during the Prior Period of (1) Curtailments, (2)
Insurance Proceeds, (3) the amount, if any, of the
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<PAGE> 102
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 IV-P
Mortgage Loan during the Payoff Period;
(ii) second, to the Class IV-X-M, Class Y-4
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 IV-X-M, Class Y-4
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 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;
(v) fifth, to the Class Y-4 and Class Z-4
Regular Interests, the Class Y-4 Principal
Distribution Amount and the Class Z-4 Principal
Distribution Amount, respectively; and
(vi) sixth, to the Class R-1 Certificates, the
Residual Distribution Amount for Loan Group IV 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 Certificate Insurance Policy.
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 Holders of the REMIC II Regular Interests
and the Class R-2 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
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<PAGE> 103
the Group I-L Regular Interests, on any Distribution Date,
the aggregate of all distributions with respect to the Class
I-X-M, Class I-P-M and Class W Regular Interests. With
respect to the Group II-L Regular Interests, on any
Distribution Date, the aggregate of all distributions with
respect to the Class II-X-M, Class II-P-M, Class Y-1, Class
Y-2, Class Z-1 and Class Z-2 Regular Interests and the
portion of the distributions on the Class C-X-M Regular
Interests paid pursuant to clause (b) of the definition of
REMIC I Distribution Amount. With respect to the Group III-L
Regular Interests, on any Distribution Date, the aggregate
of all distributions with respect to the Class III-X-M,
Class III-P-M, Class Y-3 and Class Z-3 Regular Interests and
the portion of the distributions on the Class C-X-M Regular
Interests paid pursuant to clause (c) of the definition of
REMIC I Distribution Amount. With respect to the Group IV-L
Regular Interests, on any Distribution Date, the aggregate
of all distributions with respect to the Class IV-X-M, Class
IV-P-M, Class Y-4 and Class Z-4 Regular Interests.
REMIC II Distribution Amount: (I) For any Distribution
Date prior to the Group I Credit Support Depletion Date or
the Combined Credit Support Depletion Date, as applicable,
the REMIC II Available Distribution Amount shall be
distributed to the REMIC II Regular Interests and the Class
R-2 Certificates in the following amounts and priority:
(a) With respect to the Group I-L Regular Interests
and the 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-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class I-P-L Regular Interests,
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
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<PAGE> 104
respect of such Class I-P Mortgage Loan during the
Payoff Period;
(ii) second, to the Group I-A-L and Class I-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;
(iii) third, to the Group I-A-L and Class I-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 I-A-L Regular Interests,
as principal, the Group I Senior Principal Distribution
Amount, as follows:
(a) first, to the Class I-A-3-L Regular
Interests, an amount, up to the amount of the
Class I-A-3 Priority Amount for such Distribution
Date, until the Class I-A-3-L Principal Balance
has been reduced to zero;
(b) second, concurrently, until the Class I-
A-12-L Principal Balance has been reduced to zero,
as follows:
(1) 85.2694608666%, sequentially, as
follows:
(A) first, concurrently,
89.1629860180% to the Class I-A-1-L
Regular Interests and 10.8370139820% to
the Class I-A-13-L Regular Interests,
until the Class I-A-13-L Principal
Balance has been reduced to zero;
(B) second, to the Class I-A-1-L
Regular Interests, until the Class I-A-1-
L Principal Balance has been reduced to
zero; and
(C) third, concurrently, as
follows:
(I) 1.8400982698% to the
Class I-A-10-L Regular Interests,
until the Class I-A-10-L Principal
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<PAGE> 105
Balance has been reduced to zero;
(II) 15.3341522481%,
sequentially, as follows:
(x) first, to the Class I-
A-5-L Regular Interests, until
the Class I-A-5-L Principal
Balance has been reduced to
zero;
(y) second, to the Class
I-A-11-L Regular Interests,
until the Class I-A-11-L
Principal Balance has been
reduced to zero; and
(z) third, to the Class I-
A-12-L Regular Interests,
until the Class I-A-12-L
Principal Balance has been
reduced to zero;
(III) 49.6954496893% to
the Class I-A-2-L Regular
Interests, until the Class I-A-2-L
Principal Balance has been reduced
to zero; and
(IV) 33.1302997928%,
sequentially, as follows:
(w) first, to the Class I-
A-4-L Regular Interests, until
the Class I-A-4-L Principal
Balance has been reduced to
zero;
(x) second, to the Class
I-A-6-L Regular Interests,
until the Class I-A-6-L
Principal Balance has been
reduced to zero;
(y) third, to the Class I-
A-7-L Regular Interests, until
the Class I-A-7-L Principal
Balance has been reduced to
zero; and
(z) fourth, to the Class
I-A-8-L and Class I-A-14-L
<PAGE>
<PAGE> 106
Regular Interests, pro rata,
until their respective Class
Principal Balances have each
been reduced to zero; and
(2) 14.7305391334%, sequentially, as
follows:
(A) first, to the Class I-A-9-L
Regular Interests, until the Class I-A-9-
L Principal Balance has been reduced to
zero; and
(B) second, concurrently, as
follows:
(I) 10.7142857143% to the
Class I-A-10-L Regular Interests,
until the Class I-A-10-L Principal
Balance has been reduced to zero;
and
(II) 89.2857142857%,
sequentially, as follows:
(x) first, to the Class I-
A-5-L Regular Interests, until
the Class I-A-5-L Principal
Balance has been reduced to
zero;
(y) second, to the Class
I-A-11-L Regular Interests,
until the Class I-A-11-L
Principal Balance has been
reduced to zero; and
(z) third, to the Class I-
A-12-L Regular Interests,
until the Class I-A-12-L
Principal Balance has been
reduced to zero; and
(c) third, to the Class I-A-3-L Regular
Interests, until the Class I-A-3-L Principal
Balance has been reduced to zero;
(v) fifth, to the Class I-P-L Regular Interests,
to the extent of amounts otherwise available to pay the
Group I Subordinate Principal Distribution Amount
(without regard to clause (B) of the definition
thereof) on such Distribution Date, the amount payable
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<PAGE> 107
to the Class I-P-L Regular Interests 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-L Regular Interests,
to the extent of amounts otherwise available to pay the
Group I Subordinate Principal Distribution Amount
(without regard to clause (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 allocated to the Class I-P-L Regular
Interests (other than a Realized Loss that is allocated
by Pro Rata Allocation) 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-L Principal
Balance;
(vii) seventh, to the Class I-B-1-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(viii) eighth, to the Class I-B-1-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(ix) ninth, to the Class I-B-1-L Regular
Interests, the portion of the Group I Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group I Subordinate Principal Distribution Amount",
until the Class I-B-1-L Principal Balance has been
reduced to zero;
(x) tenth, to the Class I-B-2-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xi) eleventh, to the Class I-B-2-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(xii) twelfth, to the Class I-B-2-L Regular
Interests, the portion of the Group I Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
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<PAGE> 108
"Group I Subordinate Principal Distribution Amount",
until the Class I-B-2-L Principal Balance has been
reduced to zero;
(xiii) thirteenth, to the Class I-B-3-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xiv) fourteenth, to the Class I-B-3-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(xv) fifteenth, to the Class I-B-3-L Regular
Interests, the portion of the Group I Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group I Subordinate Principal Distribution Amount",
until the Class I-B-3-L Principal Balance has been
reduced to zero;
(xvi) sixteenth, to the Class I-B-4-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xvii) seventeenth, to the Class I-B-4-L
Regular Interests, the Interest Distribution Amount for
such Class of Regular Interests for the current
Distribution Date;
(xviii) eighteenth, to the Class I-B-4-L Regular
Interests, the portion of the Group I Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group I Subordinate Principal Distribution Amount",
until the Class I-B-4-L Principal Balance has been
reduced to zero;
(xix) nineteenth, to the Class I-B-5-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xx) twentieth, to the Class I-B-5-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(xxi) twenty-first, to the Class I-B-5-L
Regular Interests, the portion of the Group I
<PAGE>
<PAGE> 109
Subordinate Principal Distribution Amount allocable to
such Class of Regular Interests pursuant to the
definition of "Group I Subordinate Principal
Distribution Amount", until the Class I-B-5-L Principal
Balance has been reduced to zero;
(xxii) twenty-second, to the Class I-B-6-L
Regular Interests, the Interest Distribution Amount for
such Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xxiii) twenty-third, to the Class I-B-6-L
Regular Interests, the Interest Distribution Amount for
such Class of Regular Interests for the current
Distribution Date;
(xxiv) twenty-fourth, to the Class I-B-6-L
Regular Interests, the portion of the Group I
Subordinate Principal Distribution Amount allocable to
such Class of Regular Interests pursuant to the
definition of "Group I Subordinate Principal
Distribution Amount", until the Class I-B-6-L Principal
Balance has been reduced to zero;
(xxv) twenty-fifth, to each Class of Group I-B-
L Regular Interests in the order of seniority, the
remaining portion, if any, of the REMIC II Available
Distribution Amount for the Group I-L Regular
Interests, 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)(xxv) of this definition of "REMIC II
Distribution Amount" shall not cause a further
reduction in the Class Principal Balances of the Group
I-B-L Regular Interests; and
(xxvi) twenty-sixth, to the Class R-2
Certificates, the Residual Distribution Amount for the
Group I-L Regular Interests for such Distribution Date;
(b) With respect to the Group II-L Regular Interests
and the Class C-X-L Regular Interests on any Distribution
Date prior to the Combined Credit Support Depletion Date, to
the extent of the REMIC II Available Distribution Amount for
the Group II-L Regular Interests 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
<PAGE>
<PAGE> 110
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, Class II-X-L
and Class C-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;
(iii) third, to the Class II-A-1-L, Class II-X-
L and Class C-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; provided, however, that for
purposes of the Interest Distribution Amount payable to
the Class C-X-L Regular Interests pursuant to clause
(I)(b)(ii) or this clause (I)(b)(iii), only the portion
thereof derived from the Class C-X Group II Notional
Amount shall be payable pursuant to clause (I)(b)(ii)
or this clause (I)(b)(iii); and
(iv) fourth, to the Group II-A-L Regular
Interests, as principal, the Group II Senior Principal
Distribution Amount, as follows:
(a) first, to the Class II-A-2-L Regular
Interests, an amount, up to the amount of the
Class II-A-2 Principal Distribution Amount for
such Distribution Date, until the Class II-A-2-L
Principal Balance has been reduced to zero; and
(b) second, to the Class II-A-1-L Regular
Interests, until the Class II-A-1-L Principal
Balance has been reduced to zero;
(c) With respect to the Group III-L Regular Interests
and the Class C-X-L Regular Interests on any Distribution
<PAGE>
<PAGE> 111
Date prior to the Combined Credit Support Depletion Date, to
the extent of the REMIC II Available Distribution Amount for
the Group III-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class III-P-L Regular
Interests, the aggregate for all Class III-P Mortgage
Loans of the product for each Class III-P Mortgage Loan
of the applicable Class III-P Fraction and the sum of
(x) scheduled payments of principal on such Class III-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 III-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 III-P Mortgage Loan during the
Payoff Period;
(ii) second, to the Class III-A-1-L, Class C-X-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;
(iii) third, to the Class III-A-1-L, Class C-X-
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; provided, however, that for
purposes of the Interest Distribution Amount payable to
the Class C-X-L Regular Interests pursuant to clause
(I)(c)(ii) or this clause (I)(c)(iii), only the portion
thereof derived from the Class C-X Group III Notional
Amount shall be payable pursuant to clause (I)(c)(ii)
or this clause (I)(c)(iii); and
(iv) fourth, to the Class III-A-1-L Regular
Interests, as principal, the Group III Senior Principal
Distribution Amount;
(d) With respect to the Group IV-L Regular Interests
and the Class R-2 Certificates on any Distribution Date
<PAGE>
<PAGE> 112
prior to the Combined Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the
Group IV-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class IV-P-L Regular Interests,
the aggregate for all Class IV-P Mortgage Loans of the
product for each Class IV-P Mortgage Loan of the
applicable Class IV-P Fraction and the sum of (x)
scheduled payments of principal on such Class IV-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 IV-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 IV-P Mortgage Loan during the
Payoff Period;
(ii) second, to the Group IV-A-L, Class IV-X-L and
Class R-3-L Regular Interests and the Class R-2
Certificates, 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;
(iii) third, to the Group IV-A-L, Class IV-X-L
and Class R-3-L Regular Interests and the Class R-2
Certificates, 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 IV-A-L and Class R-3-L
Regular Interests and the Class R-2 Certificates, as
principal, the Group IV Senior Principal Distribution
Amount, concurrently, as follows:
(a) 27.6267255335%, sequentially, as
follows:
(1) first, to the Class IV-A-3-L
Regular Interests, an amount, up to the
amount of the Class IV-A-3 Priority
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<PAGE> 113
Amount for such Distribution Date, until
the Class IV-A-3-L Principal Balance has
been reduced to zero;
(2) second, sequentially, to the
Class R-2 Certificates and the Class R-3-
L Regular Interests, until their
respective Class Principal Balances have
each been reduced to zero;
(3) third, to the Class IV-A-1-L
and Class IV-A-7-L Regular Interests,
pro rata, until their respective Class
Principal Balances have each been
reduced to zero;
(4) fourth, concurrently, until
the Class IV-A-8-L Principal Balance has
been to zero, as follows:
(A) 3.7037118744% to the
Class IV-A-8-L Regular Interests;
and
(B) 96.2962881256%,
sequentially, as follows:
(x) first, to the Class
IV-A-2-L Regular Interests,
until the Class IV-A-2-L
Principal Balance has been
reduced to zero; and
(y) second, to the Class
IV-A-9-L Regular Interests,
until the Class IV-A-9-L
Principal Balance has been
reduced to zero; and
(5) fifth, to the Class IV-A-3-L
Regular Interests, until the Class IV-A-
3-L Principal Balance has been reduced
to zero;
(b) 13.5000134561% to the Class IV-A-4-L
Regular Interests, until the Class IV-A-4-L
Principal Balance has been reduced to zero; and
(c) 58.8732610104% to the Class IV-A-5-L
Regular Interests, until the Class IV-A-5-L
Principal Balance has been reduced to zero;
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(e) With respect to the Group C-B-L, Class II-P-L,
Class III-P-L and Class IV-P-L Regular Interests and the
Class R-2 Certificates, on any Distribution Date prior to
the Combined Credit Support Depletion Date and subject to
the payment of the amounts pursuant to paragraph (I)(b),
paragraph (I)(c) and paragraph (I)(d) of this definition of
"REMIC II Distribution Amount", and to the extent of the
REMIC II Available Distribution Amounts for the Group II-L,
Group III-L and Group IV-L Regular Interests remaining
following prior distributions, if any, on such Distribution
Date:
(i) first, to the Class II-P-L, Class III-P-L and
Class IV-P-L Regular Interests, to the extent of
amounts otherwise available to pay the Group C-B
Subordinate Principal Distribution Amount (without
regard to clause (B) of the definition thereof) on such
Distribution Date, the amount payable to such Classes
of Regular Interests on previous Distribution Dates
pursuant to clause (I)(e)(ii) of this definition of
"REMIC II Distribution Amount" and remaining unpaid
from such previous Distribution Dates;
(ii) second, to the Class II-P-L, Class III-P-L
and Class IV-P-L Regular Interests, to the extent of
amounts otherwise available to pay the Group C-B
Subordinate Principal Distribution Amount (without
regard to clause (B) of the definition thereof) on such
Distribution Date, principal in an amount equal to the
Class II-P, Class III-P or Class IV-P Fraction, as
applicable, of any Realized Loss on a Class II-P
Mortgage Loan, a Class III-P Mortgage Loan or a Class
IV-P Mortgage Loan (other than a Realized Loss which,
pursuant to the definition of "Realized Losses", is
allocated by Pro Rata Allocation) provided that any
amounts distributed in respect of losses pursuant to
paragraph (I)(e)(i) or this paragraph (I)(e)(ii) of
this definition of "REMIC II Distribution Amount" shall
not cause a further reduction in any of the Class II-P-
L Principal Balance, the Class III-P-L Principal
Balance or the Class IV-P-L Principal Balance;
provided, further, that if the amounts otherwise
available to pay the Group C-B Subordinate Principal
Distribution Amount for any such Distribution Date are
insufficient to cover such outstanding principal losses
for the Class II-P-L, Class III-P-L and Class IV-P-L
Regular Interests as provided in paragraph (I)(e)(i) or
this paragraph (I)(e)(ii) of this definition of "REMIC
II Distribution Amount", then the amounts otherwise
available to pay the Group C-B Subordinate Principal
Distribution Amount will be allocated pro rata to the
Class II-P-L, Class III-P-L and Class IV-P-L Regular
<PAGE>
<PAGE> 115
Interests based on the amount such Regular Interests
are entitled to receive pursuant to paragraph (I)(e)(i)
or this paragraph (I)(e)(ii) of this definition of
"REMIC II Distribution Amount";
(iii) third, to the Class C-B-1-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(iv) fourth, to the Class C-B-1-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(v) fifth, to the Class C-B-1-L Regular
Interests, the portion of the Group C-B Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group C-B Subordinate Principal Distribution Amount",
until the Class C-B-1-L Principal Balance has been
reduced to zero;
(vi) sixth, to the Class C-B-2-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(vii) seventh, to the Class C-B-2-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(viii) eighth, to the Class C-B-2-L Regular
Interests, the portion of the Group C-B Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group C-B Subordinate Principal Distribution Amount",
until the Class C-B-2-L Principal Balance has been
reduced to zero;
(ix) ninth, to the Class C-B-3-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(x) tenth, to the Class C-B-3-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(xi) eleventh, to the Class C-B-3-L Regular
<PAGE>
<PAGE> 116
Interests, the portion of the Group C-B Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group C-B Subordinate Principal Distribution Amount",
until the Class C-B-3-L Principal Balance has been
reduced to zero;
(xii) twelfth, to the Class C-B-4-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xiii) thirteenth, to the Class C-B-4-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(xiv) fourteenth, to the Class C-B-4-L Regular
Interests, the portion of the Group C-B Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group C-B Subordinate Principal Distribution Amount",
until the Class C-B-4-L Principal Balance has been
reduced to zero;
(xv) fifteenth, to the Class C-B-5-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xvi) sixteenth, to the Class C-B-5-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
(xvii) seventeenth, to the Class C-B-5-L
Regular Interests, the portion of the Group C-B
Subordinate Principal Distribution Amount allocable to
such Class of Regular Interests pursuant to the
definition of "Group C-B Subordinate Principal
Distribution Amount", until the Class C-B-5-L Principal
Balance has been reduced to zero;
(xviii) eighteenth, to the Class C-B-6-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests remaining unpaid from
previous Distribution Dates;
(xix) nineteenth, to the Class C-B-6-L Regular
Interests, the Interest Distribution Amount for such
Class of Regular Interests for the current Distribution
Date;
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<PAGE> 117
(xx) twentieth, to the Class C-B-6-L Regular
Interests, the portion of the Group C-B Subordinate
Principal Distribution Amount allocable to such Class
of Regular Interests pursuant to the definition of
"Group C-B Subordinate Principal Distribution Amount",
until the Class C-B-6-L Principal Balance has been
reduced to zero;
(xxi) twenty-first, to the Certificate
Insurer, the Class IV-A-5 Reimbursement Amount;
(xxii) twenty-second, to each Class of Group C-
B-L Regular Interests in the order of seniority, the
remaining portion, if any, of the REMIC II Available
Distribution Amount for the Group II-L, Group III-L and
Group IV-L Regular Interests, 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)(e)(xxii) of
this definition of "REMIC II Distribution Amount" shall
not cause a further reduction in the Class Principal
Balances of the Group C-B-L Regular Interests; and
(xxiii) twenty-third, to the Class R-2
Certificates, the Residual Distribution Amount for the
Group II-L, Group III-L and Group IV-L Regular
Interests for such Distribution Date.
Notwithstanding the foregoing paragraph (I) of this
definition of "REMIC II Distribution Amount,"
(X) on any Distribution Date occurring on or
after the date on which the aggregate Class Principal
Balance of one or more of the Group II-A-L, Class III-A-1-L
or Group IV-A-L Regular Interests have been reduced to zero,
all amounts in respect of principal on the Mortgage Loans in
the Loan Group or Groups relating to the Class A-L Regular
Interests that have been paid in full (after distributions
of principal to the related Class P-L Regular Interests
pursuant to paragraph (I)(b)(i), (I)(c)(i) or (I)(d)(i)
above, if applicable) shall be paid as principal to the
remaining Class A Regular Interests of the other Regular
Interest Group or Groups in accordance with paragraphs
(I)(b)(iv), (I)(c)(iv) or (I)(d)(iv) above (with such
amounts being added to the Group II, Group III or Group IV
Senior Principal Distribution Amount, as applicable) to the
extent of and in reduction of the Class Principal Balances
thereof, prior to any distributions of principal to the
Group C-B Certificates pursuant to paragraph (I)(e) above;
provided, however, that if there are two Regular Interest
Groups with outstanding Class A-L Regular Interests, then
<PAGE>
<PAGE> 118
such principal will be distributed between those Class A-L
Regular Interests pro rata according to Class Principal
Balance, provided, further, that principal will not be
distributed as set forth above if on such Distribution Date
(a) the Group C-B Percentage for such Distribution Date is
greater than or equal to 200% of the Group C-B Percentage as
of the Closing Date and (b) the average outstanding
principal balance of the Mortgage Loans in any of Loan Group
II, Loan Group III or Loan Group IV delinquent 60 days or
more over the last six months (including Mortgage Loans in
foreclosure and Mortgage Loans the property of which is held
by REMIC I and acquired by foreclosure or deed in lieu of
foreclosure), as a percentage of the related Group C-B
Component Balance, is less than 50%, and
(Y) if on any Distribution Date any of Loan Group
II, Loan Group III or Loan Group IV is an
Undercollateralized Group and the other Loan Group or Groups
is an Overcollateralized Group, then the REMIC II Available
Distribution Amount of the Overcollateralized Group or
Groups, to the extent remaining after distributions to the
Class X-L, Class P-L and Class A-L Regular Interests of the
Overcollateralized Group or Groups pursuant to paragraph
(I)(b), paragraph (I)(c) or paragraph (I)(d), as applicable,
will be paid in the following priority: (i) an amount equal
to the Interest Transfer Amount will be distributed to the
Class X-L and Class A-L Regular Interests and the portion of
the Class C-X-L Regular Interests of the Undercollateralized
Group or Groups in the amounts and in the priority described
in clause (I)(b), clause (I)(c) or clause (I)(d), as
applicable and (ii) an amount equal to the Principal
Transfer Amount will be distributed to the Class A-L Regular
Interests of the Undercollateralized Group or Groups in the
amounts and in the priority described in clause (I)(b),
clause (I)(c) or clause (I)(d), as applicable (with such
Principal Transfer Amount being added to the Group II, Group
III or Group IV Senior Principal Distribution Amount, as
applicable) and (iii) any remaining amounts will be
distributed pursuant to paragraph (I)(e) of this definition
of "REMIC II Distribution Amount"; provided that (x) if
there is exactly one Undercollateralized Group, then the
remaining REMIC II Available Distribution Amounts of the two
Overcollateralized Groups will be distributed to the Regular
Interests of the Undercollateralized Group in accordance
with clauses (i) and (ii) of this paragraph (Y) pro rata,
according to the remaining REMIC II Available Distribution
Amounts of the two Overcollateralized Groups and (y) if
there are two Undercollateralized Groups and the remaining
REMIC II Available Distribution Amount for the
Overcollateralized Group is insufficient to pay the Interest
Transfer Amount or the Principal Transfer Amount to both
such Undercollateralized Groups in accordance with clauses
<PAGE>
<PAGE> 119
(i) and (ii) of this paragraph (Y), then the remaining REMIC
II Available Distribution Amount for the Overcollateralized
Group will be distributed to the Regular Interests of the
Undercollateralized Groups, pro rata, according to their
respective Interest Transfer Amounts or Principal Transfer
Amounts, as applicable.
(II) For any Distribution Date on or after the
Group I Credit Support Depletion Date or the Combined Credit
Support Depletion Date, as applicable, the REMIC II
Available Distribution Amount shall be distributed to the
outstanding Classes of REMIC II Regular Interests and the
Class R-2 Certificates in the following amounts and
priority:
(a) With respect to the Group I-L Regular Interests
and the 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-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class I-P-L Regular Interests,
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-L and Class I-X-L
Regular Interests, the amount payable to each such
Class of Regular Interests 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-L and Class I-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 I-A-L Regular Interests,
pro rata, the Group I Senior Principal Distribution
Amount; and
(v) fifth, to the Class R-2 Certificates, the
Residual Distribution Amount for the Group I-L Regular
Interests for such Distribution Date;
(b) With respect to the Group II-L and Class C-X-L
<PAGE>
<PAGE> 120
Regular Interests and the Class R-2 Certificates, on each
Distribution Date on or after the Combined Credit Support
Depletion Date, to the extent of the REMIC II Available
Distribution Amount for the Group II-L Regular Interests
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 II Distribution Amount";
(ii) second, to the Class II-A-1-L, Class II-X-L
and Class C-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 II
Distribution Amount", and remaining unpaid, pro rata
according to such amount;
(iii) third, to the Class II-A-1-L, Class II-X-
L and Class C-X-L Regular Interests, the sum of the
Interest Distribution Amounts for each such Class of
Regular Interests for the current Distribution Date,
pro rata according to their respective Interest
Distribution Amounts; provided, however, that for
purposes of the Interest Distribution Amount payable to
the Class C-X-L Regular Interests pursuant to this
clause (II)(b)(iii), only the portion thereof derived
from the Class C-X Group II Notional Amount shall be
payable pursuant to this clause (II)(b)(iii);
(iv) fourth, to the Class II-A-2-L Regular
Interests, the Class II-A-2 Principal Distribution
Amount;
(v) fifth, to the Class II-A-1-L Regular
Interests, the Group II Senior Principal Distribution
Amount (reduced by the Class II-A-2 Principal
Distribution Amount); and
(vi) sixth, to the Class R-2 Certificates, the
Residual Distribution Amount for the Group II-L Regular
Interests for such Distribution Date;
(c) With respect to the Group III-L and Class C-X-L
Regular Interests and the Class R-2 Certificates, on each
Distribution Date on or after the Combined Credit Support
Depletion Date, to the extent of the REMIC II Available
Distribution Amount for the Group III-L Regular Interests
remaining following prior distributions, if any, on such
<PAGE>
<PAGE> 121
Distribution Date:
(i) first, to the Class III-P-L Regular
Interests, principal in the amount that would otherwise
be distributed to such Class on such Distribution Date
pursuant to clause (I)(c)(i) of this definition of
"REMIC II Distribution Amount";
(ii) second, to the Class III-A-1-L, Class III-X-L
and Class C-X-L Regular Interests, the amount payable
to each such Class of Regular Interests on prior
Distribution Dates pursuant to clause (I)(c)(ii) or
(II)(c)(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 Class III-A-1-L, Class III-
X-L and Class C-X-L Regular Interests, the Interest
Distribution Amount for each such Class of Regular
Interests for the current Distribution Date, pro rata
according to their respective Interest Distribution
Amounts; provided, however, that for purposes of the
Interest Distribution Amount payable to the Class C-X-L
Regular Interests pursuant to this clause (II)(c)(iii),
only the portion thereof derived from the Class C-X
Group III Notional Amount shall be payable pursuant to
this clause (II)(c)(iii);
(iv) fourth, to the Class III-A-1-L Regular
Interests, the Group III Senior Principal Distribution
Amount; and
(v) fifth, to the Class R-2 Certificates, the
Residual Distribution Amount for the Group III-L
Regular Interests for such Distribution Date.
(d) With respect to the Group IV-L Regular Interests
and the Class R-2 Certificates, on each Distribution Date on
or after the Combined Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the
Group IV-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class IV-P-L Regular Interests,
principal in the amount that would otherwise be
distributed to such Class on such Distribution Date
pursuant to clause (I)(d)(i) of this definition of
"REMIC II Distribution Amount";
(ii) second, to the Group IV-A-L, Class R-3-L and
Class IV-X-L Regular Interests and the Class R-2
<PAGE>
<PAGE> 122
Certificates, the amount payable to each such Class of
Regular Interests and Certificates on prior
Distribution Dates pursuant to clause (I)(d)(ii) or
(II)(d)(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 IV-A-L, Class R-3-L
and Class IV-X-L Regular Interests and the Class R-2
Certificates, the Interest Distribution Amount for each
such Class of Regular Interests and Certificates for
the current Distribution Date, pro rata according to
their respective Interest Distribution Amounts;
(iv) fourth, to the Group IV-A-L Regular
Interests, pro rata, the Group IV Senior Principal
Distribution Amount;
(v) fifth, to the Certificate Insurer, the Class
IV-A-5 Reimbursement Amount; and
(vi) sixth, to the Class R-2 Certificates, the
Residual Distribution Amount for the Group IV-L Regular
Interests for such Distribution Date.
Notwithstanding the foregoing paragraph (II) of this
definition of "REMIC II Distribution Amount" and prior to
distributions pursuant to paragraph (II)(a)(v), paragraph
(II)(b)(vi), paragraph (II)(c)(v) and paragraph (II)(d)(vi),
if on any Distribution Date any of Loan Group II, Loan Group
III or Loan Group IV is an Undercollateralized Group and the
other Loan Group or Groups is an Overcollateralized Group,
then the REMIC II Available Distribution Amount of the
Overcollateralized Group or Groups, to the extent remaining
after distributions to the Class X-L, Class P-L and Class A-
L Regular Interests of the Overcollateralized Group or
Groups pursuant to paragraph (II)(b), paragraph (II)(c) or
paragraph (II)(d), as applicable, will be paid in the
following priority: (i) an amount equal to the Interest
Transfer Amount will be distributed to the Class X-L and
Class A-L Regular Interests and the portion of the Class C-X-
L Regular Interests of the Undercollateralized Group or
Groups in the amounts and in the priority described in
clause (II)(b), clause (II)(c) or clause (II)(d), as
applicable and (ii) an amount equal to the Principal
Transfer Amount will be distributed to the Class A-L Regular
Interests of the Undercollateralized Group or Groups in the
amounts and in the priority described in clause (II)(b),
clause (II)(c) or clause (II)(d), as applicable (with such
Principal Transfer Amount being added to the Group II, Group
III or Group IV Senior Principal Distribution Amount, as
<PAGE>
<PAGE> 123
applicable), and (iii) any remaining amounts will be
distributed pursuant to paragraph (II)(a)(v), paragraph
(II)(b)(vi), paragraph (II)(c)(v) and paragraph (II)(d)(vi)
of this definition of "REMIC II Distribution Amount";
provided that (x) if there is exactly one
Undercollateralized Group, then the remaining REMIC II
Available Distribution Amounts of the two Overcollateralized
Groups will be distributed to the Regular Interests of the
Undercollateralized Group in accordance with clauses (i) and
(ii) of this paragraph pro rata, according to the remaining
REMIC II Available Distribution Amounts of the two
Overcollateralized Groups and (y) if there are two
Undercollateralized Groups and the remaining REMIC II
Available Distribution Amount for the Overcollateralized
Group is insufficient to pay the Interest Transfer Amount or
the Principal Transfer Amount to both such
Undercollateralized Groups in accordance with clauses (i)
and (ii) of this paragraph, then the remaining REMIC II
Available Distribution Amount for the Overcollateralized
Group will be will be distributed to the Regular Interests
of the Undercollateralized Groups, pro rata, according to
their respective Interest Transfer Amounts or Principal
Transfer Amounts, as applicable.
REMIC II Regular Interest: The Classes of Regular
Interests in the REMIC II Trust Fund designated as "regular
interests" in the table titled "REMIC II Trust Fund" in the
Preliminary Statement hereto.
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 REMIC II Regular Interests and the Class R-2
Certificates issued hereunder.
REMIC III: The segregated pool of assets consisting of
the REMIC III Trust Fund conveyed in trust to the Trustee
for the benefit of the Holders of the REMIC III Regular
Interests and the Class R-3 Certificateholders pursuant to
Section 2.07, with respect to which a separate REMIC
election is to be made.
REMIC III 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
distributions with respect to the Group II-L Regular
Interests and the portion of the distributions to the Class
C-X-L Regular Interests paid pursuant to paragraph (I)(b) or
(II)(b) of the definition of "REMIC II Distribution Amount".
<PAGE>
<PAGE> 124
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 and the portion
of the distributions to the Class C-X-L Regular Interests
paid pursuant to paragraph (I)(c) or (II)(c) of the
definition of "REMIC II Distribution Amount". With respect
to the Group IV Certificates and Class R-3 Certificates, on
any Distribution Date, the aggregate of all distributions
with respect to the Group IV-L Regular Interests. With
respect to the Group C-B Certificates, on any Distribution
Date, the aggregate of all distributions with respect to the
Group C-B-L Regular Interests.
REMIC III Distribution Amount: The REMIC III
Available Distribution Amount shall be distributed to the
Certificates (other than the Class R-1 and Class R-2
Certificates) in the following amounts and priority:
(a) With respect to the Group I and Class R-3
Certificates, to the extent of the REMIC III Available
Distribution Amount for the Group I Certificates:
(i) to each Class of Group I Certificates, the amounts
distributed to its Corresponding Class on such Distribution
Date; and
(ii) to the Class R-3 Certificates, the applicable Residual
Distribution Amount, if any.
(b) With respect to the Group II Certificates and the
Class C-X Certificates, to the extent of the REMIC III
Available Distribution Amount for the Group II Certificates,
to each Class of Group II Certificates, the amounts
distributed to its Corresponding Class on such Distribution
Date and to the Class C-X Certificates, the amounts
distributed to the Class C-X-L Regular Interests pursuant to
clause (I)(b) and clause (II)(b) of the definition of "REMIC
II Distribution Amount".
(c) With respect to the Group III Certificates and the
Class C-X Certificates, to the extent of the REMIC III
Available Distribution Amount for the Group III
Certificates, to each Class of Group III Certificates, the
amounts distributed to its Corresponding Class on such
Distribution Date and to the Class C-X Certificates, the
amounts distributed to the Class C-X-L Regular Interests
pursuant to clause (I)(c) and clause (II)(c) of the
definition of "REMIC II Distribution Amount".
(d) With respect to the Group IV Certificates and the
Class R-3 Certificates, to the extent of the REMIC III
Available Distribution Amount for the Group IV Certificates:
<PAGE>
<PAGE> 125
(i) to each Class of Group IV Certificates (other than the
Class IV-A-6 and Class IV-A-7 Certificates) and the Class R-
3 Certificates, the amounts distributed to its Corresponding
Class on such Distribution Date; and
(ii) (A) to the Class IV-A-7 Certificates, the amount
distributed as principal to the Class IV-A-7-L Regular
Interests on such Distribution Date and (B) to the Class IV-
A-6 and Class IV-A-7 Certificates, the amount distributed as
interest to the Class IV-A-7-L Regular Interests on such
Distribution Date concurrently as follows: (I) to the Class
IV-A-7 Certificates, an amount equal to the product of 1/12
of the Class IV-A-7 Certificate Interest Rate and the Class
IV-A-7 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 IV-A-6 Certificates, an amount equal to the
product of 1/12 of the Class IV-A-6 Certificate Interest
Rate and the Class IV-A-6 Notional Amount.
(e) With respect to the Group C-B Certificates and
the Class R-3 Certificates, to the extent of the REMIC III
Available Distribution Amount for the Group C-B
Certificates:
(i) to each Class of Group C-B Certificates, the amounts
distributed to its Corresponding Class on such Distribution
Date; and
(ii) to the Class R-3 Certificates, the applicable
Residual Distribution Amount, if any.
In each case where a distribution is required to be
made concurrently to two or more Classes of Certificates
pursuant to this definition of "REMIC III Distribution
Amount", if the portion of the REMIC III Available
Distribution Amount from which such deemed distribution is
required to be made is insufficient to make such
distribution in full to such Classes of Certificates, such
distribution shall be allocated between such Classes of
Certificates pro rata according to the respective amounts to
which they are otherwise entitled from such distribution.
REMIC III Regular Interest: The Classes of Regular
Interests in the REMIC III Trust Fund designated as "regular
interests" in the table titled "REMIC III Trust Fund" in the
Preliminary Statement hereto.
REMIC III Trust Fund: The REMIC III Trust Fund created
pursuant to Section 2.07 of this Agreement. The REMIC III
Trust Fund consists of the REMIC II Regular Interests to be
held by the Trustee for the benefit of the Holders from time
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to time of the REMIC III Regular Interests and Class R-3
Certificates issued hereunder.
Residual Certificates: With respect to REMIC I, the
Class R-1 Certificates, which are being issued in a single
class, with respect to REMIC II, the Class R-2 Certificates,
which are being issued in a single class and with respect to
REMIC III, the Class R-3 Certificates, which are being
issued in a single class. The Class R-1, Class R-2 and Class
R-3 Certificates are hereby designated the sole Class of
"residual interests" in REMIC I, REMIC II and REMIC III,
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, any portion of
the REMIC I Available Distribution Amount remaining after
all distributions to the REMIC I Regular Interests and Class
R-1 Certificates pursuant to clauses (a)(i) through (a)(iv),
(b)(i) through (b)(iv), (c)(i) through (c)(iv) or (d)(i)
through (d)(v), as applicable, of the definition of "REMIC I
Distribution Amount". With respect to the Class R-2
Certificates, any portion of the REMIC II Available
Distribution Amount remaining after all distributions to the
REMIC II Regular Interests and the Class R-2 Certificates
and the payment of the Class IV-A-5 Reimbursement Amount
pursuant to clauses (I)(a)(i) through (I)(a)(xxv), (I)(e)(i)
through (I)(e)(xxii), (II)(a)(i) through (II)(a)(iv),
(II)(b)(i) through (II)(b)(v), (II)(c)(i) through
(II)(c)(iv) or (II)(d)(i) through (II)(d)(v), as applicable,
of the definition of "REMIC II Distribution Amount". With
respect to the Class R-3 Certificates, any portion of the
REMIC III Available Distribution Amount remaining after all
distributions to the Certificates pursuant to clause (a)(i)
or (e)(i) of the definition of "REMIC III Distribution
Amount". Upon termination of the obligations created by this
Agreement and the REMIC I Trust Fund, the REMIC II Trust
Fund and the REMIC III Trust Fund created hereby, the
amounts which remain on deposit in the Certificate Account
after payment to the Holders of the REMIC I Regular
Interests 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, Class R-2 and Class R-
3 Certificates in accordance with the preceding sentence of
this definition as if the date of such distribution were a
Distribution Date.
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
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of and familiarity with the particular subject.
Rounding Amount: With respect to the Class I-A-14
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-14 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 Certificates, the Group III Certificates, the
Group IV Certificates, the Class C-X Certificates and the
Residual Certificates.
Senior Subordinate Certificates: The Subordinate
Certificates other than the Junior Subordinate 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.
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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 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 Coverage Initial Amount: With respect to
Loan Group I, $6,820,621 and with respect to and Loan Group
II, Loan Group III and Loan Group IV, $12,849,669.
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
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order of any government or public authority.
Step Down Percentage: For any Distribution Date, the
percentage indicated below:
Distribution Date Occurring Step Down Percentage
In
December 1998 through 0%
November 2003
December 2003 through 30%
November 2004
December 2004 through 40%
November 2005
December 2005 through 60%
November 2006
December 2006 through 80%
November 2007
December 2007 and thereafter 100%
Stripped Interest Rate: For each Group I Loan, the
excess, if any, of the Pass-Through Rate for such Mortgage
Loan over 6.250% per annum. For each Subgroup II-3 Loan, the
excess, if any, of the Pass-Through Rate for such Mortgage
Loan over 6.000% per annum. For each Subgroup II-1,
Subgroup II-2 and Group III Loan, the excess, if any, of the
Pass-Through Rate for such Mortgage Loan over 7.000% per
annum. For each Group IV Loan, the excess, if any, of the
Pass-Through Rate for such Mortgage Loan over 6.500% per
annum.
Subgroup: Subgroup II-1, Subgroup II-2, Subgroup II-3,
Subgroup III-1, Subgroup III-2, Subgroup IV-1 and Subgroup
IV-2.
Subgroup II-1 Loan: Any Group II Loan which is
designated as such on the Mortgage Loan Schedule.
Subgroup II-2 Loan: Any Group II Loan which is
designated as such on the Mortgage Loan Schedule.
Subgroup II-3 Loan: Any Group II Loan which is
designated as such on the Mortgage Loan Schedule.
Subgroup III-1 Loan: Any Group III Loan which is
designated as such on the Mortgage Loan Schedule.
Subgroup III-2 Loan: Any Group III Loan which is
designated as such on the Mortgage Loan Schedule.
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Subgroup IV-1 Loan: Any Group IV Loan which is
designated as such on the Mortgage Loan Schedule.
Subgroup IV-2 Loan: Any Group IV Loan which is
designated as such on the Mortgage Loan Schedule.
Subgroup II-1 Senior Component Balance: For any date
of determination, an amount equal to $199,184,302 (i)
reduced by (a) all principal previously distributed to the
Group II-A-L Regular Interests derived from Subgroup II-1
and (b) all principal losses allocated to such Regular
Interests derived from Subgroup II-1 and (ii) reduced or
increased, as applicable, by any reduction or addition
thereto made on any Distribution Date in accordance with the
seventh paragraph of the definition of "Realized Loss".
Subgroup II-2 Senior Component Balance: For any date
of determination, an amount equal to $453,548,684 (i)
reduced by (a) all principal previously distributed to the
Group II-A-L Regular Interests derived from Subgroup II-2
and (b) all principal losses allocated to such Regular
Interests derived from Subgroup II-2 and (ii) reduced or
increased, as applicable, by any reduction or addition
thereto made on any Distribution Date in accordance with the
seventh paragraph of the definition of "Realized Loss".
Subgroup II-3 Senior Component Balance: For any date
of determination, an amount equal to $102,204,659 (i)
reduced by (a) all principal previously distributed to the
Group II-A-L Regular Interests derived from Subgroup II-3
and (b) all principal losses allocated to such Regular
Interests derived from Subgroup II-3 and (ii) reduced or
increased, as applicable, by any reduction or addition
thereto made on any Distribution Date in accordance with the
seventh paragraph of the definition of "Realized Loss".
Subgroup II-1 Senior Liquidation Amount: The aggregate,
for each Subgroup II-1 Loan which became a Liquidated
Mortgage Loan during the Prior Period, of the lesser of: (i)
the Subgroup II-1 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 Subgroup II-1 Senior Prepayment Percentage of the
Liquidation Principal with respect to such Mortgage Loan.
Subgroup II-2 Senior Liquidation Amount: The aggregate,
for each Subgroup II-2 Loan which became a Liquidated
Mortgage Loan during the Prior Period, of the lesser of: (i)
the Subgroup II-2 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 Subgroup II-2 Senior Prepayment Percentage of the
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Liquidation Principal with respect to such Mortgage Loan.
Subgroup II-3 Senior Liquidation Amount: The aggregate,
for each Subgroup II-3 Loan which became a Liquidated
Mortgage Loan during the Prior Period, of the lesser of: (i)
the Subgroup II-3 Senior Percentage of the Principal Balance
of such Mortgage Loan and (ii) the Subgroup II-3 Senior
Prepayment Percentage of the Liquidation Principal with
respect to such Mortgage Loan.
Subgroup II-1 Senior Percentage: With respect to any
Distribution Date, the lesser of (i) 100% and (ii) the
Senior Component Balance for Subgroup II-1 divided by the
aggregate Principal Balance of the Subgroup II-1 Loans (less
the aggregate Principal Balance of the Class II-P Mortgage
Loans in Subgroup II-1), in each case immediately prior to
the Distribution Date.
Subgroup II-2 Senior Percentage: With respect to any
Distribution Date, the lesser of (i) 100% and (ii) the
Senior Component Balance for Subgroup II-2 divided by the
aggregate Principal Balance of the Subgroup II-2 Loans (less
the aggregate Principal Balance of the Class II-P Mortgage
Loans in Subgroup II-2), in each case immediately prior to
the Distribution Date.
Subgroup II-3 Senior Percentage: With respect to any
Distribution Date, the lesser of (i) 100% and (ii) the
Senior Component Balance for Subgroup II-3 divided by the
aggregate Principal Balance of the Subgroup II-3 Loans, in
each case immediately prior to the Distribution Date.
Subgroup II-1 Senior Prepayment Percentage: See the
definition of "Group II Senior Prepayment Percentage"
herein.
Subgroup II-2 Senior Prepayment Percentage: See the
definition of "Group II Senior Prepayment Percentage"
herein.
Subgroup II-3 Senior Prepayment Percentage: See the
definition of "Group II Senior Prepayment Percentage"
herein.
Subgroup II-1 Senior Principal Distribution Amount: For
any Distribution Date, an amount equal to the sum of (a) the
Subgroup II-1 Senior Percentage of the Principal Payment
Amount for Subgroup II-1 (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 II Distribution
Amount"), (b) the Subgroup II-1 Senior Prepayment Percentage
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of the Principal Prepayment Amount for Subgroup II-1
(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 II Distribution Amount") and (c) the Subgroup II-1
Senior Liquidation Amount.
Subgroup II-2 Senior Principal Distribution Amount: For
any Distribution Date, an amount equal to the sum of (a) the
Subgroup II-2 Senior Percentage of the Principal Payment
Amount for Subgroup II-2 (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 II Distribution
Amount"), (b) the Subgroup II-2 Senior Prepayment Percentage
of the Principal Prepayment Amount for Subgroup II-2
(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 II Distribution Amount") and (c) the Subgroup II-2
Senior Liquidation Amount.
Subgroup II-3 Senior Principal Distribution Amount: For
any Distribution Date, an amount equal to the sum of (a) the
Subgroup II-3 Senior Percentage of the Principal Payment
Amount for Subgroup II-3, (b) the Subgroup II-3 Senior
Prepayment Percentage of the Principal Prepayment Amount for
Subgroup II-3 and (c) the Subgroup II-3 Senior Liquidation
Amount.
Subgroup II-1 Subordinate Component Balance: For any
date of determination, an amount equal to the then
outstanding aggregate Principal Balance of the Subgroup II-1
Loans reduced by the Subgroup II-1 Senior Component Balance.
Subgroup II-2 Subordinate Component Balance: For any
date of determination, an amount equal to the then
outstanding aggregate Principal Balance of the Subgroup II-2
Loans reduced by the Subgroup II-2 Senior Component Balance.
Subgroup II-3 Subordinate Component Balance: For any
date of determination, an amount equal to the then
outstanding aggregate Principal Balance of the Subgroup II-3
Loans reduced by the Subgroup II-3 Senior Component Balance.
Subgroup II-1 Subordinate Percentage: For any
Distribution Date, the excess of 100% over the Subgroup II-1
Senior Percentage for such date.
Subgroup II-2 Subordinate Percentage: For any
Distribution Date, the excess of 100% over the Subgroup II-2
Senior Percentage for such date.
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Subgroup II-3 Subordinate Percentage: For any
Distribution Date, the excess of 100% over the Subgroup II-3
Senior Percentage for such date.
Subordinate Certificates: The Group I-B and Group C-B
Certificates.
Subordinate Percentage: The Group I Subordinate
Percentage, the Group II Subordinate Percentage, the
Subgroup II-1 Subordinate Percentage, the Subgroup II-2
Subordinate Percentage, the Subgroup II-3 Subordinate
Percentage, the Group III Subordinate Percentage and the
Group IV Subordinate Percentage, as applicable.
Subordination Level: On any specified date, with
respect to any of the Group C-B-L Regular Interests, the
percentage obtained by dividing the sum of the Class
Principal Balances of the Classes of REMIC II Regular
Interests which are subordinate in right of payment to such
Class by the aggregate Class Principal Balances of the Group
II-L, Group III-L, Group IV-L and Group C-B-L Regular
Interests as of such date prior to giving effect to
distributions of principal or interest or allocations of
Realized Losses on the Group II Loans, the Group III Loans
and the Group IV Loans on such date. On any specified date,
with respect to any of the Group I-B-L Regular Interests,
the percentage obtained by dividing the sum of the Class
Principal Balances of the Classes of Group I-B-L Regular
Interests which are subordinate in right of payment to such
Class by the aggregate Class Principal Balances of the Group
I-L Regular Interests as of such date prior to giving effect
to distributions of principal or interest or allocations of
Realized Losses on the Group I Loans on such date.
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.
Tax Matters Person: A Holder of the Class R-1
Certificate, with respect to REMIC I, a Holder of the Class
R-2 Certificate, with respect to REMIC II and a holder of
the Class R-3 Certificate with respect to REMIC III, in each
case holding a Certificate having an Authorized Denomination
of at least 0.01% or any Permitted Transferee of such Class
R-1, Class R-2 or Class R-3 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, Class R-2 or
Class R-3 Certificate. If the Tax Matters Person for REMIC
I, REMIC II or REMIC III becomes a Disqualified
Organization, the last preceding Holder of such Authorized
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Denomination of the Class R-1, Class R-2 or Class R-3
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.
Trust: The pool of assets consisting of the Trust Fund
conveyed pursuant to Section 2.01 of this Agreement.
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.
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 (including an initial deposit therein on the Closing
Date by the Company in the amount of $129,528.55 for the
payment of interest on Mortgage Loans which do not begin
accruing interest until January 1998, which initial deposit
shall be irrevocable) and the Investment Account (except
amounts representing the Master Servicing Fee or the
Servicing Fee) and in the Class I-A-14 Rounding Account;
(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 or a Buydown Fund Account 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 Certificate Insurance Policy,
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the CMAC Policy and 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.
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, 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 and
(b) aggregate Curtailment Shortfall with respect to the
Mortgage Loans in the related Loan Group over (ii)
Compensating Interest with respect to such Loan Group.
Uncompensated Interest Shortfall for Loan Group I shall
be allocated to the Group I-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 II
shall be allocated to the Group II-L and Class C-X-L Regular
Interests pro rata according to the amount of the Interest
Distribution Amount (or, in the case of the Class C-X-L
Regular Interests, only the portion of its Interest
Distribution Amount derived from the Class C-X Group II
Notional 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 and
the Class C-X-L Regular Interests pro rata according to the
amount of the Interest Distribution Amount (or, in the case
of the Class C-X-L Regular Interests, only the portion of
its Interest Distribution Amount derived from the Class C-X
Group III Notional Amount) to which each such Class would
otherwise be entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group IV
shall be allocated to the Group IV-L Regular Interests pro
rata according to the amount of the Interest Distribution
Amount to which each such Class would otherwise be entitled
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in reduction thereof.
Uncompensated Interest Shortfall for Subgroup II-1,
Subgroup II-2 and Subgroup II-3 shall be allocated to the
Class II-X-M, Class C-X-M, Class Y-1, Class Y-2, Class Z-1
and Class Z-2 Regular Interests, pro rata according to (i)
in the case of the Class Y and Class Z Regular Interests,
the amount of the Interest Distribution Amount to which each
would be entitled and (ii) in the case of the Class II-X-M
and Class C-X-M Regular Interests, the portion of the
Interest Distribution Amount to which such Classes would
otherwise be entitled attributable to such Subgroup (which,
in the case of the Class C-X-M Regular Interests, includes
only the portion of its Interest Distribution Amount derived
from the Class C-X Group II Notional Amount), in each case
in reduction thereof.
Uncompensated Interest Shortfall for Loan Group III
shall be allocated to the Class III-X-M, Class C-X-M, Class
Y-3 and Class Z-3 Regular Interests, pro rata according to
the amount of the Interest Distribution Amount (or, in the
case of the Class C-X-M, only the portion of its Interest
Distribution Amount derived from the Class C-X Group III
Notional Amount) to which each such Class of Regular
Interests would otherwise be entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group IV
shall be allocated to the Class IV-X-M, Class Y-4 and Class
Z-4 Regular Interests, pro rata according to the amount of
the Interest Distribution Amount to which each such Class of
Regular Interests would otherwise be entitled in reduction
thereof.
Uncompensated Interest Shortfall for Loan Group I shall
be allocated to the Class W and Class I-X-M Regular
Interests, pro rata according to the amount of the Interest
Distribution Amount to which each such Class of Regular
Interests would otherwise be entitled in reduction thereof.
Undercollateralized Group: Loan Group II, if on any
Distribution Date the aggregate Class Principal Balance of
the Group II-A Certificates is greater than the aggregate
Principal Balance of the Mortgage Loans in Loan Group II
(less the Class II-P Principal Balance); Loan Group III, if
on any Distribution Date the Class III-A-1 Principal Balance
is greater than the aggregate Principal Balance of the
Mortgage Loans in Loan Group III (less the Class III-P
Principal Balance); and Loan Group IV, if on any
Distribution Date the aggregate Class Principal Balance of
the Group IV-A Certificates is greater than the aggregate
Principal Balance of the Mortgage Loans in Loan Group IV
(less the Class IV-P Principal Balance).
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Underwriting Standards: The underwriting standards of
HomeSide Lending, Inc., Temple-Inland Mortgage Corporation,
CTX Mortgage Company, Old Kent Mortgage Company, Washington
Mutual Bank, Standard Federal Bank, PNC Mortgage Corp. of
America, Headlands Mortgage Company, Fairbanks Mortgage,
IndyMac, Inc., Impac Funding Corporation, Imperial Home
Loans, Inc., 1st Greensboro Home Equity, PMCC Mortgage
Corp., Cendant Mortgage Corporation, Western Financial
Savings Bank, Prism Mortgage Company, Chase Manhattan
Mortgage Corporation and Commerce Security Bank.
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. The "related Due Date" for any Withdrawal Date is the
Due Date immediately preceding the related 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 Election
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
the 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
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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, without recourse, all the
Company's right, title and interest in and to the Trust
Fund, including but not limited to (i) all scheduled
payments of principal and interest due after the Cut-Off
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
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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 Class I-A-14 Rounding Account, 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
Certificate Insurance Policy, the CMAC Policy and 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;
(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
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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
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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
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.
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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.
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
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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 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.
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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
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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 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
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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 Loans. 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 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
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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, 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) All of the Group I Loans, not less than approximately
77.4% (by Principal Balance) of the Group II Loans, not less
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than approximately 82.1% (by Principal Balance) of the Group
III Loans and not less than approximately 83.4% (by
Principal Balance) of the Group IV Loans with Loan-to-Value
Ratios as of the Cut-Off Date in excess of 80% were covered
by a Primary Insurance Policy (or, with respect to Loan
Group II and Loan Group III, the CMAC 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 and other than with respect to
Cooperative Loans, the Mortgaged Property securing each
Mortgage 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, or are approvable by FNMA or FHLMC or have
otherwise been approved by the Company;
(xviii) None of the Mortgage Loans are Buydown Loans;
(xix) Based solely on representations of the Mortgagors
obtained at the origination of the related Mortgage Loans,
approximately 97.65% (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 2.00% (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 0.35% (by Principal Balance) of the Group I
Loans will be secured by Mortgaged Properties which were
investor properties of the related Mortgagors; approximately
78.20% (by Principal Balance) of the Group II Loans will be
secured by owner occupied Mortgaged Properties which are the
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primary residences of the related Mortgagors, approximately
2.57% (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
19.23% (by Principal Balance) of the Group II Loans will be
secured by Mortgaged Properties which were investor
properties of the related Mortgagors; approximately 72.83%
(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
6.12% (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
21.05% (by Principal Balance) of the Group III Loans will be
secured by Mortgaged Properties which were investor
properties of the related Mortgagors; approximately 90.59%
(by Principal Balance) of the Group IV Loans will be secured
by owner occupied Mortgaged Properties which are the primary
residences of the related Mortgagors, approximately 1.48%
(by Principal Balance) of the Group IV Loans will be secured
by owner occupied Mortgaged Properties which were second or
vacation homes of the Mortgagors and approximately 7.94% (by
Principal Balance) of the Group IV Loans will be secured by
Mortgaged Properties which were investor properties of the
related Mortgagors; none of the Group I Loans will be
secured by interests in Cooperative Apartments and
approximately 0.53% (by Principal Balance) of the Group II
Loans, approximately 0.58% (by Principal Balance) of the
Group III Loans and approximately 0.28% (by Principal
Balance) of the Group IV 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 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
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by or on behalf of the Trustee will not be materially
adversely affected by the absence of the original Mortgage
Note;
(xxv) Based upon an appraisal of the Mortgaged Property
securing each Mortgage Loan, approximately 85.65% (by
Principal Balance) of the Group I Loans had a current Loan-
to-Value Ratio less than or equal to 80%, approximately
14.36% (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 66.48% (by
Principal Balance) of the Group II Loans had a current Loan-
to-Value Ratio less than or equal to 80%, approximately
32.70% (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 approximately 0.83% (by Principal
Balance) of the Group II Loans had a current Loan-to-Value
Ratio greater than 95%; approximately 77.95% (by Principal
Balance) of the Group III Loans had a current Loan-to-Value
Ratio less than or equal to 80%, approximately 22.05% (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%; and approximately 83.42% (by Principal
Balance) of the Group IV Loans had a current Loan-to-Value
Ratio less than or equal to 80%, approximately 16.58% (by
Principal Balance) of the Group IV Loans had a current Loan-
to-Value Ratio greater than 80% but less than or equal to
95% and no Group IV Loan had a current Loan-to-Value Ratio
greater than 95%;
(xxvi) Approximately 53.74% (by Principal Balance) of the
Group I Loans, approximately 47.35% (by Principal Balance)
of the Group II Loans, approximately 57.43% (by Principal
Balance) of the Group III Loans and approximately 62.06% (by
Principal Balance) of the Group IV Loans were originated for
the purpose of refinancing existing mortgage debt, including
cash-out refinancings; and approximately 46.25% (by
Principal Balance) of the Group I Loans, approximately
52.65% (by Principal Balance) of the Group II Loans,
approximately 42.57% (by Principal Balance) of the Group III
Loans and approximately 37.94% (by Principal Balance) of the
Group IV Loans were originated for the purpose of purchasing
the Mortgaged Property;
(xxvii) Not less than approximately 92.92%, 31.71%, 38.37%
and 26.91% (by Principal Balance) of the Group I Loans,
Group II Loans, Group III Loans and Group IV Loans,
respectively, were originated under full documentation
programs;
(xxviii) 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);
(xxix) With respect to each Cooperative Loan, the
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Cooperative Stock that is pledged as security for the
Mortgage 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);
and
(xxx) 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.
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 and the
Certificate Insurer 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
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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 REMIC II
Regular Interests and the Class R-2 Certificates. The
purpose of REMIC II is to hold the REMIC II Trust Fund and
provide for the issuance, execution and delivery of the
REMIC II Regular Interests and the Class R-2 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. 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
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trust for the benefit of the Holders of the REMIC II Regular
Interests and the Class R-2 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 REMIC II Regular Interests and the
Class R-2 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 Class I-A-14 Rounding Account
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
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therein attributable to the Mortgage Loans); (iii) the
Certificate Insurance Policy, the CMAC Policy and
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 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
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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.
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
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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 REMIC II Regular Interests and the Class R-2
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 REMIC II Regular Interests and the
Class R-2 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
Company for the payment of such tax (to the extent that the
Company has not been previously reimbursed therefor).
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 REMIC II
Regular Interests and the Class R-2 Certificates. In
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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 Class R-2
Certificates in Authorized Denominations evidencing the
residual ownership interest in the REMIC II Trust Fund.
Section 2.07. Conveyance of REMIC III; REMIC Election and
Designations. A trust ("REMIC III") 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 and Class R-2 Certificates). The
purpose of REMIC III is to hold the REMIC III Trust Fund and
provide for the issuance, execution and delivery of the
Certificates (other than the Class R-1 and Class R-2
Certificates). The assets of REMIC III shall consist of the
REMIC III Trust Fund. REMIC III shall be irrevocable.
The assets of REMIC III shall remain in the custody of
the Trustee, on behalf of REMIC III, and shall be kept in
REMIC III. Moneys to the credit of REMIC III shall be held
by the Trustee and invested as provided herein. All assets
received and held in REMIC III 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 III, shall not have the power or authority
to transfer, assign, hypothecate, pledge or otherwise
dispose of any of the assets of REMIC III to any Person,
except as permitted herein. No creditor of a beneficiary of
REMIC III, 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 III, 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 Certificateholders (other than
the Class R-1 and Class R-2 Certificateholders), without
recourse, all the Company's right, title and interest in and
to the REMIC III Trust Fund, including all interest and
principal received by the Company on or with respect to the
REMIC II Regular Interests after the Cut-Off Date. The
Trustee hereby accepts REMIC III created hereby and accepts
delivery of the REMIC III Trust Fund on behalf of REMIC III
and acknowledges that it holds the REMIC II Regular
Interests for the benefit of the Holders of the Certificates
(other than the Class R-1 and Class R-2 Certificates) issued
pursuant to this Agreement. It is the express intent of the
parties hereto that the conveyance of the REMIC III Trust
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Fund to the Trustee by the Company as provided in this
Section 2.07 be, and be construed as, an absolute sale of
the REMIC III Trust Fund. It is, further, not the intention
of the parties that such conveyance be deemed a pledge of
the REMIC III 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 III 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
III Trust Fund, then
(a) this Agreement shall be deemed to be a security
agreement;
(b) the conveyance provided for in this Section 2.07
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 II 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 Class I-A-14 Rounding Account
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
therein attributable to the Mortgage Loans); (iii) the
Certificate Insurance Policy, the CMAC Policy and any
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 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
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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 III 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
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Servicer as Custodian of the documents or instruments
referred to above in this Section 2.07, 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.
The Company and the Trustee agree that the Company, on
behalf of the REMIC III Trust Fund, shall elect to treat the
REMIC III 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 III Trust Fund for its
first taxable year.
The Closing Date is hereby designated as the "startup
day" of the REMIC constituted by the REMIC III 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 III Trust Fund are hereby designated as "regular
interests" for purposes of Section 860G(a)(1) of the Code.
The Class R-3 Certificates are being issued in a single
Class, which is hereby designated as the sole class of
"residual interest" in the REMIC III Trust Fund for purposes
of Section 860G(a)(2) of the Code.
The parties intend that the affairs of the REMIC III
Trust Fund formed hereunder shall constitute, and that the
affairs of the REMIC III 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 III 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 III 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 III Trust
Fund, to be treated as a REMIC on the federal tax return of
the REMIC III 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
Certificateholders (other than the Class R-1 and Class R-2
Certificateholders) 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 III Trust
Fund at all times that any Certificates are outstanding so
as to maintain the status of the REMIC III Trust Fund as a
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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 III Trust Fund; and (f) pay the amount of any federal
prohibited transaction penalty taxes imposed on the REMIC
III 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
III 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 III 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-3 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-3 Certificates
on any Distribution Date sufficient funds to reimburse the
Company for the payment of such tax (to the extent that the
Company has not been previously reimbursed therefor).
Section 2.08. Acceptance by Trustee; Authentication of
Certificates. The Trustee acknowledges and accepts the
assignment to it of the property constituting the REMIC III
Trust Fund and declares that as of the Closing Date it holds
and shall hold any documents constituting a part of the
REMIC III Trust Fund, and the REMIC III Trust Fund, as
Trustee in trust, upon the trusts herein set forth, for the
use and benefit of all present and future Certificateholders
(other than the Class R-1 and Class R-2 Certificateholders).
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 III Trust Fund, the Certificates
(other than the Class R-1 and Class R-2 Certificates) in
Authorized Denominations evidencing the entire ownership of
the REMIC III Trust Fund.
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Company to Act as Master Servicer. The
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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 REMIC I, REMIC II and
REMIC III 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, the CMAC Policy, any FHA insurance
policy or VA guaranty, any 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
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,
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of all Mortgage Loans.
Consistent with the terms of this Section 3.01, the
Master Servicer may waive, modify or vary any term of any
Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant
indulgence to any Mortgagor if 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 by such waiver, modification, postponement or
indulgence; provided, however, that (unless the Mortgagor is
in default with respect to the Mortgage Loan or in the
reasonable judgment of the Master Servicer such default is
imminent) the Master Servicer shall not permit any
modification with respect to any Mortgage Loan that would
(i) change the applicable Mortgage Interest Rate, defer or
forgive the payment of any principal or interest, reduce the
outstanding principal balance (except for actual payments of
principal) or extend the final maturity date with respect to
such Mortgage Loan, or (ii) be inconsistent with the terms
of any applicable Primary Insurance Policy, FHA insurance
policy, VA guaranty, hazard insurance policy or federal
flood insurance policy or the CMAC Policy. 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 any REMIC to fail to qualify as such under the
Code.
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
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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 any of the REMICs 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.
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
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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, the
CMAC 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
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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:
(i) Scheduled installments of principal and
interest on the Mortgage Loans received or advanced by
the applicable Servicers which were due on the related
Due 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
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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, the Class R-1 Certificateholders
and the Certificate Insurer 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 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. The Trustee shall deposit
into the Certificate Account amounts received under the
Certificate Insurance Policy in accordance with Section
3.22(b) hereof.
(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:
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(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;
(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;
(vi) 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); and
after making or providing for the above withdrawals
(vii) 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
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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 and the CMAC Policy required with respect
to a Mortgage 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 any 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
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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 or the CMAC 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 or the CMAC 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,
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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 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 or
the CMAC Policy, if applicable. 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
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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 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
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Master Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; 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.
With respect to each of the Group C-B Certificates and
the Group I-B Certificates, the Master Servicer may enter
into a special servicing agreement with an unaffiliated
holder of a 100% Percentage Interest of the Class B
Certificate with the lowest priority or a holder of a 100%
interest in a class of securities representing such
interests in such Class, subject to each Rating Agency's
acknowledgment that the Ratings of the Certificates in
effect immediately prior to the entering into of such
agreement would not be qualified, downgraded or withdrawn
and the Certificates would not be placed on credit review
status (except for possible upgrading) as a result of such
agreement. Any such agreement may contain provisions
whereby such holder may (a) instruct the Master Servicer to
instruct a Servicer to the extent provided in the applicable
Selling and Servicing Contract to commence or delay
foreclosure proceedings with respect to delinquent Mortgage
Loans and will contain provisions for the deposit of cash
with the Master Servicer by the holder that would be
available for distribution to Certificateholders if
Liquidation Proceeds are less than they otherwise may have
been had the Servicer acted in accordance with its normal
procedures or (b) purchase delinquent Mortgage Loans from
the REMIC I Trust Fund immediately prior to the commencement
of foreclosure proceedings at a price equal to the aggregate
outstanding Principal Balance of such Mortgage Loans plus
accrued interest thereon at the applicable Mortgage Interest
Rate through the last day of the month in which such
Mortgage Loan is purchased and/or (c) assume all of the
servicing rights and obligations with respect to delinquent
Mortgage Loans so long as (i) the Master Servicer has the
right to transfer the servicing rights and obligations of
such Mortgage Loans to another servicer and (ii) such holder
will service such Mortgage Loans in accordance with the
applicable Selling and Servicing Contract.
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
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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 and the Certificate Insurer 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, 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
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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, REMIC III 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 and the CMAC Policy, the
Trustee shall, upon request of the Master Servicer and
delivery to it of a trust receipt signed by a Servicing
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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 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 and the
Certificate Insurer 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
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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 REMIC I
Trust Fund through foreclosure, deed in lieu of foreclosure
or other exercise of the REMIC I 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 and the Certificate
Insurer, 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
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 Loans. 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
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expense, shall cause a firm of independent public
accountants to furnish a statement to the Trustee and the
Certificate Insurer 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. [Reserved]
Section 3.17. [Reserved.]
Section 3.18. [Reserved.]
Section 3.19. [Reserved.]
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
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 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
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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-14 Rounding
Account; Collections Thereunder. On or prior to the Closing
Date, the Trustee shall establish and maintain the Class I-A-
14 Rounding Account and DLJ shall deposit $999.99 therein.
On the first Distribution Date with respect to which the
Master Servicer determines that amounts are available out of
the REMIC III Available Distribution Amount for
distributions of principal on the Class I-A-14 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 in
writing by Noon New York City time two Business Days prior
to such Distribution Date of the Rounding Amount, and the
Trustee shall withdraw from the Class I-A-14 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 the Class I-A-14 Certificates by Pro
Rata Allocation, with respect to which the Master Servicer
determines that amounts are available out of the REMIC III
Available Distribution Amount for distributions of principal
on the Class I-A-14 Certificates, the aggregate amount
allocable to such Class will be applied first to replenish
any funds withdrawn from the Class I-A-14 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 in writing 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 Class I-A-14 Rounding Account, to the
extent funds are available therein, the amount so notified
by the Master Servicer.
Any amounts withdrawn by the Trustee from the Class I-A-
14 Rounding Account shall be deposited in the Certificate
Account for distribution to the Class I-A-14
Certificateholders as described in the immediately preceding
paragraph (and shall be deemed to have been distributed to
the Class I-A-14-L Regular Interests and deposited for their
benefit into the Certificate Account in accordance with
Section 4.01(i)).
Amounts on deposit in the Class I-A-14 Rounding Account
shall not be invested and shall not be held in an interest-
bearing account.
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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 the Class I-A-14 Certificates by Pro
Rata Allocation, the Master Servicer shall be entitled to
withdraw and pay to itself as additional servicing
compensation any remaining amounts on deposit in the Class I-
A-14 Rounding Account.
Section 3.22. Maintenance of Certificate Insurance Policy;
Collections Thereunder.
(a) Prior to Noon New York City time on the third
Business Day prior to each Distribution Date, the Master
Servicer shall determine if a Deficiency Amount for such
Distribution Date exists and, if so, shall immediately
notify the Trustee in writing of such amount; the Trustee,
upon receipt of such notice, shall complete the Notice and
submit such Notice in accordance with the Certificate
Insurance Policy to the Certificate Insurer no later than
12:00 P.M., New York City time, on the second Business Day
immediately preceding each Distribution Date, as a claim for
an Insured Payment in an amount equal to such Deficiency
Amount. If at any time the Trustee receives a certified copy
of an order of an appropriate court that any payment of
principal and interest on the Insured Certificates
constitutes a Preference Amount, the Trustee, at the expense
of the Trust, shall take the actions required on its part by
the terms of the Certificate Insurance Policy to obtain
payment of such Preference Amount by the Certificate
Insurer.
(b) Upon receipt of an Insured Payment from the
Certificate Insurer on behalf of the Insured
Certificateholders, the Trustee shall deposit such Insured
Payment in the Certificate Account. All such amounts on
deposit in the Certificate Account shall remain uninvested.
The Trustee shall include on each Distribution Date any
amounts received by it from or on behalf of the Certificate
Insurer with respect to the Deficiency Amount for such
Distribution Date in the amount distributed to the
applicable Insured Certificateholders pursuant to Section
4.04. If on any Distribution Date, the Trustee or the
Master Servicer determines (the Master Servicer having
notified the Trustee of such determination) that the
Certificate Insurer has paid more under the Certificate
Insurance Policy than is required by the terms thereof, the
Trustee shall promptly return the excess amount to the
Certificate Insurer.
(c) The Trustee shall (i) receive as attorney-in-fact
of each Insured Certificateholder any Insured Payment
delivered to it by the Certificate Insurer and (ii)
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distribute such Insured Payment to such Insured
Certificateholders as set forth in subsection (b) above.
Insured Payments disbursed by the Trustee from proceeds of
the Certificate Insurance Policy shall not be considered
payment by the Trust Fund with respect to the Insured
Certificates, nor shall such disbursement of such Insured
Payments discharge the obligations of the Trust Fund with
respect to the amounts thereof, and the Certificate Insurer
shall become owner of such amounts to the extent covered by
such Insured Payments as the deemed assignee of such Insured
Certificateholders. The Trustee hereby agrees on behalf of
each Insured Certificateholder (and each Insured
Certificateholder, by its acceptance of its Insured
Certificates, hereby agrees) for the benefit of the
Certificate Insurer that, to the extent the Certificate
Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the
Insured Certificateholders, the Certificate Insurer will be
subrogated to the rights of the Insured Certificateholders
to the extent of such payments and the Trustee shall pay
such amounts to the Certificate Insurer to the extent
included in the REMIC III Distribution Amount (as notified
to the Trustee by the Master Servicer in the written
statement required pursuant to Section 3.21).
(d) On each Distribution Date and prior to making any
distributions on such Distribution Date pursuant to Section
4.01, Section 4.04 or Section 4.05, the Trustee shall
withdraw from the Certificate Account and pay to the
Certificate Insurer the Certificate Insurer Premium.
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 (A) 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 Holders and the Class R-1
Certificateholder, or by any other means of payment
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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 III
and 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; provided that, with
respect to any Balloon Loan that is delinquent on its
maturity date, the Master Servicer will not be required to
advance the related balloon payment but will be required to
continue to make advances in accordance with this Section
4.02 with respect to such Balloon Loan in an amount equal to
one month's interest on the unpaid principal balance at the
applicable Pass-Through Rate for each Distribution Date .
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 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 written 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
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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 and the Certificate Insurer with a
statement in writing regarding the amount of the Certificate
Insurer Premium, the amounts to be distributed to the
Certificate Insurer pursuant to the definition of REMIC II
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Distribution Amount, the Deficiency Amount, if any, to be
paid by the Certificate Insurer, the amount, if any, to be
withdrawn from the Class I-A-14 Rounding Account pursuant to
Section 3.21 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, each Class of REMIC II 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", "REMIC II Distribution
Amount" and "REMIC III Distribution Amount", Section 4.01,
Section 4.04 and Section 4.06 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 Holders of REMIC II Regular
Interests and Class R-2 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 II Distribution Amount to the
Holders of the REMIC II Regular Interests and to have
deposited such amount for their benefit into the Certificate
Account and (ii) from the Certificate Account shall
distribute (A) to the Class R-2 Certificateholders the
amounts to be distributed to the Class R-2
Certificateholders pursuant to subsection (I)(e)(xxi) and
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subsection (II)(d)(v) of the definition of "REMIC II
Distribution Amount" for such Distribution Date and (B) to
the Certificate Insurer, the amounts to be distributed to
the Certificate Insurer pursuant to the definition of "REMIC
II Distribution Amount" for such Distribution Date, all in
accordance with written statements received from the Master
Servicer pursuant to Section 4.02(b), by (except with
respect to payments to the Certificate Insurer) wire
transfer in immediately available funds for the account of
each such Holders and the Class R-2 Certificateholder, or by
any other means of payment acceptable to each such Holder
and the Class R-2 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 and,
with respect to payments to the Certificate Insurer, by
means of payment acceptable to the Certificate Insurer as
specified by the Certificate Insurer. Notwithstanding any
other provision of this Agreement, no actual distributions
pursuant to clause (i) of this Section 4.04 shall be made on
account of the deemed distributions described in this
paragraph except in the event of a liquidation of REMIC III
and not REMIC II.
Section 4.05. Distributions to Certificateholders (other
than Class R-1 and Class R-2 Certificateholders).
(a) On each Distribution Date, the Trustee (or any
duly appointed paying agent) shall withdraw from the
Certificate Account, (i) the REMIC III Available
Distribution Amount for such Distribution Date and shall
distribute, from the amount so withdrawn, to the extent of
the REMIC III Available Distribution Amount, the REMIC III
Distribution Amount to the Certificates (other than the
Class R-1 and Class R-2 Certificates and provided that any
portion of such amount distributable to the Class I-A-14
Certificates shall be used first to pay any amount payable
to the Class I-A-14 Rounding Account pursuant to Section
3.21) and to the Certificate Insurer in respect of the
Certificate Insurer's subrogation to certain rights to
payment due to the Insured Certificateholders as set forth
in Section 3.22, (ii) the Deficiency Amount, if any, from
the Certificate Account and distribute such amount to the
Insured Certificateholders and (iii) the Rounding Amount for
distribution on such date pursuant to Section 3.21 and
distribute the amounts so withdrawn to the Class I-A-14
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 (except with
respect to payments to the Certificate Insurer) wire
transfer in immediately available funds for the account of,
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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
and with respect to payments to the Certificate Insurer, by
means of payment acceptable to the Certificate Insurer.
(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 4.05(c)(ii) and Section 9.01(b).
(c) Whenever, on the basis of Curtailments, Payoffs,
proceeds of the Certificate Insurance Policy 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 4.06. Statements to Certificateholders. With each
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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
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 the Group I Special Hazard
Coverage and the Combined Special Hazard Coverage
available to the Senior Certificates remaining as of
the close of business on the applicable Determination
Date;
(d) The amount of the Group I Bankruptcy Coverage
and the Combined Bankruptcy Coverage available to the
Senior Certificates remaining as of the close of
business on the applicable Determination Date;
(e) The amount of the Group I Fraud Coverage and
Combined Fraud Coverage available to the Senior
Certificates remaining as of the close of business on
the applicable Determination Date;
(f) The amount of the Class IV-A-5 Reimbursement
Amount as of the applicable Determination Date, the
amount of any Preference Amount and any amount payable
to the Certificate Insurer pursuant to its subrogation
rights; and
(g) The amount of Realized Losses incurred in
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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 4.07. Principal Distributions on the Class I-A-14
Certificates. (a) Prior to the earlier of (i) the Group I
Credit Support Depletion Date and (ii) the date on which any
loss is allocated to the Class I-A-14 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 such
Class and at the request of Living Holders of Certificates
of such Class or by mandatory distributions, pursuant to
Section 4.07(a) and Section 4.07(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 the Class I-
A-14 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 4.07(e).
(a) On each Distribution Date on which principal
distributions to the Class I-A-14 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) second, 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.
Thereafter, distributions will be made, with respect to the
Class I-A-14 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.
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All requests for principal distributions to Class I-A-
14 Certificates will be accepted in accordance with the
provisions set forth in Section 4.07(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 Class I-A-14
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 4.07(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
Class I-A-14 Certificate, all in accordance with the
procedures of DTC and the Trustee. Upon the transfer of
beneficial ownership of any Class I-A-14 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 4.07(c) using
a form required by DTC.
Distributions in reduction of the Class Principal
Balance of the Class I-A-14 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 4.05, plus any amounts available for
distribution from the Class I-A-14 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 the Class I-A-14
Certificates on any Distribution Date exceeds the aggregate
Certificate Principal Balance of Class I-A-14 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
4.07(d).
(b) A Class I-A-14 Certificate shall be deemed to be held
by a Deceased Holder for purposes of this Section 4.07 if
the death of the Holder thereof is deemed to have occurred.
Class I-A-14 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
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common will be deemed to be the death of the Holder, and the
Class I-A-14 Certificates so beneficially owned will be
eligible for priority with respect to principal
distributions, subject to the limitations stated above.
Class I-A-14 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 Class I-A-14 Certificates greater than the number
of Class I-A-14 Certificates of which such trust is the
owner. The death of a beneficiary of a trust will be deemed
to be the death of a Holder of the Class I-A-14 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 Class I-A-14
Certificate will be deemed to be the death of the Holder of
such Class I-A-14 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 Class I-A-14 Certificate and the right to receive the
proceeds therefrom, as well as interest and principal
distributions, as applicable, payable with respect thereto.
The Trustee may rely entirely upon documentation delivered
to it in establishing beneficial ownership interests in
Class I-A-14 Certificates. 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
4.07(c) in establishing the eligibility of any Holder to
receive the priority accorded Deceased Holders in Section
4.07(a).
(c) Requests for principal distributions to any Class I-A-
14 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
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<PAGE> 191
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 Class I-
A-14 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 4.07(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 Class I-A-14 Rounding Account) to be distributed to
the Class I-A-14 Certificates by mandatory distribution
pursuant to Section 4.07(d). Requests shall be honored by
DTC in accordance with the procedures, and subject to the
priorities and limitations, described in this Section 4.07.
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 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.
Class I-A-14 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 Class I-A-14 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
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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 4.07, 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 the Class I-A-14 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
4.07(a) above, additional Class I-A-14 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, Class I-A-14
Certificates from among those held in its accounts to
receive mandatory principal distributions, such that the
total amount of principal distributed to the Class I-A-14
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 Class I-
A-14 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 in writing 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
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on which any loss is allocated to the Class I-A-14
Certificates by Pro Rata Allocation,, 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 4.07(a) or by mandatory distributions
as provided for by Section 4.07(d).
In the event that Definitive Certificates representing
the Class I-A-14 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 I-A-14 Principal
Balance are to be made; provided that such procedures shall
be consistent, to the extent practicable and customary for
certificates similar to the Class I-A-14 Certificates, with
the provisions of this Section 4.07.
ARTICLE V
The Certificates
Section 5.01. The Certificates.
(a) The Certificates shall be substantially in the
forms set forth in Exhibit A and B 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.
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(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 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
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<PAGE> 195
"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 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
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<PAGE> 196
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
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<PAGE> 197
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.
(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
(determined in the case of the Insured
Certificates, without giving effect to the
Certificate Insurance Policy); 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,
REMIC II and REMIC III to cease to qualify as a
REMIC and will not create a risk that (1) REMIC I,
REMIC II and REMIC III 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
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<PAGE> 198
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
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] [R-3] 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] [R-3]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, REMIC II and REMIC III, 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 B 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
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to the Trustee and the Company to the effect that the
purchase or holding of a Class B 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 B 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.
(e) No transfer, sale, pledge or other disposition of
a Junior Subordinate Certificate shall be made unless such
transfer, sale, pledge or other disposition is made in
accordance with this Section 5.01(e) or Section 5.01(f);
provided that any transfer, sale, pledge or other
disposition of a Junior Subordinate Certificate shall be
exempt from the requirements of this Section 5.01(e) and
Section 5.01(f) if each of the Certificateholder desiring to
effect such transfer and such Certificateholder's transferee
are among the following: (i) DLJ Mortgage Capital, Inc.,
(ii) Donaldson, Lufkin & Jenrette Securities Corporation and
(iii) DLJ Mortgage Acceptance Corp. Each Person who, at any
time, acquires any ownership interest in any Junior
Subordinate Certificate shall be deemed by the acceptance or
acquisition of such ownership interest to have agreed to be
bound by the following provisions of this Section 5.01(e)
and Section 5.01(f), as applicable. No transfer of a Junior
Subordinate Certificate shall be deemed to be made in
accordance with this Section 5.01(e) unless such transfer is
made pursuant to an effective registration statement under
the Securities Act or unless the Trustee is provided with
the certificates and an Opinion of Counsel, if required, on
which the Trustee may conclusively rely, which establishes
or establish to the Trustee's satisfaction that such
transfer is exempt from the registration requirements under
the Securities Act, as follows: In the event that a
transfer is to be made in reliance upon an exemption from
the Securities Act, the Trustee shall require, in order to
assure compliance with the Securities Act, that the
Certificateholder desiring to effect such transfer certify
to the Trustee in writing, in substantially the form
attached hereto as Exhibit F, the facts surrounding the
transfer, with such modifications to such Exhibit F as may
be appropriate to reflect the actual facts of the proposed
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transfer, and that the Certificateholder's proposed
transferee certify to the Trustee in writing, in
substantially the form attached hereto as Exhibit G, the
facts surrounding the transfer, with such modifications to
such Exhibit G as may be appropriate to reflect the actual
facts of the proposed transfer. If such certificate of the
proposed transferee does not contain substantially the
substance of Exhibit G, the Trustee shall require an Opinion
of Counsel satisfactory to it that such transfer may be made
without registration, which Opinion of Counsel shall not be
obtained at the expense of the Trustee, the REMIC I Trust
Fund, the REMIC II Trust Fund, the REMIC III Trust Fund or
the Company. Such Opinion of Counsel shall allow for the
forwarding, and the Trustee shall forward, a copy thereof to
the Rating Agencies. Notwithstanding the foregoing, any
Junior Subordinate Certificate may be transferred, sold,
pledged or otherwise disposed of in accordance with the
requirements set forth in Section 5.01(f).
(f) To effectuate a Certificate transfer of a Junior
Subordinate Certificate in accordance with this Section
5.01(f), the proposed transferee of such Certificate must
provide the Trustee and the Company with an investment
letter substantially in the form of Exhibit L attached
hereto, which investment letter shall not be an expense of
the Trustee or the Company, and which investment letter
states that, among other things, such transferee (i) is a
"qualified institutional buyer" as defined under Rule 144A,
acting for its own account or the accounts of other
"qualified institutional buyers" as defined under Rule 144A,
and (ii) is aware that the proposed transferor intends to
rely on the exemption from registration requirements under
the Securities Act provided by Rule 144A. Notwithstanding
the foregoing, the proposed transferee of such Certificate
shall not be required to provide the Trustee or the Company
with Annex 1 or Annex 2 to the form of Exhibit L attached
hereto if the Company so consents prior to each such
transfer. Such transfers shall be deemed to have complied
with the requirements of this Section 5.01(f). The Holder of
a Certificate desiring to effect such transfer does hereby
agree to indemnify the Trustee, the Company, and the
Certificate Registrar against any liability that may result
if transfer is not made in accordance with this Agreement.
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
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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 Certificate Interest Rates, initial Class 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 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, New York 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.
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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 (and with respect to the
Insured Certificates, the Certificate Insurer) 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 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 III Trust Fund (or with respect to
the Class R-1 and Class R-2 Certificates, the residual
ownership interests in the REMIC I Trust Fund and REMIC II
Trust Fund, respectively) 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, the Certificate Insurer (with
respect to the Insured Certificates) 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, Section
4.04 and Section 4.06 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.
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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 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:
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,
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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-
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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.
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.
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Section 5.10. Office for Transfer of Certificates. The
Trustee shall maintain in Massachusetts and in New York, New
York, an office or agency where Certificates may be
surrendered for registration of transfer or exchange. The
Corporate Trust Office and State Street Bank and Trust
Company, N.A., 61 Broadway, New York, NY 10006, Attention:
Corporate Trust Window 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.
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,
employees or agents of the Company or the Master Servicer
shall be under any liability to the REMIC I, REMIC II or
REMIC III 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
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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.
Section 6.05. Trustee Access. The Master Servicer shall
afford the Depositor and the Trustee, upon reasonable
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notice, during normal business hours access to all records
maintained by the Master Servicer, in respect of its rights
and obligations hereunder and access to such of its officers
as are responsible for such obligations. Upon reasonable
request, the Master Servicer, shall furnish the Depositor
and the Trustee with its most recent financial statements
(or, for so long as PNC Mortgage Securities Corp. is the
Master Servicer, the most recent consolidating financial
statements for PNC Mortgage Securities Corp. appearing in
the audited financial statements of PNC Bank Corp.) and such
other information as it possesses, and which it is not
prohibited by law or, to the extent applicable, binding
obligations to third parties with respect to confidentiality
from disclosing, regarding its business, affairs, property
and condition, financial or otherwise.
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 III 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 III Trust Fund; or
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(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 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 III
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
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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.
(b) In case one or more of the following Events of
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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 III 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 III 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.
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(c) In any circumstances in which this Agreement
states that Certificateholders owning Certificates
evidencing a certain percentage Percentage Interest in the
REMIC III 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 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
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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 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,
(ii) the Trustee shall not be liable except for
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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
(iii) 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 III 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) Concurrently with the execution hereof, the Trustee
shall execute and deliver to the Certificate Insurer the
Insurance Agreement dated of even date herewith and shall
perform its obligations thereunder in accordance with the
terms thereof.
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
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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 (including the Certificate
Insurer, with respect to the Insured Certificates)
evidencing Percentage Interests aggregating not less
than 25% of the REMIC III 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;
(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; and
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(vii) In no event shall the Trustee be held
liable for acts of omissions of the Master Servicer
(excepting the Trustee's own actions as Master
Servicer). No provision of this Agreement shall
require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the
performance of any of its duties hereunder (except for
the giving of required notices), or in the exercise of
any of its rights or powers, if it shall have
reasonable grounds for believing the repayment of such
funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
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 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
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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, the REMIC II Trust Fund or the REMIC
III 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 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
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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 III 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
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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, (ii) the Certificate Insurer and
(iii) 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.
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 REMIC I Trust
Fund, the REMIC II Trust Fund or REMIC III 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 REMIC I Trust Fund, the
REMIC II Trust Fund or REMIC III Trust Fund and to vest in
such Person or Persons, in such capacity, such title to the
REMIC I Trust Fund, the REMIC II Trust Fund or REMIC III
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
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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 REMIC I Trust Fund, the REMIC II Trust Fund or
the REMIC III 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 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
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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.
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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
Certificate Account, and distributions to Certificateholders
as provided in Section 4.01, Section 4.04, Section 4.06(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
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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.
(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 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
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them hereunder and the payment to the Certificate Insurer of
any remaining amounts pursuant to the priority set forth in
the definition of REMIC I Distribution Amount of the Class
IV-A-5 Reimbursement Amount; 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 the Certificate Insurer (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 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
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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,
the REMIC II Trust Fund and the REMIC III Trust Fund shall
be terminated in accordance with the following additional
requirements, unless the Company, at its own expense,
obtains for the Trustee and the Certificate Insurer an
Opinion of Counsel to the effect that the failure of the
REMIC I Trust Fund, the REMIC II Trust Fund and REMIC III
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, the
REMIC II Trust Fund and the REMIC III Trust Fund as
described in Section 860F of the Code, or (ii) cause the
REMIC I Trust Fund, the REMIC II Trust Fund or the REMIC III
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, the REMIC II Trust Fund and the REMIC III 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, the REMIC II Trust
Fund and the REMIC III 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
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<PAGE> 226
REMIC I Trust Fund, the REMIC II Trust Fund and the
REMIC III 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 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, but with the
prior written consent of the Certificate Insurer with
respect to any amendment that adversely affects the
interests of any of the Insured 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 REMIC I Trust Fund, the REMIC II
Trust Fund or the REMIC III Trust Fund, or to assure the
conveyance to the Trustee of any property included in the
REMIC I Trust Fund, the REMIC II Trust Fund or the REMIC III
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
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<PAGE> 227
REMIC III 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 Certificate Interest 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 REMIC I Trust Fund, the REMIC II Trust Fund or
the REMIC III 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.
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 Agreement. 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. Without
limiting the foregoing, the Trustee shall make the filings
required by Chapter 182 of the Massachusetts General Laws.
Section 10.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement, the REMIC I Trust Fund,
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<PAGE> 228
the REMIC II Trust Fund or REMIC III 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 REMIC I Trust
Fund, the REMIC II Trust Fund or the REMIC III 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 REMIC I Trust Fund, the REMIC II Trust Fund or the
REMIC III 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 III 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 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
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<PAGE> 229
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.
For so long as no Certificate Insurer Default exists
(and whether or not any payments with respect to Deficiency
Amounts or Preference Amounts have been made), the
Certificate Insurer shall be deemed to be the sole Holder of
all outstanding Insured Certificates with respect to any
rights hereunder (other than the right to receive
distributions on such Insured Certificates, except as
provided in Section 3.22); provided that such rights may not
be used to reduce the rights of the Insured
Certificateholders to receive distributions or to otherwise
impair their rights under this Agreement as further
described in the definition of "Certificateholder."
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
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<PAGE> 230
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 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, (e) in
the case of DCR, 55 E. Monroe Street, 38th floor, Chicago,
Illinois 60603, Attention: Michelle Lyn Russell, or such
other address as may hereafter be furnished to the Trustee
and Master Servicer in writing by DCR and (f) in the case of
the Certificate Insurer, to MBIA Insurance Corporation, 113
King Street, Armonk, New York 10504, Attn: Insured Portfolio
Management - Structured Finance (IPM-SF), or such other
address as may hereafter be furnished to the Trustee and
Master Servicer in writing by the Certificate Insurer.
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
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<PAGE> 231
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;
(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;
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<PAGE> 232
(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 (with a copy to the
Certificate Insurer) 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 (with a
copy to the Certificate Insurer) in respect of each
Distribution Date, without regard to whether any
Certificateholder or the Trustee has requested such report
for such Distribution Date.
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)
By: /s/ Michael A. Aaknes
---------------------
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<PAGE> 233
Its: Assistant Vice President
STATE STREET BANK AND TRUST
COMPANY,
as TRUSTEE
(SEAL)
By: /s/ David Duclos
---------------------
Its: Assistant Vice President
ACKNOWLEDGEMENT OF CORPORATION
STATE OF ILLINOIS )
) SS.
COUNTY OF LAKE )
On this 30th day of November 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.
/s/ Laura A. Kelsey
-------------------
Notary Public
(SEAL)
CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
On this 30th day of November, 1998 before me, a Notary
<PAGE>
<PAGE> 234
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 whose name is subscribed
to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on
the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ Kim R. Holland (SEAL)
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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
<PAGE>
<PAGE> 235
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 1998-12 Portion of the Class I-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-1 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-1 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-2
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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
<PAGE>
<PAGE> 236
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 1998-12 Portion of the Class I-A-2
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-2 Certificate Interest Rate: 5.750%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-2 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-3
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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
<PAGE>
<PAGE> 237
Date") of this Certificate is November 30, 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 1998-12 Portion of the Class I-A-3
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-3 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-3 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-4
<PAGE>
<PAGE> 238
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 1998-12 Portion of the Class I-A-4
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-4 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-4 Principal Balance
as of the Cut-Off Date: $[ ]
<PAGE>
<PAGE> 239
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-5
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 1998-12 Portion of the Class I-A-5
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
<PAGE>
<PAGE> 240
$__________________________________________
Class I-A-5 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-5 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-6
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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
<PAGE>
<PAGE> 241
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 1998-12 Portion of the Class I-A-6
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-6 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-6 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-7
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 $
<PAGE>
<PAGE> 242
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 1998-12 Portion of the Class I-A-7
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-7 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-7 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-8
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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
<PAGE>
<PAGE> 243
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 November 30, 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 1998-12 Portion of the Class I-A-8
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-8 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-8 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
<PAGE>
<PAGE> 244
Class I-A-9
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 1998-12 Portion of the Class I-A-9
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-9 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-9 Principal Balance
as of the Cut-Off Date: $[ ]
<PAGE>
<PAGE> 245
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-10
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 1998-12 Portion of the Class I-A-10
Principal Balance as of
<PAGE>
<PAGE> 246
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-10 Certificate Interest Rate: 0.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-10 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-11
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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
<PAGE>
<PAGE> 247
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 1998-12 Portion of the Class I-A-11
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-11 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-11 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-12
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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
<PAGE>
<PAGE> 248
$ 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 1998-12 Portion of the Class I-A-12
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-12 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-12 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-13
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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.
<PAGE>
<PAGE> 249
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 November 30, 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 1998-12 Portion of the Class I-A-13
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-13 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-A-13 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
<PAGE>
<PAGE> 250
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-14
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 1998-12 Portion of the Class I-A-14
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class I-A-14 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
<PAGE>
<PAGE> 251
Last Scheduled Distribution Date:
Class I-A-14 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-X
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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.
<PAGE>
<PAGE> 252
Series 1998-12 Portion of the Class I-X
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
____________
Class I-X Certificate Interest
Rate: 6.250% applied to the
Class I-X Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 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
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-P
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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
<PAGE>
<PAGE> 253
attributable to the short period is not more than $
per $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the
Mortgage Loans will prepay at a rate based on the Standard
Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Trustee or its agent for registration
of transfer, exchange, or payment, and any Certificate issued is
registered in the name of Cede & Co. or such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
Series 1998-12 Portion of the Class I-P Principal
Balance as of the Cut-Off Date
evidenced by this Certificate:
Class I-P Certificate Interest Rate: 0.00%$_______________________________
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998.
[Assuming that the Mortgage Loans underlying the Certificates
<PAGE>
<PAGE> 254
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-B-1 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-B-1 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-B-1 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 1998-12 Portion of the Class I-B-1
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_________________________________________
Class I-B-1 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-B-1 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
<PAGE>
<PAGE> 255
Class I-B-2
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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-B-2 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-B-2 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-B-2 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 1998-12 Portion of the Class I-B-2
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_________________________________________
Class I-B-2 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
<PAGE>
<PAGE> 256
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-B-2 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-3
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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-B-3 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-B-3 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.
<PAGE>
<PAGE> 257
The Class I-B-3 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 1998-12 Portion of the Class I-B-3
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_________________________________________
Class I-B-3 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-B-3 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-4
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 "Date") of this Certificate is November 30, 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.]
<PAGE>
<PAGE> 258
IN THE CASE OF ANY CLASS I-B-4 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-B-4 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 SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class I-B-4 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 1998-12 Portion of the Class I-B-
4 Principal Balance as of
the Cut-Off Date
Evidenced by this
Certificate:
$
Class I-B-4 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-B-4 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-5
Evidencing a Percentage Interest in a trust fund whose assets
consist of interests in another trust fund whose assets consists
of, among other things, a pool of conventional one- to four-
<PAGE>
<PAGE> 259
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 "Date") of this Certificate is November 30, 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-B-5 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-B-5 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 SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class I-B-5 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 1998-12 Portion of the Class I-B-
5 Principal Balance as of
the Cut-Off Date
Evidenced by this
<PAGE>
<PAGE> 260
Certificate:
$
Class I-B-5 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-B-5 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-6
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 "Date") of this Certificate is November 30, 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-B-6 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-B-6 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
<PAGE>
<PAGE> 261
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 SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class I-B-6 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 1998-12 Portion of the Class I-B-
6 Principal Balance as of
the Cut-Off Date
Evidenced by this
Certificate:
$
Class I-B-6 Certificate Interest Rate: 6.250%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class I-B-6 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
<PAGE>
<PAGE> 262
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class II-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$_____________________________________
Class II-A-1 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution Date:
Class II-A-1 Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-2
<PAGE>
<PAGE> 263
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class II-A-2
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$_____________________________________
Class II-A-2 Certificate Interest Rate: 0.000%
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution Date:
<PAGE>
<PAGE> 264
Class II-A-2 Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-X-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class II-X-1
<PAGE>
<PAGE> 265
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
____________
Class II-X-1 Certificate
Interest Rate: 7.000%
applied to the Class II-X-1
Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution
Date:
Class II-X-1 Principal Balance
as of the Cut-Off Date:
$0.00
Class II-X-1 Notional Amount
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-X-2
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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
<PAGE>
<PAGE> 266
under the exact method. No representation is made that the
Mortgage Loans will prepay at a rate based on the Basic
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 1998-12 Portion of the Class II-X-2
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
____________
Class II-X-2 Certificate
Interest Rate: 7.000%
applied to the Class II-X-2
Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution
Date:
Class II-X-2 Principal Balance
as of the Cut-Off Date:
$0.00
Class II-X-2 Notional Amount
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-X
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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
<PAGE>
<PAGE> 267
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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class C-X
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
____________
Class C-X Certificate Interest
Rate: 7.000% applied to the
Class C-X Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution
Date:
Class C-X Principal Balance
as of the Cut-Off Date:
$0.00
Class C-X Notional Amount
<PAGE>
<PAGE> 268
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-P
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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., 100% of the Basic 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 $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the
Mortgage Loans will prepay at a rate based on the Basic
Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Trustee or its agent for registration
of transfer, exchange, or payment, and any Certificate issued is
registered in the name of Cede & Co. or such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
Series 1998-12 Portion of the Class II-P Principal
Balance as of the Cut-Off Date
<PAGE>
<PAGE> 269
evidenced by this Certificate:
Class II-P Certificate Interest Rate: 0.00%$_______________________________
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class II-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-A-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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
<PAGE>
<PAGE> 270
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 1998-12 Portion of the Class III-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class III-A-1 Certificate Interest Rate: 7.000%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
In the event that Loan Group III becomes under collateralized,
the final distribution date may become substantially later than
the
Last Scheduled Distribution Date.
Class III-A-1 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-X-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
<PAGE>
<PAGE> 271
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class III-X-1
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
____________
Class III-X-1 Certificate
Interest Rate: 7.000%
applied to the Class III-X-1
Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution
Date:
In the event that Loan Group
III becomes under
collateralized, the final
distribution date may become
substantially later than the
Last Scheduled Distribution
Date.
Class III-X-1 Principal
Balance
as of the Cut-Off Date:
$0.00
Class III-X-1 Notional Amount
<PAGE>
<PAGE> 272
as of the Cut-Off Date: $[
]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-P
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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., 100% of the Basic 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 $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the
Mortgage Loans will prepay at a rate based on the Basic
Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Trustee or its agent for registration
of transfer, exchange, or payment, and any Certificate issued is
registered in the name of Cede & Co. or such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
Series 1998-12 Portion of the Class III-P
<PAGE>
<PAGE> 273
Principal Balance as of the Cut-Off
Date evidenced by this Certificate:
Class III-P Certificate Interest Rate: 0.00%$_______________________________
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
In the event that Loan Group III becomes
under collateralized, the final distribution date
may become substantially later than the
Last Scheduled Distribution Date.
Class III-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
Prepayment Assumption or any other rate.]
<PAGE>
<PAGE> 274
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 1998-12 Portion of the Class IV-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-1 Certificate Interest Rate: 6.500%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-1 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-2
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
<PAGE>
<PAGE> 275
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class IV-A-2
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-2 Certificate Interest Rate: 6.750%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-2 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-3
Evidencing a Percentage Interest in a trust fund whose assets
consist of interests in another trust fund whose assets consists
of, among other things, a pool of conventional one- to four-
<PAGE>
<PAGE> 276
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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class IV-A-3
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-3 Certificate Interest Rate: 6.500%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-3 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
<PAGE>
<PAGE> 277
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-4
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class IV-A-4
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
<PAGE>
<PAGE> 278
Class IV-A-4 Certificate Interest Rate: 6.500%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-4 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-5
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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
<PAGE>
<PAGE> 279
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 1998-12 Portion of the Class IV-A-5
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-5 Certificate Interest Rate: 6.475%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-5 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-6
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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
<PAGE>
<PAGE> 280
Mortgage Loans will prepay at a rate based on the Basic
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 1998-12 Portion of the Class IV-A-6
Notional Amount as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-6 Certificate
Interest Rate: 6.500%
applied to the Class IV-A-6
Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution
Date:
Class IV-A-6 Principal Balance
as of the Cut-Off Date:
$0.00
Class IV-A-6 Notional Amount
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-7
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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
<PAGE>
<PAGE> 281
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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class IV-A-7
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-7 Certificate Interest Rate: 6.100%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-7 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
Exhibit A
<PAGE>
<PAGE> 282
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-8
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 1998-12 Portion of the Class IV-A-8
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-8 Certificate Interest Rate: 0.000%
<PAGE>
<PAGE> 283
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-8 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-A-9
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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
<PAGE>
<PAGE> 284
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
Series 1998-12 Portion of the Class IV-A-9
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$__________________________________________
Class IV-A-9 Certificate Interest Rate: 6.750%
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-A-9 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-X-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
<PAGE>
<PAGE> 285
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 1998-12 Portion of the Class IV-X-1
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
____________
Class IV-X-1 Certificate
Interest Rate: 6.500%
applied to the Class IV-X-1
Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution
Date:
Class IV-X-1 Principal Balance
as of the Cut-Off Date:
$0.00
Class IV-X-1 Notional Amount
as of the Cut-Off Date: $[
]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-X-2
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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
<PAGE>
<PAGE> 286
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 November 30, 1998. [Assuming that
the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this
Certificate (i.e., 100% of the Basic 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 Basic
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 1998-12 Portion of the Class IV-X-2
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
____________
Class IV-X-2 Certificate
Interest Rate: 6.500%
applied to the Class IV-X-2
Notional Amount
Cut-Off Date: November 1,
1998
First Distribution Date:
December 28, 1998
Last Scheduled Distribution
Date:
Class IV-X-2 Principal Balance
as of the Cut-Off Date:
$0.00
<PAGE>
<PAGE> 287
Class IV-X-2 Notional Amount
as of the Cut-Off Date: $[
]
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class IV-P
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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., 100% of the Basic 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 $100,000 of initial Certificate Principal Balance, computed
under the exact method. No representation is made that the
Mortgage Loans will prepay at a rate based on the Basic
Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Trustee or its agent for registration
of transfer, exchange, or payment, and any Certificate issued is
registered in the name of Cede & Co. or such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
<PAGE>
<PAGE> 288
Series 1998-12 Portion of the Class IV-P Principal
Balance as of the Cut-Off Date
evidenced by this Certificate:
Class IV-P Certificate Interest Rate: 0.00%$_______________________________
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class IV-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-1
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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 C-B-1 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
C-B-1 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
<PAGE>
<PAGE> 289
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 C-B-1 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 1998-12 Portion of the Class C-B-1
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_________________________________________
Class C-B-1 Certificate Interest Rate: Variable
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class C-B-1 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-2
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 November 30, 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,
<PAGE>
<PAGE> 290
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 C-B-2 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
C-B-2 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 C-B-2 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 1998-12 Portion of the Class C-B-2
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_________________________________________
Class C-B-2 Certificate Interest Rate: Variable
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class C-B-2 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-3
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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
<PAGE>
<PAGE> 291
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 November 30, 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 C-B-3 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
C-B-3 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 C-B-3 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 1998-12 Portion of the Class C-B-3
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_________________________________________
Class C-B-3 Certificate Interest Rate: Variable
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class C-B-3 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
<PAGE>
<PAGE> 292
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-4
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 "Date") of this Certificate is November 30, 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 C-B-4 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
C-B-4 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 SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN
<PAGE>
<PAGE> 293
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class C-B-4 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 1998-12 Portion of the Class C-B-
4 Principal Balance as of
the Cut-Off Date
Evidenced by this
Certificate:
$
Class C-B-4 Certificate Interest Rate: Variable
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class C-B-4 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-5
Evidencing a Percentage Interest in a trust fund whose assets
consist of 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 "Date") of this Certificate is November 30, 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
<PAGE>
<PAGE> 294
Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS C-B-5 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
C-B-5 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 SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class C-B-5 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 1998-12 Portion of the Class C-B-
5 Principal Balance as of
the Cut-Off Date
Evidenced by this
Certificate:
$
Class C-B-5 Certificate Interest Rate: Variable
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class C-B-5 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-6
Evidencing a Percentage Interest in a trust fund whose assets
<PAGE>
<PAGE> 295
consist of 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 "Date") of this Certificate is November 30, 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 C-B-6 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
C-B-6 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 SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class C-B-6 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 1998-12 Portion of the Class C-B-
6 Principal Balance as of
<PAGE>
<PAGE> 296
the Cut-Off Date
Evidenced by this
Certificate:
$
Class C-B-6 Certificate Interest Rate: Variable
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class C-B-6 Principal Balance
as of the Cut-Off Date: $[ ]
__________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-3
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-3 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
<PAGE>
<PAGE> 297
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-3 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-3 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 1998-12 Percentage Interest
evidenced by this Class R-
3 Certificate in the
distributions to be made
with respect to the Class
R-3 Certificates:
%
Class R-3 Certificate
Interest Rate: 6.5000%.
Additionally the Class R-3
Certificates are entitled
to the Residual
Distribution Amount as
defined in the Pooling
Agreement.
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class R-3 Principal Balance as of the Cut-Off Date: $50.00
__________________
Registered Owner
Certificate No. _________
Exhibit B
CUSIP
<PAGE>
<PAGE> 298
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
<PAGE>
<PAGE> 299
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 1998-12 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 Certificate Interest Rate:
6.500%. 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: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class R-1 Principal Balance as of the Cut-Off Date: $50.00
__________________
Registered Owner
Certificate No. _________
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
I 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
<PAGE>
<PAGE> 300
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
<PAGE>
<PAGE> 301
(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:
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 I
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 III Trust Fund. The
Pooling Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any
of the Certificates.
<PAGE>
<PAGE> 302
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. In the event that a transfer is to be made
without registration or qualification under applicable laws, (i)
in the event such transfer is made pursuant to Rule 144A under
the Securities Act, the Company and the Trustee shall require the
transferee to execute an investment letter in substantially the
form attached as Exhibit L to the Pooling Agreement, which
investment letter shall not be an expense of the Company, the
Master Servicer or the Trustee and (ii) in the event that such a
transfer is not made pursuant to Rule 144A under the Securities
Act, the Company may require an Opinion of Counsel satisfactory
to the Company that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not
be an expense of the Company, the Master Servicer or the Trustee.
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
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
<PAGE>
<PAGE> 303
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 REMIC I 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
REMIC I 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.
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.
<PAGE>
<PAGE> 304
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.
Exhibit B
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-2
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-2 CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
<PAGE>
<PAGE> 305
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-2
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 1998-12 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 Certificate Interest Rate:
6.500%. Additionally the Class R-2
Certificates are entitled to Excess
Liquidation Proceeds and the Residual
Distribution Amount as defined in the
Pooling Agreement.
Cut-Off Date: November 1, 1998
First Distribution Date: December 28, 1998
Last Scheduled Distribution Date:
Class R-2 Principal Balance as of the Cut-Off Date: $50.00
__________________
Registered Owner
Certificate No. _________
This Certificate does not represent an obligation of or
<PAGE>
<PAGE> 306
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, 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.
<PAGE>
<PAGE> 307
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.
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:
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.
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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 III Trust Fund. 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. In the event that a transfer is to be made
without registration or qualification under applicable laws, (i)
in the event such transfer is made pursuant to Rule 144A under
the Securities Act, the Company and the Trustee shall require the
transferee to execute an investment letter in substantially the
form attached as Exhibit L to the Pooling Agreement, which
investment letter shall not be an expense of the Company, the
Master Servicer or the Trustee and (ii) in the event that such a
transfer is not made pursuant to Rule 144A under the Securities
Act, the Company may require an Opinion of Counsel satisfactory
to the Company that such transfer may be made without such
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registration or qualification, which Opinion of Counsel shall not
be an expense of the Company, the Master Servicer or the Trustee.
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
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 REMIC I 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
REMIC I 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
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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.
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.
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
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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
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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 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
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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.
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
____________________________________________ __________________
___________ _____
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Signature of the Company's authorized Date
officer
Agreed to and accepted by PNC Mortgage Securities Corp.
________________________________________________________________
________________
Typed name and title of authorized representative
____________________________________________ __________________
___________ _____
Signature of authorized representative Date
Exhibit F
FORM OF TRANSFEROR CERTIFICATE FOR
JUNIOR SUBORDINATE CERTIFICATES
[Date]
State Street Bank and Trust Company, as Trustee
Two International Place
Boston, MA 02102
Attn: Structured Finance
Re: Purchase of PNC Mortgage Securities Corp. Mortgage Pass-
Through Certificates Series 1998-12, Class [ ] (the
"Certificates")
Ladies and Gentlemen:
In connection with our disposition of the above Certificates
we certify that (a) we understand the Certificates have not been
registered under the Securities Act of 1933, as amended (the
"Act") and are being disposed by us in a transaction that is
exempt from the registration requirements of the Act, and (b) we
have not offered or sold any certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached
or negotiated with any person with respect thereto, or taken any
other action which would result in a violation of Section 5 of
the Act.
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Very truly yours,
[Name of Transferor]
By:
Authorized Officer
Exhibit G
FORM OF TRANSFEREE'S AGREEMENT FOR
JUNIOR SUBORDINATE CERTIFICATES
[Date]
State Street Bank and Trust Company, as Trustee
Two International Place
Boston, MA 02102
Attn: Structured Finance
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
The undersigned (the "Purchaser") proposes to purchase
Class [ ] Certificates evidencing an undivided interest in PNC
Mortgage Securities Corp. Mortgage Pass-Through Certificates,
Series 1998-12 (the "Purchased Certificates") in the principal
amount of $______________. In doing so, the Purchaser hereby
acknowledges and agrees as follows:
Section 1. Definitions. Each capitalized term used
herein and not otherwise defined herein shall have the meaning
ascribed to it in the Pooling and Servicing Agreement, dated as
of November 1, 1998 (the "Pooling Agreement"), by and between PNC
Mortgage Securities Corp. ("PNC") and State Street Bank and Trust
Company, as trustee (the "Trustee"), of the PNC Mortgage
Securities Corp. Mortgage Pass-Through Certificates, Series 1998-
12.
Section 2. Representations and Warranties of the
Purchaser. In connection with the proposed transfer, the
Purchaser represents and warrants to PNC and the Trustee that:
(a) The Purchaser is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which
the Purchaser is organized, is authorized to invest in the
Purchased Certificates, and to enter into this Agreement, and
duly executed and delivered this Agreement;
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(b) The Purchaser is acquiring the Purchased
Certificates for its own account as principal and not with a view
to the distribution thereof, in whole or in part;
(c) The Purchaser is an "accredited investor" as such
term is defined in paragraph (a)(1), (a)(2), (a)(3), (a)(7) or
(a)(8) of Section 501 of Regulation D under the Securities Act of
1933, as amended (the "Act"), has knowledge of financial and
business matters and is capable of evaluating the merits and
risks of an investment in the Purchased Certificates; the
Purchaser has sought such accounting, legal and tax advice as it
has considered necessary to make an informed investment decision;
and the Purchaser is able to bear the economic risk of an
investment in the Purchased Certificates and can afford a
complete loss of such investment;
(d) The Purchaser is not affiliated with the Trustee;
(e) The Purchaser confirms that PNC has made available
to the Purchaser the opportunity to ask questions of, and receive
answers from PNC concerning the trust funds created pursuant to
the Pooling Agreement (the "Trust Funds"), the purchase by the
Purchaser of the Purchased Certificates and all matters relating
thereto that PNC possesses or can acquire without unreasonable
effort or expense; and
(f) If applicable, the Purchaser has complied, and
will continue to comply, with the guidelines established by
Thrift Bulletin 12 issued December 13, 1988, by the Office of
Regulatory Activities of the Federal Home Loan Bank System; and
(g) The Purchaser will provide the Trustee and the
Master Servicer with affidavits substantially in the form of
Exhibit A attached hereto.
Section 3.Transfer of Purchased Certificates.
(a) The Purchaser understands that the Purchased
Certificates have not been registered under the Act, or any state
securities laws and that no transfer may be made unless the
Purchased Certificates are registered under the Act and under
applicable state law or unless an exemption from registration is
available. The Purchaser further understands that neither PNC nor
the Trust Funds are under any obligation to register the
Purchased Certificates or make an exemption available. In the
event that such a transfer is to be made within two years from
the Closing Date without registration under the Act or applicable
state securities laws, (i) the Trustee shall require, in order to
assure compliance with such laws, that the Certificateholder's
prospective transferee each certify to PNC and the Trustee as to
the factual basis for the registration or qualification exemption
relied upon, and (ii) the Trustee or PNC may require an Opinion
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of Counsel that such transfer may be made pursuant to an
exemption from the Act and state securities laws, which Opinion
of Counsel shall not be an expense of the Trustee or PNC. Any
such Certificateholder desiring to effect such transfer shall,
and does hereby agree to, indemnify the Trustee and PNC 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.
(b) No transfer of a Purchased Certificate shall be
made unless the transferee provides PNC and the Trustee with (i)
a Transferee's Agreement, substantially in the form of this
Agreement, and (ii) either (a) an affidavit substantially in the
form of Exhibit A hereto that the proposed transferee (x) is not
an employee benefit plan or other plan or arrangement subject to
the prohibited transaction provisions of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended, or comparable
provisions of any subsequent enactments (a "Plan"), a trustee of
any Plan, or any other Person who is using the "plan assets" of
any Plan to effect such acquisition or (y) is 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 Department of Labor 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, or (b) a Benefit
Plan Opinion (as defined in Exhibit A hereto).
(c) The Purchaser acknowledges that its Purchased
Certificates bear a legend setting forth the applicable
restrictions on transfer.
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be validly executed by its duly authorized
representative as of the day and the year first above written.
[Purchaser]
By:
Its:
Exhibit A to Form of Transferee Agreement (Exhibit G)
PNC MORTGAGE SECURITIES CORP.
BENEFIT PLAN AFFIDAVIT
RE: PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-12
(THE "TRUST") CLASS [ ] CERTIFICATES
(THE "PURCHASED CERTIFICATES")
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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 (i) is not an employee benefit
plan or other plan or arrangement 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"), or
comparable provisions of any subsequent enactments (a "Plan"), a
trustee of any Plan, or any other Person who is using the "plan
assets" of any Plan to effect such acquisition, (ii) has provided
a "Benefit Plan Opinion" satisfactory to PNC Mortgage Securities
Corp. (the "Company") and the Trustee of the Trust Funds or (iii)
is 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 Department of Labor
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.
A Benefit Plan Opinion is an opinion of counsel to the effect
that the proposed transfer (a) is permissible under applicable
law, (b) will not constitute or result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the
Code, and (c) 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 Benefit Plan Opinion shall not be an expense of
the Trustee, the Master Servicer or the Company.
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:
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
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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
Exhibit H
FORM OF ADDITIONAL MATTER INCORPORATED INTO
THE FORM OF THE CERTIFICATES (OTHER THAN THE CLASS R-1 AND CLASS
R-2 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
III 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
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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 III Available
Distribution Amount for such Distribution Date then distributable
on the Certificates of this Class, as specified in Section 4.05
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.
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:
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Dated:
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
III 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 III Trust Fund. 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
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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. In the event that a transfer is to be made
without registration or qualification under applicable laws, (i)
in the event such transfer is made pursuant to Rule 144A under
the Securities Act, the Company and the Trustee shall require the
transferee to execute an investment letter in substantially the
form attached as Exhibit L to the Pooling Agreement, which
investment letter shall not be an expense of the Company, the
Master Servicer or the Trustee and (ii) in the event that such a
transfer is not made pursuant to Rule 144A under the Securities
Act, the Company may require an Opinion of Counsel satisfactory
to the Company that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not
be an expense of the Company, the Master Servicer or the Trustee.
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
Denominations evidencing the same aggregate interest in the
portion of the REMIC III 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
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<PAGE> 323
Company, the Trustee, the Certificate Registrar nor any such
agent shall be affected by notice to the contrary.
[to be used only in the case of the Class IV-A-5
Certificates] [Each Holder of this Certificate hereby agrees for
the benefit of the Certificate Insurer that, to the extent the
Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Insured
Certificateholders, the Certificate Insurer will be subrogated to
the rights of the Insured Certificateholders to the extent of
such payments.]
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 REMIC I 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
REMIC I 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.
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
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<PAGE> 324
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.
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 1998-12, Class [R-1] [R-2][R-3]
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
1998-12, Class [R-1][R-2][R-3] (the "Certificate"), pursuant to
Section 5.01 of the Pooling and Servicing Agreement (the "Pooling
Agreement"), dated as of November 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:
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<PAGE> 325
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.
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:
Exhibit J
TRANSFEREE AFFIDAVIT AND AGREEMENT
STATE OF )
) ss:
COUNTY OF )
<PAGE>
<PAGE> 326
[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][R-3]
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] [R-3] Certificates,
and (ii) is acquiring the Class [R-1][R-2] [R-3] 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] [R-3]
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]
[R-3] 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.
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<PAGE> 327
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding the Class [R-1][R-2] [R-3]
Certificates if at any time during the taxable year of the pass-
through entity a disqualified 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] [R-3] 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] [R-3] Certificates and
the provisions of Section 5.01 of the Pooling Agreement under
which the Class [R-1][R-2] [R-3] 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] [R-3] 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] [R-3] 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.
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<PAGE> 328
12. That no purpose of the Owner relating to any sale
of the Class [R-1][R-2] [R-3] 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, the REMIC II Trust Fund and the REMIC III
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, 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] [R-
3] Certificates has represented to their transferor that, if the
Class [R-1][R-2] [R-3] 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] [R-3] 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:
<PAGE>
<PAGE> 329
[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
Exhibit K
[RESERVED]
Exhibit L
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
The undersigned seller, as registered holder (the
"Seller"), intends to transfer the Rule 144A Securities described
above to the undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with
the agreements pursuant to which the Rule 144A Securities were
issued, the Seller hereby certifies the following facts: Neither
the Seller nor anyone acting on its behalf has offered,
<PAGE>
<PAGE> 330
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with
respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action,
that would constitute a distribution of the Rule 144A Securities
under the Securities Act of 1933, as amended (the "1933 Act"), or
that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Seller has not offered the Rule
144A Securities to any person other than the Buyer or another
"qualified institutional buyer" as defined in Rule 144A under the
1933 Act.
2. The Buyer warrants and represents to, and covenants
with, the Seller, the Trustee and the Master Servicer (as defined
in the Pooling and Servicing Agreement (the "Agreement") dated as
of November 1, 1998 between PNC Mortgage Securities Corp., as
Depositor and Master Servicer and State Street Bank and Trust
Company, as Trustee) pursuant to Section 5.01(f) of the
Agreement, as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or
the securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge
and experience in financial and business matters that it is
capable of evaluating the merits and risks of investment in
the Rule 144A Securities.
c. The Buyer has received and reviewed the Private
Placement Memorandum dated as of November __, 1998 relating
to the Rule 144A Securities and has been furnished with all
information regarding the Rule 144A Securities that it has
requested from the Seller, the Trustee, the Company or the
Master Servicer.
d. Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to
<PAGE>
<PAGE> 331
the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any
other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render
the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it
authorize any person to act, in such manner with respect to
the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has
(1) completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2, or (2)
obtained the waiver of the Company with respect to Annex 1
and Annex 2 pursuant to Section 5.01(f) of the Agreement.
The Buyer is aware that the sale to it is being made in
reliance on Rule 144A. The Buyer is acquiring the Rule 144A
Securities for its own account or the accounts of other
qualified institutional buyers, understands that such Rule
144A Securities may be resold, pledged or transferred only
(i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or
for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being
made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the 1933 Act.
f. The Buyer is not affiliated with (i) the Trustee
or (ii) any Rating Agency that rated the Rule 144A
Securities.
g. If applicable, the Buyer has complied, and will
continue to comply, with the guidelines established by
Thrift Bulletin 12 issued December 13, 1988, by the Office
of Regulatory Activities of the Federal Home Loan Bank
System.
[Required only in the case of a transfer of a Class B
Certificate] [3. The Buyer warrants and represents to, and
covenants with, the Trustee, the Master Servicer and the Company
that (1) the Buyer is not an employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), subject to the
prohibited transaction provisions of ERISA ("Plan"), or a plan
(within the meaning of Section 4975(e)(1) of the Internal Revenue
Code of 1986 ("Code")) subject to Section 4975 of the Code (also
a "Plan"), and the Buyer is not directly or indirectly purchasing
the Rule 144A Securities on behalf of, as investment manager of,
as named fiduciary of, as trustee of, or with "plan assets" of
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<PAGE> 332
any Plan, (2) the Buyer's purchase of the Rule 144A Securities 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 and the Buyer has provided an Opinion of Counsel
to such effect in accordance with Section 5.01(d) of the
Agreement or (3) the Buyer is an insurance company, the source of
funds to be used by it to purchase the Rule 144A Securities is an
"insurance company general account" (within the meaning of
Department of Labor 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.]
4. This document may be executed in one or more
counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to
be an original; such counterparts, together, shall constitute one
and the same document.
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
Print Name of Seller Print Name of Buyer
By: By:
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer
Identification:
No.: No.:
Date: Date:
Annex 1 to Exhibit L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
<PAGE>
<PAGE> 333
The undersigned hereby certifies as follows in connection
with the Rule 144A Investment Representation to which this
Certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive
officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is
a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because
(i) the Buyer owned and/or invested on a discretionary basis
$______________________(Buyer must own and/or invest on a
discretionary basis at lest $100,000,000 in securities unless
Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in
securities) in securities (except for the excluded securities
referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Buyer satisfies the criteria in the category
marked below.
___ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in Section
501(c)(3) of the Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official
or is a foreign bank or equivalent institution, and (b) has
an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements.
___ Broker-Dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange Act of
1934.
<PAGE>
<PAGE> 334
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is the
writing of insurance or the reinsuring of risks underwritten
by insurance companies and which is subject to supervision
by the insurance commissioner or a similar official or
agency of a State or territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political subdivisions, or
any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
and is subject to the fiduciary responsibility provisions of
ERISA.
___ Investment Adviser. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act
of 1958.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is
a bank or trust company and whose participants are
exclusively (a) plans established and maintained by a State,
its political subdivisions, or any agency or instrumentality
of the State or its political subdivisions, for the benefit
of its employees, or (b) employee benefit plans within the
meaning of Title I of the Employee Retirement Income
Security Act of 1974, but is not a trust fund that includes
as participants individual retirement accounts or H.R. 10
plans.
3. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer,
(ii) securities that are part of an unsold allotment to or
subscription by the Buyer, if the Buyer is a dealer, (iii) bank
deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned
but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the
<PAGE>
<PAGE> 335
Buyer, the Buyer used the cost of such securities to the Buyer
and did not include any of the securities referred to in the
preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared
in accordance with generally accepted accounting principles and
if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if
the Buyer is a majority-owned, consolidated subsidiary of another
enterprise and the Buyer is not itself a reporting company under
the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule
144A and understands that the seller to it and other parties
related to the Certificates are relying and will continue to rely
on the statements made herein because one or more sales to the
Buyer may be in reliance on Rule 144A.
Will the Buyer be purchasing the
Rule 144A
Yes No Securities only for the Buyer's
own account?
6. If the answer to the foregoing question is "no", the
Buyer agrees that, in connection with any purchase of securities
sold to the Buyer for the account of a third party (including any
separate account) in reliance on Rule 144A, the Buyer will only
purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase
securities for a third party unless the Buyer has obtained a
current representation letter from such third party or taken
other appropriate steps contemplated by Rule 144A to conclude
that such third party independently meets the definition of
"qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's
purchase of Rule 144A Securities will constitute a reaffirmation
of this certification as of the date of such purchase.
Print Name of Buyer
By:
Name:
<PAGE>
<PAGE> 336
Title:
Date:
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection
with the Rule 144A Investment Representation to which this
Certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or,
if the Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933 ("Rule
144A") because Buyer is part of a Family of Investment Companies
(as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A
because (i) the Buyer is an investment company registered under
the Investment Company Act of 1940, and (ii) as marked below, the
Buyer alone, or the Buyer's Family of Investment Companies, owned
at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment
Companies, the cost of such securities was used.
____ The Buyer owned $___________________ in securities
(other than the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $______________ in securities
(other than the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or
series thereof) that have the same investment adviser or
investment advisers that are affiliated (by virtue of being
majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
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(i) securities of issuers that are affiliated with the Buyer or
are part of the Buyer's Family of Investment Companies, (ii) bank
deposit notes and certificates of deposit, (iii) loan
participations, (iv) repurchase agreements, (v) securities owned
but subject to a repurchase agreement and (vi) currency, interest
rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands
that each of the parties to which this certification is made are
relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on
Rule 144A. In addition, the Buyer will only purchase for the
Buyer's own account.
6. The undersigned will notify each of the parties to
which this certification is made of any changes in the
information and conclusions herein. Until such notice, the
Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification by the undersigned as of the
date of such purchase.
Print Name of Buyer
By:
Name:
Title:
Date:
IF AN ADVISER:
Print Name of Buyer
By:
Name:
Title:
Date:
(SEAL)
Exhibit M
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<PAGE> 338
[Date]
[Company]
Re: Pooling and Servicing Agreement dated as of
November 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
1998-12
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
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<PAGE> 339
By:
Name:
Title:
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 1998-12
(THE "TRUST") CLASS [_-B-_] 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
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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:
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
