The attached Registration Statement filed by Credit Suisse First Boston Mortgage
Securities Corp. on May 23, 2000, replaces the Registration Statement filed
earlier on this date, which inadvertently suppressed the Form S-3 cover.
<PAGE>
As filed with the Securities and Exchange Commission on May 23, 2000
Registration No. 333-______
======================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
------------------
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
13-3320910
(I.R.S. employer identification number)
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
(212) 325-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principle executive offices)
Thomas Zingalli
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
(212) 325-2000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Katharine I. Crost, Esq.
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. |-|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
Title of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered(1) Registered Aggregate Price Per Aggregate Offering Registration Fee
- - - - - - - - ------------------------------- -------------------- ---------------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Conduit Mortgage and
Manufactured Housing Contract $1,000,000 100% $1,000,000(2) $264
Pass-Through Certificates
</TABLE>
================================================================================
(1) This Registration Statement also relates to certain market making
transactions that may be made by Credit Suisse First Boston Corporation, an
affiliate of the Registrant.
(2) Estimated solely for the purpose of calculating the registration fee.
-------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Explanatory Note
This Registration Statement includes (i) the basic prospectus relating to
Conduit Mortgage and Manufactured Housing Contract Pass-Through Certificates,
and (ii) an illustrative form of prospectus supplement for use in an offering of
Mortgage Asset-Backed Pass-Through Certificates representing beneficial
ownership interests in a trust fund consisting primarily of mortgage loans.
The information in this prospectus supplement is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities Exchange Commission is effective. This prospectus supplement
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED ________________, 200_
Prospectus supplement dated ________,_____ (to prospectus dated
_____________,____)
$____________
[_________________]
SELLER AND SERVICER
CREDIT SUISSE FIRST BOSTON
MORTGAGE SECURITIES CORP.
DEPOSITOR
MORTGAGE-BACKED PASS-THROUGH CERTIFICATES, SERIES 200_-___
ISSUER
THE TRUST
The trust will hold a pool of one- to four-family residential first mortgage
loans.
OFFERED CERTIFICATES
The trust will issue these classes of certificates that are offered under this
prospectus supplement:
o [_] classes of Class A Certificates
[o [_] classes of Class R Certificates]
o [_] classes of Class M Certificates
CREDIT ENHANCEMENT
Credit enhancement for all of these certificates will be provided by
subordinated certificates.
- - - - - - - - --------------------------------------------------------------------------------
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-[_] IN THIS
PROSPECTUS SUPPLEMENT.
- - - - - - - - --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE OFFERED CERTIFICATES OR DETERMINED
THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Credit Suisse First Boston Corporation will offer the Class A Certificates,
Class M certificates [and Class R Certificates], subject to availability.
[NAME OF UNDERWRITER]
UNDERWRITER
[_________], 200_
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS
You should rely on the information contained in this document or to which
we have referred you to in this prospectus supplement. We have not authorized
anyone to provide you with information that is different. This document may only
be used where it is legal to sell these securities.
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail:
o the prospectus, which provides general information, some of which may
not apply to your series of certificates; and
o this prospectus supplement, which describes the specific terms of your
series of certificates.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Terms" beginning
on page 126 in the prospectus.
TABLE OF CONTENTS
[INSERT HERE]
<PAGE>
SUMMARY
The following summary highlights selected information from this prospectus
supplement. It does not contain all of the information that you should consider
in making your investment decision. To understand the terms of the offered
certificates, read carefully this entire prospectus supplement and the
accompanying prospectus.
- - - - - - - - --------------------------------------------------------------------------------
Title of series...........[_________________________ Mortgage-Backed
Pass-Through Certificates, Series 200_-___].
Depositor.................Credit Suisse First Boston Mortgage Securities Corp.
Seller and servicer.......[_________________________].
Trustee...................[_________________________].
Mortgag pool..............[_____] [fixed] [adjustable] rate mortgage loans
with an aggregate principal balance of approximately
$[________] as of the cut-off date, secured by first
liens on one- to four-family residential properties.
Cut-off date..............[__________ 1, 200_].
Closing date..............On or about [_________, 200_].
Distribution date.........Beginning on [__________, 200_], and thereafter
on the [ ] day of each month, or if the [ ] day is not
a business day, on the next business day.
Scheduled final
distribution date........[__________, 20__]. The actual
final distribution date could be substantially
earlier.
Form of offered
certificates............ Book-entry: Class A Certificates and Class M
Certificates.
Physical: Class R Certificates.
SEE "DESCRIPTION OF THE CERTIFICATES--BOOK-ENTRY
REGISTRATION" IN THIS PROSPECTUS SUPPLEMENT.
Minimum denominations.....[Class A Certificates and Class M Certificates]:
$25,000. Class R-1 and Class R-2 Certificates: [ ]%
percentage interests.
S-3
<PAGE>
- - - - - - - - --------------------------------------------------------------------------------
OFFERED CERTIFICATES
- - - - - - - - --------------------------------------------------------------------------------
<TABLE>
INITIAL
INITIAL PASS- INITIAL
PRINCIPAL THROUGH RATING
CLASS BALANCE RATE (____/____) DESIGNATION
- - - - - - - - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A CERTIFICATES:
- - - - - - - - --------------------------------------------------------------------------------
$ % Aaa/AAA Senior
- - - - - - - - --------------------------------------------------------------------------------
$ % Aaa/AAA Senior
- - - - - - - - --------------------------------------------------------------------------------
Total Class A
Offered
Certificates: $
- - - - - - - - --------------------------------------------------------------------------------
[CLASS R CERTIFICATES:
- - - - - - - - --------------------------------------------------------------------------------
R-1 $ % NA/AAA Senior/Residual
- - - - - - - - --------------------------------------------------------------------------------
R-2 $ % NA/AAA Senior/Residual
- - - - - - - - --------------------------------------------------------------------------------
Total Class R
Certificates: $ ]
- - - - - - - - --------------------------------------------------------------------------------
CLASS M CERTIFICATES:
- - - - - - - - --------------------------------------------------------------------------------
$ % NA/AA Mezzanine
- - - - - - - - --------------------------------------------------------------------------------
Total Class M
Certificates: $
- - - - - - - - --------------------------------------------------------------------------------
Total offered
certificates: $
- - - - - - - - --------------------------------------------------------------------------------
</TABLE>
S-4
<PAGE>
THE TRUST
The depositor will establish a trust for the Series 200_-___ Mortgage-Backed
Pass-Through Certificates, under a pooling and servicing agreement, dated as of
[_______] 1, 200_, among the depositor, the seller and servicer and
[______________], as trustee. On the closing date, the depositor will deposit
the pool of mortgage loans described in this prospectus into the trust.
Each certificate will represent a partial ownership interest in the trust.
Distributions on the certificates will be made from payments received on the
mortgage loans as described in this prospectus.
THE MORTGAGE POOL
The mortgage pool will consist of approximately [____] [fixed] [adjustable]
rate, fully amortizing mortgage loans secured by first liens on one-to
four-family residential properties having an aggregate principal balance of
approximately $_______ as of __________ 1, 200_ .]
FOR ADDITIONAL INFORMATION REGARDING THE MORTGAGE POOL SEE "DESCRIPTION OF THE
MORTGAGE POOL" IN THIS PROSPECTUS SUPPLEMENT.
DISTRIBUTIONS ON THE OFFERED CERTIFICATES
AMOUNT AVAILABLE FOR MONTHLY DISTRIBUTION. On each monthly distribution date,
the trustee will make distributions to investors. The amount available for
distribution will include:
o collections of monthly payments on the mortgage loans, including
prepayments and other unscheduled collections PLUS
o advances for delinquent payments MINUS
o the fees and expenses of the subservicers and the servicer, including
reimbursement for advances.
SEE "DESCRIPTION OF THE CERTIFICATES--GLOSSARY OF TERMS--AVAILABLE DISTRIBUTION
AMOUNT" IN THIS PROSPECTUS SUPPLEMENT.
PRIORITY OF DISTRIBUTIONS. Distributions on the offered certificates will be
made from available amounts as follows:
o Distribution of interest to the interest-bearing [Class A Certificates and
Class R Certificates]
o Distribution of principal to the remaining [Class A Certificates and Class
R Certificates] entitled to principal
o Payment to servicer for various unreimbursed advances
Distribution to the Class M Certificates in the following order:
o Interest to the Class M Certificates
o Principal to the Class M Certificates
INTEREST DISTRIBUTIONS. The amount of interest owed to each class of interest
bearing certificates on each distribution date will equal:
o the pass-through rates set forth on page S-[_] for that class of
certificates MULTIPLIED BY
o the principal balance of that class of certificates as of the day
immediately prior to the related distribution date MULTIPLIED BY
/
o 1/12th MINUS
o the share of some types of interest shortfalls allocated to that class.
S-5
<PAGE>
SEE "DESCRIPTION OF THE CERTIFICATES--INTEREST DISTRIBUTIONS" IN THIS PROSPECTUS
SUPPLEMENT.
It is possible that, on any given distribution date, there will be insufficient
payments from the mortgage loans to cover interest owed on the certificates. As
a result, some certificates, most likely the subordinate certificates, may not
receive the full amount of accrued interest to which they are entitled. If this
happens, those certificates will be entitled to receive any shortfall in
interest distributions in the following month in the same priority as their
distribution of current interest. However, there will be no extra interest paid
to make up for the delay.
ALLOCATIONS OF PRINCIPAL. Principal distributions on the certificates will be
allocated among the various classes of offered certificates as described in this
prospectus supplement. It is possible that on any distribution date, there will
be insufficient payments from the mortgage loans to make principal distributions
on the certificates. As a result, some certificates may not receive the full
amount of principal distributions to which they are entitled.
Until the distribution date in [__________] 200_, all prepayments on the
mortgage loans will be distributed to the [Class A Certificates and Class R
Certificates], unless the principal balances of those certificates have been
reduced to zero.
In addition, unscheduled collections of principal relating to the Class M
Certificates and Class B Certificates will be paid to the most senior classes of
the Class M Certificates and Class B certificates as described in this
prospectus supplement.
SEE "DESCRIPTION OF THE CERTIFICATES--PRINCIPAL DISTRIBUTIONS" AND "--PRIORITY
OF DISTRIBUTIONS" IN THIS PROSPECTUS SUPPLEMENT.
CREDIT ENHANCEMENT
ALLOCATION OF LOSSES. Most losses on the mortgage loans will be allocated in
full to the first class listed below with a principal balance greater than zero:
o Class B Certificates
o Class M Certificates
When this occurs, the principal balance of the class to which the loss is
allocated is reduced without a corresponding payment of principal.
If none of the Class M Certificates or Class B Certificates are outstanding,
losses on the mortgage loans will be allocated proportionately among the senior
certificates.
SEE "DESCRIPTION OF THE CERTIFICATES--ALLOCATION OF LOSSES; SUBORDINATION" IN
THIS PROSPECTUS SUPPLEMENT.
PRIORITY OF DISTRIBUTIONS
All or a disproportionately large portion of principal prepayments and other
unscheduled payments of principal will be allocated to the senior certificates.
This provides additional credit enhancement for the senior certificates by
preserving the principal balances of the Class M certificates and Class B
certificates for absorption of losses.
YIELD CONSIDERATIONS
The yield to maturity of each class of certificates will depend on, among other
things:
o the price at which the certificates are purchased;
S-6
<PAGE>
o the applicable pass-through rate; and
o the rate of prepayments on the related mortgage loans.
FOR A DISCUSSION OF SPECIAL YIELD CONSIDERATIONS APPLICABLE TO THE OFFERED
CERTIFICATES, SEE "RISK FACTORS" AND "SPECIAL YIELD AND PREPAYMENT
CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT.
ADVANCES
For any month, if the servicer does not receive the full scheduled payment on a
mortgage loan, the servicer will advance funds to cover the amount of the
scheduled payment that was not made. However, the servicer will advance funds
only if it determines that the advance will be recoverable from future payments
or collections on that mortgage loan.
SEE "DESCRIPTION OF THE CERTIFICATES--ADVANCES" IN THIS PROSPECTUS SUPPLEMENT.
OPTIONAL TERMINATION
On any distribution date on which the principal balances of the mortgage loans
is less than 10% of their principal balances as of the cut-off date, the
servicer will have the option to purchase from the trust all remaining mortgage
loans, causing an early retirement of the certificates.
Early retirement of the certificates may cause the holders of one or more
classes of certificates to receive less than their outstanding principal balance
plus the accrued interest.
SEE "THE POOLING AND SERVICING AGREEMENT--TERMINATION; RETIREMENT OF
CERTIFICATES" IN THE PROSPECTUS.
TAX STATUS
For federal income tax purposes, the depositor will elect to treat the trust as
[two] real estate mortgage investment conduits. The certificates, other than the
Class R Certificates, will represent ownership of regular interests in the trust
and will be treated as representing ownership of debt for federal income tax
purposes. You will be required to include as income all interest and original
issue discount, if any, on the certificates in accordance with the accrual
method of accounting regardless of your usual methods of accounting. For federal
income tax purposes, each of the Class R Certificates will be the sole residual
interest in one of the two real estate mortgage investment conduits.
FOR FURTHER INFORMATION REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF
INVESTING IN THE OFFERED CERTIFICATES, SEE "FEDERAL INCOME TAX CONSEQUENCES" IN
THIS PROSPECTUS SUPPLEMENT AND IN THE PROSPECTUS.
ERISA CONSIDERATIONS
The [Class A Certificates] may be considered eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts.
Sales of the Class M Certificates to these plans or individual retirement
accounts may be prohibited. Sales of the Class R Certificates to these plans and
retirement accounts are prohibited. Persons investing assets of those plans or
accounts should consult with their counsel before purchasing the notes.
SEE "ERISA CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN THE PROSPECTUS.
LEGAL INVESTMENT
When issued, the [Class A Certificates and Class R Certificates] will, and the
[Class M
S-7
<PAGE>
Certificates] will not, be "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984 or SMMEA. You should consult
your legal advisors in determining whether and to what extent the offered
certificates constitute legal investments for you.
SEE "LEGAL INVESTMENT" IN THIS PROSPECTUS SUPPLEMENT FOR IMPORTANT INFORMATION
CONCERNING POSSIBLE RESTRICTIONS ON OWNERSHIP OF THE OFFERED CERTIFICATES BY
REGULATED INSTITUTIONS.
RATINGS
When issued, the offered certificates will receive ratings which are not lower
than those listed in the table on page S-[__] of this prospectus supplement. The
ratings on the offered certificates address the likelihood that the holders of
the offered certificates will receive all distributions on the underlying
mortgage loans to which they are entitled. A security rating is not a
recommendation to buy, sell or hold a security and may be changed or withdrawn
at any time by the assigning rating agency. The ratings also do not address the
rate of principal prepayments on the mortgage loans. For example, the rate of
prepayments, if different than originally anticipated, could adversely affect
the yield realized by holders of the offered certificates.
SEE "RATINGS" IN THIS PROSPECTUS SUPPLEMENT.
S-8
<PAGE>
RISK FACTORS
The offered certificates are not suitable investments for all investors. In
particular, you should not purchase any class of offered certificates unless you
understand the prepayment, credit, liquidity and market risks associated with
that class.
The offered certificates are complex securities. You should possess, either
alone or together with an investment advisor, the expertise necessary to
evaluate the information contained in this prospectus supplement and the
prospectus in the context of your financial situation and tolerance for risk.
You should carefully consider, among other things, the following factors in
connection with the purchase of the offered certificates:
RISK OF LOSS
THE UNDERWRITING STANDARDS FOR THE MORTGAGE LOANS CREATE GREATER RISKS TO YOU.
[____]% of the mortgage loans included in the mortgage loan pool were
underwritten using standards that are standards less stringent than the
underwriting standards applied for the by other mortgage loan purchase programs,
such as mortgage Fannie Mae or Freddie Mac. Applying less stringent underwriting
standards creates additional risks that greater losses on the mortgage loans
will be allocated to certificateholders.
Examples include:
o mortgage loans with original principal balances of greater than
$1,000,000;
o mortgage loans secured by non-owner occupied properties;
o mortgage loans made to borrowers who have high debt-to-income
ratios (i.e., a large portion of the borrower's income is used to
make payments on other debt); and
o mortgage loans made to borrowers whose income was not required to
be disclosed or verified.
SEE "DESCRIPTION OF THE MORTGAGE POOL--UNDERWRITING STANDARDS" AND
"CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND CONTRACTS" IN THE
PROSPECTUS.
S-9
<PAGE>
THE RETURN ON YOUR CERTIFICATES MAY BE PARTICULARLY SENSITIVE TO CHANGES IN REAL
ESTATE MARKETS IN SPECIFIC AREAS. One risk of investing in mortgage-backed
securities is created by any concentration of the related properties in one or
more geographic regions. Approximately [ ]% of the cut-off date principal
balance of the mortgage loans are located in the State of [___________]. [No
more than [____]% of the cut-off date principal balance of the mortgage loans
are located in any one zip code in the State of [____________ ].] If the
regional economy or housing market in the state of [___________] weakens, or in
any other region having a significant concentration of properties underlying the
mortgage loans, the mortgage loans in that region may experience high rates of
loss and delinquency, resulting in losses to certificateholders. A region's
economic condition and housing market may be adversely affected by a variety of
events, including a downturn in various industries or other businesses
concentrated in the region, natural disasters such as earthquakes, hurricanes
and floods, and civil disturbances including riots. The depositor cannot predict
whether, or to what extent or for how long, these events may occur.
SEE "DESCRIPTION OF THE MORTGAGE POOL--GENERAL" IN THIS PROSPECTUS
SUPPLEMENT.
THE RETURN ON YOUR CERTIFICATES WILL BE REDUCED IF LOSSES EXCEED THE CREDIT
ENHANCEMENT AVAILABLE TO YOUR CERTIFICATES. The only credit enhancement for the
senior certificates will be the subordination provided by the Class M
Certificates and Class B Certificates. The only credit enhancement for the Class
M Certificates will be the subordination provided by the Class B losses
Certificates. If the aggregate principal balance of the e Class B certificates
is reduced to zero, losses will be allocated to the Class M certificates until
the principal balance of the Class M Certificates has been reduced to zero.
SEE "SUMMARY--CREDIT ENHANCEMENT" AND "DESCRIPTION OF THE
CERTIFICATES--ALLOCATION OF LOSSES; SUBORDINATION" IN THIS PROSPECTUS
SUPPLEMENT.
LIMITED OBLIGATIONS
PAYMENTS ON THE MORTGAGE LOANS ARE THE ONLY SOURCE OF PAYMENTS ON YOUR
CERTIFICATES. The certificates represent interests only in the trust. The
certificates do not represent an interest in or obligation of the depositor, the
servicer, the seller or any of their affiliates. None of the depositor, the
servicer or any of their affiliates will have any obligation to replace or
supplement the credit enhancement, or to take any other action to maintain any
rating of the certificates. If proceeds from the assets of the trust are not
sufficient to make all payments provided for under the pooling and servicing
agreement, investors will have no recourse to the depositor, the servicer, the
seller or any other entity, and will incur the losses.
S-10
<PAGE>
LIQUIDITY RISKS
YOU MAY HAVE TO HOLD YOUR CERTIFICATES TO MATURITY IF THEIR MARKETABILITY IS
LIMITED. A secondary market for the offered certificates may not develop. Even
if a secondary market does develop, it may not continue or it may be illiquid.
Neither the underwriter nor any other person will have any obligation to make a
secondary market in your certificates. Illiquidity means you may not be able to
find a buyer to buy your securities readily or at prices that will enable you to
realize a desired yield. Illiquidity can have a severe adverse effect on the
market value of your certificates.
Any class of offered certificates may experience illiquidity, although typically
illiquidity is more likely for classes that are especially sensitive to
prepayment, credit or interest rate risk, or that have been structured to meet
the investment requirements of limited categories of investors.
SPECIAL YIELD AND PREPAYMENT CONSIDERATIONS
THE YIELD TO MATURITY ON YOUR CERTIFICATES WILL DEPEND ON VARIOUS FACTORS,
INCLUDING THE RATE OF PREPAYMENTS. The yield to maturity on each class of
offered certificates will depend on a variety of factors, including:
o the rate and timing of Principal payments on the mortgage loans,
including prepayments, defaults and factors, liquidations, and
repurchases due to breaches of representations or warranties;
o interest shortfalls due to mortgagor prepayments; and
o the purchase price of that class.
The rate of prepayments is one of the most important and least predictable
of these factors.
In general, if you purchase a certificate at a price higher than its
outstanding principal balance and principal distributions on your
certificate occur faster than you assumed at the time of purchase, your
yield will be lower than you anticipated. On the other hand, if you
purchase a certificate at a price lower than its outstanding principal
balance and principal distributions on that class occur more slowly than
you assumed at the time of purchase, your yield will be lower than you
anticipated.
S-11
<PAGE>
THE RATE OF PREPAYMENTS ON THE MORTGAGE LOANS WILL VARY DEPENDING ON FUTURE
MARKET CONDITIONS AND OTHER FACTORS. Because mortgagors can typically prepay
their mortgage loans at any time, the rate and timing of principal distributions
on the offered certificates are highly uncertain. Typically, when market
interest rates increase, borrowers are less likely to prepay their mortgage
loans. This could result in a slower return of principal to you at a time when
you might have been able to reinvest your funds at a higher rate of interest
than the pass-through rate on your class of certificates. On the other hand,
when market interest rates decrease, borrowers are typically more likely to
prepay their mortgage loans. This could result in a faster return of principal
to you at a time when you might not be able to reinvest your funds at an
interest rate as high as the pass-through rate on your class of certificates.
[____]% of the mortgage loans provide for a prepayment penalty if the mortgagor
prepays the mortgage loan. Prepayment penalties may reduce the rate of
prepayment on the mortgage loans until the end of the period during which a
prepayment penalty applies.
SEE "MATURITY AND PREPAYMENT CONSIDERATIONS" IN THE PROSPECTUS.
THE YIELD ON YOUR CERTIFICATES WILL BE AFFECTED BY THE SPECIFIC CHARACTERISTICS
THAT APPLY TO THAT CLASS, DISCUSSED BELOW. The offered certificates of each
class have different yield considerations and different sensitivities to the
rate and timing of principal distributions. The following is a general
discussion of some yield considerations and prepayment sensitivities of each
class.
SEE "CERTAIN YIELD AND PREPAYMENT CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT.
CLASS A CERTIFICATES. The Class A Certificates are subject to various priorities
for payment of principal. Distributions of principal on the Class A Certificates
with an earlier priority of payment will be affected by the rates and timing of
prepayment of the mortgage loans early in the life of the mortgage pool.
CLASS M CERTIFICATES. Losses on the mortgage loans will be allocated among the
certificates in the manner described in this prospectus supplement. The yield to
investors in the Class M Certificates will be sensitive to the rate and timing
of losses on the mortgage loans, if those losses are not covered by the Class B
Certificates.
SEE "SUMMARY--CREDIT ENHANCEMENT--ALLOCATION OF LOSSES" AND "DESCRIPTION OF THE
CERTIFICATES--ALLOCATION OF LOSSES; SUBORDINATION" IN THIS PROSPECTUS
SUPPLEMENT.
S-12
<PAGE>
It is not expected that the Class M Certificates will receive any distributions
of principal prepayments until the distribution date in [__________] 200_. After
that date, a large portion of principal prepayments on the mortgage loans may be
allocated to the senior certificates, and none or a relatively small portion of
principal prepayments may be paid to the holders of the Class M Certificates and
Class B Certificates. [As a result, the weighted average lives of the Class M
Certificates may be longer than would otherwise be the case.]
RISK OF CERTAIN SHORTFALLS
RECEIVERSHIP BY THE FDIC OF THE SERVICER COULD CREATE GREATER RISKS TO YOU. If
seller's transfer of the mortgage loans to the depositor is deemed to constitute
the creation of a security interest in the mortgage loans and to the servicer
extent the security interest was validly perfected [before the seller's
insolvency and was not taken in contemplation of insolvency of the seller, or
with the intent to hinder, delay or defraud the seller or the creditors of the
seller], the Federal Deposit Insurance Act or FDIA, as amended by FIRREA,
provides that the security interest should not be subject to avoidance by the
FDIC. If the FDIC cannot avoid a legally enforceable and perfected security
interest, it may repudiate the security interest. If the FDIC repudiates an
unavoidable security interest, it could be liable for statutory damages. These
damages are typically limited to actual compensatory damages.
In addition, the FDIC, would also have the power to repudiate contracts,
including the seller's obligations under the pooling and servicing agreement to
repurchase mortgage loans which do not conform to the seller's representations
and warranties. The non-conforming mortgage loans could suffer losses which
could result in losses on the certificates.
In addition, in the case of an event of default relating to the receivership,
conservatorship or insolvency of the servicer, the receiver or conservator may
terminate the servicer and replace it with a successor servicer. Any
interference with the termination of the servicer or appointment of a successor
servicer could result in a delay in payments to the certificateholders.
THE LACK OF PHYSICAL CERTIFICATES MAY CAUSE DELAYS IN PAYMENT AND CAUSE
DIFFICULTY IN PLEDGING OR SELLING OFFERED CERTIFICATES. The Class A Certificates
and Class M Certificates will physical not be issued in physical form. As a
result, certificateholders will be able to transfer certificates only through
DTC and its participants or indirect participants. In addition,
certificateholders may experience some delay in receiving distributions on these
certificates because the trustee will send all distributions to DTC, which will
then credit those distributions to the participating organizations. Those
organizations will in turn credit accounts certificateholders have either
directly or indirectly through indirect participants.
SEE "DESCRIPTION OF THE CERTIFICATES--REGISTRATION OF THE OFFERED CERTIFICATES"
IN THIS PROSPECTUS SUPPLEMENT.
S-13
<PAGE>
INTRODUCTION
Credit Suisse First Boston Mortgage Securities Corp. will establish a trust
for [____________________] Mortgage-Backed Pass-Through Certificates, Series
200_-____ on the closing date, under a pooling and servicing agreement among the
depositor, [_________________], as servicer and [_____________________], as
trustee, dated as of [_______ 1, 200_]. On the closing date, the depositor will
deposit into the trust a pool of mortgage loans secured by one- to four-family
residential properties with terms to maturity of not more than [__] years.
Some capitalized terms used in this prospectus supplement have the meanings
given below under "Description of the Certificates--Glossary of Terms" or in the
prospectus under "Glossary."
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The mortgage pool will consist of approximately [____] mortgage loans with
an aggregate principal balance outstanding as of the cut-off date, after
deducting payments of principal due on or before the cut-off date, of
approximately $[________]. The mortgage loans are secured by first liens on fee
simple or leasehold interests in one- to four-family residential real properties
with terms to maturity of not more than [__] years. The mortgage pool will
consist of conventional, [fixed] [adjustable] rate, [fully-amortizing], [level
monthly payment] mortgage loans. All percentages of the mortgage loans described
in this prospectus supplement are approximate percentages by aggregate principal
balance as of the cut-off date unless otherwise indicated.
The mortgage loans will be purchased by the depositor from the seller.
[___]% of the mortgage loans were either originated or purchased by the seller
in the normal course of its business. [[___]%, [___]% and [___]% of the mortgage
loans were originated by or purchased by ____________________,
_____________________ and ________________________], respectively.
[___]%, [___]%, [___]% and [___]% of the mortgage loans are secured by
mortgaged properties in the states of [_________], [_________], [__________] and
[________], respectively. Less than [___]% of the mortgage loans are secured by
mortgaged properties in any other single state. No more than [___]% of the
mortgage loans are secured by mortgaged properties in any single zip code.
Except for approximately [___]% of the mortgage loans, each mortgage loan
at the time of origination was represented by the related mortgagor to be
owner-occupied.
The mortgage loans may be prepaid by the mortgagors at any time without
payment of any prepayment fee or penalty[, except for [___]% of the mortgage
loans, which provide for payment of a prepayment penalty. This prepayment
penalty may discourage mortgagors from prepaying their mortgage loans. The
prepayment penalty is calculated as a percentage of the original loan amount and
declines each year. The prepayment penalty is only charged for
S-14
<PAGE>
mortgage loans paid in full. The prepayment penalty only applies during the
first three years of the mortgage loan term].
As of the cut-off date, not more than [__]% of the mortgage loans were more
than 30 days delinquent in payments of principal and interest.
As of the cut-off date, not more than [__]% of the mortgage loans provide
for deferred interest or negative amortization.
MORTGAGE LOAN POOL CHARACTERISTICS. The mortgage loans will have the following
characteristics:
o The mortgage loans consist of [____] fixed rate mortgage loans and
[____] adjustable rate mortgage loans.
o The mortgage loans have an aggregate principal balance as of the
cut-off date of $[__________].
o The mortgage loans had individual principal balances as of the cut-off
date of at least $[________] but not more than $[_________], with an
average principal balance as of the cut-off date of approximately
$[________].
o The mortgage loans have original terms to stated maturity of
approximately [__] years.
o The mortgage loans have a weighted average remaining term to stated
maturity of approximately [___] months as of the cut-off date.
o As of the cut-off date, the fixed rate mortgage loans bore interest at
mortgage rates of at least [___]% per annum but no more than [___]%
per annum, with a weighted average mortgage rate of approximately
[___]% per annum.
o As of the cut-off date, the adjustable rate mortgage loans bore
interest at mortgage rates of at least [____]% per annum but not more
than [____]% per annum, with a weighted average mortgage rate of
approximately [____]% per annum. The maximum interest rates ranged
from [____]% per annum to [____]% per annum, with a weighted average
maximum rate of [____]% per annum, the minimum interest rates ranged
from [____] % per annum to [____]% per annum with a weighted average
minimum rate of [____]% per annum. The gross margins ranged from
[____]% per annum to [____]% per annum with a weighted average gross
margin of [____]% per annum.
o [Description of Index].
o The original loan-to-value ratio of the mortgage loans was not more
than [___]%, with a weighted average original loan-to-value ratio of
approximately [___]%.
Loan-to-value ratio as used in this prospectus supplement, is calculated as
the original mortgage loan amount, divided by the lesser of (i) the appraised
value of the related mortgaged
S-15
<PAGE>
property at origination and (ii) if the mortgage loan is a purchase money loan,
the sales price of the related mortgaged property.
S-16
<PAGE>
The tables below describe additional statistical characteristics of the
mortgage loans as of the cut-off date. All percentages are approximate and are
stated by principal balance of the mortgage loans as of the cut-off date, and
have been rounded in order to add to 100%. Dollar amounts and number of months
have also been rounded.
DISTRIBUTION OF YEAR OF FIRST PAYMENT
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
YEAR OF FIRST PAYMENT MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Total
</TABLE>
S-17
<PAGE>
GROSS MARGIN
<TABLE>
RANGE OF GROSS NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
MARGINS(%) MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
TOTAL..........
</TABLE>
MORTGAGE RATES
<TABLE>
RANGE OF NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
MORTGAGE RATES MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
%
%
%
%
%
%
%
Total
</TABLE>
As of the cut-off date, the weighted average mortgage rates of the mortgage
loans will be [____]%.
CUT-OFF DATE MORTGAGE LOAN
PRINCIPAL BALANCES
S-18
<PAGE>
<TABLE>
RANGE OF CUT-OFF DATE NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
PRINCIPAL BALANCES MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Up to $50,000.00
$50,000.01-$100,000.00
$100,000.01-$150,000.00
$150,000.01-$200,000.00
$200,000.01-$250,000.00
$250,000.01-$300,000.00
$300,000.01-$350,000.00
$350,000.01-$400,000.00
$400,000.01-$500,000.00
$500,000.01-$600,000.00
$600,000.01-$700,000.00
$700,000.01-$800,000.00
$800,000.01-$900,000.01
$900,000.01-$1,000,000.00
Over $1,000,000.01
Total
</TABLE>
As of the cut-off date, the mortgage loan principal balances will be
$[______].
S-19
<PAGE>
MORTGAGED PROPERTY TYPES
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
PROPERTY TYPE MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Single-Family
Residence
Condominium
Two Family
Three Family
Four Family
Townhouse
Total
</TABLE>
MORTGAGE LOAN PURPOSE
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
PURPOSE MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Refinancing
Cash-Out Refinancing
Purchase
Unknown
Total
</TABLE>
MORTGAGE LOAN OCCUPANCY TYPES
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
OCCUPANCY TYPE MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Primary
Investment
Second Home
Total
</TABLE>
S-20
<PAGE>
MORTGAGE LOAN DOCUMENTATION TYPES
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
DOCUMENTATION MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Low Documentation
Full Documentation
Reduced Documentation
Streamline Refinance
Total
</TABLE>
ORIGINAL TERM TO STATED
MATURITY OF THE MORTGAGE LOANS
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
RANGE OF MONTHS MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
</TABLE>
The weighted average original term to stated maturity for the mortgage
loans is [___] months.
REMAINING TERM TO STATED
MATURITY OF THE MORTGAGE LOANS
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
RANGE OF MONTHS MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Total
</TABLE>
The weighted average remaining term to stated maturity for the mortgage
loans is [___] months.
S-21
<PAGE>
[INSERT GEOGRAPHICAL DISTRIBUTION TABLE]
ORIGINAL LOAN-TO-VALUE
RATIOS OF THE MORTGAGE LOANS
<TABLE>
RANGE OF ORIGINAL NUMBER OF AGGREGATE % OF AGGREGATE
LOAN-TO-VALUE RATIOS MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
0.00%--50.00%
50.01%-55.00%
55.01%-60.00%
60.01%-65.00%
65.01%-70.00%
70.01%-75.00%
75.01%-80.00%
80.01%-85.00%
85.01%-90.00%
90.01%-95.00%
Total
</TABLE>
The weighted average of the original loan-to-value ratios for the mortgage
loans is [___]%.
The weighted average of the Discount Fractions of the mortgage loans will
be ___%.
[Included below is a table showing the Credit Scores for some mortgagors.
Credit Scores are obtained by many mortgage lenders in connection with mortgage
loan applications to help assess a borrower's credit-worthiness. Credit Scores
are obtained from credit reports provided by various credit reporting
organizations, each of which may employ differing computer models and
methodologies. The Credit Score is designed to assess a borrower's credit
history at a single point in time, using objective information currently on file
for the borrower at a particular credit reporting organization. Information used
to create a Credit Score may include, among other things, payment history,
delinquencies on accounts, levels of outstanding indebtedness, length of credit
history, types of credit, and bankruptcy experience. Credit Scores range from
[__] to [__], with higher scores indicating an individual with a more favorable
credit history compared to an individual with a lower score. However, a Credit
Score purports only to be a measurement of the relative degree of risk a
borrower represents to a lender at a single point in time, i.e., a borrower with
a higher score is statistically expected to be less likely to default in payment
than a borrower with a lower score. In addition, investors should be aware that
Credit Scores were developed to indicate a level of default probability over a
two-year period, which does not correspond to the life of a mortgage loan.
Mortgage loans typically amortize over a [__] year period. Furthermore, Credit
Scores were not developed specifically for use in connection with mortgage
loans, but for consumer loans in general, and assess only the borrower's past
credit history. Therefore, a Credit Score does not take into consideration the
differences between mortgage loans and consumer loans generally, or the specific
characteristics of the related mortgage loan, for example, the loan-to-value
ratio, the collateral for the mortgage loan, or the debt to income ratio. There
can be no assurance that the Credit Scores of the
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<PAGE>
mortgagors will be an accurate predictor of the likelihood of repayment of the
related mortgage loans or that any mortgagor's Credit Score would not be lower
if obtained as of the date of the prospectus supplement.]
[CREDIT SCORE DISTRIBUTION]
<TABLE>
NUMBER OF AGGREGATE PRINCIPAL % OF AGGREGATE
RANGE OF NOTE MARGINS MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
451-500
501-550
551-600
601-650
651-700
701-750
751-800
801-850
Total
</TABLE>
UNDERWRITING STANDARDS
GENERAL
All of the mortgage loans included in the mortgage pool will be acquired by
the depositor from the seller. The following is a brief description of the
various underwriting standards and the procedures applicable to the mortgage
loans.
All one- to four-family residential mortgage loans must meet acceptable
credit, appraisal and underwriting criteria as established by the seller. The
seller's underwriting standards are applied in accordance with applicable state
and federal laws and regulations. Underwriting guidelines are established to set
acceptable criteria regarding credit history, repayment ability, adequacy of
necessary liquidity, and adequacy of the collateral. These guidelines typically
conform to secondary market standards, particularly for conforming loan amounts.
Additional loan-to-value ratio guidelines are established for individual
programs and loan amount ranges.
Three general sets of underwriting guidelines are applicable to mortgage
loans:
o Standard: includes all the basic guidelines and is applied to both
fixed rate and ARM products;
o Portfolio Feature: includes specific enhanced guidelines such as
slightly higher loan-to-value ratios, and 40 year terms, and is
available only on ARM products; and
S-23
<PAGE>
o Subprime: allows for deviations from basic guidelines for credit,
collateral and income stability in return for risk-based pricing
premiums.
[The mortgage loans have been originated under documentation guidelines
classified as "Full Doc", "Low Doc Reduced Doc" and "Streamline Refinance Doc."
The Full Doc program consists of two years of tax returns for self-employed
applicants, paystubs and W-2's for salaried applicants and bank statements for
verification of liquidity. The Low Doc program utilizes income as stated by the
borrower in the loan application and, for certain loan-to-value ratios and loan
amounts, assets as stated by the borrower. In Low Doc transactions, independent
confirmation of the borrower's source of income is obtained. The Reduced
Documentation program utilizes borrower paystubs and W-2 forms and a Streamline
Refinance Documentation program utilizes borrower paystubs and original
appraised value with a current drive-by inspection.]
[CSFB]'s underwriting of the mortgage loans consisted of an analysis of
the following applicant information:
o an applicant's income, employment, assets, debts, payments and
specific questions regarding credit history,
o an evaluation and confirmation of an applicant's credit history,
o the adequacy and stability of an applicant's income, including a
review of the documentation, verification of employment and income, an
analysis of tax returns and statements of assets and liabilities.
o calculations are made to establish the relationship between fixed
expenses and gross monthly income, which are reviewed for the
applicant's overall ability to repay the mortgage loan including other
income sources, commitment to the property as evidenced by loan to
value, other liquid resources, ability to accumulate assets and other
compensating factors, and
o the adequacy of the mortgaged property to serve as collateral for a
mortgage loan, including a physical inspection of the property, an
evaluation of the property's value for recent sales of comparable
properties and its conformity to neighborhood standards.
[All mortgage loans are subject to a sampling by the seller's internal
Quality Assurance Department, which reviews and reverifies a statistical
sampling of loans on a regular basis. All loans with loan-to-value ratios over
80% have either private mortgage insurance coverage in an amount meeting Fannie
Mae and Freddie Mac requirements or a higher interest rate in lieu of private
mortgage insurance.] Adequate title insurance and hazard insurance is required
for all loans. From time to time, loan-to-value ratio exceptions may be made for
credit worthy applicants who exhibit strong compensating factors and well
supported collateral valuations.
S-24
<PAGE>
THE SELLER AND THE SERVICER
GENERAL
[____________________], is the seller and servicer for all the mortgage loans in
the mortgage pool.
[ADDITIONAL SERVICER INFORMATION TO BE INCLUDED]
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Trust will issue the following [___] classes of senior certificates:
o [Class A Certificates]; [and
o [Class R Certificates].]
In addition to the senior certificates, the trust will also include the
following [___] classes of subordinate certificates:
o [Class M Certificates]; and
o [Class B Certificates].
Only the Class A Certificates[, Class R Certificates] and Class M certificates
are offered by this prospectus supplement.
The certificates will evidence the entire beneficial ownership interest in
the trust. The trust will consist of:
o the mortgage loans;
o the assets as from time to time are identified as deposited relating
to the mortgage loans in the Custodial Account and in the Certificate
Account and belonging to the trust;
o property acquired by foreclosure of the mortgage loans or deed in lieu
of foreclosure;
o any applicable primary mortgage insurance policies and hazard
insurance policies; and
o all proceeds of any of the foregoing.
S-25
<PAGE>
The Class A Certificates evidence in the aggregate an initial beneficial
ownership interest of approximately [___]% in the trust. The Class M
Certificates and Class B Certificates will evidence in the aggregate an initial
beneficial ownership interest of approximately [___]% and [___]% respectively,
in the trust.
The Class A Certificates and the Class M Certificates will be available
only in book-entry form through the facilities of The Depository Trust Company
or DTC. The Class A Certificates and Class M Certificates will be issued in
minimum denominations of $25,000 and integral multiples of $1 in excess of that
amount. [The Class R Certificates will be issued in registered, certificated
form in minimum denominations of [__]% percentage interests.]
BOOK-ENTRY REGISTRATION
The Class A Certificates and Class M Certificates will be issued,
maintained and transferred on the book-entry records of DTC and its
participants. Any person acquiring an interest in any Class A Certificate and
Class M Certificate will hold its certificate through DTC, if it is a
participant in that system, or indirectly through organizations which are
participants in that system. The Class A Certificates and Class M Certificates
will be represented by one or more certificates registered in the name of the
nominee of DTC. The depositor has been informed by DTC that DTC's nominee will
be Cede & Co.
Beneficial owners that are not participants or indirect participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, the Class A Certificates or Class M Certificates may do so only through
participants and indirect participants. In addition, beneficial owners will
receive all distributions of principal of and interest on the Class A
Certificates and Class M Certificates from the paying agent through DTC and
participants. Accordingly, beneficial owners may experience delays in their
receipt of payments. Unless and until definitive certificates are issued for the
Class A Certificates and Class M Certificates, it is anticipated that the only
registered certificateholder of the Class A Certificates and Class M
Certificates will be Cede, as nominee of DTC. No beneficial owner will be
entitled to receive a certificate of any class in fully registered form, a
definitive certificate, except as described in this prospectus supplement.
Beneficial owners will not be recognized by the trustee or the servicer as
certificateholders, as the term is used in the pooling and servicing agreement,
and beneficial owners will be permitted to receive information furnished to
certificateholders and to exercise the rights of certificateholders only
indirectly through DTC, its participants and indirect participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of the Class A
Certificates and Class M Certificates among participants and to receive and
transmit distributions of principal of, and interest on, the Class A
Certificates and Class M Certificates. Participants and indirect participants
with which beneficial owners have accounts for the Class A Certificates and
Class M Certificates similarly are required to make book-entry transfers and
receive and transmit distributions on behalf of their respective beneficial
owners. Accordingly, although beneficial owners will not possess physical
certificates evidencing their interests in the Class A Certificates and Class M
Certificates, DTC's rules provide a mechanism by which beneficial owners,
through
S-26
<PAGE>
their participants and indirect participants, will receive distributions and
will be able to transfer their interests in the Class A Certificates and Class M
Certificates.
None of the depositor, the servicer or the trustee will have any liability
for any actions taken by DTC or its nominee, including, without limitation,
actions for any aspect of the records relating to or payments made on account of
beneficial ownership interests in the Class A Certificates and Class M
Certificates held by Cede, as nominee for DTC, or for maintaining, supervising
or reviewing any records relating to the beneficial ownership interests.
DEFINITIVE CERTIFICATES
Definitive certificates will be issued to beneficial owners or their
nominees, respectively, rather than to DTC or its nominee, only under the
following limited conditions:
o the depositor notifies the trustee in writing that DTC is no longer
willing or able to discharge its responsibilities as depository in
relation to the book-entry certificates and the trustee and the
depositor are unable to locate a qualified successor;
o the depositor elects to terminate the book-entry system through DTC;
or
o after the occurrence of an event of default under the pooling and
servicing agreement, holders of certificates evidencing at least 66
2/3% of the aggregate outstanding certificate principal balance of the
certificates, advise the trustee and DTC that the use of the
book-entry system through DTC is no longer in the best interests of
the holders of the certificates.
On the occurrence of any of the events described above, DTC is required to
notify all DTC participants of the availability of definitive certificates. On
surrender by DTC of the definitive certificates representing the Class A
Certificates and Class M Certificates and on receipt of instructions from DTC
for re-registration, the trustee will reissue the Class A Certificates and Class
M Certificates as definitive certificates issued in the respective principal
amounts owned by individual beneficial owners, and thereafter the trustee and
the servicer will recognize the holders of the definitive certificates as
certificateholders under the pooling and servicing agreement.
S-27
<PAGE>
GLOSSARY OF TERMS
The following terms are given the meanings shown below to help describe the
cash flows on the certificates:
AGGREGATE SUBORDINATE PERCENTAGE - For any date of determination, an amount
equal to the aggregate Certificate Principal Balance of the Class M Certificates
and Class B Certificates, divided by the aggregate Principal Balances of the
mortgage loans immediately prior to that date.
AVAILABLE DISTRIBUTION AMOUNT - For any distribution date, the excess of:
(A) the sum of:
o the aggregate amount of scheduled payments and collections received by
the servicer relating to each mortgage loan on or prior to the related
determination date and not previously remitted, from any source,
including amounts received from the related mortgagor, Insurance
Proceeds, Liquidation Proceeds, net of related Liquidation Expenses,
and condemnation awards, and amounts received in connection with the
purchase of any mortgage loans by the seller or servicer and the
substitution of replacement mortgage loans, and excluding interest and
other earnings on amounts on deposit in or credited to the Custodial
Account and the Certificate Account, and
o the aggregate amount of monthly Advances [and Compensating Interest],
required to be remitted by the servicer relating to that distribution
date;
(B) over the sum of:
o the aggregate amount of the servicing compensation to be paid to the
servicer under the terms of the pooling and servicing agreement,
including, without limitation, servicing fees, prepayment penalties,
fees or premiums, late payment charges and assumption fees and any
excess interest charges payable by the mortgagor by virtue of any
default or other non-compliance by the mortgagor with the terms of the
mortgage note or any other instrument or document executed in
connection therewith or otherwise,
o any amount representing late payments or other recoveries of principal
or interest, including Liquidation Proceeds, net of Liquidation
Expenses, Insurance Proceeds and condemnation awards, for any mortgage
loans which the servicer has made a previously unreimbursed monthly
Advance to the extent of that monthly Advance,
o amounts representing reimbursement of nonrecoverable Advances and
other amounts permitted to be withdrawn from the Custodial Account or
the Certificate Account,
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<PAGE>
o all monthly payments or portions of monthly payments, other than
principal prepayments and other unscheduled collections of principal,
received relating to scheduled principal and interest on any mortgage
loan due after the related due period and included therein,
o all payments due on any mortgage loan on or prior to the cut-off date
and included therein, and
o principal prepayments and other unscheduled collections of principal
received after the related prepayment period and included therein.
CERTIFICATE PRINCIPAL BALANCE - For any offered certificate as of any date
of determination, an amount equal to the initial Certificate Principal Balance
of that certificate, reduced by the aggregate of:
o all amounts allocable to principal previously distributed for that
certificate, and
o any reductions in the Certificate Principal Balance of that
certificate deemed to have occurred in connection with allocations of
Realized Losses in the manner described in this prospectus supplement.
CLASS B PERCENTAGE - As of any date of determination a percentage equal to
100% minus the sum of the Class A Percentage and the Class M Percentage.
CLASS M INTEREST DISTRIBUTION AMOUNT - For any distribution date, an amount
equal to:
o one-twelfth of the product of (i) the Certificate Principal Balance
for the related class of certificates immediately preceding that
distribution date, multiplied by (ii) the pass-through rate for that
class;
o minus, the sum of:
(1) any related Prepayment Interest Shortfalls occurring during the
related Prepayment Period; and
(2) any related Relief Act Shortfalls occurring during the related
due period.
CLASS M PERCENTAGE - For any date of determination, the aggregate
Certificate Principal Balances of the Class M Certificates divided by the
aggregate Principal Balances of all mortgage loans immediately prior to that
determination date.
CLASS M PRINCIPAL DISTRIBUTION AMOUNT - For any distribution date, an
amount equal to the lesser of (i) the Available Distribution Amount remaining
after payment of the Senior Interest Distribution Amount, the Senior Principal
Distribution Amount and the Class M Interest Amount and (ii) the product of the
related Class M Percentage and the Principal Distribution Amount.
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<PAGE>
[COMPENSATING INTEREST - The sum of the servicing fee payable to the
servicer for its servicing activities and reinvestment income received by the
servicer on amounts payable for that distribution date.]
FINAL DISPOSITION - With respect to a defaulted mortgage loan, a Final
Disposition is deemed to have occurred upon a determination by the servicer that
it has received all Insurance Proceeds, Liquidation Proceeds and other payments
or cash recoveries which the servicer reasonably and in good faith expects to be
finally recoverable with respect to the mortgage loan.
NET MORTGAGE RATE - On each mortgage loan is equal to its mortgage rate
minus the servicing fee rate as described in this prospectus supplement.
PASS-THROUGH RATE - For each class of certificates is the per annum rate at
which interest accrues on that class.
o The Pass-Through Rate for the Class A, Class M and Class R
Certificates is equal to the per annum rate listed on page S-[__].
o The Pass-Through Rate for the Class B Certificates is equal to [__]%.
PREPAYMENT INTEREST SHORTFALL - For any distribution date is equal to the
aggregate shortfall if any in collections of interest, adjusted to the related
Net Mortgage Rates, resulting from full or partial mortgagor prepayments of
principal on the related mortgage loans during the related prepayment period
less any Compensating Interest payable for that distribution date. These
shortfalls will result because interest on prepayments in full is distributed
only to the date of prepayment, and because no interest is distributed on
prepayments in part, as prepayments in part are applied to reduce the
outstanding principal balance of the related mortgage loans as of the due date
in the month of prepayment. For any distribution date, any interest shortfalls
resulting from prepayments in full during the preceding calendar month will be
offset by the servicer, but only to the extent such interest shortfalls do not
exceed an amount equal to the lesser of (a) one-twelfth of 0.125% of the [Stated
Principal Balance] of the mortgage loans immediately preceding that distribution
date and (b) the sum of the servicing fee payable to the servicer for its
servicing activities and reinvestment income received by the servicer on amounts
payable for that distribution date.
PREPAYMENT PERIOD - For any distribution date is the calendar month prior
to the month in which that distribution date occurs.
PRINCIPAL BALANCE - For any mortgage loan as of any date of determination,
an amount equal to the initial certificate principal balance as of the cut-off
date, minus all amounts allocated to principal that have been distributed to
certificateholders for that mortgage loan on or before that date, as further
reduced to the extent any Realized Loss thereon has been allocated to one or
more classes of certificates on or before that date.
PRINCIPAL DISTRIBUTION AMOUNT - On any distribution date, the sum of the
following:
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(1) the principal portion of all scheduled monthly payments due during
the related due period on each outstanding mortgage loan, whether or not
received on or prior to the related determination date;
(2) the Principal Balance of any mortgage loan repurchased during the
related Prepayment Period under the pooling and servicing agreement and the
amount of any shortfall deposited in the Custodial Account in connection
with the substitution of a deleted mortgage loan under the pooling and
servicing agreement during the related prepayment period;
(3) the principal portion of all other unscheduled collections,
including principal prepayments in full and curtailments and amounts
received in connection with a [Final Disposition] [Cash Liquidation or REO
Disposition] of a mortgage loan described in clause (a)(ii)(B), Insurance
Proceeds, Liquidation Proceeds; and
any amounts allocable to principal for any previous distribution date
calculated under clauses (1), (2) and (3) above that remain undistributed to the
extent that such amounts are not attributable to Realized Losses which were
allocated to the Class M Certificates or Class B Certificates.
REALIZED LOSS - The amount determined by the servicer, in connection with
any mortgage loan equal to (i) for any liquidated loan, the excess of the
principal balance of the liquidated loan plus interest thereon at a rate equal
to the applicable Net Mortgage Rate from the due date as to which interest was
last paid up to the due date next succeeding such liquidation over proceeds, if
any, received in connection with the liquidation, after application of all
withdrawals permitted to be made by the servicer from the related Custodial
Account for the mortgage loan, (ii) for any mortgage loan which has become the
subject of a deficient valuation, the excess of the principal balance of the
mortgage loan over the principal amount as reduced in connection with the
proceedings resulting in the deficient valuation, (iii) for any mortgage loan
which has become the subject of a Debt Service Reduction, the present value of
all monthly Debt Service Reductions on that mortgage loan, assuming that the
mortgagor pays each monthly payment on the applicable due date and that no
principal prepayments are received for that mortgage loan, discounted monthly at
the applicable mortgage rate, or (iv) the amount of any reduction by the
servicer to the principal balance of that mortgage loan under the pooling and
servicing agreement as a result of a default or imminent default.
RELIEF ACT SHORTFALL - For any distribution date and any mortgage loan, is
the amount of any interest that is not collectible from the mortgagor during the
related due period under the Relief Act or similar legislation or regulations as
in effect from time to time.
SENIOR CUMULATIVE INTEREST SHORTFALL AND CLASS M CUMULATIVE INTEREST
SHORTFALL - For any distribution date, an amount equal to (i) any portion of the
related Senior Interest Distribution Amount or Class M Interest Distribution
Amount, as applicable, that was not distributed to the Holders of the related
Senior Certificates or the Holders of Class M Certificates, as applicable, on
any preceding Distribution Date less (ii) any amount described in clause (i)
hereof that is included in a Realized Loss that has been allocated to the
holders of
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Class A Certificates, Class R Certificates or Class M Certificates on or prior
to that distribution date.
SENIOR INTEREST DISTRIBUTION AMOUNT - For each distribution date an amount
equal to: one-twelfth of the product of the Certificate Principal Balance for
the related class of Class A Certificates immediately preceding that
distribution date, multiplied by the pass-through rate on that class, provided
that if the Available Distribution Amount is insufficient to make the full
distributions of interest referred to in this clause, the Available Distribution
Amount shall be distributed to the Class A Certificates and the Class R
Certificates pro rata based on the full amounts allocable to that class.
SENIOR PERCENTAGE - As of any date of determination a percentage equal to
the lesser of (a) 100% and (b) the aggregate Certificate Principal Balance of
the [Class A Certificates and Class R Certificates], immediately prior to that
distribution date divided by the aggregate Principal Balance of all of the
mortgage loans immediately prior to that distribution date.
SENIOR PRINCIPAL DISTRIBUTION AMOUNT - On any distribution date, an amount
equal to the lesser of (a) the balance of the Available Distribution Amount
remaining after the Senior Interest Distribution Amount has been distributed and
(b) the Senior Percentage times the Principal Distribution Amount.
DISTRIBUTIONS
Distributions on the offered certificates will be made by the trustee on
the [__] day of each month or, if that day is not a business day, then the next
succeeding business day, commencing in [______ 200_]. Distributions on the
certificates will be made to the persons in whose names the certificates are
registered at the close of business on the day prior to each distribution date
or, if the certificates are no longer DTC registered certificates, on the record
date. See "Description of the Securities--Distributions" in the prospectus.
Distributions will be made by check or money order mailed, or on the request of
a certificateholder owning [Class A Certificates] having denominations,
aggregating at least $1,000,000, by wire transfer or otherwise, to the address
of the person entitled to the distribution, which, in the case of DTC registered
certificates, will be DTC or its nominee, as it appears on the trustee's
register in amounts calculated as described in this prospectus supplement on the
determination date. However, the final distribution relating to the certificates
will be made only on presentation and surrender of the certificate at the office
or the agency of the trustee specified in the notice to certificateholders of
the final distribution. A business day is any day other than (a) a Saturday or
Sunday or (b) a day on which banking institutions in the states of [__________]
and [_______] are required or authorized by law to be closed.
INTEREST DISTRIBUTIONS
Holders of each class of Class A Certificates [and each class of Class R
Certificates], will be entitled to receive interest distributions in an amount
equal to the Accrued Certificate Interest on that class on each distribution
date, to the extent of the Available Distribution Amount for that distribution
date, commencing on the first distribution date in the case of all classes of
Class A Certificates [and Class R Certificates] entitled to interest
distributions.
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Holders of each class of Class M Certificates will be entitled to receive
interest distributions in an amount equal to the Accrued Certificate Interest on
that class on each distribution date, to the extent of the Available
Distribution Amount for that distribution date after distributions of interest
and principal to the Class A Certificates [and Class R Certificates], and
reimbursements for some Advances to the servicer.
Prepayment Interest Shortfalls will result because interest on prepayments
in full is distributed only to the date of prepayment, and because no interest
is distributed on prepayments in part, as these prepayments in part are applied
to reduce the outstanding principal balance of the related mortgage loans as of
the due date in the month of prepayment.
[However, on any distribution date, any Prepayment Interest Shortfalls
resulting from prepayments in full during the preceding calendar month will be
offset by the servicer, but only to the extent those Prepayment Interest
Shortfalls do not exceed the amount of the servicing fee due on that
distribution date. Prepayment Interest Shortfalls resulting from partial
prepayments will not be offset by the servicer from servicing compensation or
otherwise. No assurance can be given that the servicing compensation will be
sufficient to cover the shortfalls on any distribution date. Prepayment Interest
Shortfalls will be allocated to all certificates from which the shortfall arose,
based on interest accrued on those classes for that distribution date. See
"Pooling and Servicing Agreement--Servicing and Other Compensation and Payment
of Expenses" in this prospectus supplement.]
If on any distribution date the Available Distribution Amount is less than
Accrued Certificate Interest on the Class A Certificates [and Class R
Certificates] for that distribution date, the shortfall will be allocated among
the holders of all classes of Class A Certificates [and Class R Certificates] in
proportion to the respective amounts of Accrued Certificate Interest for that
distribution date. In addition, the amount of any interest shortfalls that are
covered by subordination, specifically, interest shortfalls not described in the
definition of Available Distribution Amount preceding paragraph, will be unpaid
Accrued Certificate Interest and will be distributable to holders of the
certificates of those classes entitled to those amounts on subsequent
distribution dates, in each case to the extent of available funds after interest
distributions as required in this prospectus supplement.
These shortfalls could occur, for example, if delinquencies on the mortgage
loans were exceptionally high and were concentrated in a particular month and
Advances by the servicer did not cover the shortfall. Any amounts so carried
forward will not bear interest. Any interest shortfalls will not be offset by a
reduction in the servicing compensation of the servicer or otherwise, except to
the limited extent described in the preceding paragraph for Prepayment Interest
Shortfalls resulting from prepayments in full.
As described in this prospectus supplement, the Accrued Certificate Interest
allocable to each class of certificates is based on the Certificate Principal
Balance of that class.
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PRINCIPAL DISTRIBUTIONS ON THE CLASS A CERTIFICATES, CLASS M CERTIFICATES AND
CLASS R CERTIFICATES
Distributions of principal in an amount equal to the Senior Principal
Distribution Amount on the Class A Certificates [and Class R Certificates] on
each distribution date will be made to the Class A Certificates [and Class R
Certificates], after distribution of the Senior Interest Distribution and any
Senior Cumulative Interest Shortfall Amount, pro rata, in reduction of their
Certificate Principal Balances, until their Certificate Principal Balances have
been reduced to zero.
Holders of each class of the Class M Certificates will be entitled to
receive on each distribution date, to the extent of the portion of the Available
Distribution Amount remaining after:
o the sum of the Senior Interest Distribution Amount, Principal Only
Distribution Amount and Senior Principal Distribution Amount is
distributed,
o reimbursement is made to the master servicer for some Advances
remaining unreimbursed following the final liquidation of the related
mortgage loan to the extent described below under "Advances," and
o the aggregate amount of Accrued Certificate Interest required to be
distributed to the class of Class M Certificates on that distribution
date is distributed to those Class M Certificates,
a distribution allocable to principal equal to the Class M Principal
Distribution Amount in reduction of their Certificate Principal Balance until
the Certificate Principal Balances of the Class M Certificates has been reduced
to "zero."
REMAINING DISTRIBUTIONS
Any amounts remaining after the distributions to the Class A, [Class R] and
Class M Certificateholders on any distribution date shall be paid to the holders
of the Class B Certificates and Class R Certificates in accordance with the
terms of the Pooling Agreement.
ASSIGNMENT OF MORTGAGE LOANS
On the closing date, the seller will transfer to the depositor and the
depositor will in turn transfer to the trust, all of its right, title and
interest in and to each mortgage loan, the related mortgage note and other
related documents contained in the mortgage file, including all payments
received after the cut-off date, except payments that represent scheduled
principal and interest on the mortgage loans due on or before [_______] 1, 200_.
Each mortgage loan transferred to the trust will be identified on a schedule and
the schedule will be delivered to the trustee under the pooling and servicing
agreement. The mortgage loan schedule will include
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information as to the principal balance of each mortgage loan as of the cut-off
date, as well as information regarding the mortgage rates on the mortgage loans.
The servicer and the seller, respectively, will make representations and
warranties regarding its ability to service and sell the mortgage loans. The
seller will make representations and warranties as to the accuracy in all
material respects of information furnished to the trustee regarding each
mortgage loan. In addition, the seller will represent and warrant, as of the
closing date, that, among other things (i) the seller has transferred or
assigned to the depositor all of its right, title and interest in each mortgage
loan and mortgage file, free of any lien, and (ii) each mortgage loan complied,
at the time of origination, in all material respects with applicable state and
federal laws. Under the pooling and servicing agreement, the seller will, on
discovery of a breach of any representation and warranty which materially and
adversely affects the interest of the certificateholders in the related mortgage
loans and mortgage files, have a period of 60 days after discovery or notice of
the breach to effect a cure. If the breach cannot be cured within the 60-day
period, or 120 days if the seller is diligently pursuing a cure, the seller will
be obligated to (i) substitute for the defective mortgage loan a replacement
mortgage loan if the substitution is within two years of the closing date or
(ii) purchase the defective mortgage loan from the trust at a price equal to the
outstanding principal balance of the defective mortgage loan as of the date of
purchase, plus unpaid interest thereon from the date interest was last paid or
with respect to which interest was advanced and not reimbursed through the end
of the calendar month in which the purchase occurred, plus the amount of any
unreimbursed servicing advances made by the servicer.
ALLOCATION OF LOSSES; SUBORDINATION
The subordination provided to the senior certificates by the Class B
Certificates and Class M Certificates and the subordination provided to each of
the Class M Certificates by the Class B Certificates and will cover Realized
Losses on the mortgage loans. Realized Losses will be allocated as follows:
o first, to the Class B Certificates; and
o second, to the Class M Certificates,
in each case until the certificate principal balance of the class of
certificates has been reduced to zero; and thereafter, Realized Losses among all
the remaining classes of [Class A Certificates and Class R Certificates] on a
pro rata basis, until the Certificate Principal Balances of the [Class A
Certificates and the Class R Certificates] has been reduced to zero.
Investors in the Class A Certificates and Class R Certificates should be
aware that the certificate principal balances of the Class M Certificates and
Class B Certificates could be reduced to zero as a result of a disproportionate
amount of realized losses on the mortgage loans. Therefore, the allocation to
the Class M Certificates and Class B Certificates of realized losses on the
mortgage loans will reduce the subordination provided to the Class A
Certificates and Class R Certificates by the Class M Certificates and Class B
Certificates and increase the likelihood that realized losses may be allocated
to any class of the Class A Certificates and Class R Certificates.
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Any allocation of a Realized Loss to a certificate will be made by
reducing:
o its Certificate Principal Balance, in the case of the principal
portion of the Realized Loss, in each case until the Certificate
Principal Balance of the class has been reduced to zero, and
o the Accrued Certificate Interest for that certificate, in the case of
the interest portion of the Realized Loss, by the amount so allocated
as of the distribution date occurring in the month following the
calendar month in which the Realized Loss was incurred.
In addition, any allocation of a Realized Loss to a Class M Certificate may
also be made by operation of the payment priorities described under "--Principal
Distributions on the Senior Certificates" and any class of Class M Certificates
with a higher payment priority.
In order to maximize the likelihood of distribution in full of each Senior
Interest Distribution Amount, Principal Only Distribution Amount and Senior
Principal Distribution Amount, on each distribution date, holders of the Class A
Certificates and Class R Certificates have a right to distributions of the
related Available Distribution Amount that is prior to the rights of the holders
of the Class M Certificates and Class B Certificates, to the extent necessary to
satisfy each Senior Interest Distribution Amount, Principal Only Distribution
Amount and Senior Principal Distribution Amount. Similarly, and holders of the
Class M Certificates have a right to distributions of the Available Distribution
Amount prior to the rights of holders of the Class B Certificates.
An allocation of a Realized Loss on a pro rata basis among two or more
classes of certificates means an allocation to each of those classes of
certificates on the basis of its then outstanding Certificate Principal Balance
prior to giving effect to distributions to be made on that distribution date in
the case of an allocation of the principal portion of a Realized Loss, or based
on the Accrued Certificate Interest thereon for that distribution date in the
case of an allocation of the interest portion of a Realized Loss.
The application of the Senior Accelerated Prepayment Percentage, when it
exceeds the Senior Percentage, to determine the related Senior Principal
Distribution Amount will accelerate the amortization of the related senior
certificates relative to the actual amortization of the mortgage loans. To the
extent that the senior certificates are amortized faster than the mortgage
loans, in the absence of offsetting Realized Losses allocated to the Class M
Certificates and Class B Certificates, the percentage interest evidenced by the
senior certificates in the trust will be decreased, with a corresponding
increase in the interest in the trust evidenced by the Class M Certificates and
Class B Certificates, thereby increasing, relative to their respective
certificate principal balances, the subordination afforded the senior
certificates by the Class M Certificates and the Class B Certificates
collectively.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer will be entitled to receive each month a servicing fee equal
to one-twelfth of the per annum rate established for each mortgage loan as the
servicing fee rate on the Principal Balance of each mortgage loan. The servicing
fee relating to each mortgage loan will be retained
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by the servicer from payments and collections, including Insurance Proceeds and
Liquidation Proceeds, for that mortgage loan. The servicer will also be entitled
to retain as additional servicing compensation all investment income earned on
amounts on deposit in the Custodial Account, all default charges and all
prepayment, late payment and assumption fees and other fees payable by the
mortgagor under the related mortgage note.
The servicer will pay all expenses incurred in connection with its
responsibilities under the pooling and servicing agreement, including all fees
and expenses payable to any subservicer and the various expenses discussed in
the prospectus. See "Description of the Certificates--Servicing by Unaffiliated
Sellers" in the prospectus.
ADVANCES
Prior to each distribution date, the servicer is required to make Advances
of monthly payments which were due on the mortgage loans on the immediately
preceding due date and delinquent on the business day next preceding the related
determination date.
These Advances are required to be made only to the extent they are deemed
by the servicer to be recoverable from related late collections, Insurance
Proceeds, Liquidation Proceeds or amounts otherwise payable to the holders of
the certificates. The purpose of making these Advances is to maintain a regular
cash flow to the certificateholders, rather than to guarantee or insure against
losses. The servicer will not be required to make any Advances with respect to
reductions in the amount of the monthly payments on the mortgage loans due to
the application of the Relief Act or similar legislation or regulations. Any
failure by the servicer to make an Advance as required under the pooling and
servicing agreement will constitute an event of default, in which case the
trustee, as successor servicer, will be obligated to make any Advance, in
accordance with the terms of the pooling and servicing agreement.
All Advances will be reimbursable to the servicer on a first priority basis
from either (i) late collections, Insurance Proceeds and Liquidation Proceeds
from the mortgage loan as to which such unreimbursed Advance was made or (ii) as
to any Advance that remains unreimbursed in whole or in part following the final
liquidation of the related mortgage loan, from any amounts otherwise
distributable on any of the certificates. The effect of these provisions on the
Class M Certificates is that, for any Advance which remains unreimbursed
following the final liquidation of the related mortgage loan, the entire amount
of the reimbursement for the Advance will be borne first by the holders of the
Class B Certificates, and then by the holders of the class of Class M
Certificates to the extent of the amounts otherwise distributable to them,
except as provided above.
OPTIONAL TERMINATION
The servicer will have the option, on any distribution date on which the
aggregate principal balance of the mortgage loans is less than 10% of the
aggregate principal balance of the mortgage loans as of the cut-off date, to
purchase all remaining mortgage loans and other assets in the trust, thereby
effecting early retirement of the offered certificates. Any purchase of mortgage
loans and other assets of the trust shall be made at a price equal to the sum of
(a) 100% of the unpaid principal balance of each mortgage loan as of the date of
repurchase plus (b)
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accrued interest on each mortgage loan at the Net Mortgage Rate to, but not
including, the first day of the month in which the repurchase price is
distributed. Distributions on the certificates relating to any optional
termination will be paid, first, to the Class A Certificates and the Class R
Certificates, pro rata, second, to the Class M Certificates in the order of
their payment priority and, third, to the Class B Certificates.
On presentation and surrender of the offered certificates in connection
with the termination of the trust under the circumstances described above, the
holders of the offered certificates will receive an amount equal to the
Certificate Principal Balance of that class plus interest thereon at the
then-applicable pass-through rate, plus any previously unpaid interest, reduced,
as described above, in the case of the termination of the trust resulting from a
purchase of all the assets of the trust.
THE TRUSTEE
The trustee, [________________________], has its corporate trust offices at
[_______________________]. The trustee may resign at any time, in which event
the depositor will be obligated to appoint a successor trustee. The depositor
may also remove the trustee if the trustee ceases to be eligible to continue as
such under the pooling and servicing agreement or if the trustee becomes
insolvent. In these circumstances, the depositor will also be obligated to
appoint a successor trustee. Any resignation or removal of the trustee and
appointment of a successor trustee will not become effective until acceptance of
the appointment by the successor trustee.
The pooling and servicing agreement requires the trustee to maintain, at
its own expense, an office or agency in New York City where certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the trustee and the certificate registrar relating to the
certificates under the pooling and servicing agreement may be served.
The trustee, or any of its affiliates, in its individual or any other
capacity, may become the owner or pledgee of certificates with the same rights
as it would have if it were not trustee.
The trustee will also act as paying agent, certificate registrar and
authenticating agent under the pooling and servicing agreement.
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CERTAIN YIELD AND PREPAYMENT CONSIDERATIONS
FACTORS AFFECTING PREPAYMENTS AND DEFAULTS ON THE MORTGAGE LOANS
The yields to maturity and the aggregate amount of distributions on the
offered certificates will be affected by the rate and timing of principal
payments on the mortgage loans and the amount and timing of mortgagor defaults
resulting in Realized Losses. The rate of principal payments on the mortgage
loans will in turn be affected by the amortization schedules of the mortgage
loans, the rate of mortgagor prepayments on the mortgage loans by the
mortgagors, liquidations of defaulted mortgage loans and purchases of mortgage
loans due to breaches of some representations and warranties.
The timing of changes in the rate of prepayments, liquidations and
purchases of the mortgage loans may, and the timing of Realized Losses will,
significantly affect the yield to an investor, even if the average rate of
principal payments experienced over time is consistent with an investor's
expectation. The rate of prepayments on mortgage loans is also influenced by a
variety of economic, geographic, social and other factors, including the level
of mortgage interest rates and the rate at which mortgagors default on their
mortgages. In general, if interest rates fall significantly below the mortgage
rates on the mortgage loans, the mortgage loans are likely to be subject to a
higher incidence of prepayment. On the other hand, if prevailing interest rates
rise significantly above the mortgage rates on the mortgage loans, the mortgage
loans are likely to be subject to a lower incidence of prepayment. Since the
rate and timing of principal payments on the mortgage loans will depend on
future events and on a variety of factors, as described in this prospectus
supplement and in the prospectus under "Yield Considerations" and "Maturity and
Prepayment Considerations", no assurance can be given as to the rate or the
timing of principal payments on the offered certificates.
The mortgage loans in most cases may be prepaid by the mortgagors at any
time without payment of any prepayment fee or penalty, although a portion of the
mortgage loans provide for payment of a prepayment penalty, which may have a
substantial effect on the rate of prepayment of those mortgage loans. See
"Description of the Mortgage Pool--Mortgage Pool Characteristics."
Investors in the offered certificates should consider the risk that rapid
rates of prepayments on the mortgage loans, and therefore of principal
distributions on the offered certificates, may coincide with periods of low
prevailing interest rates. During these periods, the effective interest rates on
securities in which an investor in the offered certificates may choose to
reinvest amounts received as principal distributions on the offered certificates
may be lower than the interest rate borne by the certificates. On the other
hand, slow rates of prepayments on the mortgage loans, and therefore of
principal distributions on the offered certificates may coincide with periods of
high prevailing interest rates. During these periods, the amount of principal
distributions available to an investor in the offered certificates for
reinvestment at the high prevailing interest rates may be relatively low.
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All of the mortgage loans will contain due-on-sale clauses. The sale of
mortgaged properties encumbered by non-assumable mortgage loans will result in
the prepayment of the mortgage loans and a corresponding decrease in the
weighted average life of the applicable class of offered certificates. See
"Maturity and Prepayment Considerations" in the prospectus.
The mortgage loans have been originated with underwriting standards that
are less stringent than underwriting standards employed by Freddie Mac and
Fannie Mae and, as a result, may experience a higher rate of default than
mortgage loans originated with more stringent underwriting standards. In
addition, there is significant geographic concentration in the mortgage pool,
which could also increase the risk of loss on the Mortgage loans. See "Risk
Factors" and "Description of the Mortgage Pool" in this prospectus supplement
The assumed scheduled final distribution date for the offered certificates
is [________] 20__ which is the distribution date occurring in the month
following the month in which the latest stated maturity of any mortgage loan in
the mortgage pool.
No event of default, change in the priorities for distribution among the
classes or other provision under the pooling and servicing agreement will arise
or become applicable solely by reason of the failure to retire the entire
Certificate Principal Balance of any offered certificates on or before its
assumed final distribution date.
MODELING ASSUMPTIONS
For purposes of preparing the table below, indicating the percentage of
initial Certificate Principal Balance outstanding and the weighted average life
of the offered certificates under various prepayment scenarios, the following
assumptions have been made:
the mortgage loans consist of the following characteristics:
MORTGAGE LOANS
Aggregate principal balance $
Weighted Average Mortgage Rate %
Servicing Fee Rate %
Original term to maturity
(months)
Remaining term to maturity
(months)
(1) there are no repurchases of the mortgage loans;
(2) the certificates will be purchased on [___________, 20__];
(3) distributions on the certificates will be made on the 19th day of each
month, commencing in [___________, 20__];
(4) no mortgage loan is delinquent and there are no Realized Losses while
the certificates are outstanding;
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(5) there are no Prepayment Interest Shortfalls or shortfalls of interest
with regard to the mortgage loans;
(6) there is no optional termination of the trust by the servicer.
These modeling assumptions have been based on the weighted average
characteristics of the mortgage loans. The actual characteristics of many of the
mortgage loans may vary significantly from these modeling assumptions.
Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The model used in this prospectus supplement, the
prepayment speed assumption, represents an assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of new mortgage
loans. A 100% prepayment assumption assumes a constant prepayment rate of 0.0%
per annum of the then outstanding principal balance of the mortgage loans in the
first month of the life of the mortgage loans and an additional 0.2% per annum
in each month thereafter until the thirteenth month. Beginning in the thirteenth
month and in each month thereafter during the life of the mortgage loans, a 100%
prepayment assumption assumes a constant prepayment rate of 6.0% per annum each
month. As used in the table below, a 0% prepayment assumption assumes prepayment
rates equal to 0% of prepayment assumption, no prepayments. Correspondingly, a
100% prepayment assumption assumes prepayment rates equal to 100% of prepayment
assumption, and so forth. Prepayment assumption does not purport to be a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of mortgage loans, including the
mortgage loans.
The actual characteristics and performance of the mortgage loans will
differ from the assumptions used in constructing the tables shown below, which
are hypothetical in nature and are provided only to give a general sense of how
the principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the mortgage loans will prepay at the same
rate until maturity. Any difference between the assumptions and the actual
characteristics and performance of the mortgage loans, or actual prepayment
experience, will affect the percentage of initial Certificate Principal Balance
outstanding over time and the weighted average life of the offered certificates.
[TABLES REGARDING CLASS M CERTIFICATES TO BE ADDED]
FEDERAL INCOME TAX CONSEQUENCES
Orrick, Herrington & Sutcliffe LLP, counsel to the depositor, has filed
with the depositor's registration statement an opinion to the effect that,
assuming compliance with all provisions of the pooling and servicing agreement,
for federal income tax purposes, the trust will qualify as a REMIC under the
Internal Revenue Code.
For federal income tax purposes:
o the Class R Certificates will constitute the sole class of "residual
interests" in the related REMIC, and
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o each class of Class A Certificates, Class M Certificates and Class B
Certificates will represent ownership of "regular interests" in the
REMIC and will be treated as debt instruments of the REMIC.
See "Federal Income Tax Consequences--REMIC Trust Funds" in the prospectus.
For federal income tax reporting purposes, the [Class [__] Certificates
will] [the Class [__] Certificates may] [and Class [__] Certificates will not]
be treated as having been issued with original issue discount. The prepayment
assumption that will be used in determining the rate of accrual of original
issue discount, market discount and premium, if any, for federal income tax
purposes will be based on the assumption that, subsequent to the date of any
determination the mortgage loans will prepay at a rate equal to [100]% of the
prepayment assumption. No representation is made that the mortgage loans will
prepay at that rate or at any other rate. See "Federal Income Tax
Consequences--General" and "--REMIC Trust Funds--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount" in the prospectus.
If the method for computing original issue discount described in the
prospectus results in a negative amount for any period with respect to a
certificateholder, the amount of original issue discount allocable to that
period would be zero and the certificateholder will be permitted to offset that
negative amount only against future original issue discount, if any,
attributable to those certificates.
In some circumstances the OID regulations permit the holder of a debt
instrument to recognize original issue discount under a method that differs from
that used by the issuer. Accordingly, it is possible that the holder of a
certificate may be able to select a method for recognizing original issue
discount that differs from that used by the servicer in preparing reports to the
certificateholders and the IRS.
Some of the offered certificates may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of one of those
classes of certificates will be treated as holding a certificate with
amortizable bond premium will depend on the certificateholder's purchase price
and the distributions remaining to be made on the certificate at the time of its
acquisition by the certificateholder. Holders of those classes of certificates
should consult their tax advisors regarding the possibility of making an
election to amortize this premium. See "Federal Income Tax Consequences--REMIC
Trust Funds--Taxation of Owners of REMIC Regular Certificates" and "--Market
Discount and Premium" in the prospectus.
The [offered certificates] will be treated as assets described in Section
7701(a)(19)(C) of the Internal Revenue Code and "real estate assets" under
Section 856(c)(4)(A) of the Internal Revenue Code in the same proportion that
the assets of the trust would be so treated. In addition, interest on the
offered certificates will be treated as "interest on obligations secured by
mortgages on real property" under Section 856(c)(3)(B) of the Internal Revenue
Code to the extent that the Class A Certificates are treated as "real estate
assets" under Section 856(c)(4)(A) of the Internal Revenue Code. Moreover, the
offered certificates, other than the Principal Only Certificates, will be
"qualified mortgages" within the meaning of Section 860G(a)(3) of the Internal
Revenue Code if transferred to another REMIC on its startup day in exchange for
a regular or residual interest therein. However, prospective investors in
offered certificates that
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<PAGE>
will be treated as assets described in Section 860G(a)(3) of the Internal
Revenue Code should note that, regardless of the treatment, any repurchase of a
certificate pursuant to the right of the servicer or the depositor to repurchase
the offered certificates may adversely affect any REMIC that holds the offered
certificates if the repurchase is made under circumstances giving rise to a
Prohibited Transaction Tax. See "Description of the Certificates--Termination"
and "Federal Income Tax Consequences--REMIC Trust Funds--Classification of REMIC
Trust Funds" in the prospectus.
SPECIAL TAX CONSIDERATIONS APPLICABLE TO THE CLASS R CERTIFICATES
The IRS has issued REMIC regulations under the provisions of the Internal
Revenue Code that significantly affect holders of the Class R Certificates. The
REMIC regulations impose restrictions on the transfer or acquisition of certain
residual interests, including the Class R Certificates. In addition, the REMIC
regulations contain restrictions that apply to the transfer of "noneconomic"
residual interests to United States persons. The pooling and servicing agreement
includes other provisions regarding the transfer of Class R Certificates,
including (i) the requirement that any transferee of a Class R Certificate
provide an affidavit representing that the transferee (a) is not a disqualified
organization, (b) is not acquiring the Class R Certificate on behalf of a
disqualified organization and (c) will maintain that status and will obtain a
similar affidavit from any person to whom the transferee shall subsequently
transfer a Class R Certificate, (ii) a provision that any transfer of a Class R
Certificate to a disqualified person shall be null and void and (iii) a grant to
the servicer of the right, without notice to the holder or any prior holder, to
sell to a purchaser of its choice any Class R Certificate that shall become
owned by a disqualified organization despite (i) and (ii) above. In addition,
under the pooling and servicing agreement, the Class R Certificates may not be
transferred to non-United States persons.
The REMIC regulations also provide that a transfer to a United States
person of "noneconomic" residual interests will be disregarded for all federal
income tax purposes, and that the purported transferor of "noneconomic" residual
interests will continue to remain liable for any taxes due with respect to the
income on the residual interests, unless "no significant purpose of the transfer
was to impede the assessment or collection of tax." Based on the REMIC
regulations, the Class R Certificates may constitute noneconomic residual
interests during some or all of their terms for purposes of the REMIC
regulations and, accordingly, unless no significant purpose of a transfer is to
impede the assessment or collection of tax, transfers of the Class R
Certificates may be disregarded and purported transferors may remain liable for
any taxes due relating to the income on the Class R Certificates. All transfers
of the Class R Certificates will be restricted in accordance with the terms of
the pooling and servicing agreement that are intended to reduce the possibility
of any transfer being disregarded to the extent that the Class R Certificates
constitute noneconomic residual interests. See "Federal Income Tax
Consequences--REMIC Trust Funds--Taxation of Owners of REMIC Residual
Certificates--Noneconomic REMIC Residual Certificates" in the prospectus.
The Class R Certificateholders may be required to report an amount of
taxable income for the earlier accrual periods of the term of the REMIC that
significantly exceeds the amount of cash distributions received by the Class R
Certificateholders from the REMIC for those periods. Furthermore, the tax on
that income may exceed the cash distributions for those periods.
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<PAGE>
Consequently, Class R Certificateholders should have other sources of funds
sufficient to pay any federal income taxes due in the earlier years of the
REMIC's term as a result of their ownership of the Class R Certificates. In
addition, the required inclusion of this amount of taxable income during the
REMIC's earlier accrual periods and the deferral of corresponding tax losses or
deductions until later accrual periods or until the ultimate sale or disposition
of a Class R Certificate or possibly later under the "wash sale" rules of
Section 1091 of the Internal Revenue Code may cause the Class R
Certificateholders' after-tax rate of return to be zero or negative even if the
Class R Certificateholders' pre-tax rate of return is positive. That is, on a
present value basis, the Class R Certificateholders' resulting tax liabilities
could substantially exceed the sum of any tax benefits and the amount of any
cash distributions on the Class R Certificates over their life.
An individual, trust or estate that holds, whether directly or indirectly
through pass-through entities, a Class R Certificate may have significant
additional gross income with respect to, but may be limited on the deductibility
of, servicing and trustee's fees and other administrative expenses properly
allocable to the REMIC in computing the certificateholder's regular tax
liability and will not be able to deduct those fees or expenses to any extent in
computing the certificateholder's alternative minimum tax liability. See
"Federal Income Tax Consequences--REMIC Trust Funds--Taxation of Owners of REMIC
Residual Certificates--Pass-Through of Servicing Fees" in the prospectus.
The seller will be designated as the "tax matters person" for the REMIC as
defined in the REMIC Provisions, and in connection therewith will be required to
hold not less than 0.01% of the Class R Certificates.
Purchasers of the Class R Certificates are strongly advised to consult
their tax advisors as to the economic and tax consequences of investment in the
Class R Certificates. For further information regarding the federal income tax
consequences of investing in the Class R Certificates, see "Federal Income Tax
Consequences--REMIC Trust Funds--Taxation of Owners of REMIC Residual
Certificates" in the prospectus.
NEW WITHHOLDING REGULATIONS
The Treasury Department has issued new regulations which make modifications
to the withholding, backup withholding and information reporting rules described
above. The new regulations attempt to unify certification requirements and
modify reliance standards. The new regulations will be effective for payments
made after [December 31, 200_], subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the new
regulations.
METHOD OF DISTRIBUTION
In accordance with the terms and conditions of an underwriting agreement,
dated [__________], 200_, Credit Suisse First Boston Corporation has agreed to
purchase and the depositor has agreed to sell the Class A Certificates and the
Class M Certificates, [except that a de minimis portion of the Class R
Certificates will be retained by [____________]]. The certificates being sold to
the underwriter are referred to as the underwritten certificates. It is
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<PAGE>
expected that delivery of the underwritten certificates will be made only in
book-entry form through the Same Day Funds Settlement System of DTC, on or about
[________, 200_], against payment therefor in immediately available funds. It is
expected that the Class R Certificates will be available for delivery at the
office of the underwriter, against payment therefor in immediately available
funds.
In connection with the underwritten certificates, the underwriter has
agreed, in accordance with the terms and conditions of the underwriting
agreement, to purchase all of the underwritten certificates if any of the
underwritten certificates are purchased thereby.
The underwriting agreement provides that the obligations of the underwriter
to pay for and accept delivery of the underwritten certificates is conditioned
upon, among other things, the receipt of legal opinions and to the conditions,
among others, that no stop order suspending the effectiveness of the depositor's
registration statement shall be in effect, and that no proceedings for that
purpose shall be pending before or threatened by the Securities and Exchange
Commission.
The distribution of the offered certificates by the underwriter may be
effected from time to time in one or more negotiated transactions, or otherwise,
at varying prices to be determined at the time of sale. The underwriter may
effect the transactions by selling the certificates to or through dealers, and
these dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the underwriter for whom they act as agent. In
connection with the sale of the underwritten certificates, the underwriter may
be deemed to have received compensation from the depositor in the form of
underwriting compensation. The underwriter and any dealers that participate with
the underwriter in the distribution of any underwritten certificates may be
deemed to be underwriters and any profit on the resale of the underwritten
certificates positioned by them may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933, as amended. Proceeds to the
depositor from the sale of the underwritten certificates, before deducting
expenses payable by the depositor, will be approximately [___]% of the aggregate
Certificate Principal Balance of the underwritten certificates plus accrued
interest from the cut-off date. The underwriter will sell the underwritten
certificates, other than the Class R Certificates, to the seller.
The underwriting agreement provides that the depositor will indemnify the
underwriter, and that under limited circumstances the underwriter will indemnify
the depositor, against some liabilities under the Securities Act, or contribute
to payments required to be made in respect thereof.
The primary source of information available to investors concerning the
underwritten certificates will be the monthly statements discussed in the
prospectus under "Description of the Certificates--Reports to
Certificateholders," which will include information as to the outstanding
principal balance of the offered certificates. There can be no assurance that
any additional information regarding the offered certificates will be available
through any other source. In addition, the depositor is not aware of any source
through which price information about the offered certificates will be available
on an ongoing basis. The limited nature of this information regarding the
offered certificates may adversely affect the liquidity of the offered
certificates, even if a secondary market for the offered certificates becomes
available.
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<PAGE>
LEGAL OPINIONS
Certain legal matters relating to the certificates will be passed on for
the depositor and the underwriter by [Orrick, Herrington & Sutcliffe LLP, New
York, New York]. Legal matters relating to the seller and the servicer will be
passed on by [_____________________].
RATINGS
It is a condition to the issuance of the Class A Certificates, other than
the Principal Only Certificates, and the Class R Certificates, that they be
rated "AAA" by [___________________] and [__________________]. It is a condition
to the issuance of the Class M Certificates that they be rated not lower than
"[_____]," "[_____]"and "[_____]," respectively, by [__________].
The ratings on mortgage pass-through certificates address the likelihood of
the receipt by certificateholders of all distributions on the underlying
mortgage loans to which the certificateholders are entitled. The rating process
addresses the structural and legal aspects associated with the certificates,
including the nature of the underlying mortgage loans. The ratings assigned to
mortgage pass-through certificates do not represent any assessment of the
likelihood that principal prepayments will be made by mortgagors or the degree
to which any prepayments might differ from those originally anticipated, and do
not address the possibility that certificateholders might suffer a lower than
anticipated yield.
[The "r" of the "AAAr" rating of the Principal Only Certificates by
_____________ is attached to highlight derivative, hybrid, and other obligations
that ______________ believes may experience high volatility or high variability
in expected returns due to non-credit risks. Examples of these obligations are:
o securities whose principal or interest return is indexed to equities,
commodities, or currencies
o certain swaps and options; and
o interest only and principal only mortgage securities.
The absence of an "r" symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.]
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating. In the event that the ratings initially assigned to the
offered certificates are subsequently lowered for any reason, no person or
entity is obligated to provide any additional support or credit enhancement for
the offered certificates.
LEGAL INVESTMENT
The [Class A Certificates and Class M Certificates] will constitute
"mortgage related securities" for purposes of SMMEA so long as they are rated in
at least the second highest rating category by one of the Rating Agencies, and,
as such, are legal investments for entities to the extent provided in SMMEA.
SMMEA provides, however, that states could override its
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<PAGE>
provisions on legal investment and restrict or condition investment in mortgage
related securities by taking statutory action on or prior to October 3, 1991.
Some states have enacted legislation which overrides the preemption provisions
of SMMEA.
The depositor makes no representations as to the proper characterization of
any class of the offered certificates for legal investment or other purposes, or
as to the ability of particular investors to purchase any class of the offered
certificates under applicable legal investment restrictions. These uncertainties
may adversely affect the liquidity of any class of offered certificates.
Accordingly, all institutions whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their legal advisors in determining
whether and to what extent any class of the offered certificates constitutes a
legal investment or is subject to investment, capital or other restrictions.
See "Legal Investment" in the prospectus.
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<PAGE>
ERISA CONSIDERATIONS
Any ERISA plan, any insurance company, whether through its general or
separate accounts or any other person investing ERISA plan assets of any ERISA
plan, as defined under "ERISA Considerations--Plan Assets Regulations" in the
prospectus, should carefully review with its legal advisors whether the purchase
or holding of offered certificates could give rise to a transaction prohibited
or not otherwise permissible under ERISA or Section 4975 of the Internal Revenue
Code.
The purchase or holding of the offered certificates, other than the Class M
Certificates or the Class R Certificates, by or on behalf of, or with ERISA plan
assets of, an ERISA plan may qualify for exemptive relief under the
underwriter's prohibited transaction exemption, as described under "ERISA
Considerations--Underwriter's PTE" in the prospectus. However, the exemption
contains a number of conditions which must be met for the exemption to apply,
including the requirement that the ERISA plan must be an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act.
[Insurance companies contemplating the investment of general account assets
in the offered certificates should consult with their legal advisors for the
applicability of Section 401(c) of ERISA, as described under "ERISA
Considerations--Insurance Company General Accounts" in the prospectus. The DOL
issued final regulations under Section 401(c) on January 4, 2000, but these
final regulations are not applicable until July 5, 2001.]
Because the exemptive relief afforded by the exemption or any similar
exemption that might be available will not likely apply to the purchase, sale or
holding of the Class M Certificates, no Class M Certificate or any interest
therein may be acquired or held by any ERISA plan, any trustee or other person
acting on behalf of any ERISA plan, or any other person using ERISA plan assets
to effect the acquisition or holding - a plan investor - unless:
o the acquirer or holder is an insurance company,
o the source of funds used to acquire or hold the certificate or
interest therein is an "insurance company general account" as defined
in U.S. Department of Labor Prohibited Transaction Class Exemption
95-60, and
o the conditions Sections I and III of PTCE 95-60 have been satisfied.
Each beneficial owner of a Class M Certificate or any interest therein
shall be deemed to have represented, by virtue of its acquisition or holding of
the certificate or interest therein, that either (i) it is not a Plan Investor
or (ii) (1) it is an insurance company, (2) the source of funds used to acquire
or hold the certificate or interest therein is an "insurance company general
account" as the term is defined in PTCE 95-60, and (3) the conditions listed in
Sections I and III of PTCE 95-60 have been satisfied.
If any Class M Certificate or any interest therein is acquired or held in
violation of the provisions of the preceding paragraph, the next preceding
permitted beneficial owner will be
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<PAGE>
treated as the beneficial owner of the Class M Certificate, retroactive to the
date of transfer to the purported beneficial owner. Any purported beneficial
owner whose acquisition or holding of any certificate or interest therein was
effected in violation of the provisions of the preceding paragraph shall
indemnify and hold harmless the depositor, the trustee, the servicer, any
subservicer and the trust from and against any and all liabilities, claims,
costs or expenses incurred by those parties as a result of that acquisition or
holding.
Investors in the Class M Certificates are urged to obtain from a transferee
of those certificates a certification of the transferee's eligibility to
purchase the certificates in the form of the representation letter attached as
Annex I to this prospectus supplement.
Because the exemptive relief afforded by the exemption or any similar
exemption that might be available also will not likely apply to the purchase,
sale or holding of the Class R Certificates, transfers of those certificates
will not be registered by the trustee unless the transferor provides the
depositor and the trustee with a certification that the transferee is not a
ERISA plan investor.
Any fiduciary of an ERISA plan considering whether to purchase any offered
certificate should consult with its own counsel concerning the impact of ERISA
and the Internal Revenue Code and the potential consequences to its specific
circumstances, prior to making an investment in the certificates. Moreover, each
ERISA plan fiduciary should determine whether, under the general fiduciary
standards of investment procedure and diversification, an investment in the
offered certificate is appropriate for the ERISA plan, taking into account the
overall investment policy of the ERISA plan and the composition of the ERISA
plan's investment portfolio.
In addition, any fiduciary or other investor of ERISA plan assets that
proposes to acquire or hold the offered certificates on behalf of or with ERISA
plan assets of any ERISA plan should consult with its counsel with respect to:
(i) whether the specific and general conditions and the other requirements in
the exemption or any other exemption would be satisfied, or whether any other
prohibited transaction exemption would apply; and (ii) the potential
applicability of the general fiduciary responsibility provisions of ERISA and
the prohibited transaction provisions of ERISA and Section 4975 of the Internal
Revenue Code to the proposed investment. See "ERISA Considerations" in the
prospectus.
The sale of any of the offered certificates to an ERISA plan is in no
respect a representation by the depositor or the underwriter that the investment
meets all relevant legal requirements for investments by ERISA plans generally
or any particular ERISA plan, or that such an investment is appropriate for
ERISA plans generally or any particular ERISA plan.
S-49
<PAGE>
ANNEX I
ERISA REPRESENTATION LETTER
[date]
- - - - - - - - --------------------------
- - - - - - - - --------------------------
- - - - - - - - --------------------------
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
Attention: General Counsel
- - - - - - - - --------------------------
- - - - - - - - --------------------------
- - - - - - - - --------------------------
Re: [__________________________]
Mortgage-Backed Pass-Through Certificates, Series 200_-__, Class M-
Dear Ladies and Gentlemen:
[__________________________], (the "Purchaser") intends to purchase from
[______], (the "Seller") $[____________________] initial Certificate Principal
Balance of the above-referenced certificates (the "Certificates"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of [_______] 1, 200_, among Credit Suisse First Boston
Mortgage Securities Corp., as depositor (the "Depositor"),
[__________________________]., as seller and servicer (the "Company") and
[________________________], as trustee (the "Trustee"). All terms used in this
prospectus supplement and not otherwise defined shall have the meanings set
forth in the Pooling and Servicing Agreement.
The Purchaser hereby certifies, represents and warrants to, and covenants
with the Depositor, the Company and the Trustee, either:
(a) The Purchaser is not an employee benefit 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 (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 Certificate with
"plan assets" of any Plan within the meaning of the U.S. Department of
Labor ("DOL") regulation at 29 C.F.R.ss.2510.3-101; or
(b) The Purchaser is an insurance company, the source of funds to be
used by which to purchase the Certificates is an "insurance company general
account" (as such term is defined in
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DOL Prohibited Transaction Class Exemption ("PTCE") 95-60), and the
conditions set forth in Sections I and III of PTCE 95-60 have been
satisfied.
In addition, the Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Company and the Trustee that the Purchaser
will not transfer the Certificates to any Plan or person unless such Plan or
person meets the requirements set forth in either (a) or (b) above.
Very truly yours,
By:________________________________
Name:______________________________
Title:_____________________________
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<PAGE>
[_______________]
$___________
Mortgage-Backed Pass-Through Certificates
Series 200_-___
Prospectus Supplement
CREDIT FIRST
SUISSE BOSTON
Underwriter
You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the certificates in any state where the offer is not
permitted.
We represent the accuracy of the information in this prospectus supplement and
the accompanying prospectus only as of the dates on their respective covers.
Dealers will be required to deliver a prospectus supplement and prospectus when
acting as underwriters of the certificates offered hereby and with respect to
their unsold allotments or subscriptions. In addition, all dealers selling the
offered certificates, whether or not participating in this offering, may be
required to deliver a prospectus supplement and prospectus until
[____________________, 200_].
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Prospectus
Conduit Mortgage and Manufactured Housing Contract
Pass-Through Certificates
Credit Suisse First Boston Mortgage Securities Corp.
Depositor
The depositor may periodically form separate trust funds to issue securities in
series, secured by assets of that trust fund.
Offered Securities. The securities in a series will consist of certificates
representing interests in a trust fund and will be paid only
from the assets of that trust fund. Each series may include
multiple classes of securities with differing payment terms
and priorities. Credit enhancement will be provided for all
offered securities.
Trust Assets. Each trust fund will consist primarily of:
o mortgage loans secured by one- to four-family
residential properties;
o mortgage loans secured by multifamily
residential rental properties consisting of
five or more dwelling units;
o mortgage loans secured by commercial real
estate properties;
o mortgage loans secured by mixed residential
and commercial real estate properties;
o loans secured by unimproved land;
o loans made to finance the purchase of certain rights
relating to cooperatively owned properties secured by
the pledge of shares issued by a cooperative corporation
and the assignment of the proprietary lease or occupancy
agreement providing the exclusive right to occupy a
particular dwelling unit;
o manufactured housing installment sales
contracts and installment loan agreements; or
o mortgage or asset-backed securities backed
by, and whole or partial participations in,
the types of assets listed above.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
May __, 2000
<PAGE>
Important notice about information presented in this
prospectus and the accompanying prospectus supplement
We provide information to you about the certificates in two separate documents
that provide progressively more detail:
o this prospectus, which provides general information, some of which may not
apply to your series of certificates; and
o the accompanying prospectus supplement, which describes the specific terms
of your series of certificates.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted.
If the description of your securities in the accompanying prospectus supplement
differs from the related description in this prospectus, you should rely on the
information in that prospectus supplement.
Some capitalized terms used in this prospectus are defined in the section titled
"Glossary" beginning on page 104 of this prospectus.
We include cross-references in this prospectus and the accompanying prospectus
supplement to captions in these materials where you can find further related
discussions. The following table of contents and the table of contents included
in the accompanying prospectus supplement provide the pages on which these
captions are located.
2
<PAGE>
Table of Contents
Page
The Trust Fund....................................................5
The Mortgage Pools..........................................5
Underwriting Standards for Mortgage Loans..................10
Qualifications of Unaffiliated Sellers.....................13
Representations by Unaffiliated Sellers; Repurchases.......13
Mortgage Certificates......................................14
The Contract Pools.........................................15
Underwriting Standards for Contracts.......................16
Pre-Funding................................................16
The Depositor....................................................17
Use of Proceeds..................................................17
Yield Considerations.............................................17
Maturity and Prepayment Considerations...........................20
Description of the Certificates..................................22
General....................................................22
Form of Certificates.......................................24
Distributions of Principal and Interest....................26
Assignment of Mortgage Loans...............................27
Assignment of Contracts....................................29
Assignment of Mortgage Certificates........................31
Servicing of Mortgage Loans and Contracts..................31
Payments on Mortgage Loans.................................32
Payments on Contracts......................................33
Collection of Payments on Mortgage Certificates............34
Distributions on Certificates..............................34
Special Distributions......................................35
Reports to Certificateholders..............................36
Advances...................................................36
Collection and Other Servicing Procedures..................37
Standard Hazard Insurance..................................38
Special Hazard Insurance...................................39
Pool Insurance.............................................39
Primary Mortgage Insurance.................................39
Mortgagor Bankruptcy Bond..................................40
Presentation of Claims.....................................40
Enforcement of Due-on-Sale Clauses; Realization
Upon Defaulted Mortgage Loans..............................41
Enforcement of "Due-on-Sale" Clauses;
Realization Upon Defaulted Contracts.......................42
Servicing Compensation and Payment of Expenses.............42
Evidence as to Compliance..................................43
Certain Matters Regarding the Servicer, the
Depositor, the Trustee and the Special Servicer............44
Events of Default..........................................45
Rights Upon Event of Default...............................45
Amendment..................................................45
Termination................................................46
Credit Support...................................................47
Financial Guaranty Insurance
Policies; Surety Bonds................................47
Letters of Credit..........................................48
Subordinated Certificates..................................49
Shifting Interest..........................................49
Overcollateralization......................................49
Swaps and Yield Supplement
Agreements............................................49
Purchase Obligations.......................................50
3
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Reserve Fund..............................................50
Performance Bond..........................................52
Description of Insurance........................................52
Primary Mortgage Insurance Policies.......................52
FHA Insurance and VA Guarantees...........................54
Standard Hazard Insurance Policies on Mortgage Loans......55
Standard Hazard Insurance Policies on the
Manufactured Homes........................................56
Pool Insurance Policies...................................57
Special Hazard Insurance Policies.........................59
Mortgagor Bankruptcy Bond.................................60
Certain Legal Aspects of the Mortgage Loans and Contracts.......60
The Mortgage Loans........................................60
The Manufactured Housing Contracts........................68
Enforceability of Certain Provisions......................70
Consumer Protection Laws..................................70
Applicability of Usury Laws...............................71
Environmental Legislation.................................71
Soldiers' and Sailors' Civil Relief Act of 1940...........72
Default Interest and Limitations on Prepayments...........72
Forfeitures in Drug and RICO Proceedings..................73
Negative Amortization Loans...............................73
Material Federal Income Tax Consequences........................73
General...................................................73
Classification of REMICs and FASITs.......................74
Taxation of Owners of REMIC and FASIT Regular
Certificates..............................................75
Taxation of Owners of REMIC Residual Certificates.........82
Backup Withholding with Respect to Securities.............90
Foreign Investors in Regular Certificates.................90
Non-REMIC Trust Funds.....................................92
State and Other Tax Consequences................................95
ERISA Considerations............................................95
Plan Assets Regulation....................................96
Underwriter's PTE.........................................96
General Considerations....................................98
Insurance Company General Accounts........................99
Legal Investment................................................99
Plan of Distribution...........................................101
Legal Matters..................................................102
Financial Information..........................................102
Additional Information.........................................102
Reports to Certificateholders102
Incorporation of Certain Information by Reference..............102
Ratings........................................................103
Glossary.......................................................104
4
<PAGE>
The Trust Fund
Ownership of the mortgage or contract pool included in the trust fund for a
series of certificates may be evidenced by one or more classes of certificates,
which may consist of one or more subclasses, as described in the prospectus
supplement for each series of certificates. Each certificate will evidence the
undivided interest, beneficial interest or notional amount specified in the
related prospectus supplement in a mortgage pool containing mortgage loans or a
contract pool containing manufactured housing installment sales contracts or
installment loan agreements, or contracts. If stated in the related prospectus
supplement, each class or subclass of the certificates of a series will evidence
the percentage interest specified in the related prospectus supplement in the
payments of principal and interest on the mortgage loans in the related mortgage
pool or on the contracts in the related contract pool.
To the extent specified in the related prospectus supplement, each mortgage
pool or contract pool, with respect to a series will be covered by some form of
credit enhancement. Types of credit enhancement that may be used include:
o financial guaranty insurance policies or surety bonds;
o letters of credit;
o pool insurance policies;
o special hazard insurance policies;
o mortgagor bankruptcy bonds;
o the subordination of the rights of the holders of the subordinated
certificates of a series to the rights of the holders of the senior
certificates of that series, which, if stated in the related prospectus
supplement, may include certificates of a subordinated class or subclass;
o the establishment of a reserve fund;
o by the right of one or more classes or subclasses of certificates to
receive a disproportionate amount of certain distributions of principal;
o another form or forms of Alternative Credit Support acceptable to the
related Rating Agency; or
o by any combination of the foregoing.
See "Description of Insurance" and "Credit Support" in this prospectus.
The Mortgage Pools
General. If stated in the prospectus supplement with respect to a series,
the trust fund for that series may include:
(1) one or more mortgage pools containing:
o conventional one- to four-family residential, first and/or second mortgage
loans,
o Cooperative Loans made to finance the purchase of certain rights relating
to cooperatively owned properties secured by the pledge of shares issued by
a Cooperative and the assignment of a proprietary lease or occupancy
agreement providing the exclusive right to occupy a particular Cooperative
Dwelling,
o mortgage loans secured by multifamily property,
o mortgage loans secured by commercial property,
o mortgage loans secured by Mixed-Use Property,
o mortgage loans secured by unimproved land,
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o mortgage participation certificates or pass-through certificates evidencing
interests in those loans that are acceptable to the related Rating Agency,
or
o mortgage pass-through certificates issued by one or more trusts established
by one or more private entities;
(2) one or more contract pools containing manufactured housing
conditional sales contracts and installment loan agreements or
participation certificates or pass-through certificates representing
interests in those contracts; or
(3) any combination of the foregoing.
The mortgage loans and contracts, will be newly originated or seasoned, and will
be purchased by the depositor, Credit Suisse First Boston Mortgage Securities
Corp., either directly or through affiliates, from one or more affiliates or
sellers unaffiliated with the depositor.
All mortgage loans will be evidenced by Mortgage Notes. Single family
property will consist of one- to four-family residential dwelling units
including single family detached homes, attached homes, single family units
having a common wall, individual units located in condominiums, and Cooperative
Dwellings and such other type of homes or units as are set forth in the related
prospectus supplement. Multi-family property may include multifamily residential
rental properties and apartment buildings owned by cooperative housing
corporations. Each detached or attached home or multifamily property will be
constructed on land owned in fee simple by the mortgagor or on land leased by
the mortgagor. Attached homes may consist of duplexes, triplexes and fourplexes
(multifamily structures where each mortgagor owns the land upon which the unit
is built with the remaining adjacent land owned in common). Multifamily property
may include, and Mixed-Use Property will consist of, mixed commercial and
residential buildings. The mortgaged properties may include investment
properties and vacation and second homes. Commercial property will consist of
income-producing commercial real estate. Mortgage loans secured by commercial
property, multifamily property and Mixed-Use Property may also be secured by an
assignment of leases and rents and operating or other cash flow guarantees
relating to the mortgaged properties to the extent specified in the related
prospectus supplement.
If stated in the related prospectus supplement, a mortgage pool may contain
mortgage loans with adjustable mortgage rates. Any mortgage loan with an
adjustable mortgage rate may provide that on the day on which the mortgage rate
adjusts, the amount of the monthly payments on the mortgage loan will be
adjusted to provide for the payment of the remaining principal amount of the
mortgage loan with level monthly payments of principal and interest at the new
mortgage rate to the maturity date of the mortgage loan. Alternatively, the
mortgage loan may provide that the mortgage rate adjusts more frequently than
the monthly payment. As a result, a greater or lesser portion of the monthly
payment will be applied to the payment of principal on the mortgage loan, thus
increasing or decreasing the rate at which the mortgage loan is repaid. See
"Yield Considerations" in this prospectus. In the event that an adjustment to
the mortgage rate causes the amount of interest accrued in any month to exceed
the amount of the monthly payment on such mortgage loan, the excess or
"deferred" interest will be added to the principal balance of the mortgage loan,
unless otherwise paid by the mortgagor, and will bear interest at the mortgage
rate in effect from time to time. The amount by which the mortgage rate or
monthly payment may increase or decrease and the aggregate amount of deferred
interest on any mortgage loan may be subject to certain limitations, as
described in the related prospectus supplement.
If stated in the prospectus supplement for the related series, the mortgage
rate on certain adjustable rate mortgage loans will be convertible from an
adjustable rate to a fixed rate, at the option of the mortgagor under certain
circumstances. If stated in the related prospectus supplement, the related
pooling and servicing agreement will provide that the seller from which the
depositor acquired the convertible adjustable rate mortgage loans will be
obligated to repurchase from the trust fund any adjustable rate mortgage loan as
to which the conversion option has been exercised, at a purchase price set forth
in the related prospectus supplement. The amount of the purchase price will be
required to be deposited in the Certificate Account and will be distributed to
the certificateholders on the distribution date in the month following the month
of the exercise of the conversion option. The obligation of the related seller
to repurchase converted adjustable rate mortgage loans may or may not be
supported by cash, letters of credit, insurance policies, third party guarantees
or other similar arrangements.
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A mortgage pool may include VA Loans or FHA Loans. VA Loans will be
partially guaranteed by the United States Department of Veteran's Affairs, or
VA, under the Servicemen's Readjustment Act of 1944, as amended. The
Servicemen's Readjustment Act of 1944, as amended, permits a veteran, or in
certain instances the spouse of a veteran, to obtain a mortgage loan guarantee
by the VA covering mortgage financing of the purchase of a one- to four-family
dwelling unit at interest rates permitted by the VA. The program has no mortgage
loan limits, requires no down payment from the purchasers and permits the
guarantee of mortgage loans of up to 30 years' duration. However, no VA Loan
will have an original principal amount greater than five times the partial VA
guarantee for such VA Loan. The maximum guarantee that may be issued by VA under
this program is 50% of the principal amount of the mortgage loan if the
principal amount of the mortgage loan is $45,000 or less, the lesser of $36,000
and 40% of the principal amount of the mortgage loan if the principal amount of
the mortgage loan is greater than $45,000 but less than or equal to $144,000,
and the lesser of $46,000 and 25% of the principal amount of the mortgage loan
if the principal amount of the mortgage loan is greater than $144,000.
FHA Loans will be insured by the Federal Housing Administration, or FHA, as
authorized under the National Housing Act, as amended, and the United States
Housing Act of 1937, as amended. FHA Loans will be insured under various FHA
programs including the standard FHA 203-b programs to finance the acquisition of
one-to four-family housing units, the FHA 245 graduated payment mortgage program
and the FHA 221 and 223 programs to finance certain multifamily residential
rental properties. FHA Loans generally require a minimum down payment of
approximately 5% of the original principal amount of the FHA Loan. No FHA Loan
may have an interest rate or original principal amount exceeding the applicable
FHA limits at the time of origination of such FHA Loan.
With respect to any trust fund that contains mortgage loans, the prospectus
supplement for the series of certificates related to that trust fund, will
contain information as to the type of mortgage loans that will comprise the
related mortgage pool. The related prospectus supplement will also contain
information as to:
o the aggregate principal balance of the mortgage loans as of the applicable
Cut-off Date,
o the type of mortgaged properties securing the mortgage loans, o the range
of original terms to maturity of the mortgage loans,
o the range of principal balances and average principal balance of the
mortgage loans,
o the earliest origination date and latest maturity date of the mortgage
loans,
o the aggregate principal balance of mortgage loans having loan-to-value
ratios at origination exceeding 80%,
o the interest rate or range of interest rates borne by the mortgage loans,
o the geographical distribution of the mortgage loans,
o the aggregate principal balance of Buy-Down Loans or GPM Loans, if
applicable,
o the delinquency status of the mortgage loans as of the Cut-off Date,
o with respect to adjustable rate mortgage loans, the adjustment dates, the
highest, lowest and weighted average margin, the limitations on the
adjustment of the interest rates on any adjustment date and over the life
of the loans, and
o whether the mortgage loan provides for an interest only period and whether
the principal amount of that mortgage loan is fully amortizing or is
amortized on the basis of a period of time that extends beyond the maturity
date of the mortgage loan.
The aggregate principal balance of the mortgage loans or contracts in a mortgage
pool or contract pool as stated in the related prospectus supplement is subject
to a permitted variance of plus or minus 5%.
No assurance can be given that values of the mortgaged properties in a
mortgage pool have remained or will remain at their levels on the dates of
origination of the related mortgage loans. If the real estate market should
experience an overall decline in property values such that the outstanding
balances of the mortgage loans and any
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secondary financing on the mortgaged properties in a particular mortgage pool
become equal to or greater than the value of the mortgaged properties, the
actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the mortgage lending industry. In addition,
the value of property securing Cooperative Loans and the delinquency rate with
respect to Cooperative Loans could be adversely affected if the current
favorable tax treatment of cooperative stockholders were to become less
favorable. See "Certain Legal Aspects of the Mortgage Loans and Contracts--The
Mortgage Loans" in this prospectus. To the extent that such losses are not
covered by the methods of credit support or the insurance policies described in
this prospectus or by Alternative Credit Support, they will be borne by holders
of the certificates of the series evidencing interests in the related mortgage
pool.
The depositor will cause the mortgage loans constituting each mortgage pool
to be assigned to the trustee named in the applicable prospectus supplement, for
the benefit of the holders of the certificates of that series. The servicer, if
any, named in the related prospectus supplement will service the mortgage loans,
either by itself or through other mortgage servicing institutions, if any, or a
special servicer, if any, pursuant to a pooling and servicing agreement, as
described in this prospectus, among the servicer, the special servicer, if any,
the depositor and the trustee, or a separate servicing agreement between the
servicer and the depositor and will receive a fee for those services. See
"--Mortgage Loan Program" and "Description of the Certificates" in this
prospectus. With respect to those mortgage loans serviced by a special servicer,
the special servicer will be required to service the related mortgage loans in
accordance with a servicing agreement between the servicer and the special
servicer, and will receive the fee for the services specified in the related
agreement; however, the servicer will remain liable for its servicing
obligations under the pooling and servicing agreement as if the servicer alone
were servicing the related mortgage loans.
If stated in the applicable prospectus supplement, the depositor will make
certain limited representations and warranties regarding the mortgage loans, but
its assignment of the mortgage loans to the trustee will be without recourse.
See "Description of the Certificates--Assignment of Mortgage Loans." The seller
of the Mortgage Loans will also make certain limited representations and
warranties with respect to the Mortgage Loans. See "-- Representations by
Unaffiliated Sellers; Repurchases." The servicer's obligations with respect to
the mortgage loans will consist principally of its contractual servicing
obligations under the related pooling and servicing agreement. This will include
its obligation to enforce certain purchase and other obligations of any special
servicer, subservicers and/or sellers unaffiliated with the depositor, as more
fully described in this prospectus under "--Mortgage Loan
Program--Representations by Unaffiliated Sellers; Repurchases," "Description of
the Certificates--Assignment of Mortgage Loans" and "--Servicing by Unaffiliated
Sellers," and its obligations to make Advances in the event of delinquencies in
payments on or with respect to the mortgage loans or in connection with
prepayments and liquidations of the mortgage loans, in amounts described in this
prospectus under "Description of the Certificates--Advances." Advances with
respect to delinquencies will be limited to amounts that the servicer believes
ultimately would be reimbursable under any applicable financial guaranty
insurance policy or surety bond, letter of credit, pool insurance policy,
special hazard insurance policy, mortgagor bankruptcy bond or other policy of
insurance, from amounts in the related reserve fund, if any, under any
Alternative Credit Support or out of the proceeds of liquidation of the mortgage
loans, cash in the Certificate Account or otherwise. See "Description of the
Certificates--Advances," "Credit Support" and "Description of Insurance" in this
prospectus.
Single Family Mortgage Loans. The applicable prospectus supplement will
specify the types of mortgaged properties securing single family mortgage loans,
the original principal balances of the single family mortgage loans, the
original maturities of such mortgage loans and the loan-to-value ratios of such
mortgage loans. Single family mortgage loans may be fully-amortizing mortgage
loans or balloon mortgage loans. If stated in the related prospectus supplement,
a mortgage pool may also include adjustable rate mortgage loans with a mortgage
interest rate adjusted periodically, with corresponding adjustments in the
amount of monthly payments, to equal the sum, which may be rounded, of a fixed
margin and an index described in that prospectus supplement, subject to any
applicable restrictions on those adjustments. The mortgage pools may also
include other types of single family mortgage loans to the extent set forth in
the applicable prospectus supplement.
If provided for in the applicable prospectus supplement, a mortgage pool
may contain Buy-Down Loans. The resulting difference in payment on a Buy-Down
Loan shall be compensated for from amounts on deposit in the related Buy-Down
Fund. In lieu of a cash deposit, if stated in the related prospectus supplement,
a letter of credit or guaranteed investment contract may be delivered to the
trustee to fund the Buy-Down Fund. See "Description of the
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Certificates--Payments on Mortgage Loans" in this prospectus. Buy-Down Loans
included in a mortgage pool will provide for a reduction in monthly interest
payments by the mortgagor for a period of up to the first four years of the term
of such mortgage loans.
If provided for in the applicable prospectus supplement, a mortgage pool
may contain GPM Loans. If stated in the related prospectus supplement, the
resulting difference in payment on a GPM Loan shall be compensated for from
amounts on deposit in the GPM Fund. In lieu of cash deposit, the depositor may
deliver to the trustee a letter of credit, guaranteed investment contract or
another instrument acceptable to the related Rating Agency to fund the GPM Fund.
If specified in the related prospectus supplement, a mortgage pool may
contain "re-performing loans", which includes previously delinquent loans that
have been brought current, mortgage loans that are subject to a repayment plan
or bankruptcy plan, and that had arrearages of at least three monthly payments
when the repayment plan or bankruptcy plan was entered into, and mortgage loans
that have been modified. These mortgage loans may be acquired by the depositor
from a wide variety of sources through bulk or periodic sales. The rate of
default on re-performing mortgage loans may be higher than the rate of default
on mortgage loans that have not previously been in arrears.
If specified in the applicable prospectus supplement, the mortgage loans
may include "step-down" mortgage loans, which permit the servicer to reduce the
interest rate on the mortgage loan if the borrower has been current in its
monthly payments of principal and interest. The amount by which the mortgage
rate may be reduced and the period during which the mortgage loan must have been
current will be specified in the mortgage note.
Commercial, Multifamily and Mixed-Use Mortgage Loans. The commercial
mortgage loans, multifamily mortgage loans and Mixed-Use Mortgage Loans will
consist of mortgage loans secured by first or junior mortgages, deeds of trust
or similar security instruments on, or installment contracts for the sale of,
fee simple or leasehold interests in commercial real estate property,
multifamily residential property, cooperatively owned multifamily properties
and/or mixed residential and commercial property, and related property and
interests. Commercial mortgage loans will not represent more than 10% of the
aggregate principal balance of any mortgage pool as of the related Cut-off Date.
Certain of the commercial mortgage loans, multifamily mortgage loans and
Mixed-Use Mortgage Loans may be Simple Interest Loans, and other mortgage loans
may provide for payment of interest in advance rather than in arrears.
The commercial mortgage loans, multifamily mortgage loans and Mixed-Use
Mortgage Loans may also be secured by one or more assignments of leases and
rents, management agreements or operating agreements relating to the mortgaged
property and in some cases by certain letters of credit, personal guarantees or
both. Pursuant to an assignment of leases and rents, the related mortgagor
assigns its right, title and interest as landlord under each related lease and
the income derived therefrom to the related lender, while retaining a license to
collect the rents for so long as there is no default. If the mortgagor defaults,
the license terminates and the related lender is entitled to collect the rents
from tenants to be applied to the monetary obligations of the mortgagor. State
law may limit or restrict the enforcement of the assignment of leases and rents
by a lender until the lender takes possession of the related mortgaged property
and a receiver is appointed. See "Certain Legal Aspects of the Mortgage Loans
and Contracts--Leases and Rents" in this prospectus.
The prospectus supplement relating to each series will specify the
originator or originators relating to the commercial mortgage loans, multifamily
mortgage loans and Mixed-Use Mortgage Loans, which may include, among others,
commercial banks, savings and loan associations, other financial institutions,
insurance companies or real estate developers and, to the extent available, the
underwriting criteria in connection with originating the related mortgage loans.
Commercial, multifamily and mixed-use real estate lending is generally
viewed as exposing the lender to a greater risk of loss than one- to four-family
residential lending. Commercial, multifamily and mixed-use real estate lending
typically involves larger loans to single borrowers or groups of related
borrowers than residential one- to four-family mortgage loans. Furthermore, the
repayment of loans secured by income producing properties is
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typically dependent upon the successful operation of the related real estate
project. If the cash flow from the project is reduced, for example, if leases
are not obtained or renewed, the borrower's ability to repay the loan may be
impaired. Commercial, multifamily and mixed-use real estate can be affected
significantly by supply and demand in the market for the type of property
securing the loan and, therefore, may be subject to adverse economic conditions.
Market values may vary as a result of economic events or governmental
regulations outside the control of the borrower or lender, such as rent control
laws, which impact the future cash flow of the property. Corresponding to the
greater lending risk is a generally higher interest rate applicable to
commercial, multifamily and mixed-use real estate lending.
Balloon Loans. A mortgagor's ability to pay the balloon amount at maturity,
which, based on the amortization schedule of those loans, is expected to be a
substantial amount, will typically depend on the mortgagor's ability to obtain
refinancing of the related mortgage loan or to sell the mortgaged property prior
to the maturity of the balloon loan. The ability to obtain refinancing will
depend on a number of factors prevailing at the time refinancing or sale is
required, including, without limitation, real estate values, the mortgagor's
financial situation, the level of available mortgage loan interest rates, the
mortgagor's equity in the related mortgaged property, tax laws, prevailing
general economic conditions and the terms of any related first lien mortgage
loan. Neither the depositor, the servicer or subservicer, the trustee, as
applicable, nor any of their affiliates will be obligated to refinance or
repurchase any mortgage loan or to sell the mortgaged property.
Simple Interest Loans. If specified in the accompanying prospectus
supplement, a portion of the loans underlying a series of securities may be
simple interest loans. A simple interest loan provides the amortization of the
amount financed under the loan over a series of equal monthly payments, except,
in the case of a balloon mortgage loan, the final payment. Each monthly payment
consists of an installment of interest which is calculated on the basis of the
outstanding principal balance of the loan multiplied by the stated loan rate and
further multiplied by a fraction, with the numerator equal to the number of days
in the period elapsed since the preceding payment of interest was made and the
denominator equal to the number of days in the annual period for which interest
accrues on the loan. As payments are received under a simple interest loan, the
amount received is applied first to interest accrued to the date of payment and
then the remaining amount is applied to pay any unpaid fees and then to reduce
the unpaid principal balance. Accordingly, if a borrower pays a fixed monthly
installment on a simple interest loan before its scheduled due date, the portion
of the payment allocable to interest for the period since the preceding payment
was made will be less than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid principal
balance will be correspondingly greater. On the other hand, if a borrower pays a
fixed monthly installment after its scheduled due date, the portion of the
payment allocable to interest for the period since the preceding payment was
made will be greater than it would have been had the payment been made as
scheduled, and the remaining portion, if any, of the payment applied to reduce
the unpaid principal balance will be correspondingly less. If each scheduled
payment under a simple interest loan is made on or prior to its scheduled due
date, the principal balance of the loan will amortize more quickly than
scheduled. However, if the borrower consistently makes scheduled payments after
the scheduled due date, the loan will amortize more slowly than scheduled. If a
simple interest loan is prepaid, the borrower is required to pay interest only
to the date of prepayment. The variable allocations among principal and interest
of a simple interest loan may affect the distributions of principal and interest
on the securities, as described in the accompanying prospectus supplement.
Monthly payments on most loans are computed and applied on an actuarial
basis. Monthly payments on actuarial loans are applied first to interest,
generally in an amount equal to, one-twelfth of the applicable loan rate times
the unpaid principal balance, with any remainder of the payment applied to
principal.
Underwriting Standards for Mortgage Loans
The depositor expects that the originator of each of the loans will have
applied, consistent with applicable federal and state laws and regulations,
underwriting procedures intended to evaluate the borrower's credit standing and
repayment ability and/or the value and adequacy of the related property as
collateral. The depositor expects that any FHA loan or VA loans will have been
originated in compliance with the underwriting policies of the FHA or VA,
respectively. The underwriting criteria applied by the originators of the loans
included in a pool may vary significantly among sellers. The accompanying
prospectus supplement will describe most aspects of the underwriting criteria,
to the extent known by the depositor, that were applied by the originators of
the loans. In
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most cases, the depositor will have less detailed information concerning the
origination of seasoned loans than it will have concerning newly-originated
loans.
The underwriting standards of any particular originator typically include a
set of specific criteria by which the underwriting evaluation is made. However,
the application of the underwriting standards does not imply that each specific
criterion was satisfied individually. Rather, a loan will be considered to be
originated in accordance with a given set of underwriting standards if, based on
an overall qualitative evaluation, the loan is in substantial compliance with
the underwriting standards. For example, a loan may be considered to comply with
a set of underwriting standards, even if one or more specific criteria included
in the underwriting standards were not satisfied, if other factors compensated
for the criteria that were not satisfied or if the loan is considered to be in
substantial compliance with the underwriting standards.
Mortgage loans may have been originated over the internet, or acquired by
the depositor or the seller pursuant to a purchase that was arranged over the
internet.
Single and Multi-Family Mortgage Loans. The mortgage credit approval
process for one- to four-family residential loans follows a standard procedure
that generally complies with FHLMC and FNMA regulations and guidelines, except
that certain mortgage loans may have higher loan amount and qualifying ratios,
and applicable federal and state laws and regulations. The credit approval
process for Cooperative Loans follows a procedure that generally complies with
applicable FNMA regulations and guidelines, except for the loan amounts and
qualifying ratios, and applicable federal and state laws and regulations. The
originator of a mortgage loan generally will review a detailed credit
application by the prospective mortgagor designed to provide pertinent credit
information, including a current balance sheet describing assets and liabilities
and a statement of income and expenses, as well as an authorization to apply for
a credit report that summarizes the prospective mortgagor's credit history with
local merchants and lenders and any record of bankruptcy. In addition, an
employment verification is obtained from the prospective mortgagor's employer
wherein the employer reports the length of employment with that organization,
the current salary, and gives an indication as to whether it is expected that
the prospective mortgagor will continue such employment in the future. If the
prospective mortgagor is self-employed, he or she is required to submit copies
of signed tax returns. The prospective mortgagor may also be required to
authorize verification of deposits at financial institutions. In certain
circumstances, other credit considerations may cause the originator or depositor
not to require some of the above documents, statements or proofs in connection
with the origination or purchase of certain mortgage loans.
An appraisal generally will be required to be made on each residence to be
financed. Such appraisal generally will be made by an appraiser who meets FNMA
requirements as an appraiser of one- to four-family residential properties. The
appraiser is required to inspect the property and verify that it is in good
condition and that, if new, construction has been completed. The appraisal
generally will be based on the appraiser's judgment of value, giving appropriate
weight to both the market value of comparable homes and the cost of replacing
the residence. Alternatively, as specified in the accompanying prospectus
supplement, values may be supported by:
o a statistical valuation;
o a broker's price opinion; or
o a drive-by appraisal or other certification of value.
Based on the data provided, certain verifications and the appraisal, a
determination is made by the originator as to whether the prospective mortgagor
has sufficient monthly income available to meet the prospective mortgagor's
monthly obligations on the proposed loan and other expenses related to the
residence, such as property taxes, hazard and primary mortgage insurance and, if
applicable, maintenance, and other financial obligations and monthly living
expenses. Each originator's lending guidelines for conventional mortgage loans
generally will specify that mortgage payments plus taxes and insurance and all
monthly payments extending beyond one year, including those mentioned above and
other fixed obligations, such as car payments, would equal no more than
specified percentages of the prospective mortgagor's gross income. These
guidelines will be applied only to the payments to be made during the first year
of the loan. Other credit considerations may cause an originator to depart from
these guidelines. For example, when two individuals co-sign the loan documents,
the incomes and expenses of both individuals may be included in the computation.
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The mortgaged properties may be located in states where, in general, a
lender providing credit on a single-family property may not seek a deficiency
judgment against the mortgagor but rather must look solely to the property for
repayment in the event of foreclosure. Lenders' underwriting standards
applicable to all states, including anti-deficiency states, typically require
that the value of the property being financed, as indicated by the appraisal,
currently supports and is anticipated to support in the future the outstanding
loan balance.
Certain of the types of mortgage loans that may be included in the mortgage
pools may involve additional uncertainties not present in traditional types of
loans. For example, Buy-Down Loans and GPM Loans provide for escalating or
variable payments by the mortgagor. These types of mortgage loans are
underwritten on the basis of a judgment that the mortgagor will have the ability
to make larger monthly payments in subsequent years. In some instances the
mortgagor's income may not be sufficient to enable it to continue to make
scheduled loan payments as such payments increase.
To the extent specified in the related prospectus supplement, the depositor
may purchase mortgage loans for inclusion in a trust fund that are underwritten
under standards and procedures which vary from and are less stringent than those
described in this prospectus. For instance, mortgage loans may be underwritten
under a "limited documentation" program if stated in the related prospectus
supplement. With respect to these mortgage loans, minimal investigation into the
borrowers' credit history and income profile is undertaken by the originator and
such mortgage loans may be underwritten primarily on the basis of an appraisal
of the mortgaged property or Cooperative Dwelling and the loan-to-value ratio at
origination. Thus, if the loan-to-value ratio is less than a percentage
specified in the related prospectus supplement, the originator may forego
certain aspects of the review relating to monthly income, and traditional ratios
of monthly or total expenses to gross income may not be considered.
Other examples of underwriting standards that may be less stringent than
traditional underwriting standards include investment properties, loans with
high loan-to-value ratios and no primary mortgage insurance, and loans made to
borrowers with imperfect credit histories.
The loan-to-value ratio of a mortgage loan will be equal to:
o the original principal amount of the mortgage loan divided by the lesser of
the "appraised value" or the sales price for the mortgaged property; or
o such other ratio as described in the related prospectus supplement.
The underwriting standards for mortgage loans secured by multifamily
property will be described in the related prospectus supplement.
Commercial and Mixed-Use Mortgage Loans. The underwriting procedures and
standards for commercial mortgage loans and Mixed-Use Mortgage Loans included in
a mortgage pool will be specified in the related prospectus supplement to the
extent such procedures and standards are known or available. Such mortgage loans
may be originated in contemplation of the transactions described in this
prospectus and the related prospectus supplement or may have been originated by
third-parties and acquired by the depositor directly or through its affiliates
in negotiated transactions.
The majority of originators of commercial mortgage loans or Mixed-Use
Mortgage Loans will have applied underwriting procedures intended to evaluate,
among other things, the income derived from the mortgaged property, the
capabilities of the management of the project, including a review of
management's past performance record, its management reporting and control
procedures, to determine its ability to recognize and respond to problems, and
its accounting procedures to determine cash management ability, the obligor's
credit standing and repayment ability and the value and adequacy of the
mortgaged property as collateral.
If stated in the related prospectus supplement, the adequacy of a
commercial property or Mixed-Use Property as security for repayment will
generally have been determined by an appraisal by an appraiser selected in
accordance with preestablished guidelines established by or acceptable to the
loan originator for appraisers. If stated in the related prospectus supplement,
the appraiser must have personally inspected the property and verified that it
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was in good condition and that construction, if new, has been completed. The
appraisal will have been based upon a cash flow analysis and/or a market data
analysis of recent sales of comparable properties and, when deemed applicable, a
replacement cost analysis based on the current cost of constructing or
purchasing a similar property, or such other factors that are described in the
applicable prospectus supplement.
No assurance can be given that values of any commercial properties or
Mixed-Use Properties in a mortgage pool have remained or will remain at their
levels on the dates of origination of the related mortgage loans. Further, there
is no assurance that appreciation of real estate values generally will limit
loss experiences on commercial properties or Mixed-Use Properties. If the
commercial real estate market should experience an overall decline in property
values such that the outstanding balances of any commercial mortgage loans
and/or Mixed-Use Mortgage Loans and any additional financing on the related
mortgaged properties in a particular mortgage pool become equal to or greater
than the value of the mortgaged properties, the actual rates of delinquencies,
foreclosures and losses on such mortgage loans could be higher than those now
generally experienced in the mortgage lending industry. To the extent that such
losses are not covered by the methods of credit support or the insurance
policies described in this prospectus or by Alternative Credit Support, they
will be borne by holders of the certificates of the series evidencing interests
in the mortgage pool. Even where credit support covers all losses resulting from
defaults and foreclosure, the effect of defaults and foreclosures may be to
increase prepayment experience on the related mortgage loans, thus shortening
weighted average life and affecting yield to maturity.
Qualifications of Unaffiliated Sellers
Each seller unaffiliated with the depositor must be an institution
experienced in originating conventional mortgage loans and/or FHA Loans or VA
Loans in accordance with accepted practices and prudent guidelines, and must
maintain satisfactory facilities to originate those loans, or have such other
origination or servicing experience as may be specified in the related
prospectus supplement.
Representations by Unaffiliated Sellers; Repurchases
If stated in the related prospectus supplement, each seller that sold
mortgage loans directly or indirectly to the depositor, will have made
representations and warranties in respect of the mortgage loans sold by that
seller. These representations and warranties will generally include, among other
things:
o with respect to each mortgaged property, that title insurance, or in the
case of mortgaged properties located in areas where such policies are
generally not available, an attorney's certificate of title, and any
required hazard and primary mortgage insurance was effective at the
origination of each mortgage loan, and that each policy, or certificate of
title, remained in effect on the date of purchase of the mortgage loan from
the seller;
o that the seller had good and marketable title to each mortgage loan sold by
it;
o to the best of the seller's knowledge, the mortgaged property is free from
damage and in good repair;
o with respect to each mortgaged property, that each mortgage constituted a
valid first lien, or, if applicable, a more junior lien, on the mortgaged
property, subject only to permissible title insurance exceptions; and
o that there were no delinquent tax or assessment liens against the mortgaged
property.
With respect to a Cooperative Loan, the seller will represent and warrant
that:
o the security interest created by the cooperative security agreements
constituted a valid first lien, or, if applicable, a more junior lien, on
the collateral securing the Cooperative Loan, subject to the right of the
related Cooperative to cancel shares and terminate the proprietary lease
for unpaid assessments and to the lien of the related Cooperative for
unpaid assessments representing the mortgagor's pro rata share of the
Cooperative's payments for its mortgage, current and future real property
taxes, maintenance charges and other assessments to which like collateral
is commonly subject; and
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o the related cooperative apartment was free from damage and was in good
repair.
The representations and warranties of a seller in respect of a mortgage
loan generally will have been made as of the date on which that seller sold the
mortgage loan to the depositor or its affiliate. A substantial period of time
may have elapsed between such date and the date of initial issuance of the
series of certificates evidencing an interest in that mortgage loan. Since the
representations and warranties of a seller do not address events that may occur
following the sale of a mortgage loan by that seller, the repurchase obligation
described below will not arise if, during the period commencing on the date of
sale of a mortgage loan by that seller to or on behalf of the depositor, the
relevant event occurs that would have given rise to a repurchase obligation had
the event occurred prior to sale of the affected mortgage loan. However, the
depositor will not include any mortgage loan in the trust fund for any series of
certificates if anything has come to the depositor's attention that would cause
it to believe that the representations and warranties of an seller will not be
accurate and complete in all material respects in respect of the related
mortgage loan as of the related Cut-off Date. If stated in the related
prospectus supplement, the seller may have made no, or extremely limited,
representations and warranties regarding the mortgage loans.
In most cases, the depositor will assign its rights with respect to the
representations and warranties of the seller regarding the mortgage loans to the
trustee for the benefit of the certificateholders. Alternatively, the depositor
will make similar representations and warranties regarding the mortgage loans to
the trustee for the benefit of the certificateholders. Upon the discovery of the
breach of any representation or warranty made by a seller or the depositor in
respect of a mortgage loan that materially and adversely affects the interests
of the certificateholders of the related series, that seller or the depositor,
as the case may be, will be obligated to repurchase the mortgage loan at a
purchase price equal to 100% of the unpaid principal balance thereof at the date
of repurchase or, in the case of a series of certificates as to which the
depositor has elected to treat the related trust fund as a REMIC, as defined in
the Code, at some other price as may be necessary to avoid a tax on a prohibited
transaction, as described in Section 860F(a) of the Code, in each case together
with accrued interest on the mortgage loans in the related mortgage pool, to the
first day of the month following the repurchase and the amount of any
unreimbursed Advances made by the servicer or subservicer, as applicable, in
respect of that mortgage loan. The servicer will be required to enforce this
obligation for the benefit of the trustee and the certificateholders, following
the practices it would employ in its good faith business judgment were it the
owner of that mortgage loan. Subject to the right, if any, and the ability of
the seller or the depositor to substitute for certain mortgage loans, this
repurchase obligation constitutes the sole remedy available to the
certificateholders of the related series for a breach of representation or
warranty by a seller or the depositor.
If stated in the related prospectus supplement, if the seller or depositor
discovers or receives notice of any breach of its representations and warranties
relating to a mortgage loan within two years of the date of the initial issuance
of the certificates, or other period as may be specified in the related
prospectus supplement, the seller or depositor may remove that mortgage loan
from the trust fund, rather than repurchase the mortgage loan as provided above,
and substitute in its place a substitute mortgage loan. Any substitute mortgage
loan, on the date of substitution, will:
o have an outstanding principal balance, after deduction of all scheduled
payments due in the month of substitution, not in excess of the outstanding
principal balance of the mortgage loan that it is replacing, the amount of
any shortfall to be distributed to certificateholders in the month of
substitution;
o have a mortgage rate not less than, and not more than 1% greater than, the
mortgage rate of the mortgage loan that it is replacing;
o have a remaining term to maturity not greater than, and not more than one
year less than, that of the mortgage loan that it is replacing; and
o comply with all the representations and warranties set forth in the related
pooling and servicing agreement as of the date of substitution.
This repurchase or substitution obligation constitutes the sole remedy available
to the certificateholders or the trustee for any breach of representation.
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No assurance can be given that sellers will carry out their respective
repurchase obligations with respect to mortgage loans. Neither the depositor nor
any other person will be obligated to repurchase mortgage loans if the seller
fails to do so.
Mortgage Certificates
If stated in the prospectus supplement with respect to a series, the trust
fund for such series may include Mortgage Certificates. A description of the
mortgage loans underlying the Mortgage Certificates and the related pooling and
servicing arrangements will be set forth in the applicable prospectus
supplement. The applicable prospectus supplement, will also set forth
information with respect to the entity or entities forming the related mortgage
pool, the issuer of any credit support with respect to the Mortgage
Certificates, the aggregate outstanding principal balance and the pass-through
rate borne by each Mortgage Certificate included in the trust fund. The
inclusion of Mortgage Certificates in a trust fund with respect to a series of
certificates is conditioned upon their characteristics being in form and
substance satisfactory to the related Rating Agency.
The Contract Pools
General. If stated in the prospectus supplement with respect to a series,
the trust fund for that series may include a contract pool evidencing interests
in manufactured housing conditional sales contracts and installment loan
agreements originated by a manufactured housing dealer in the ordinary course of
business and purchased by the depositor. The contracts may be conventional
manufactured housing contracts or contracts insured by the FHA or partially
guaranteed by the VA. Each contract will be secured by a manufactured home. The
contracts may be fully amortizing or provide for a balloon payment at maturity,
and will bear interest at a fixed annual percentage rate or a variable rate
described in the applicable prospectus supplement.
The manufactured homes securing the contracts consist of manufactured homes
within the meaning of 42 United States Code, Section 5402(6), which defines a
"manufactured home" as "a structure, transportable in one or more sections,
which in the traveling mode, is eight body feet or more in width or forty body
feet or more in length, or, when erected on site, is three hundred twenty or
more square feet, and which is built on a permanent chassis and designed to be
used as a dwelling with or without a permanent foundation when connected to the
required utilities, and includes the plumbing, heating, air conditioning, and
electrical systems contained therein; except that such term shall include any
structure which meets all the requirements of [this] paragraph except the size
requirements and with respect to which the manufacturer voluntarily files a
certification required by the Secretary of Housing and Urban Development and
complies with the standards established under [this] chapter."
The depositor will cause the contracts constituting each contract pool to
be assigned to the trustee named in the related prospectus supplement for the
benefit of the related certificateholders. The servicer specified in the related
prospectus supplement will service the contracts, either by itself or through
other subservicers, pursuant to a pooling and servicing agreement. See
"Description of the Certificates--Servicing by Unaffiliated Sellers" in this
prospectus. With respect to those contracts serviced by the servicer through a
subservicer, the servicer will remain liable for its servicing obligations under
the related pooling and servicing agreement as if the servicer alone were
servicing the related contracts. If stated in the related prospectus supplement,
the contract documents may be held for the benefit of the trustee by a custodian
appointed pursuant to a custodial agreement among the depositor, the trustee and
the custodian named in the custodial agreement.
The related prospectus supplement, or, if such information is not available
in advance of the date of the related prospectus supplement, will specify, for
the contracts contained in the related contract pool, among other things:
o the range of dates of origination of the contracts;
o the weighted average annual percentage rate on the contracts;
o the range of outstanding principal balances as of the Cut-off Date;
o the average outstanding principal balance of the contracts as of the
Cut-off Date;
o the weighted average term to maturity as of the Cut-off Date; and
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o the range of original maturities of the contracts.
The servicer or the seller of the contracts will represent and warrant as
to the payment status of the contracts as of the Cut-off Date and as to the
accuracy in all material respects of certain information furnished to the
trustee in respect of each such contract. Upon a breach of any representation
that materially and adversely affects the interest of the certificateholders in
a contract, the servicer or the seller, as appropriate, will be obligated either
to cure the breach in all material respects or to purchase the contract or, if
stated in the related prospectus supplement, to substitute another contract as
described below. This repurchase or substitution obligation constitutes the sole
remedy available to the certificateholders or the trustee for a breach of
representation by the servicer, or seller.
Underwriting Standards for Contracts
Conventional contracts will comply with the underwriting policies of the
originator or seller as described in the related prospectus supplement.
With respect to a contract made in connection with the related obligor's
purchase of a manufactured home, the "appraised value" is the amount determined
by a professional appraiser. The appraiser must personally inspect the
manufactured home and prepare a report which includes market data based on
recent sales of comparable manufactured homes and, when deemed applicable, a
replacement cost analysis based on the current cost of a similar manufactured
home. The loan-to-value ratio of a contract will be equal to:
o the original principal amount of the contract divided by the lesser of the
"appraised value" or the sales price for the manufactured home; or
o such other ratio as described in the related prospectus supplement.
Pre-Funding
If stated in the related prospectus supplement, a portion of the issuance
proceeds of the certificates of a particular series will be deposited in a
pre-funding account to be established with the trustee, which will be used to
acquire additional mortgage loans or contracts from time to time during the time
period specified in the related prospectus supplement. Prior to the investment
of amounts on deposit in the related pre-funding account in additional mortgage
loans or contracts, those amounts may be invested in one or more Eligible
Investments, or other investments that may be specified in the related
prospectus supplement.
Additional mortgage loans or contracts that are purchased with amounts on
deposit in a pre-funding account will be required to satisfy certain eligibility
criteria more fully set forth in the related prospectus supplement. The
eligibility criteria for additional mortgage loans or contracts will be
consistent with the eligibility criteria of the mortgage loans or contracts
included in the related trust fund as of the related closing date subject to the
exceptions that are stated in the related prospectus supplement.
Although the specific parameters of a pre-funding account with respect to
any issuance of certificates will be specified in the related prospectus
supplement, it is anticipated that:
o the period during which additional mortgage loans or contracts may be
purchased from amounts on deposit in the related pre-funding account will
not exceed 90 days from the related closing date; and
o the additional mortgage loans or contracts to be acquired by the related
trust fund will be subject to the same representations and warranties as
the mortgage loans or contracts included in the related trust fund on the
related closing date, although additional criteria may also be required to
be satisfied, as described in the related prospectus supplement.
In no event will the period during which additional mortgage loans or contracts
may be purchased exceed one year. In no event will the amounts on deposit in any
pre-funding account exceed 25% of the initial principal amount of the
certificates of the related series.
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The Depositor
The depositor was incorporated in the State of Delaware on December 31,
1985, as a wholly-owned subsidiary of First Boston Securities Corporation, the
name of which was subsequently changed to Credit Suisse First Boston Securities
Corporation, or FBSC. FBSC is a wholly-owned subsidiary of Credit Suisse First
Boston, Inc. Credit Suisse First Boston Corporation, which may act as an
underwriter in offerings made by this prospectus and an accompanying prospectus
supplement, as described in "Plan of Distribution" in this prospectus, is also a
wholly-owned subsidiary of Credit Suisse First Boston, Inc. The principal
executive offices of the depositor are located at 11 Madison Avenue, New York,
N.Y. 10010. Its telephone number is (212) 325-2000.
The depositor was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests in those trusts and acquiring
and selling mortgage assets to those trusts. Neither the depositor, its parent
nor any of the depositor's affiliates will ensure or guarantee distributions on
the certificates of any series.
Trust Assets will be acquired by the depositor directly or through one or
more affiliates.
Use of Proceeds
The depositor will apply all or substantially all of the net proceeds from
the sale of each series offered by this prospectus and by the related prospectus
supplement to purchase the Trust Assets, to repay indebtedness which has been
incurred to obtain funds to acquire the Trust Assets, to establish the reserve
funds, if any, for the series and to pay costs of structuring and issuing the
certificates. If stated in the related prospectus supplement, certificates may
be exchanged by the depositor for Trust Assets. The Trust Assets for each series
of certificates will be acquired by the depositor either directly, or through
one or more affiliates which will have acquired the related Trust Assets from
time to time either in the open market or in privately negotiated transactions.
Yield Considerations
The yield to maturity of a security will depend on the price paid by the
holder of the security, the pass-through rate on any security entitled to
payments of interest, which pass-through rate may vary if stated in the
accompanying prospectus supplement, and the rate and timing of principal
payments on the loans, including prepayments, liquidations and repurchases, and
the allocation of principal payments to reduce the principal balance of the
security or notional amount thereof, if applicable.
In general, if a security is purchased at a premium over its face amount
and payments of principal on the related loan occur at a rate faster than
anticipated at the time of purchase, the purchaser's actual yield to maturity
will be lower than that assumed at the time of purchase. On the other hand, if a
class of securities is purchased at a discount from its face amount and payments
of principal on the related loan occur at a rate slower than anticipated at the
time of purchase, the purchaser's actual yield to maturity will be lower than
assumed. The effect of principal prepayments, liquidations and purchases on
yield will be particularly significant in the case of a class of securities
entitled to payments of interest only or disproportionate payments of interest.
In addition, the total return to investors of securities evidencing a right to
distributions of interest at a rate that is based on the weighted average net
loan rate of the loans from time to time will be adversely affected by principal
prepayments on loans with loan rates higher than the weighted average loan rate
on the loans. In general, loans with higher loan rates prepay at a faster rate
than loans with lower loan rates. In some circumstances rapid prepayments may
result in the failure of the holders to recoup their original investment. In
addition, the yield to maturity on other types of classes of securities,
including accrual securities, securities with a pass-through rate that
fluctuates inversely with or at a multiple of an index or other classes in a
series including more than one class of securities, may be relatively more
sensitive to the rate of prepayment on the related loans than other classes of
securities.
A class of securities may be entitled to payments of interest at a fixed,
variable or adjustable pass-through rate, or any combination of pass-through
rates, each as specified in the accompanying prospectus supplement. A variable
pass-through rate may be calculated based on the weighted average of the net
loan rates, net of servicing fees and any excess spread, of the related loans
for the month preceding the distribution date. An adjustable pass-through rate
may be calculated by reference to an index or otherwise.
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The aggregate payments of interest on a class of securities, and the yield
to maturity on that security, will be affected by the rate of payment of
principal on the securities, or the rate of reduction in the notional amount of
securities entitled to payments of interest only, and, in the case of securities
evidencing interests in adjustable rate mortgage loans, by changes in the net
loan rates on the adjustable rate mortgage loans. See "Maturity and Prepayment
Considerations" in this prospectus. The yield on the securities will also be
affected by liquidations of loans following borrower defaults and by purchases
of loans in the event of breaches of representations made for the loans by the
depositor, the servicer or the subservicer and others, or conversions of
adjustable rate mortgage loans to a fixed interest rate. See "The Trust Fund" in
this prospectus.
In general, defaults on mortgage loans and contracts are expected to occur
with greater frequency in their early years. The rate of default on cash out
refinance, limited documentation or no documentation mortgage loans, and on
loans with high loan-to-value ratios or combined loan-to-value ratios, as
applicable, may be higher than for other types of loans. Likewise, the rate of
default on loans that have been originated under lower than traditional
underwriting standards may be higher than those originated under traditional
standards. A trust fund may include mortgage loans or contracts that are one
month or more delinquent at the time of offering of the related series of
securities or which have recently been several months delinquent. The rate of
default on delinquent mortgage loans or mortgage loans or contracts with a
recent history of delinquency, including re-performing loans, is more likely to
be higher than the rate of default on loans that have a current payment status.
The rate of defaults and the severity of losses on mortgage loans or
contracts with document deficiencies may be higher than for mortgage loans or
contracts with no documentation deficiencies. To the extent that any document
relating to a loan is not in the possession of the trustee, the deficiency may
make it difficult or impossible to realize on the mortgaged property in the
event of foreclosure, which will affect the timing and the amount of liquidation
proceeds received by the trustee.
The risk of loss may also be greater on mortgage loans or contracts with
loan-to-value ratios or combined loan-to-value ratios greater than 80% and no
primary insurance policies. The yield on any class of securities and the timing
of principal payments on that class may also be affected by modifications or
actions that may be taken or approved by the servicer, the subservicer or any of
their affiliates as described in this prospectus under "Description of the
Certificates--Servicing of Mortgage Loans and Contracts," in connection with a
mortgage loan or contract that is in default, or if a default is reasonably
foreseeable.
In addition, the rate and timing of prepayments, defaults and liquidations
on the mortgage loans or contracts will be affected by the general economic
condition of the region of the country or the locality in which the related
mortgaged properties are located. The risk of delinquencies and loss is greater
and prepayments are less likely in regions where a weak or deteriorating economy
exists, as may be evidenced by, among other factors, increasing unemployment or
falling property values.
For some loans, including adjustable rate mortgage loans, the loan rate at
origination may be below the rate that would result if the index and margin
relating to those loans were applied at origination. Under the applicable
underwriting standards, the borrower under each of the loans usually will be
qualified on the basis of the loan rate in effect at origination which reflects
a rate significantly lower than the maximum rate. The repayment of any loan may
thus be dependent on the ability of the borrower to make larger monthly payments
following the adjustment of the loan rate. In addition, the periodic increase in
the amount paid by the borrower of a Buy-Down Loan during or at the end of the
applicable buy-down period may create a greater financial burden for the
borrower, who might not have otherwise qualified for a mortgage under the
applicable underwriting guidelines, and may accordingly increase the risk of
default for the related loan.
For any loans secured by junior liens on the related mortgaged property,
the inability of the borrower to pay off the balance thereof may be affected by
the ability of the borrower to obtain refinancing of any related senior loan,
thereby preventing a potential improvement in the borrower's circumstances.
The holder of a loan secured by a junior lien on the related mortgaged
property will be subject to a loss of its mortgage if the holder of a senior
mortgage is successful in foreclosure of its mortgage and its claim, including
any related foreclosure costs, is not paid in full, since no junior liens or
encumbrances survive such a foreclosure. Also, due to the priority of the senior
mortgage, the holder of a loan secured by a junior lien on the related
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mortgaged property may not be able to control the timing, method or procedure of
any foreclosure action relating to the mortgaged property. Investors should be
aware that any liquidation, insurance or condemnation proceeds receiving
relating to any loans secured by junior liens on the related mortgaged property
will be available to satisfy the outstanding balance of such loans only to the
extent that the claims of the holders of the senior mortgages have been
satisfied in full, including any related foreclosure costs. For loans secured by
junior liens that have low balances relative to the amount secured by more
senior mortgages, foreclosure costs may be substantial relative to the
outstanding balance of the loan, and the amount of any liquidation proceeds
available to certificateholders may be smaller as a percentage of the
outstanding balance of the loan than would be the case for a first lien
residential loan. In addition, the holder of a loan secured by a junior lien on
the related mortgaged property may only foreclose on the property securing the
related loan subject to any senior mortgages, in which case the holder must
either pay the entire amount due on the senior mortgages to the senior
mortgagees at or prior to the foreclosure sale or undertake the obligation to
make payments on the senior mortgages.
Similarly, a borrower of a Balloon Loan will be required to pay the Balloon
Amount at maturity. Those loans pose a greater risk of default than
fully-amortizing loans, because the borrower's ability to make such a
substantial payment at maturity will in most cases depend on the borrower's
ability to obtain refinancing or to sell the mortgaged property prior to the
maturity of the loan. The ability to obtain refinancing will depend on a number
of factors prevailing at the time refinancing or sale is required, including,
without limitation, the borrower's personal economic circumstances, the
borrower's equity in the related mortgaged property, real estate values,
prevailing market interest rates, tax laws and national and regional economic
conditions. None of the the depositor, any seller, or any of their affiliates
will be obligated to refinance or repurchase any loan or to sell any mortgaged
property, unless that obligation is specified in the accompanying prospectus
supplement.
The loans rates on adjustable rate mortgage loans that are subject to
negative amortization typically adjust monthly and their amortization schedules
adjust less frequently. Because initial loan rates are typically lower than the
sum of the indices applicable at origination and the related margins, during a
period of rising interest rates as well as immediately after origination, the
amount of interest accruing on the principal balance of those loans may exceed
the amount of the scheduled monthly payment. As a result, a portion of the
accrued interest on negatively amortizing loans may become deferred interest
which will be added to their principal balance and will bear interest at the
applicable loan rate.
If stated in the accompanying prospectus supplement, a trust may contain
GPM Loans or Buy-down Loans that have monthly payments that increase during the
first few years following origination. Borrowers in most cases will be qualified
for those loans on the basis of the initial monthly payment. To the extent that
the related borrower's income does not increase at the same rate as the monthly
payment, such a loan may be more likely to default than a mortgage loan with
level monthly payments.
Manufactured homes, unlike residential real estate properties, in most
cases depreciate in value. Consequently, at any time after origination it is
possible, especially in the case of contracts with high loan-to-value ratios at
origination, that the market value of a manufactured home may be lower than the
principal amount outstanding under the related contract.
If credit enhancement for a series of securities is provided by a letter of
credit, insurance policy or bond that is issued or guaranteed by an entity that
suffers financial difficulty, that credit enhancement may not provide the level
of support that was anticipated at the time an investor purchased its
certificate. In the event of a default under the terms of a letter of credit,
insurance policy or bond, any Realized Losses on the loans not covered by the
credit enhancement will be applied to a series of securities in the manner
described in the accompanying prospectus supplement and may reduce an investor's
anticipated yield to maturity.
The accompanying prospectus supplement may set forth other factors
concerning the loans securing a series of securities or the structure of that
series that will affect the yield on the securities.
No assurance can be given that the value of the mortgaged property securing
a loan has remained or will remain at the level existing on the date of
origination. If the residential real estate market should experience an overall
decline in property values such that the outstanding balances of the loans and
any secondary financing on the mortgaged properties in a particular pool become
equal to or greater than the value of the mortgaged properties, the
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actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the mortgage lending industry.
Generally, when a full prepayment is made on a mortgage loan or contract,
the mortgagor under the mortgage loan or the obligor under a contract, is
charged interest for the number of days actually elapsed from the due date of
the preceding monthly payment up to the date of such prepayment, at a daily
interest rate determined by dividing the mortgage rate or contract rate by 365.
Full prepayments will reduce the amount of interest paid by the related
mortgagor or obligor because interest on the principal amount of any mortgage
loan or contract so prepaid will be paid only to the date of prepayment instead
of for a full month; however, unless otherwise provided in the applicable
prospectus supplement, the servicer with respect to a series will be required to
pay from its own funds the portion of any interest at the related mortgage rate
or contract rate, in each case less the servicing fee rate, that is not so
received. Partial prepayments generally are applied on the first day of the
month following receipt, with no resulting reduction in interest payable for the
period in which the partial prepayment is made. Accordingly, to the extent not
covered by the servicer, prepayments will reduce the yield to maturity of the
certificates. See "Maturity and Prepayment Considerations" in this prospectus.
Maturity and Prepayment Considerations
As indicated in this prospectus under "The Trust Fund," the original terms
to maturity of the loans in a given trust will vary depending on the type of
loans included in that trust. The prospectus supplement for a series of
securities will contain information regarding the types and maturities of the
loans in the related trust. The prepayment experience, the timing and rate of
repurchases and the timing and amount of liquidations for the related loans will
affect the weighted average life of and yield on the related series of
securities.
Prepayments on loans are commonly measured relative to a prepayment
standard or model. The prospectus supplement for each series of securities may
describe one or more prepayment standards or models and may contain tables
setting forth the projected yields to maturity on each class of securities or
the weighted average life of each class of securities and the percentage of the
original principal amount of each class of securities of that series that would
be outstanding on the specified distribution dates for the series based on the
assumptions stated in the accompanying prospectus supplement, including
assumptions that prepayments on the loans are made at rates corresponding to
various percentages of the prepayment standard or model. There is no assurance
that prepayment of the loans underlying a series of securities will conform to
any level of the prepayment standard or model specified in the accompanying
prospectus supplement.
The following is a list of factors that may affect prepayment experience:
o homeowner mobility;
o economic conditions;
o changes in borrowers' housing needs;
o job transfers;
o unemployment;
o borrowers' equity in the properties securing the mortgages;
o servicing decisions;
o enforceability of due-on-sale clauses;
o mortgage market interest rates;
o mortgage recording taxes;
o solicitations and the availability of mortgage funds; and
o the obtaining of secondary financing by the borrower.
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All statistics known to the depositor that have been compiled for
prepayment experience on loans indicate that while some loans may remain
outstanding until their stated maturities, a substantial number will be paid
significantly earlier than their respective stated maturities. The rate of
prepayment for conventional fixed-rate loans has fluctuated significantly in
recent years. In general, however, if prevailing interest rates fall
significantly below the loan rates on the loans underlying a series of
securities, the prepayment rate of those loans is likely to be significantly
higher than if prevailing rates remain at or above the rates borne by those
loans. Conversely, when prevailing interest rates increase, borrowers are less
likely to prepay their loans.
Some mortgage loans may only be prepaid by the borrowers during specified
periods upon the payment of a prepayment fee or penalty. The requirement to pay
a prepayment fee or penalty may discourage some borrowers from prepaying their
mortgage loans or contracts. The servicer or subservicer will be entitled to all
prepayment charges and late payment charges received on the loans and those
amounts will not be available for payment on the securities, except to the
extent specified in the related prospectus supplement. However, some states'
laws restrict the imposition of prepayment charges even when the mortgage loans
or contracts expressly provide for the collection of those charges. As a result,
it is possible that prepayment charges may not be collected even on mortgage
loans or contracts that provide for the payment of these charges.
The addition of any deferred interest to the principal balance of any
related class of securities will lengthen the weighted average life of that
class of securities and may adversely affect yield to holders of those
securities.
Mortgage loans and contracts with fixed interest rates, except in the case
of FHA and VA Loans, generally contain due-on-sale clauses permitting the
mortgagee or obligee to accelerate the maturity thereof upon conveyance of the
mortgaged property. In most cases, the servicer may permit proposed assumptions
of mortgage loans and contracts where the proposed buyer meets the underwriting
standards applicable to that mortgage loan or contract. This assumption would
have the effect of extending the average life of the mortgage loan or contract.
FHA Loans and VA Loans are not permitted to contain "due on sale" clauses, and
are freely assumable.
An adjustable rate mortgage loan is assumable, in some circumstances, if
the proposed transferee of the related mortgaged property establishes its
ability to repay the loan and, in the reasonable judgment of the servicer, the
security for the adjustable rate mortgage loan would not be impaired by the
assumption. The extent to which adjustable rate mortgage loans are assumed by
purchasers of the mortgaged properties rather than prepaid by the related
borrowers in connection with the sales of the mortgaged properties will affect
the weighted average life of the related series of securities. See "Description
of the Certificates--Servicing of Mortgage Loans and Contracts," "--Enforcement
of "Due-on-Sale" Clauses; Realization Upon Defaulted Mortgage Loans," and
"Certain Legal Aspects of the Mortgage Loans and Contracts--Enforceability of
Certain Provisions" for a description of provisions of each agreement and legal
developments that may affect the prepayment rate of loans.
The terms of the pooling and servicing agreement related to a specific
series generally will require the related subservicer, special servicer, if
applicable, or servicer to enforce any due-on-sale clause to the extent it has
knowledge of the conveyance or the proposed conveyance of the underlying
mortgaged property or Cooperative Dwelling; provided, however, that any
enforcement action that would impair or threaten to impair any recovery under
any related insurance policy will not be required or permitted. See "Description
of the Certificates--Enforcement of "Due-On-Sale" Clauses; Realization Upon
Defaulted Mortgage Loans" and "Certain Legal Aspects of the Mortgage Loans and
Contracts--The Mortgage Loans" for a description of certain provisions of each
pooling and servicing agreement and certain legal developments that may affect
the prepayment experience on the related mortgage loans.
At the request of the related mortgagors, the related servicer or
subservicer, as applicable, may refinance the mortgage loans in any mortgage
pool by accepting prepayments on those mortgage loans and making new loans
secured by a mortgage on the same property. Upon any refinancing, the new loans
will not be included in the related mortgage pool and the related servicer or
subservicer, as applicable, will be required to repurchase the affected mortgage
loan. A mortgagor may be legally entitled to require the related servicer or
subservicer, as applicable, to allow a refinancing. Any repurchase of a
refinanced mortgage loan will have the same effect as a prepayment in full of
the related mortgage loan.
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For any index used in determining the rate of interest applicable to any
series of securities or loan rates of the underlying mortgage loans or
contracts, there are a number of factors that affect the performance of that
index and may cause that index to move in a manner different from other indices.
If an index applicable to a series responds to changes in the general level of
interest rates less quickly than other indices, in a period of rising interest
rates, increases in the yield to certificateholders due to those rising interest
rates may occur later than that which would be produced by other indices, and in
a period of declining rates, that index may remain higher than other market
interest rates which may result in a higher level of prepayments of the loans,
which adjust in accordance with that index, than of mortgage loans or contracts
which adjust in accordance with other indices.
Mortgage loans made with respect to commercial properties, multifamily
properties and Mixed-Use Properties may have provisions that prohibit prepayment
entirely or for certain periods and/or require payment of premium or yield
maintenance penalties, and may provide for payments of interest only during a
certain period followed by amortization of principal on the basis of a schedule
extending beyond the maturity of the related mortgage loan. Prepayments of such
mortgage loans may be affected by these and other factors, including changes in
interest rates and the relative tax benefits associated with ownership of
commercial property, multifamily property and Mixed-Use Property.
If stated in the prospectus supplement relating to a specific series, the
depositor or other specified entity will have the option to repurchase the
assets included in the related trust fund under the conditions stated in the
related prospectus supplement. For any series of securities for which the
depositor has elected to treat the trust fund as a REMIC, any optional
repurchase of assets will be effected in compliance with the requirements of
Section 860F(a)(4) of the Code so as to constitute a "qualifying liquidation"
thereunder. In addition, the depositor will be obligated, under certain
circumstances, to repurchase certain assets of the related trust fund. The
sellers will also have certain repurchase obligations, as more fully described
in this prospectus. In addition, the mortgage loans underlying Mortgage
Certificates may be subject to repurchase under circumstances similar to those
described above. Repurchases of the mortgage loans underlying Mortgage
Certificates will have the same effect as prepayments in full. See "The Trust
Fund--Mortgage Loan Program--Representations by Unaffiliated Sellers;
Repurchases," "Description of the Certificates--Assignment of Mortgage Loans,"
"--Assignment of Mortgage Certificates," "--Assignment of Contracts" and
"--Termination."
Description of the Certificates
Each series of securities will be issued pursuant to an agreement
consisting of either:
o a pooling and servicing agreement; or
o a trust agreement.
A pooling and servicing agreement will be an agreement among the depositor, the
servicer, if any, and the trustee named in the applicable prospectus supplement.
A trust agreement will be an agreement between the depositor and the trustee.
Forms of the pooling and servicing agreement and the trust agreement have been
filed as exhibits to the Registration Statement of which this prospectus is a
part. The following summaries describe all material terms of the securities and
the pooling and servicing agreements or trust agreement that are not described
in the related prospectus supplement. The summaries do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the pooling and servicing agreement or trust
agreement for the applicable series and the related prospectus supplement.
General
The trust fund with respect to a series will consist of:
o the mortgage loans, contracts, and Mortgage Certificates and distributions
thereon as from time to time are subject to the applicable related pooling
and servicing agreement;
o the assets as from time to time identified as deposited in the related
Certificate Account;
o the related property acquired by foreclosure of mortgage loans or deed in
lieu of foreclosure, or manufactured homes acquired by repossession;
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o the surety bond or financial guaranty insurance policy, if any, with
respect to that series;
o the letter of credit, if any, with respect to that series;
o the pool insurance policy, if any, with respect to that series, described
below under "Description of Insurance",
o the special hazard insurance policy, if any, with respect to that series,
described below under "Description of Insurance";
o the mortgagor bankruptcy bond and proceeds thereof, if any, with respect to
that series, as described below under "Description of Insurance";
o the performance bond and proceeds thereof, if any, with respect to that
series;
o the primary mortgage insurance policies, if any, with respect to that
series, as described below under "Description of Insurance"; and
o the GPM Funds and Buy-Down Funds, if any, with respect to that series; or,
in lieu of some or all of the foregoing, the Alternative Credit Support as
shall be described in the applicable prospectus supplement.
Upon the original issuance of a series of securities, certificates
representing the minimum undivided interest or beneficial ownership interest in
the related trust fund or the minimum notional amount allocable to each class
will evidence the undivided interest, beneficial ownership interest or
percentage ownership interest specified in the related prospectus supplement.
If stated in the related prospectus supplement, one or more subservicers or
the depositor may directly perform some or all of the duties of a servicer with
respect to a series.
If stated in the prospectus supplement for a series, ownership of the trust
fund for that series may be evidenced by one or more classes of certificates.
Distributions of principal and interest with respect to those classes may be
made on a sequential or concurrent basis, as specified in the related prospectus
supplement.
The Residual Certificates, if any, included in a series will be designated
by the depositor as the "residual interest" in the related REMIC for purposes of
Section 860G(a)(2) of the Code, and will represent the right to receive
distributions as specified in the prospectus supplement for the related series.
All other classes of securities of the related series will constitute "regular
interests" in the related REMIC, as defined in the Code. If stated in the
related prospectus supplement, the Residual Certificates may be offered hereby
and by means of the related prospectus supplement. See "Federal Income Tax
Consequences" in this prospectus.
If stated in the prospectus supplement for a series, each asset in the
related trust fund will be assigned an initial asset value. If stated in the
related prospectus supplement, the asset value of each asset in the related
trust fund will be the Certificate Principal Balance of each class or classes of
certificates of that series that, based upon certain assumptions, can be
supported by distributions on the Trust Assets allocable to that class or
subclass, together with reinvestment income thereon, to the extent specified in
the related prospectus supplement. The method of determining the asset value of
the assets in the trust fund for a series will be specified in the related
prospectus supplement.
If stated in the prospectus supplement with respect to a series, ownership
of the trust fund for that series may be evidenced by one or more classes or
subclasses of securities that are senior securities and one or more classes or
subclasses of securities that are subordinated securities, each representing the
undivided interests in the trust fund specified in the related prospectus
supplement. If stated in the related prospectus supplement, one or more classes
or subclasses of subordinated securities of a series may be subordinated to the
right of the holders of securities of one or more other classes or subclasses of
subordinated securities within that series to receive distributions with respect
to the mortgage loans or contracts in the related trust fund, in the manner and
to the extent specified in the related prospectus supplement. If stated in the
related prospectus supplement, the holders of the senior certificates of that
series may have the right to receive a greater than pro rata percentage of
prepayments of
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principal on the related mortgage loans, contracts or mortgage loans underlying
the related Mortgage Certificates in the manner and under the circumstances
described in the related prospectus supplement.
If stated in the related prospectus supplement, the depositor may sell
certain classes or subclasses of the certificates of a series, including one or
more classes or subclasses of subordinated certificates or Residual
Certificates, in privately negotiated transactions exempt from registration
under the Securities Act of 1933, as amended. Certificates sold in one of these
privately negotiated exempt transactions will be transferable only pursuant to
an effective registration statement or an applicable exemption under the
Securities Act of 1933, as amended, and pursuant to any applicable state law.
Alternatively, if stated in the related prospectus supplement, the depositor may
offer one or more classes or subclasses of the subordinated certificates or
Residual Certificates of a series by means of this prospectus and the related
prospectus supplement. The certificates of a series offered hereby and by means
of the related prospectus supplements will be transferable and exchangeable at
the office or agency maintained by the trustee for the purposes set forth in the
related prospectus supplement. No service charge will be made for any transfer
or exchange of certificates, but the trustee may require payment of a sum
sufficient to cover any tax or other governmental charge in connection with any
transfer or exchange.
Form of Certificates
As specified in the applicable prospectus supplement, the securities of
each series will be issued either as physical securities or in book-entry form.
If issued as physical securities, the securities will be in fully registered
form only in the denominations specified in the accompanying prospectus
supplement, and will be transferable and exchangeable at the corporate trust
office of the certificate registrar appointed under the related pooling and
servicing agreement or trust agreement to register the certificates. No service
charge will be made for any registration of exchange or transfer of securities,
but the trustee may require payment of a sum sufficient to cover any tax or
other governmental charge. The term certificateholder or holder refers to the
entity whose name appears on the records of the certificate registrar or, if
applicable, a transfer agent, as the registered holder of the certificate,
except as otherwise indicated in the accompanying prospectus supplement.
If issued in book-entry form, the classes of a series of securities will be
initially issued through the book-entry facilities of The Depository Trust
Company, or DTC, or Clearstream Banking, societe anonyme, formerly known as
Cedelbank, SA, or Clearstream, or the Euroclear System in Europe, if they are
participants of those systems, or indirectly through organizations which are
participants in those systems, or through any other depository or facility as
may be specified in the accompanying prospectus supplement. As to any class of
book-entry securities so issued, the record holder of those securities will be
DTC's nominee. Clearstream and Euroclear System will hold omnibus positions on
behalf of their participants through customers' securities accounts in
Clearstream's and Euroclear System's names on the books of their respective
depositaries, which in turn will hold those positions in customers' securities
accounts in the depositaries' names on the books of DTC. DTC is a
limited-purpose trust company organized under the laws of the State of New York,
which holds securities for its DTC participants, which include securities
brokers and dealers, banks, trust companies and clearing corporations. DTC
together with the Clearstream and Euroclear System participating organizations
facilitates the clearance and settlement of securities transactions between
participants through electronic book-entry changes in the accounts of
participants. Other institutions that are not participants but indirect
participants which clear through or maintain a custodial relationship with
participants have indirect access to DTC's clearance system.
Unless otherwise specified in the accompanying prospectus supplement, no
beneficial owner in an interest in any book-entry certificate will be entitled
to receive a certificate representing that interest in registered, certificated
form, unless either (i) DTC ceases to act as depository for that certificate and
a successor depository is not obtained, or (ii) the depositor elects in its sole
discretion to discontinue the registration of the securities through DTC. Prior
to any such event, beneficial owners will not be recognized by the trustee, the
servicer or the subservicer as holders of the related securities for purposes of
the related agreement, and beneficial owners will be able to exercise their
rights as owners of their securities only indirectly through DTC, participants
and indirect participants. Any beneficial owner that desires to purchase, sell
or otherwise transfer any interest in book-entry securities may do so only
through DTC, either directly if the beneficial owner is a participant or
indirectly through participants and, if applicable, indirect participants. Under
the procedures of DTC, transfers of the beneficial ownership of any book-entry
securities will be required to be made in minimum denominations specified in the
accompanying prospectus supplement. The ability of a beneficial owner to pledge
book-entry securities to persons or entities that are not
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participants in the DTC system, or to otherwise act with respect to the
securities, may be limited because of the lack of physical certificates
evidencing the securities and because DTC may act only on behalf of
participants.
Because of time zone differences, the securities account of a Clearstream
or Euroclear System participant as a result of a transaction with a DTC
participant, other than a depositary holding on behalf of Clearstream or
Euroclear System, will be credited during a subsequent securities settlement
processing day, which must be a business day for Clearstream or Euroclear
System, as the case may be, immediately following the DTC settlement date.
Credits or any transactions in those securities settled during this processing
will be reported to the relevant Euroclear System participant or Clearstream
participants on that business day. Cash received in Clearstream or Euroclear
System as a result of sales of securities by or through a Clearstream
participant or Euroclear System participant to a DTC participant, other than the
depositary for Clearstream or Euroclear System, will be received with value on
the DTC settlement date, but will be available in the relevant Clearstream or
Euroclear System cash account only as of the business day following settlement
in DTC.
Transfers between participants will occur in accordance with DTC rules.
Transfers between Clearstream participants and Euroclear System participants
will occur in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
participants or Euroclear System participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by the relevant depositaries; however, the cross
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in that system in
accordance with its rules and procedures and within its established deadlines
defined with respect to European time. The relevant European international
clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its depositary to take action to effect final settlement
on its behalf by delivering or receiving securities in DTC, and making or
receiving payment in accordance with normal procedures for same day funds
settlement applicable to DTC. Clearstream participants and Euroclear System
participants may not deliver instructions directly to the depositaries.
Clearstream, as a professional depository, holds securities for its
participating organizations and facilitates the clearance and settlement of
securities transactions between Clearstream participants through electronic
book-entry changes in accounts of Clearstream participants, thereby eliminating
the need for physical movement of securities. As a professional depository,
Clearstream is subject to regulation by the Luxembourg Monetary Institute.
Euroclear System was created to hold securities for participants of
Euroclear System and to clear and settle transactions between Euroclear System
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of securities and
any risk from lack of simultaneous transfers of securities and cash. Euroclear
System operator is the Brussels, Belgium office of Morgan Guaranty Trust Company
of New York, under contract with the clearance cooperative, Euroclear System
Clearance Systems S.C., a Belgian co-operative corporation. All operations are
conducted by the Euroclear System operator, and all Euroclear System securities
clearance accounts and Euroclear System cash accounts are accounts with the
Euroclear System operator, not the clearance cooperative.
The clearance cooperative establishes policy for Euroclear System on behalf
of Euroclear System participants. The Euroclear System operator is the Belgian
branch of a New York banking corporation which is a member bank of the Federal
Reserve System. As a result, it is regulated and examined by the Board of
Governors of the Federal Reserve System and the New York State Banking
Department, as well as the Belgian Banking Commission. Securities clearance
accounts and cash accounts with the Euroclear System operator are governed by
the terms and conditions Governing Use of Euroclear System and the related
operating procedures of the Euroclear System and applicable Belgian law. The
terms and conditions govern transfers of securities and cash within Euroclear
System, withdrawals of securities and cash from Euroclear System, and receipts
of payments for securities in Euroclear System. All securities in Euroclear
System are held on a fungible basis without attribution of specific securities
to specific securities clearance accounts.
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Distributions on the book-entry securities will be forwarded by the trustee
to DTC, and DTC will be responsible for forwarding those payments to
participants, each of which will be responsible for disbursing the payments to
the beneficial owners it represents or, if applicable, to indirect participants.
Accordingly, beneficial owners may experience delays in the receipt of payments
relating to their securities. Under DTC's procedures, DTC will take actions
permitted to be taken by holders of any class of book-entry securities under the
related agreement only at the direction of one or more participants to whose
account the book-entry securities are credited and whose aggregate holdings
represent no less than any minimum amount of percentage interests or voting
rights required therefor. DTC may take conflicting actions for any action of
certificateholders of any class to the extent that participants authorize those
actions. None of the servicer, the subservicer, the depositor, the trustee or
any of their respective affiliates will have any liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the book-entry securities, or for maintaining, supervising or
reviewing any records relating to those beneficial ownership interests.
Distributions of Principal and Interest
Beginning on the date specified in the related prospectus supplement,
distributions of principal and interest on the certificates of a series will be
made by the servicer or trustee, if stated in the related prospectus supplement,
on each distribution date to persons in whose name the certificates are
registered at the close of business on the day specified in the related
prospectus supplement. Distributions of interest will be calculated in the
manner and at the per annum rate specified in the related prospectus supplement,
which rate may be fixed or variable. Interest on the certificates will be
calculated on the basis of a 360-day year consisting of twelve 30-day months, or
such other method as specified in the related prospectus supplement.
Distributions of principal on the certificates will be made in the priority and
manner and in the amounts specified in the related prospectus supplement.
On each distribution date, the trustee will distribute to each holder of a
certificate for each class or subclass an amount equal to:
o the product of the Percentage Interest evidenced by that certificate and
the interest of the related class or subclass in the distribution of
principal and the distribution of interest; or
o some other amount as described in the related prospectus supplement.
A certificate of a class or subclass may represent a right to receive a
percentage of both the distribution of principal and the distribution of
interest or a percentage of either the distribution of principal or the
distribution of interest, as specified in the related prospectus supplement. If
stated in the related prospectus supplement, a class or subclass of certificates
may be entitled to interest only or principal only.
If stated in the related prospectus supplement, the holders of the senior
certificates may have the right to receive a percentage of prepayments of
principal on the related mortgage loans or contracts that is greater than the
percentage of regularly scheduled payment of principal that holder is entitled
to receive. These percentages may vary from time to time, subject to the terms
and conditions specified in the prospectus supplement.
Distributions of interest on certain classes or subclasses of certificates,
known as Compound Interest Certificates, will be made only after the occurrence
of certain events specified in the related prospectus supplement. Prior to the
time distributions of interest are made on those certificates, accrued and
unpaid interest, or Accrual Distribution Amount, will be added to the
Certificate Principal Balance of those certificates on each distribution date
and will accrue interest until paid as described in the related prospectus
supplement. If stated in the related prospectus supplement, the Accrual
Distribution Amount will be payable as principal to one or more classes or
subclasses of certificates.
Distributions in reduction of the Certificate Principal Balance of
certificates of a series will be made on each distribution date for the related
series to the holders of the certificates of the class or subclass then entitled
to receive distributions until the aggregate amount of distributions have
reduced the Certificate Principal Balance of the certificates to zero.
Allocation of distributions in reduction of Certificate Principal Balance will
be made to each class or subclass of certificates in the order and amounts
specified in the related prospectus supplement, which, if stated in the related
prospectus supplement, may be concurrently.
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The Certificate Principal Balance of a certificate of a series at any time
represents the maximum specified dollar amount, exclusive of interest at the
related Pass-Through Rate, to which the holder thereof is entitled from the
assets in the trust fund for the related series, and will decline to the extent
distributions in reduction of Certificate Principal Balance are received by, and
losses on the mortgage loans or contracts are allocated to, the
certificateholder. The initial Certificate Principal Balance of each class or
subclass within a series that has been assigned a Certificate Principal Balance
will be specified in the related prospectus supplement.
Distributions, other than the final distribution in retirement of the
certificates, will be made by check mailed to the address of the person entitled
thereto as it appears on the certificate register for the related series, except
that, with respect to any holder of a certificate meeting the requirements
specified in the applicable prospectus supplement, distributions shall be made
by wire transfer in immediately available funds, provided that the trustee shall
have been furnished with appropriate wiring instructions not less than two
business days prior to the related distribution date. The final distribution in
retirement of certificates will be made only upon presentation and surrender of
the certificates at the office or agency designated by the trustee or the
servicer for that purpose, as specified in the final distribution notice to
certificateholders.
Assignment of Mortgage Loans
The depositor will cause the mortgage loans constituting a mortgage pool to
be assigned to the trustee, together with all principal and interest received on
or with respect to those mortgage loans after the Cut-off Date, but not
including principal and interest due on or before the Cut-off Date. The trustee
will, concurrently with the assignment of mortgage loans, deliver the
certificates to the depositor in exchange for the mortgage loans. Each mortgage
loan will be identified in a schedule appearing as an exhibit to the related
pooling and servicing agreement. The schedule will include information as to the
adjusted principal balance of each mortgage loan as of the Cut-off Date, as well
as information respecting the mortgage rate, the currently scheduled monthly, or
other periodic, payment of principal and interest, the maturity date of the
Mortgage Note and the loan-to-value ratio of the mortgage loan at origination.
If stated in the accompanying prospectus supplement, and in accordance with
the rules of membership of MERSCORP, Inc. and/or Mortgage Electronic
Registration Systems, Inc. or, MERS(R), assignments of mortgages for any trust
asset in the related trust will be registered electronically through Mortgage
Electronic Registration Systems, Inc., or MERS(R) System. For trust assets
registered through the MERS(R) System, MERS(R) shall serve as mortgagee of
record solely as a nominee in an administrative capacity on behalf of the
trustee and shall not have any interest in any of those trust assets.
In addition, in most cases the depositor will, as to each mortgage loan
that is not a Cooperative Loan, deliver or cause to be delivered to the trustee,
or to the custodian hereinafter referred to, the Mortgage Note endorsed to the
order of the trustee or in blank, the mortgage with evidence of recording
indicated thereon and, except in the case of a mortgage registered with MERS(R),
an assignment of the mortgage in recordable form. With respect to any mortgage
not returned from the public recording office, the depositor will deliver a copy
of the mortgage together with its certificate stating that the original of the
mortgage was delivered to the recording office. In most cases, assignments of
the mortgage loans to the trustee will be recorded in the appropriate public
office for real property records, except in states where, in the opinion of
counsel acceptable to the trustee, a recording is not required to protect the
trustee's interest in the mortgage loan against the claim of any subsequent
transferee or any successor to or creditor of the depositor or the originator of
the mortgage loan. In other cases, the Mortgage Notes and mortgages may be
retained by sellers unaffiliated with the depositor or the servicer under the
circumstances described in the related prospectus supplement, and the
assignments of mortgage into the name of the trustee will only be recorded under
the circumstances described in the related prospectus supplement. In addition,
with respect to any commercial mortgage loans, multifamily mortgage loans and
Mixed-Use Mortgage Loans, the depositor will deliver or cause to be delivered to
the trustee, or the custodian hereinafter referred to, the assignment of leases,
rents and profits, if separate from the mortgage, and an executed re-assignment
of assignment of leases, rents and profits.
The depositor will cause to be delivered to the trustee, its agent, or a
custodian, with respect to any Cooperative Loan, the related original security
agreement, the proprietary lease or occupancy agreement, the recognition
agreement, an executed financing statement and the relevant stock certificate
and related blank stock
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powers. The servicer will file in the appropriate office a financing statement
evidencing the trustee's security interest in each Cooperative Loan.
The trustee or a custodian on behalf of the trustee will, within a
specified number of days after receipt thereof, review the mortgage loan
documents. If the seller or another entity specified in the related prospectus
supplement cannot cure any material omission or defect in the mortgage loan
documents within the time period specified in the related prospectus supplement,
the seller or other entity will be obligated to either substitute the affected
mortgage loan for a substitute mortgage loan or loans, or to repurchase the
related mortgage loan from the trustee within the time period specified in the
related prospectus supplement at a price equal to the principal balance thereof
as of the date of purchase or, in the case of a series as to which an election
has been made to treat the related trust fund as a REMIC, at some other price as
may be necessary to avoid a tax on a prohibited transaction, as described in
Section 860F(a) of the Code, in each case together with accrued interest at the
applicable mortgage rate to the first day of the month following the repurchase,
plus the amount of any unreimbursed Advances made by the servicer in respect of
the related mortgage loan. The servicer is obligated to enforce the repurchase
obligation of the seller, to the extent described above under "The Trust
Fund--Representations by Unaffiliated Sellers; Repurchases." This purchase
obligation constitutes the sole remedy available to the certificateholders or
the trustee for a material omission or defect in a constituent document. If
stated in the related prospectus supplement, mortgage loans or contracts will
not be required to be repurchased or substituted for upon the discovery of
certain omissions or defects in a constituent document.
If stated in the applicable prospectus supplement, with respect to the
mortgage loans in a mortgage pool, the depositor or the seller will make
representations and warranties as to the types and geographical distribution of
the related mortgage loans and as to the accuracy in all material respects of
certain information furnished to the trustee in respect of each mortgage loan.
In addition, if stated in the related prospectus supplement, the depositor will
represent and warrant that, as of the Cut-off Date for the related series of
certificates, no mortgage loan is more than 30 days delinquent as to payment of
principal and interest. Upon a breach of any representation or warranty by the
depositor or the seller that materially and adversely affects the interest of
the certificateholders, the depositor or the seller, as applicable, will be
obligated either to cure the breach in all material respects or to purchase the
mortgage loan at the purchase price set forth in the previous paragraph. In some
cases, the depositor or the seller may substitute for mortgage loans as
described in the succeeding paragraph. This repurchase or substitution
obligation constitutes the sole remedy available to the certificateholders or
the trustee for a breach of representation or warranty by the depositor or the
seller.
Within the period specified in the related prospectus supplement, following
the date of issuance of a series of certificates, the depositor, the servicer,
sellers unaffiliated with the depositor or the related subservicer, as the case
may be, may deliver to the trustee substitute mortgage loans in substitution for
any one or more of the mortgage loans initially included in the trust fund but
which do not conform in one or more respects to the description thereof
contained in the related prospectus supplement, or as to which a breach of a
representation or warranty is discovered, which breach materially and adversely
affects the interests of the certificateholders. The required characteristics of
any substitute mortgage loan and any additional restrictions relating to the
substitution of mortgage loans will generally be as described in this prospectus
under "The Trust Fund-- Representations by Unaffiliated Sellers; Repurchases."
If stated in related prospectus supplement, mortgage loans may be
transferred to the trust fund with documentation of defects or omissions, such
as missing notes or mortgages or missing title insurance policies. If stated in
the related prospectus supplement, none of the seller, the depositor or any
other person will be required to cure those defects or repurchase those mortgage
loans if the defect or omission is not cured.
The trustee will be authorized, with the consent of the depositor and the
servicer, to appoint a custodian pursuant to a custodial agreement to maintain
possession of documents relating to the mortgage loans as the agent of the
trustee.
Pursuant to each pooling and servicing agreement, the servicer, either
directly or through subservicers, or a special servicer, if applicable, will
service and administer the mortgage loans assigned to the trustee as more fully
set forth below. The special servicer may also be a party to the pooling and
servicing agreement with respect to a
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series of certificates, in which case the related prospectus supplement shall
set forth the duties and responsibilities of the special servicer thereunder.
Assignment of Contracts
The depositor will cause the contracts constituting the contract pool to be
assigned to the trustee, together with principal and interest due on or with
respect to the contracts after the Cut-off Date, but not including principal and
interest due on or before the Cut-off Date. If the depositor is unable to obtain
a perfected security interest in a contract prior to transfer and assignment to
the trustee, the related unaffiliated seller will be obligated to repurchase
that contract. The trustee, concurrently with an assignment of contracts, will
authenticate and deliver the certificates for that series. Each contract will be
identified in a schedule appearing as an exhibit to the related pooling and
servicing agreement. That contract schedule will specify, with respect to each
contract, among other things:
o the original principal amount and the adjusted principal balance as of the
close of business on the Cut-off Date;
o the annual percentage rate;
o the current scheduled monthly level payment of principal and interest; and
o the maturity of the contract.
In addition, in most cases the depositor, as to each contract, will deliver
or cause to be delivered to the trustee, or, as specified in the related
prospectus supplement, the custodian, the original contract and copies of
documents and instruments related to each contract and the security interest in
the manufactured home securing each contract. In other cases, the contract and
other documents and instruments may be retained by sellers unaffiliated with the
depositor or the servicer under the circumstances described in the related
prospectus supplement. In order to give notice of the right, title and interest
of the certificateholders to the contracts, the depositor will cause a UCC-1
financing statement to be executed by the depositor identifying the trustee as
the secured party and identifying all contracts as collateral. If stated in the
related prospectus supplement, the contracts will be stamped or otherwise marked
to reflect their assignment from the depositor to the trust fund. However, in
most cases the contracts will not be stamped or otherwise marked to reflect
their assignment from the depositor to the trust fund. Therefore, if a
subsequent purchaser were able to take physical possession of the contracts
without notice of the assignment to the trustee, the interest of the
certificateholders in the contracts could be defeated. See "Certain Legal
Aspects of Mortgage Loans and Contracts--The Contracts" in this prospectus.
The trustee, or a custodian on behalf of the trustee, will review the
contract documents within the number of days specified in the related prospectus
supplement after receipt thereof. If any contract document is found to be
defective in any material respect, the related seller unaffiliated with the
depositor must cure that defect within 90 days, or within some other period that
is specified in the related prospectus supplement. If the defect is not cured,
the related seller will repurchase the related contract or any property acquired
in respect thereof from the trustee at a price equal to:
o the remaining unpaid principal balance of the defective contract; or
o in the case of a repossessed manufactured home, the unpaid principal
balance of the defective contract immediately prior to the repossession; or
o in the case of a series as to which an election has been made to treat the
related trust fund as a REMIC, at some other price as may be necessary to
avoid a tax on a prohibited transaction, as described in Section 860F(a) of
the Code;
in each case together with accrued but unpaid interest to the first day of the
month following repurchase, plus any unreimbursed Advances respecting the
defective contract. The repurchase obligation constitutes the sole remedy
available to the certificateholders or the trustee for a material defect in a
contract document.
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If stated in the related prospectus supplement, each seller of contracts
will have represented, among other things, that:
o immediately prior to the transfer and assignment of the contracts, the
seller unaffiliated with the depositor had good title to, and was the sole
owner of each contract and there had been no other sale or assignment
thereof;
o as of the date of the transfer to the depositor, the contracts are subject
to no offsets, defenses or counterclaims;
o each contract at the time it was made complied in all material respects
with applicable state and federal laws, including usury, equal credit
opportunity and disclosure laws;
o as of the date of the transfer to the depositor, each contract is a valid
first lien on the related manufactured home and the related manufactured
home is free of material damage and is in good repair;
o as of the date of the transfer to the depositor, no contract is more than
30 days delinquent in payment and there are no delinquent tax or assessment
liens against the related manufactured home; and
o with respect to each contract, the manufactured home securing the contract
is covered by a standard hazard insurance policy in the amount required in
the related pooling and servicing agreement and that all premiums now due
on the insurance have been paid in full.
All of the representations and warranties of a seller in respect of a
contract will have been made as of the date on which that seller sold the
contract to the depositor or its affiliate, which may be a date prior to the
date of initial issuance of the related series of certificates. A substantial
period of time may have elapsed between the date as of which the representations
and warranties were made and the later date of initial issuance of the related
series of certificates. Since the representations and warranties referred to in
the preceding paragraph are the only representations and warranties that will be
made by a seller, the seller's repurchase obligation described below will not
arise if, during the period commencing on the date of sale of a contract by the
seller to the depositor or its affiliate, the relevant event occurs that would
have given rise to the repurchase obligation had the event occurred prior to
sale of the affected contract.
If a seller cannot cure a breach of any representation or warranty made by
it in respect of a contract that materially and adversely affects the interest
of the certificateholders in that contract within 90 days, or other period
specified in the related prospectus supplement, after notice from the servicer,
the related seller will be obligated to repurchase the defective contract at a
price equal to:
o the principal balance thereof as of the date of the repurchase; or
o in the case of a series as to which an election has been made to treat the
related trust fund as a REMIC, at some other price as may be necessary to
avoid a tax on a prohibited transaction, as described in Section 860F(a) of
the Code;
in each case together with accrued and unpaid interest to the first day of the
month following repurchase, plus the amount of any unreimbursed Advances in
respect of the defective contract. The servicer will be required under the
applicable pooling and servicing agreement to enforce this obligation for the
benefit of the trustee and the certificateholders, following the practices it
would employ in its good faith business judgment were it the owner of the
contract. This repurchase obligation will constitute the sole remedy available
to certificateholders or the trustee for a breach of representation by a seller
unaffiliated with the depositor.
Neither the depositor nor the servicer will be obligated to purchase a
contract if a seller defaults on its obligation to do so, and no assurance can
be given that sellers will carry out their respective repurchase obligations
with respect to defective contracts. However, to the extent that a breach of the
representations and warranties of a seller may also constitute a breach of a
representation made by the depositor, the depositor may have a purchase
obligation as described in this prospectus under "The Trust Fund--The Contract
Pools."
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If stated in the related prospectus supplement, the depositor may make
certain limited representations with respect to the contracts.
Assignment of Mortgage Certificates
Pursuant to the applicable pooling and servicing agreement for a series of
certificates that includes Mortgage Certificates in the related trust fund, the
depositor will cause the Mortgage Certificates to be transferred to the trustee
together with all principal and interest distributed on those Mortgage
Certificates after the Cut-off Date. Each Mortgage Certificate included in a
trust fund will be identified in a schedule appearing as an exhibit to the
applicable pooling and servicing agreement. The schedule will include
information as to the principal balance of each Mortgage Certificate as of the
date of issuance of the certificates and its interest rate, maturity and
original principal balance. In addition, steps will be taken by the depositor as
are necessary to cause the trustee to become the registered owner of each
Mortgage Certificate which is included in a trust fund and to provide for all
distributions on each Mortgage Certificate to be made directly to the trustee.
In connection with the assignment of Mortgage Certificates to the trustee,
the depositor will make certain representations and warranties in the related
pooling and servicing agreement as to, among other things, its ownership of the
Mortgage Certificates. In the event that these representations and warranties
are breached, and the breach or breaches adversely affect the interests of the
certificateholders in the Mortgage Certificates, the depositor will be required
to repurchase the affected Mortgage Certificates at a price equal to the
principal balance thereof as of the date of purchase together with accrued and
unpaid interest thereon at the related pass-through rate to the distribution
date for the Mortgage Certificates. The Mortgage Certificates with respect to a
series may also be subject to repurchase, in whole but not in part, under the
circumstances and in the manner described in the related prospectus supplement.
Any amounts received in respect of repurchases of Mortgage Certificates will be
distributed to certificateholders on the immediately succeeding distribution
date or such other date described in the related prospectus supplement.
The applicable prospectus supplement will describe the characteristics of
the mortgage loans and contracts underlying the Mortgage Certificates.
If stated in the related prospectus supplement, within the specified period
following the date of issuance of a series of certificates, the depositor may,
in lieu of the repurchase obligation set forth above, and in certain other
circumstances, deliver to the trustee new Mortgage Certificates in substitution
for any one or more of the Mortgage Certificates initially included in the trust
fund. The required characteristics or any such substitute Mortgage Certificates
and any additional restrictions relating to the substitution of Mortgage
Certificates will be set forth in the related prospectus supplement.
Servicing of Mortgage Loans and Contracts
Each seller of a mortgage loan or a contract may act as the servicer for
the related mortgage loan or contract pursuant to a pooling and servicing
agreement. A representative form of pooling and servicing agreement has been
filed as an exhibit to the Registration Statement of which this prospectus is a
part. The following description does not purport to be complete and is qualified
in its entirety by reference to the pooling and servicing agreement entered into
by the servicer, the subservicer, the depositor and the trustee. If a servicer
is appointed pursuant to a separate servicing agreement, that agreement will
contain servicing provisions generally consistent with the provisions described
in this prospectus.
Any servicer will be required to perform the customary functions of a
servicer, including:
o collection of payments from mortgagors and obligors and remittance of
collections to the servicer;
o maintenance of primary mortgage, hazard insurance, FHA insurance and VA
guarantees and filing and settlement of claims under those policies;
o maintenance of escrow accounts of mortgagors and obligors for payment of
taxes, insurance, and other items required to be paid by the mortgagor
pursuant to terms of the related mortgage loan or the obligor pursuant to
the related contract;
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o processing of assumptions or substitutions;
o attempting to cure delinquencies;
o supervising foreclosures or repossessions;
o inspection and management of mortgaged properties, Cooperative Dwellings or
manufactured homes under certain circumstances; and
o maintaining accounting records relating to the mortgage loans and
contracts.
A servicer may delegate its servicing obligations to third-party
subservicers, but will continue to be responsible for the servicing of the
mortgage loans or contracts pursuant to the related pooling and servicing
agreement.
A servicer or subservicer will also be obligated to make Advances in
respect of delinquent installments of principal and interest on mortgage loans
and contracts, as described more fully in this prospectus under "--Payments on
Mortgage Loans" and "--Payments on Contracts," and in respect of certain taxes
and insurance premiums not paid on a timely basis by mortgagors and obligors.
As compensation for its servicing duties, a servicer or subservicer will be
entitled to amounts from payments with respect to the mortgage loans and
contracts serviced by it. A servicer or subservicer will also be entitled to
collect and retain, as part of its servicing compensation, certain fees and late
charges provided in the Mortgage Note or related instruments. A subservicer will
be reimbursed by the servicer for certain expenditures that it makes, generally
to the same extent that the servicer would be reimbursed under the applicable
pooling and servicing agreement.
Payments on Mortgage Loans
The servicer will establish and maintain a Certificate Account in
connection with each series. The Certificate Account may be maintained with a
depository institution that is an affiliate of the servicer.
The servicer will deposit in the Certificate Account for each series of
certificates on a daily basis the following payments and collections received or
made by it subsequent to the Cut-off Date, other than payments due on or before
the Cut-off Date, in the manner set forth in the related prospectus supplement:
o all payments on account of principal, including principal prepayments, on
the related mortgage loans, net of any portion of payments that represent
unreimbursed or unrecoverable Advances made by the related servicer or
subservicer;
o all payments on account of interest on the related mortgage loans, net of
any portion thereof retained by the servicer or subservicer, if any, as its
servicing fee;
o all Insurance Proceeds or any Alternative Credit Support established in
lieu of any insurance and described in the applicable prospectus
supplement;
o all Liquidation Proceeds, net of expenses of liquidation, unpaid servicing
compensation with respect to the related mortgage loans and unreimbursed or
unrecoverable Advances made by the servicers or subservicers of the related
mortgage loans;
o all payments under the financial guaranty insurance policy, surety bond or
letter of credit, if any, with respect to that series;
o all amounts required to be deposited in the Certificate Account from the
reserve fund, if any, for that series;
o any Advances made by a subservicer or the servicer, as described in this
prospectus under "--Advances";
o any Buy-Down Funds, and, if applicable, investment earnings thereon,
required to be deposited in the Certificate Account, as described below;
and
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o all proceeds of any mortgage loan repurchased by the servicer, the
depositor, any subservicer or any seller unaffiliated with the depositor,
as described in this prospectus under "The Trust Fund--Mortgage Loan
Program--Representations by Unaffiliated Sellers; Repurchases" or
"--Assignment of Mortgage Loans" or repurchased by the depositor as
described in this prospectus under "--Termination".
If stated in the applicable prospectus supplement, the servicer, in lieu of
establishing a Certificate Account, may instead establish a Custodial Account.
If the servicer elects to establish a Custodial Account, amounts in that
Custodial Account, after making the required deposits and withdrawals specified
in this section "--Payments on Mortgage Loans," shall be remitted to the
Certificate Account maintained by the trustee for distribution to
certificateholders in the manner set forth in this prospectus and in the related
prospectus supplement. The servicer will also be required to advance any monthly
installment of principal and interest that was not timely received, less its
servicing fee, provided that this requirement shall only apply to the extent the
servicer determines in good faith any advance will be recoverable out of
insurance proceeds, proceeds of the liquidation of the related mortgage loans or
otherwise.
In those cases where a subservicer is servicing a mortgage loan pursuant to
a subservicing agreement, the subservicer will establish and maintain a
Servicing Account that will comply with either the standards set forth for a
Custodial Account or, subject to the conditions set forth in the servicing
related pooling and servicing agreement, meeting the requirements of the related
Rating Agency, and that is otherwise acceptable to the servicer. The subservicer
will be required to deposit into the Servicing Account on a daily basis all
amounts enumerated above in respect of the mortgage loans received by the
subservicer, less its servicing compensation. On the date specified in the
servicing related pooling and servicing agreement, the subservicer shall remit
to the servicer all funds held in the Servicing Account with respect to each
mortgage loan. Any payments or other amounts collected by a special servicer
with respect to any specially serviced mortgage loans will be deposited by the
related special servicer as set forth in the related prospectus supplement.
With respect to each series which contains Buy-Down Loans, if stated in the
related prospectus supplement, the servicer or the related subservicer will
establish a Buy-Down Fund. Amounts on deposit in the Buy-Down Fund, together
with investment earnings thereon if specified in the applicable prospectus
supplement, will be used to support the full monthly payments due on the related
Buy-Down Loans on a level debt service basis. Neither the servicer nor the
depositor will be obligated to add to the Buy-Down Fund should investment
earnings prove insufficient to maintain the scheduled level of payments on the
Buy-Down Loans. To the extent that any insufficiency is not recoverable from the
mortgagor under the terms of the related Mortgage Note, distributions to
certificateholders will be affected. With respect to each Buy-Down Loan, the
servicer will withdraw from the Buy-Down Fund and deposit in the Certificate
Account on or before each distribution date the amount, if any, for each
Buy-Down Loan that, when added to the amount due on that date from the mortgagor
on the related Buy-Down Loan, equals the full monthly payment that would be due
on the Buy-Down Loan if it were not subject to a buy-down plan.
If stated in the prospectus supplement with respect to a series, in lieu
of, or in addition to the foregoing, the depositor may deliver cash, a letter of
credit or a guaranteed investment contract to the trustee to fund the Buy-Down
Fund for that series, which shall be drawn upon by the trustee in the manner and
at the times specified in the related prospectus supplement.
Payments on Contracts
A Certificate Account meeting the requirements set forth under "Description
of the Certificates--Payments on Mortgage Loans" will be established in the name
of the trustee.
There will be deposited in the Certificate Account or a Custodial Account
on a daily basis the following payments and collections received or made by it
subsequent to the Cut-off Date, including scheduled payments of principal and
interest due after the Cut-off Date but received by the servicer on or before
the Cut-off Date:
o all obligor payments on account of principal, including principal
prepayments, on the contracts;
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o all obligor payments on account of interest on the contracts, net of the
servicing fee;
o all Liquidation Proceeds received with respect to contracts or property
acquired in respect thereof by foreclosure or otherwise;
o all Insurance Proceeds received with respect to any contract, other than
proceeds to be applied to the restoration or repair of the manufactured
home or released to the obligor;
o any Advances made as described under "--Advances" and certain other amounts
required under the pooling and servicing agreement to be deposited in the
Certificate Account;
o all amounts received from any credit support provided with respect to a
series of certificates;
o all proceeds of any contract or property acquired in respect thereof
repurchased by the servicer, the depositor or otherwise as described above
or under "--Termination" below; and
o all amounts, if any, required to be transferred to the Certificate Account
from the reserve fund.
Collection of Payments on Mortgage Certificates
The Mortgage Certificates included in the trust fund with respect to a
series of certificates will be registered in the name of the trustee so that all
distributions thereon will be made directly to the trustee. The pooling and
servicing agreement will require the trustee, if it has not received a
distribution with respect to any Mortgage Certificate by the second business day
after the date on which that distribution was due and payable pursuant to the
terms of the Mortgage Certificate, to request the issuer or guarantor, if any,
of the Mortgage Certificate to make payment as promptly as possible and legally
permitted and to take whatever legal action against the related issuer or
guarantor as the trustee deems appropriate under the circumstances, including
the prosecution of any claims in connection therewith. The reasonable legal fees
and expenses incurred by the trustee in connection with the prosecution of any
legal action will be reimbursable to the trustee out of the proceeds of any
action and will be retained by the trustee prior to the deposit of any remaining
proceeds in the Certificate Account pending distribution thereof to
certificateholders of the affected series. In the event that the trustee has
reason to believe that the proceeds of any legal action may be insufficient to
reimburse it for its projected legal fees and expenses, the trustee will notify
the related certificateholders that it is not obligated to pursue any available
remedies unless adequate indemnity for its legal fees and expenses is provided
by those certificateholders.
Distributions on Certificates
On each distribution date with respect to a series of certificates, the
servicer will withdraw from the applicable Certificate Account funds on deposit
in that Certificate Account and distribute, or, if stated in the applicable
prospectus supplement, will withdraw from the Custodial Account funds on deposit
in that Custodial Account and remit to the trustee, who will distribute, those
funds to certificateholders of record on the applicable Record Date. The
distributions shall occur in the manner described in this prospectus under
"Description of the Certificates--Distributions of Principal and Interest" and
in the related prospectus supplement. Those funds shall consist of the aggregate
of all previously undistributed payments on account of principal, including
principal prepayments, Insurance Proceeds and Liquidation Proceeds, if any, and
interest received after the Cut-off Date and on or prior to the applicable
Determination Date, except:
o all payments that were due on or before the Cut-off Date;
o all principal prepayments received during the month of distribution and all
payments of principal and interest due after the related Due Period;
o all payments which represent early receipt, other than prepayments, of
scheduled payments of principal and interest due on a date or dates
subsequent to the first day of the month of distribution;
o amounts received on particular mortgage loans or contracts as late payments
of principal or interest and respecting which the servicer has made an
unreimbursed Advance;
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o amounts representing reimbursement for previously unreimbursed expenses
incurred or Advances made by the servicer or subservicer; and
o that portion of each collection of interest on a particular mortgage loan
in the related mortgage pool or on a particular contract in the related
contract pool that represents:
(1) servicing compensation to the servicer and, if applicable, the special
servicer; or
(2) amounts payable to the entity or entities specified in the applicable
prospectus supplement or permitted withdrawals from the Certificate Account
out of payments under the financial guaranty insurance policy, surety bond
or letter of credit, if any, with respect to the series.
No later than the business day immediately preceding the distribution date
for a series of certificates, the servicer will furnish a statement to the
trustee setting forth the information that is necessary for the trustee to
determine the amount of distributions to be made on the certificates and a
statement setting forth certain information with respect to the mortgage loans
or contracts.
If stated in the applicable prospectus supplement, the trustee will
establish and maintain the Certificate Account for the benefit of the holders of
the certificates of the related series in which the trustee shall deposit, as
soon as practicable after receipt, each distribution made to the trustee by the
servicer, as set forth above, with respect to the mortgage loans or contracts,
any distribution received by the trustee with respect to the Mortgage
Certificates, if any, included in the trust fund and deposits from any reserve
fund or GPM Fund. If stated in the applicable prospectus supplement, prior to
making any distributions to certificateholders, any portion of the distribution
on the Mortgage Certificates that represents servicing compensation, if any,
payable to the trustee shall be deducted and paid to the trustee.
Funds on deposit in the Certificate Account may be invested in Eligible
Investments maturing in general not later than the business day preceding the
next distribution date. All income and gain realized from any investment will be
for the benefit of the servicer, or other entity if stated in the applicable
prospectus supplement. The servicer or other entity will be required to deposit
the amount of any losses incurred with respect to investments out of its own
funds, when realized.
The timing and method of distribution of funds in the Certificate Account
to classes or subclasses of certificates having differing terms, whether
subordinated or not, to the extent not described in this prospectus, will be set
forth in the related prospectus supplement.
Special Distributions
To the extent specified in the prospectus supplement relating to a series
of certificates, one or more classes of certificates that do not provide for
monthly distribution dates may receive special distributions in reduction of
Certificate Principal Balance in any month, other than a month in which a
distribution date occurs, if, as a result of principal prepayments on the assets
in the related trust fund and/or low reinvestment yields, the trustee
determines, based on assumptions specified in the related pooling and servicing
agreement, that the amount of cash anticipated to be on deposit in the
Certificate Account on the next distribution date for that series and available
to be distributed to the holders of the certificates of those classes or
subclasses may be less than the sum of:
o the interest scheduled to be distributed to holders of the certificates of
those classes or subclasses; and
o the amount to be distributed in reduction of Certificate Principal Balance
on those certificates on that distribution date.
Any special distributions will be made in the same priority and manner as
distributions in reduction of Certificate Principal Balance would be made on the
next distribution date.
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Reports to Certificateholders
The servicer or the trustee will include with each distribution to
certificateholders of record of the related series, or within a reasonable time
thereafter, a statement generally setting forth, among other things, the
following information, if applicable:
(1) to each holder of a certificate, the amount of the related
distribution allocable to principal of the assets of the related
trust fund, separately identifying the aggregate amount of any
prepayments of principal on the related mortgage loans, contracts or
mortgage loans underlying the related Mortgage Certificates included
in that trust fund, and the portion, if any, advanced by the servicer
or a subservicer;
(2) to each holder of a certificate, the amount of the related
distribution allocable to interest on the assets of the related trust
fund and the portion, if any, advanced by the servicer or a
subservicer;
(3) in the case of a series of certificates with a variable
Pass-Through Rate, the Pass-Through Rate applicable to the
distribution;
(4) the amount of coverage remaining under the financial guaranty
insurance policy, surety bond, letter of credit, pool insurance
policy, special hazard insurance policy, mortgagor bankruptcy bond,
or reserve fund as applicable, in each case, after giving effect to
any amounts with respect thereto distributed to certificateholders on
that distribution date;
(5) in the case of a series of certificates benefiting from the
Alternative Credit Support described in the related prospectus
supplement, the amount of coverage under the Alternative Credit
Support after giving effect to any amounts with respect thereto
distributed to certificateholders on the distribution date;
(6) the aggregate unpaid principal balance of the assets of the related
trust fund as of a date not earlier than the distribution date after
giving effect to payments of principal distributed to
certificateholders on the distribution date;
(7) the book value of any collateral acquired by the mortgage pool or
contract pool through foreclosure, repossession or otherwise;
(8) the number and aggregate principal amount of mortgage loans or
contracts one month, two months, and three or more delinquent; and
(9) the remaining balance, if any, in the Pre-Funding Account.
In addition, within a reasonable period of time after the end of each
calendar year, the servicer, or the trustee, if specified in the applicable
prospectus supplement, will cause to be furnished to each certificateholder of
record at any time during that calendar year a report as to the aggregate of
amounts reported pursuant to (1) and (2) above and other information as in the
judgment of the servicer or the trustee, as the case may be, is needed for the
certificateholder to prepare its tax return, as applicable, for that calendar
year or, in the event such person was a certificateholder of record during a
portion of that calendar year, for the applicable portion of that year.
Advances
If stated in the related prospectus supplement, each subservicer and the
servicer, with respect to mortgage loans or contracts serviced by it and with
respect to Advances required to be made by the subservicers that were not so
made, will be obligated to advance funds in an amount equal to the aggregate
scheduled installments of payments of principal and interest, as reduced by the
servicing fee, that were due on the due date with respect to a mortgage loan or
contract and that were delinquent, as of the close of business on the date
specified in the pooling and servicing agreement, to be remitted no later than
the close of business on the business day immediately preceding the distribution
date, subject to their respective determinations that such advances are
reimbursable under any financial guaranty insurance policy, surety bond, letter
of credit, pool insurance policy, primary mortgage insurance policy, mortgagor
bankruptcy bond, from the proceeds of Alternative Credit Support, from cash in
the reserve fund, or liquidation proceeds from the mortgage loan or contracts.
In making Advances, the subservicers and servicer will endeavor to maintain a
regular flow of scheduled interest and principal payments to the
certificateholders,
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rather than to guarantee or insure against losses. Any Advances are reimbursable
to the subservicer or servicer out of related recoveries on the mortgage loans
respecting which those amounts were advanced. In addition, Advances are
reimbursable from cash in the reserve fund, the Servicing or Certificate
Accounts to the extent that the subservicer or the servicer, as the case may be,
shall determine that any Advances previously made are not ultimately recoverable
from other sources.
The subservicers and the servicer generally will also be obligated to make
advances in respect of certain taxes, insurance premiums and, if applicable,
property protection expenses not paid by mortgagors or obligors on a timely
basis and, to the extent deemed recoverable, foreclosure costs, including
reasonable attorney's fees. "Property protection expenses" comprise certain
costs and expenses incurred in connection with defaulted mortgage loans,
acquiring title or management of REO Property or the sale of defaulted mortgage
loans or REO Properties, as more fully described in the related prospectus
supplement. Funds so advanced are reimbursable out of recoveries on the related
mortgage loans. This right of reimbursement for any advance by the servicer or
subservicer will be prior to the rights of the certificateholders to receive any
amounts recovered with respect to the related mortgage loans or contracts. If
stated in the applicable prospectus supplement, the subservicers and the
servicer will also be required to advance an amount necessary to provide a full
month's interest, adjusted to the applicable Pass-Through Rate, in connection
with full or partial prepayments of the mortgage loans or contracts. Those
Advances will not be reimbursable to the subservicers or the servicer.
Collection and Other Servicing Procedures
The servicer will be responsible for servicing the mortgage loans pursuant
to the related pooling and servicing agreement for the related series. The
servicer may subcontract the servicing of all or a portion of the mortgage loans
to one or more subservicers and may subcontract the servicing of certain
commercial mortgage loans, multifamily mortgage loans and/or Mixed-Use Mortgage
Loans that are in default or otherwise require special servicing to a special
servicer, and certain information with respect to the special servicer will be
set forth in the related prospectus supplement. Any subservicer or any special
servicer may be an affiliate of the depositor and may have other business
relationships with depositor and its affiliates.
The servicer, directly or through the subservicers or a special servicer,
as the case may be, will make reasonable efforts to collect all payments called
for under the mortgage loans or contracts and will, consistent with the
applicable pooling and servicing agreement and any applicable financial guaranty
insurance policy, surety bond, letter of credit, pool insurance policy, special
hazard insurance policy, primary mortgage insurance policy, mortgagor bankruptcy
bond, or Alternative Credit Support, follow the collection procedures it follows
with respect to mortgage loans or contracts serviced by it that are comparable
to the mortgage loans or contracts, except when, in the case of FHA or VA Loans,
applicable regulations require otherwise. Consistent with the above, the
servicer may, in its discretion, waive any late payment charge or any prepayment
charge or penalty interest in connection with the prepayment of a mortgage loan
or contract or extend the due dates for payments due on a Mortgage Note or
contract for a period of not greater than 270 days, provided that the insurance
coverage for that mortgage loan or contract or the coverage provided by any
financial guaranty insurance policy, surety bond, letter of credit or
Alternative Credit Support, will not be adversely affected.
Under the related pooling and servicing agreement, the servicer, either
directly or through subservicers or a special servicer, to the extent permitted
by law, may establish and maintain an escrow in which mortgagors or obligors
will be required to deposit amounts sufficient to pay taxes, assessments,
mortgage and hazard insurance premiums and other comparable items. This
obligation may be satisfied by the provision of insurance coverage against loss
occasioned by the failure to escrow insurance premiums rather than causing
escrows to be made. The special servicer, if any, will be required to remit
amounts received for the purposes described in this paragraph on mortgage loans
serviced by it for deposit in the related escrow account, and will be entitled
to direct the servicer to make withdrawals from that escrow account as may be
required for servicing of the related mortgage loans. Withdrawals from an escrow
account may be made to effect timely payment of taxes, assessments, mortgage and
hazard insurance, to refund to mortgagors or obligors amounts determined to be
overages, to pay interest to mortgagors or obligors on balances in that escrow
account, if required, and to clear and terminate that escrow account. The
servicer will be responsible for the administration of each escrow account and
will be obliged to make advances to those accounts when a deficiency exists in
any of those escrow accounts. Alternatively, in lieu of establishing an escrow
account, the servicer may procure a performance bond or other form of insurance
coverage,
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in an amount acceptable to the related Rating Agency, covering loss occasioned
by the failure to escrow such amounts.
Standard Hazard Insurance
Except to the extent specified in a related prospectus supplement, the
terms of each pooling and servicing agreement will require the servicer or the
special servicer, if any, to cause to be maintained for each mortgage loan or
contract that it services, and the servicer will be required to maintain for
each mortgage loan or contract serviced by it directly, a policy of standard
hazard insurance covering the mortgaged property underlying the related mortgage
loan or manufactured home underlying the related contract in an amount at least
equal to the maximum insurable value of the improvements securing the related
mortgage loan or contract or the principal balance of the related mortgage loan
or contract, whichever is less.
Each subservicer, the special servicer, if any, or the servicer, as the
case may be, shall also be required to maintain on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any mortgage loan or contract, a
standard hazard insurance policy. Any amounts collected by the subservicer, the
special servicer, if any, or the servicer under those policies, other than
amounts to be applied to the restoration or repair of the mortgaged property or
manufactured home or released to the borrower in accordance with normal
servicing procedures, shall be deposited in the related Servicing Account for
deposit in the Certificate Account or, in the case of the servicer, may be
deposited directly into the Certificate Account. Any cost incurred in
maintaining any insurance shall not, for the purpose of calculating monthly
distributions to certificateholders, be added to the amount owing under the
mortgage loan or contract, notwithstanding that the terms of the mortgage loan
or contract may so permit. The cost incurred in maintaining any insurance shall
be recoverable by the servicer or the special servicer, if any, only by
withdrawal of funds from the Servicing Account or by the servicer only by
withdrawal from the Certificate Account, as described in the pooling and
servicing agreement.
No earthquake or other additional insurance is to be required of any
borrower or maintained on property acquired in respect of a mortgage loan or
contract, other than pursuant to applicable laws and regulations as shall at any
time be in force and as shall require earthquake or additional insurance. When
the mortgaged property or manufactured home is located at the time of
origination of the mortgage loan or contract in a federally designated flood
area, the related subservicer or the special servicer, if any, or the servicer,
in the case of each mortgage loan or contract serviced by it directly, will
cause flood insurance to be maintained, to the extent available, in those areas
where flood insurance is required under the National Flood Insurance Act of
1968, as amended.
The depositor will not require that a standard hazard or flood insurance
policy be maintained on the Cooperative Dwelling relating to any Cooperative
Loan. Generally, the Cooperative itself is responsible for maintenance of hazard
insurance for the property owned by the Cooperative and the tenant-stockholders
of that Cooperative do not maintain individual hazard insurance policies. To the
extent, however, that a Cooperative and the related borrower on a Cooperative
Loan do not maintain insurance or do not maintain adequate coverage or any
insurance proceeds are not applied to the restoration of damaged property, any
damage to that borrower's Cooperative Dwelling or that Cooperative's building
could significantly reduce the value of the collateral securing the related
Cooperative Loan to the extent not covered by other credit support.
The related pooling and servicing agreement will permit the servicer to
obtain and maintain a blanket policy insuring against hazard losses on all of
the related mortgage loans or contracts, in lieu of maintaining a standard
hazard insurance policy for each mortgage loan or contract that it services.
This blanket policy may contain a deductible clause, in which case the servicer
will, in the event that there has been a loss that would have been covered by a
policy absent the deductible, deposit in the Certificate Account the amount not
otherwise payable under the blanket policy because of the application of the
deductible clause.
Since the amount of hazard insurance to be maintained on the improvements
securing the mortgage loans or contracts may decline as the principal balances
owing thereon decrease, and since properties have historically appreciated in
value over time, in the event of partial loss, hazard insurance proceeds may be
insufficient to fully restore the damaged mortgaged property or manufactured
home. See "Description of Insurance--Special Hazard Insurance Policies" for a
description of the limited protection afforded by a special hazard insurance
policy against
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losses occasioned by certain hazards that are otherwise uninsured against as
well as against losses caused by the application of the coinsurance provisions
contained in the standard hazard insurance policies.
With respect to mortgage loans secured by commercial property, Mixed-Use
Property and multifamily property, certain additional insurance policies may be
required, including, but not limited to, loss of rent endorsements, business
interruption insurance and comprehensive public liability insurance, and the
related pooling and servicing agreement may require the servicer to maintain
public liability insurance with respect to any related REO Properties. Any cost
incurred by the servicer in maintaining any insurance policy will be added to
the amount owing under the related mortgage loan where the terms of that
mortgage loan so permit; provided, however, that the addition of that cost will
not be taken into account for purposes of calculating the distribution to be
made to certificateholders. These costs may be recovered by the servicer from
the Certificate Account, with interest thereon, as provided by the related
pooling and servicing agreement.
Special Hazard Insurance
If stated in the related prospectus supplement, the servicer will be
required to exercise its best reasonable efforts to maintain the special hazard
insurance policy, if any, with respect to a series of certificates in full force
and effect, unless coverage thereunder has been exhausted through payment of
claims, and will pay the premium for the special hazard insurance policy on a
timely basis; provided, however, that the servicer shall be under no such
obligation if coverage under the pool insurance policy with respect to that
series has been exhausted. If the special hazard insurance policy is cancelled
or terminated for any reason, other than the exhaustion of total policy
coverage, the servicer will exercise its best reasonable efforts to obtain from
another insurer a replacement policy comparable to the special hazard insurance
policy with a total coverage that is equal to the then existing coverage of the
special hazard insurance policy; provided that if the cost of any replacement
policy is greater than the cost of the terminated special hazard insurance
policy, the amount of coverage under the replacement special hazard insurance
policy may be reduced to a level such that the applicable premium will not
exceed the cost of the special hazard insurance policy that was replaced.
Pool Insurance
To the extent specified in a related prospectus supplement, the servicer
will exercise its best reasonable efforts to maintain a pool insurance policy
with respect to a series of certificates in effect throughout the term of the
pooling and servicing agreement, unless coverage thereunder has been exhausted
through payment of claims, and will pay the premiums for the pool insurance
policy on a timely basis. In the event that the related pool insurer ceases to
be a qualified insurer because it is not qualified to transact a mortgage
guaranty insurance business under the laws of the state of its principal place
of business or any other state which has jurisdiction over the pool insurer in
connection with the pool insurance policy, or if the pool insurance policy is
cancelled or terminated for any reason, other than the exhaustion of total
policy coverage, the servicer will exercise its best reasonable efforts to
obtain a replacement policy of pool insurance comparable to the pool insurance
policy and may obtain a total coverage that is equal to the then existing
coverage of the special hazard insurance policy; provided that if the cost of
any replacement policy is greater than the cost of the terminated pool insurance
policy, the amount of coverage under the replacement pool insurance policy may
be reduced to a level such that the applicable premium will not exceed the cost
of the pool insurance policy that was replaced.
Primary Mortgage Insurance
To the extent specified in the related prospectus supplement, the servicer
will be required to keep in force and effect for each mortgage loan secured by
single family property serviced by it directly, and each subservicer of a
mortgage loan secured by single family property will be required to keep in full
force and effect with respect to each mortgage loan serviced by it, in each case
to the extent required by the underwriting standards of the depositor, a primary
mortgage insurance policy issued by a qualified insurer with regard to each
mortgage loan for which coverage is required pursuant to the applicable pooling
and servicing agreement and to act on behalf of the trustee, or "insured," under
each primary mortgage insurance policy. Neither the servicer nor the subservicer
will be permitted to cancel or refuse to renew any primary mortgage insurance
policy in effect at the date of the initial issuance of a series of certificates
that is required to be kept in force under the related pooling and servicing
agreement unless a replacement primary mortgage insurance policy for the
cancelled or non-renewed policy is
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maintained with an insurer whose claims-paying ability is acceptable to the
related Rating Agency. See "Description of Insurance--Primary Mortgage Insurance
Policies."
Mortgagor Bankruptcy Bond
If stated in the related prospectus supplement, the servicer will exercise
its best reasonable efforts to maintain a mortgagor bankruptcy bond for a series
of certificates in full force and effect throughout the term of the pooling and
servicing agreement, unless coverage thereunder has been exhausted through
payment of claims, and will pay the premiums for the mortgagor bankruptcy bond
on a timely basis. At the request of the depositor, coverage under a mortgagor
bankruptcy bond will be cancelled or reduced by the servicer to the extent
permitted by the related Rating Agency, provided that any cancellation or
reduction does not adversely affect the then current rating of that series. See
"Description of Insurance--Mortgagor Bankruptcy Bond."
Presentation of Claims
The servicer, on behalf of itself, the trustee and the certificateholders,
will present claims to HUD, the VA, the pool insurer, the special hazard
insurer, the issuer of the mortgagor bankruptcy bond, and each primary mortgage
insurer, as applicable, and take whatever reasonable steps are necessary to
permit recovery under the related insurance policies or mortgagor bankruptcy
bond, if any, with respect to a series concerning defaulted mortgage loans or
contracts or mortgage loans or contracts that are the subject of a bankruptcy
proceeding. All collections by the servicer under any FHA insurance or VA
guarantee, any pool insurance policy, any primary mortgage insurance policy or
any mortgagor bankruptcy bond and, where the related property has not been
restored, any special hazard insurance policy, are to be deposited in the
Certificate Account, subject to withdrawal as heretofore described. In those
cases in which a mortgage loan or contract is serviced by a subservicer, the
subservicer, on behalf of itself, the trustee and the certificateholders, will
present claims to the applicable primary mortgage insurer and to the FHA and the
VA, as applicable, and all collections thereunder shall be deposited in the
Servicing Account, subject to withdrawal, as set forth above, for deposit in the
Certificate Account.
If any property securing a defaulted mortgage loan or contract is damaged
and proceeds, if any, from the related standard hazard insurance policy or the
applicable special hazard insurance policy are insufficient to restore the
damaged property to a condition sufficient to permit recovery under any pool
insurance policy or any primary mortgage insurance policy, neither the servicer
nor the subservicer, as the case may be, will be required to expend its own
funds to restore the damaged property unless it determines, and, in the case of
a determination by a subservicer, the servicer agrees:
o that the restoration will increase the proceeds to certificateholders on
liquidation of the mortgage loan or contract after reimbursement of the
expenses incurred by the subservicer or the servicer, as the case may be;
and
o that the expenses will be recoverable through proceeds of the sale of the
mortgaged property or proceeds of any related pool insurance policy, any
related primary mortgage insurance policy or otherwise.
If recovery under a pool insurance policy or any related primary mortgage
insurance policy is not available because the related subservicer or the
servicer has been unable to make the above determinations or otherwise, the
subservicer or the servicer is nevertheless obligated to follow whatever normal
practices and procedures are deemed necessary or advisable to realize upon the
defaulted mortgage loan. If the proceeds of any liquidation of the mortgaged
property or manufactured home are less than the principal balance of the
defaulted mortgage loan or contract, respectively, plus interest accrued thereon
at the Pass-Through Rate, and if coverage under any other method of credit
support with respect to that series is exhausted, the related trust fund will
realize a loss in the amount of the difference plus the aggregate of expenses
incurred by the subservicer or the servicer in connection with those proceedings
and which are reimbursable under the related pooling and servicing agreement. In
the event that any proceedings result in a total recovery that is, after
reimbursement to the subservicer or the servicer of its expenses, in excess of
the principal balance of the related mortgage loan or contract, together with
accrued and unpaid interest thereon at the applicable Pass-Through Rates, the
subservicer and the servicer will be entitled to
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withdraw amounts representing normal servicing compensation on the related
mortgage loan or contract from the Servicing Account or the Certificate Account,
as the case may be.
Enforcement of Due-on-Sale Clauses; Realization Upon Defaulted Mortgage Loans
Each pooling and servicing agreement with respect to certificates
representing interests in a mortgage pool will provide that, when any mortgaged
property has been conveyed by the related borrower, the related subservicer or
the servicer, as the case may be, will, to the extent it has knowledge of the
conveyance, exercise its rights to accelerate the maturity of that mortgage loan
under any "due-on-sale" clause applicable thereto, if any, unless it reasonably
believes that enforcement of the "due-on-sale" clause is not exercisable under
applicable law or regulations, would result in loss of insurance coverage with
respect to that mortgage loan or would not be in the best interest of the
related series of certificateholders. In any case where the due-on-sale clause
will not be exercised, the subservicer or the servicer is authorized to take or
enter into an assumption and modification agreement from or with the person to
whom the related mortgaged property has been or is about to be conveyed,
pursuant to which that person becomes liable under the Mortgage Note and, unless
prohibited by applicable state law, the mortgagor remains liable thereon,
provided that the mortgage loan will continue to be covered by any pool
insurance policy and any related primary mortgage insurance policy. In the case
of an FHA Loan, such an assumption can occur only with HUD approval of the
substitute mortgagor. Each subservicer and the servicer will also be authorized,
with the prior approval of the insurer under any required insurance policies, to
enter into a substitution of liability agreement with that person, pursuant to
which the original mortgagor is released from liability and that person is
substituted as mortgagor and becomes liable under the Mortgage Note.
Under each pooling and servicing agreement relating to a series, the
subservicer or the servicer, as the case may be, will foreclose upon or
otherwise comparably convert the ownership of properties securing those of the
related mortgage loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with the foreclosure or other conversion, the subservicer or the
servicer will follow whatever practices and procedures are deemed necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities, except when, in the case of FHA or VA Loans, applicable regulations
require otherwise. However, neither the subservicer nor the servicer will be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it determines and, in the case of a
determination by a subservicer, the servicer agrees:
o that the restoration and/or foreclosure will increase the proceeds of
liquidation of the related mortgage loan to certificateholders after
reimbursement to itself for expenses; and
o that the expenses will be recoverable to it either through Liquidation
Proceeds, Insurance Proceeds, payments under the letter of credit or
amounts in the reserve fund, if any, with respect to the related series, or
otherwise.
Any prospective purchaser of a Cooperative Dwelling will generally be
required to obtain the approval of the board of directors of the related
Cooperative before purchasing the shares and acquiring rights under the
proprietary lease or occupancy agreement securing the Cooperative Loan. See
"Certain Legal Aspects of the Mortgage Loans and Contracts--The Mortgage
Loans--Foreclosure" in this prospectus. This approval is usually based on the
purchaser's income and net worth and numerous other factors. Although the
Cooperative's approval is unlikely to be unreasonably withheld or delayed, the
necessity of acquiring the approval could limit the number of potential
purchasers for those shares and otherwise limit the trust fund's ability to sell
and realize the value of those shares.
The market value of any single family property may have declined in value
since the date of origination of the mortgage loan. The market value of any
commercial property, multifamily property or Mixed-Use Property obtained in
foreclosure or by deed in lieu of foreclosure will be based substantially on the
operating income obtained from renting the commercial or dwelling units. Since a
default on a mortgage loan secured by commercial property, multifamily property
or Mixed-Use Property is likely to have occurred because operating income, net
of expenses, is insufficient to make debt service payments on the related
mortgage loan, it can be anticipated that the market value of that property will
be less than was anticipated when the related mortgage loan was originated. To
the extent that
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the equity in the property does not absorb the loss in market value and the loss
is not covered by other credit support, a loss may be experienced by the related
trust fund.
With respect to multifamily property consisting of an apartment building
owned by a Cooperative, the Cooperative's ability to meet debt service
obligations on the mortgage loan, as well as all other operating expenses, will
be dependent in large part on the receipt of maintenance payments from the
tenant-stockholders, as well as any rental income from units or commercial areas
the Cooperative might control. Unanticipated expenditures may in some cases have
to be paid by special assessments of the tenant-stockholders. The Cooperative's
ability to pay the principal amount of the mortgage loan at maturity may depend
on its ability to refinance the mortgage loan. The depositor, any unaffiliated
seller and the servicer will have no obligation to provide refinancing for any
such mortgage loan.
The servicer or subservicer will treat a defaulted mortgage loan as having
been finally liquidated after all Liquidation Proceeds, Insurance Proceeds and
other amounts that the servicer or subservicer expects to receive in connection
with the liquidation have been received. Any Realized Loss will be allocated to
the certificates in the manner set forth in the related prospectus supplement.
Generally, amounts received after a Realized Loss has been allocated to the
certificates will not be distributed to the certificateholders, however, if
stated in the related prospectus supplement, amounts received after a Realized
Loss has been allocated to the certificates may be distributed to the
certificateholders.
Enforcement of "Due-on-Sale" Clauses; Realization Upon Defaulted Contracts
Each pooling and servicing agreement with respect to certificates
representing interests in a contract pool will provide that, when any
manufactured home securing a contract is about to be conveyed by the related
obligor, the servicer, to the extent it has knowledge of the prospective
conveyance and prior to the time of the consummation of the conveyance, may
exercise its rights to accelerate the maturity of that contract under the
applicable "due-on-sale" clause, if any, unless it is not exercisable under
applicable law. In that case, the servicer is authorized to take or enter into
an assumption agreement from or with the person to whom the related manufactured
home has been or is about to be conveyed, pursuant to which that person becomes
liable under the contract and, unless determined to be materially adverse to the
interests of certificateholders, with the prior approval of the related pool
insurer, if any, to enter into a substitution of liability agreement with that
person, pursuant to which the original obligor is released from liability and
that person is substituted as obligor and becomes liable under the contract.
Where authorized by the contract, the annual percentage rate may be increased,
upon assumption, to the then-prevailing market rate, but shall not be decreased.
Under pooling and servicing agreement, the servicer will repossess or
otherwise comparably convert the ownership of properties securing those of the
related manufactured homes as come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments.
In connection with the repossession or other conversion, the servicer or
subservicer will follow whatever practices and procedures it shall deem
necessary or advisable and as shall be normal and usual in its general contract
servicing activities. The servicer or subservicer, however, will not be required
to expend its own funds in connection with any repossession or towards the
restoration of any property unless it determines:
o that the restoration or repossession will increase the proceeds of
liquidation of the related contract to the certificateholders after
reimbursement to itself for the expenses; and
o that the expenses will be recoverable to it either through liquidation
proceeds or through insurance proceeds.
Servicing Compensation and Payment of Expenses
Under the pooling and servicing agreement for a series of certificates, the
depositor or the person or entity specified in the related prospectus supplement
and any servicer will be entitled to receive an amount described in that
prospectus supplement. The servicer's primary compensation generally will be
equal to a monthly servicing fee in the amount specified in the pooling and
servicing agreement. Servicing compensation shall be payable by withdrawal from
the related Servicing Account prior to deposit in the Certificate Account from
interest payments on
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the mortgage loans or contracts, Insurance Proceeds, Liquidation Proceeds or
letter of credit payments, as applicable. Additional servicing compensation in
the form of prepayment charges, assumption fees, late payment charges or
otherwise shall be retained by the subservicers and the servicer to the extent
not required to be deposited in the Certificate Account. If the servicer
subcontracts the servicing of specially serviced mortgage loans to a special
servicer, the amount and calculation of the fee payable to the special servicer
will be set forth in the related prospectus supplement. Subservicers will also
be entitled to receive servicing compensation in addition to the servicing
compensation to the extent described in the prospectus supplement.
The subservicers, any special servicer and the servicer will pay certain
expenses incurred in connection with the servicing of the mortgage loans or
contracts, including, without limitation, payment of the insurance policy
premiums and, in the case of the servicer, fees or other amounts payable for any
Alternative Credit Support, payment of the fees and disbursements of the
trustee, and any custodian selected by the trustee, the certificate register for
the related series and independent accountants and payment of expenses incurred
in enforcing the obligations of servicers and sellers. Certain of these expenses
may be reimbursable pursuant to the terms of the related pooling and servicing
agreement. In addition, the servicer will be entitled to reimbursement of
expenses incurred in enforcing the obligations of any special servicers,
subservicers and any sellers under certain circumstances.
As set forth in the preceding section, the subservicers, any special
servicer and the servicer will be entitled to reimbursement for certain expenses
incurred by them in connection with the liquidation of defaulted mortgage loans
or contracts. The related trust fund will suffer no loss by reason of those
expenses to the extent claims are fully paid under the financial guaranty
insurance policy, surety bond or letter of credit, if any, the related insurance
policies, from amounts in the reserve fund or under any applicable Alternative
Credit Support described in a prospectus supplement. In the event, however, that
claims are either not made or fully paid under a financial guaranty insurance
policy, surety bond, letter of credit, insurance policies or Alternative Credit
Support, or if coverage thereunder has ceased, or if amounts in the reserve fund
are not sufficient to fully pay the losses, the related trust fund will suffer a
loss to the extent that the Liquidation Proceeds, after reimbursement of the
expenses of the subservicers or the servicer, as the case may be, are less than
the principal balance of the related mortgage loan or contract. In addition, the
subservicers, a special servicer and the servicer will be entitled to
reimbursement of expenditures incurred by them in connection with the
restoration of a mortgaged property, Cooperative Dwelling or manufactured home.
The right of reimbursement will be prior to the rights of the certificateholders
to receive any payments under the financial guaranty insurance policy, surety
bond or letter of credit, if any, or from any related Insurance Proceeds,
Liquidation Proceeds, amounts in the reserve fund or any proceeds of Alternative
Credit Support.
Under the applicable trust agreement, the trustee or a certificate
administrator will be entitled to deduct, from distributions of interest with
respect to the Mortgage Certificates, a specified percentage of the unpaid
principal balance of each Mortgage Certificate as servicing compensation. The
trustee or certificate administrator shall be required to pay all expenses,
except as expressly provided in the related trust agreement, subject to limited
reimbursement as provided in the related trust agreement.
Evidence as to Compliance
The servicer will deliver to the depositor and the trustee, on or before
the date specified in the pooling and servicing agreement, an officer's
certificate stating that:
o a review of the activities of the servicer and the subservicers
during the preceding calendar year and of their performance under the
related pooling and servicing agreement has been made under the
supervision of that officer; and
o to the best of that officer's knowledge, based on the review, the
servicer and each subservicer has fulfilled all its obligations under
the related pooling and servicing agreement and the minimum servicing
standards set forth in the Uniform Single Attestation Program for
Mortgage Bankers, or, if there has been a default in the fulfillment
of any obligation, specifying each default known to that officer and
the nature and status thereof.
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The officer's certificate shall be accompanied by a statement of a firm of
independent public accountants to the effect that, on the basis of an
examination of certain documents and records relating to servicing of the
mortgage loans or contracts, the servicing of the mortgage loans or contracts
was conducted in compliance with the provisions of the pooling and servicing
agreement, and the minimum servicing standards set forth in the Uniform Single
Attestation Program for Mortgage Bankers, except for the exceptions as the firm
of independent public accountants believes it is required to report.
Certain Matters Regarding the Servicer, the Depositor, the Trustee and the
Special Servicer
The servicer under each pooling and servicing agreement will be named in
the applicable prospectus supplement. The entity acting as servicer may be a
seller unaffiliated with the depositor and have other normal business
relationships with the depositor and/or affiliates of the depositor or may be an
affiliate of the depositor. In the event there is no servicer under a pooling
and servicing agreement, all servicing of mortgage loans or contracts will be
performed by a servicer pursuant to a servicing agreement, which will provide
for servicing responsibilities similar to those described in this prospectus for
a servicer acting pursuant to a pooling and servicing agreement.
The servicer may not resign from its obligations and duties under the
pooling and servicing agreement except in connection with an assignment of its
obligations and duties permitted by the pooling and servicing agreement or upon
a determination that its duties thereunder are no longer permissible under
applicable law. No resignation will become effective until the trustee or a
successor servicer has assumed the servicer's obligations and duties under the
pooling and servicing agreement.
The trustee under each pooling and servicing agreement or trust agreement
will be named in the applicable prospectus supplement. The commercial bank or
trust company serving as trustee may have normal banking relationships with the
depositor and/or its affiliates and with the servicer and/or its affiliates.
The trustee may resign from its obligations under the related pooling and
servicing agreement or trust agreement at any time, in which event a successor
trustee will be appointed. In addition, the depositor may remove the trustee if
the trustee ceases to be eligible to act as trustee under the related pooling
and servicing agreement or trust agreement or if the trustee becomes insolvent,
at which time the depositor will become obligated to appoint a successor
trustee. The trustee may also be removed at any time by the holders of
certificates evidencing voting rights aggregating not less than 50% of the
voting rights evidenced by the certificates of that series. Any resignation and
removal of the trustee, and the appointment of a successor trustee, will not
become effective until acceptance of the appointment by the successor trustee.
Each pooling and servicing agreement and trust agreement will also provide
that neither the depositor nor the servicer nor any director, officer, employee
or agent of the depositor or the servicer or the trustee, or any responsible
officers of the trustee will be under any liability to the certificateholders,
for the taking of any action or for refraining from the taking of any action in
good faith pursuant to the pooling and servicing agreement, or for errors in
judgment; provided, however, that none of the depositor, the servicer or the
trustee nor any director, officer, employee or agent of the depositor or the
servicer or the trustee, or any responsible officers of the trustee will be
protected against, in the case of the servicer and the depositor, any breach of
representations or warranties made by them, and in the case of the servicer, the
depositor and the trustee, against any liability that would otherwise be imposed
by reason of willful misfeasance, bad faith or negligence in the performance of
its duties or by reason of reckless disregard of its obligations and duties
thereunder.
Each pooling and servicing agreement and trust agreement will further
provide that the depositor, the servicer and the trustee and any director,
officer and employee or agent of the depositor, the servicer or the trustee
shall be entitled to indemnification, by the trust fund in the case of the
depositor and servicer and by the servicer in the case of the trustee, and will
be held harmless against any loss, liability or expense incurred in connection
with any legal action relating to the applicable related pooling and servicing
agreement or the certificates, and in the case of the trustee, resulting from
any error in any tax or information return prepared by the servicer or from the
exercise of any power of attorney granted pursuant to the pooling and servicing
agreement, other than any loss, liability or expense related to any specific
mortgage loan, contract or Mortgage Certificate, except any loss, liability or
expense otherwise reimbursable pursuant to the applicable related pooling and
servicing agreement, and any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence (or, in the case of the
trustee,
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negligence), in the performance of their duties thereunder or by reason of
reckless disregard of their obligations and duties thereunder. In addition, each
related pooling and servicing agreement will provide that neither the depositor
nor the servicer, as the case may be, will be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
the related pooling and servicing agreement and that in its opinion may involve
it in any expense or liability. The depositor or the servicer may, however, in
their discretion, undertake any action deemed by them necessary or desirable
with respect to the applicable related pooling and servicing agreement and the
rights and duties of the parties thereto and the interests of the
certificateholders thereunder. In that event, the legal expenses and costs of an
action and any liability resulting therefrom will be expenses, costs and
liabilities of the related trust fund, and the servicer or the depositor, as the
case may be, will be entitled to be reimbursed therefor out of the Certificate
Account.
If the servicer subcontracts the servicing of specially serviced mortgage
loans to a special servicer, the standard of care for, and any indemnification
to be provided to, the special servicer will be set forth in the related
prospectus supplement or pooling and servicing agreement.
Events of Default
Events of default under each pooling and servicing agreement will include:
o any failure to make a specified payment which continues unremedied, in most
cases, for five business days after the giving of written notice;
o any failure by the trustee, the subservicer or the servicer, as applicable,
duly to observe or perform in any material respect any other of its
covenants or agreements in the pooling and servicing agreement which
failure shall continue for 60 days, 15 days in the case of a failure to pay
the premium for any insurance policy, or any breach of any representation
and warranty made by the servicer or the subservicer, if applicable, which
continues unremedied for 120 days after the giving of written notice of the
failure or breach; and
o certain events of insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings regarding the servicer or a
subservicer, as applicable.
Rights Upon Event of Default
So long as an Event of Default with respect to a series of certificates
remains unremedied, the depositor, the trustee or the holders of certificates
evidencing not less than the percentage of the voting rights evidenced by the
certificates of that series specified in the related pooling and servicing
agreement may terminate all of the rights and obligations of the servicer under
the pooling and servicing agreement and in and to the mortgage loans and
contracts and the proceeds thereof, whereupon, subject to applicable law
regarding the trustee's ability to make advances, the trustee or, if the
depositor so notifies the trustee and the servicer, the depositor or its
designee, will succeed to all the responsibilities, duties and liabilities of
the servicer under the related pooling and servicing agreement and will be
entitled to similar compensation arrangements. In the event that the trustee
would be obligated to succeed the servicer but is unwilling or unable so to act,
it may appoint, or petition to a court of competent jurisdiction for the
appointment of, a successor servicer. Pending an appointment, the trustee,
unless prohibited by law from so acting, shall be obligated to act in that
capacity. The trustee and the successor servicer may agree upon the servicing
compensation to be paid to the successor servicer, which in no event may be
greater than the compensation to the servicer under the related pooling and
servicing agreement.
Amendment
Each pooling and servicing agreement may be amended by the depositor, the
servicer and the trustee, without the consent of the certificateholders:
o to cure any ambiguity;
o to correct or supplement any provision in that pooling and servicing
agreement that may be inconsistent with any other provision in that pooling
and servicing agreement; or
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o to make any other provisions with respect to matters or questions arising
under the related pooling and servicing agreement that are not inconsistent
with the provisions thereof, provided that the action will not adversely
affect in any material respect the interests of any certificateholder of
the related series.
The related pooling and servicing agreement may also be amended by the
depositor, the servicer and the trustee with the consent of holders of
certificates evidencing not less than 66 2/3% of the voting rights evidenced by
the certificates, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of that pooling and servicing
agreement or of modifying in any manner the rights of the certificateholders;
provided, however, that no amendment may:
(1) reduce in any manner the amount of, delay the timing of or change the
manner in which payments received on or with respect to mortgage loans and
contracts are required to be distributed with respect to any certificate
without the consent of the holder of that certificate;
(2) adversely affect in any material respect the interests of the holders of a
class or subclass of the senior certificates, if any, of a series in a
manner other than that set forth in (1) above without the consent of the
holders of the senior certificates of that class or subclass evidencing not
less than 66 2/3% of that class or subclass;
(3) adversely affect in any material respect the interests of the holders of
the subordinated certificates, if any, of a series in a manner other than
that set forth in (1) above without the consent of the holders of
subordinated certificates evidencing not less than 66 2/3% of that class or
subclass; or
(4) reduce the aforesaid percentage of the certificates, the holders of which
are required to consent to the amendment, without the consent of the
holders of the class affected thereby.
Termination
The obligations created by the pooling and servicing agreement for a series
of certificates will terminate upon the earlier of:
(1) the repurchase of all mortgage loans or contracts and all property
acquired by foreclosure of any mortgage loan or contract; and
(2) the later of:
o the maturity or other liquidation of the last mortgage loan or contract
subject thereto and the disposition of all property acquired upon
foreclosure of any mortgage loan or contract; and
o the payment to the certificateholders of all amounts held by the servicer
and required to be paid to them pursuant to the related pooling and
servicing agreement.
The obligations created by the related pooling and servicing agreement or
trust agreement for a series of certificates will terminate upon the
distribution to certificateholders of all amounts required to be distributed to
them pursuant to that pooling and servicing agreement or trust agreement. In no
event, however, will the trust created by either the related pooling and
servicing agreement or the related trust agreement continue beyond the
expiration of 21 years from the death of the last survivor of certain persons
identified in the related pooling and servicing agreement or the related trust
agreement.
For each series of certificates, the servicer will give written notice of
termination of the applicable related pooling and servicing agreement or trust
agreement of each certificateholder, and the final distribution will be made
only upon surrender and cancellation of the certificates at an office or agency
specified in the notice of termination. After termination of the applicable
related pooling and servicing agreement or trust agreement, the certificates
will no longer accrue interest, and the only obligation of the trust fund
thereafter will be to pay principal and accrued interest that was available to
be paid on the date of termination, upon surrender of the related certificates.
The trust fund and the certificateholders will have no obligation to the
purchaser of the assets of the related trust fund with respect to the assets so
purchased.
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If stated in the related prospectus supplement, the pooling and servicing
agreement for each series of certificates will permit, but not require, the
depositor or some other person as stated in the related prospectus supplement to
repurchase from the trust fund for that series all remaining mortgage loans or
contracts subject to the pooling and servicing agreement at a price specified in
that prospectus supplement. If stated in the related prospectus supplement, the
repurchase price will be equal to:
(1) the aggregate principal balance of the mortgage loans outstanding,
including mortgage loans that have been foreclosed upon if the
Liquidation Proceeds have not yet been distributed, plus accrued and
unpaid interest thereon; or
(2) the aggregate outstanding principal balance of and accrued and unpaid
interest on the mortgage loans outstanding, plus the fair market
value of any mortgaged property acquired in foreclosure or
deed-in-lieu of foreclosure if the Liquidation Proceeds in respect of
that property have not yet been received by or on behalf of the trust
fund.
The purchase price described in clause (2) above could result in one or more
classes of certificates receiving less than their outstanding principal and
accrued interest if the fair market value of the property is less than the
outstanding principal and accrued interest on the related mortgage loan.
In the event that the depositor elects to treat the related trust fund as a
REMIC under the Code, any repurchase will be effected in compliance with the
requirements of Section 860F(a)(4) of the Code, in order to constitute a
"qualifying liquidation" under the Code. The exercise of any right to repurchase
will effect early retirement of the certificates of that series, but the right
so to repurchase may be effected only on or after the aggregate principal
balance of the mortgage loans or contracts for that series at the time of
repurchase is less than a specified percentage, not greater than 10%, of the
aggregate principal balance at the Cut-off Date for the series, or on or after
the date set forth in the related prospectus supplement.
Credit Support
Credit support for a series of certificates may be provided by one or more
financial guaranty insurance policies, surety bonds or letters of credit, the
issuance of subordinated classes or subclasses of certificates, which may, if
stated in the related prospectus supplement, be issued in notional amounts, the
provision for shifting interest credit enhancement, the establishment of a
reserve fund, the method of Alternative Credit Support specified in the
applicable prospectus supplement, or any combination of the foregoing, in
addition to, or in lieu of, the insurance arrangements set forth in this
prospectus under "Description of Insurance." The amount and method of credit
support will be set forth in the prospectus supplement with respect to a series
of certificates.
Financial Guaranty Insurance Policies; Surety Bonds
The depositor may obtain one or more financial guaranty insurance policies
or surety bonds issued by insurers or other parties acceptable to the rating
agency or agencies rating the securities of a series. Any such policy or surety
bond may provide payments to the holders of only one or more classes of
securities of a series, as specified in the applicable prospectus supplement.
Unless specified in the prospectus supplement, a financial guaranty
insurance policy or surety bond will be unconditional and irrevocable and will
guarantee to holders of the applicable securities that an amount equal to the
full amount of payments due to these holders will be received by the trustee or
its agent on behalf of the holders for payment on each payment date. The
specific terms of any financial guaranty insurance policy or surety bond will be
described in the accompanying prospectus supplement. A financial guaranty
insurance policy or surety bond may have limitations and, in most cases, will
not insure the obligation of the sellers or the depositor to purchase or
substitute for a defective trust asset and will not guarantee any specific rate
of principal prepayments or cover specific interest shortfalls. In most cases,
the insurer will be subrogated to the rights of each holder to the extent the
insurer makes payments under the financial guaranty insurance policy.
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Letters of Credit
The letters of credit, if any, with respect to a series of certificates
will be issued by the bank or financial institution specified in the related
prospectus supplement. The maximum obligation of the letter of credit bank under
the related letter of credit will be to honor requests for payment in an
aggregate fixed dollar amount, net of unreimbursed payments previously made
under the letter of credit, equal to the percentage of the aggregate principal
balance on the related Cut-off Date of the mortgage loans or contracts evidenced
by each series specified in the prospectus supplement for that series. The
duration of coverage and the amount and frequency of any reduction in coverage
provided by the letter of credit with respect to a series of certificates will
be in compliance with the requirements established by the related Rating Agency
and will be set forth in the prospectus supplement relating to that series of
certificates. The amount available under the letter of credit in all cases shall
be reduced to the extent of the unreimbursed payments previously made under the
letter of credit. The obligations of the letter of credit bank under the letter
of credit for each series of certificates will expire 30 days after the latest
of the scheduled final maturity dates of the mortgage loans or contracts in the
related mortgage pool or contract pool or the repurchase of all mortgage loans
or contracts in the mortgage pool or contract pool, or on another date specified
in the related prospectus supplement.
If stated in the applicable prospectus supplement, under the related
pooling and servicing agreement, the servicer will be required not later than
three business days prior to each distribution date to determine whether a
payment under the letter of credit will be necessary on the distribution date
and will, no later than the third business day prior to that distribution date,
advise the letter of credit bank and the trustee of its determination, stating
the amount of any required payment. On the distribution date, the letter of
credit bank will be required to honor the trustee's request for payment in an
amount equal to the lesser of:
o the remaining amount available under the letter of credit; and
o the outstanding principal balances of any Liquidating Loans to be assigned
on that distribution date, together with accrued and unpaid interest
thereon at the related mortgage rate or annual percentage rate to the
related due date.
The proceeds of payments under the letter of credit will be deposited into the
Certificate Account and will be distributed to certificateholders, in the manner
specified in the related prospectus supplement, on that distribution date,
except to the extent of any unreimbursed Advances, servicing compensation due to
the subservicers and the servicer and other amounts payable to the depositor or
the person or entity named in the applicable prospectus supplement.
If at any time the letter of credit bank makes a payment in the amount of
the full outstanding principal balance and accrued interest on a Liquidating
Loan, it will be entitled to receive an assignment by the trustee of that
Liquidating Loan, and the letter of credit bank will thereafter own the
Liquidating Loan free of any further obligation to the trustee or the
certificateholders with respect to that loan. Payments made to the Certificate
Account by the letter of credit bank under the letter of credit with respect to
a Liquidating Loan will be reimbursed to the letter of credit bank only from the
proceeds, net of liquidation costs, of that Liquidating Loan. The amount
available under the letter of credit will be increased to the extent it is
reimbursed for those payments.
To the extent the proceeds of liquidation of a Liquidating Loan acquired by
a letter of credit bank in the manner described in the preceding paragraph
exceed the amount of payments made with respect thereto, the letter of credit
bank will be entitled to retain the proceeds as additional compensation for
issuance of the letter of credit.
Prospective purchasers of certificates of a series with respect to which
credit support is provided by a letter of credit must look to the credit of the
letter of credit bank, to the extent of its obligations under the letter of
credit, in the event of default by mortgagors or obligors. If the amount
available under the letter of credit is exhausted, or the letter of credit bank
becomes insolvent, and amounts in the reserve fund, if any, with respect to that
series are insufficient to pay the entire amount of the loss and still be
maintained at the level specified in the related prospectus supplement, the
certificateholders, in the priority specified in the related prospectus
supplement, will thereafter bear all risks of loss resulting from default by
mortgagors or obligors, including losses not covered by insurance or
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Alternative Credit Support, and must look primarily to the value of the
properties securing defaulted mortgage loans or contracts for recovery of the
outstanding principal and unpaid interest.
Subordinated Certificates
To the extent of the Subordinated Amount as specified in the applicable
prospectus supplement, credit support may be provided by the subordination of
the rights of the holders of one or more classes or subclasses of certificates
to receive distributions with respect to the mortgage loans in the mortgage pool
or contracts in the contract pool underlying that series, to the rights of
senior certificateholders or holders of one or more classes or subclasses of
subordinated certificates of that series to receive distributions. In such a
case, credit support may also be provided by the establishment of a reserve
fund, as described in "--Reserve Fund." The Subordinated Amount will be reduced
by an amount equal to the aggregate amount of Realized Losses that have occurred
in the mortgage pool or contract pool. If stated in the related prospectus
supplement, the Subordinated Amount will decline over time in accordance with a
schedule which will also be set forth in the related prospectus supplement.
Shifting Interest
If stated in the prospectus supplement for a series of certificates for
which credit enhancement is provided by shifting interest as described in this
section, the rights of the holders of subordinated certificates of that series
to receive distributions with respect to the mortgage loans or contracts in the
related trust fund will be subordinated to the right of the holders of senior
certificates of that series to receive distributions to the extent described in
that prospectus supplement. This subordination feature is intended to enhance
the likelihood of regular receipt by holders of senior certificates of the full
amount of scheduled monthly payments of principal and interest due them and to
provide limited protection to the holders of senior certificates against losses
due to mortgagor defaults.
The protection afforded to the holders of senior certificates of a series
by the shifting interest subordination feature will be effected by distributing
to the holders of senior certificates a disproportionately greater percentage of
prepayments of principal on the related mortgage loans, contracts or mortgage
loans underlying the related Mortgage Certificates. The initial percentage of
principal to be received by the senior certificates for a series will be the
percentage specified in the related prospectus supplement and will decrease in
accordance with the schedule and subject to the conditions stated in that
prospectus supplement. This disproportionate distribution of prepayments of
principal on the related mortgage loans, contracts or mortgage loans underlying
the related Mortgage Certificates will have the effect of accelerating the
amortization of the senior certificates while increasing the respective interest
of the subordinated certificates in the mortgage pool or contract pool.
Increasing the respective interest of the subordinated certificates relative to
that of the senior certificates is intended to preserve the availability of the
benefits of the subordination provided by the subordinated certificates.
Overcollateralization
If stated in the applicable prospectus supplement, interest collections on
the mortgage loans or contracts may exceed interest payments on the securities
for the related distribution date. To the extent such excess interest is applied
as principal payments on the securities, the effect will be to reduce the
principal balance of the securities relative to the outstanding balance of the
mortgage loan or contract, thereby creating overcollateralization and additional
protection to the securityholders, if and to the extent specified in the
accompanying prospectus supplement.
Swaps and Yield Supplement Agreements
The trustee on behalf of the trust may enter into interest rate swaps and
related caps, floors and collars to minimize the risk to certificateholders of
adverse changes in interest rates, and other yield supplement agreements or
similar yield maintenance arrangements that do not involve swap agreements or
other notional principal contracts.
An interest rate swap is an agreement between two parties to exchange a
stream of interest payments on an agreed hypothetical or "notional" principal
amount. No principal amount is exchanged between the counterparties to an
interest rate swap. In the typical swap, one party agrees to pay a fixed rate on
a notional principal amount,
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while the counterparty pays a floating rate based on one or more reference
interest rates including the London Interbank Offered Rate or, LIBOR, a
specified bank's prime rate or U.S. Treasury Bill rates. Interest rate swaps
also permit counterparties to exchange a floating rate obligation based on one
reference interest rate (such as LIBOR) for a floating rate obligation based on
another referenced interest rate (such as U.S. Treasury Bill rates).
The swap market has grown substantially in recent years with a significant
number of banks and financial service firms acting both as principals and as
agents utilizing standardized swap documentation. Caps, floors and collars are
more recent innovations, and they are less liquid than other swaps.
Yield supplement agreements may be entered into to supplement the interest
rate or rates on one or more classes of the securities of any series.
There can be no assurance that the trust will be able to enter into or
offset swaps or enter into yield supplement agreements at any specific time or
at prices or on other terms that are advantageous. In addition, although the
terms of the swaps and yield supplement agreements may provide for termination
under some circumstances, there can be no assurance that the trust will be able
to terminate a swap or yield supplement agreement when it would be economically
advantageous to the trust to do so.
Purchase Obligations
Some of the mortgage loans or contracts and classes of certificates of any
series, as specified in the related prospectus supplement, may be subject to a
purchase obligation. The terms and conditions of each purchase obligation,
including the purchase price, timing and payment procedure, will be described in
the related prospectus supplement. A purchase obligation with respect to
mortgage loans or contracts may apply to the related mortgage loans or contracts
or to the related certificates. Each purchase obligation may be a secured or
unsecured obligation of its provider, which may include a bank or other
financial institution or an insurance company. Each purchase obligation will be
evidenced by an instrument delivered to the trustee for the benefit of the
applicable certificateholders of the related series. Each purchase obligation
with respect to mortgage loans or contracts will be payable solely to the
trustee for the benefit of the certificateholders of the related series, or if
stated in the related prospectus supplement, to some other person. Other
purchase obligations may be payable to the trustee or directly to the holders of
the certificates to which the obligations relate.
Reserve Fund
If stated in the related prospectus supplement, credit support with respect
to a series of certificates may be provided by the establishment and maintenance
with the trustee, in trust, of a reserve fund for that series. Generally, the
reserve fund for a series will not be included in the trust fund for that
series, however if stated in the related prospectus supplement the reserve fund
for a series may be included in the trust fund for that series. The reserve fund
for each series will be created by the depositor and shall be funded by:
o the retention by the servicer of certain payments on the mortgage loans or
contracts;
o the deposit with the trustee, in escrow, by the depositor of a subordinated
pool of mortgage loans or manufactured housing conditional sales contracts
and installment loan agreements with the aggregate principal balance, as of
the related Cut-off Date, set forth in the related prospectus supplement;
o an Initial Deposit;
o any combination of the foregoing; or
o some other manner as specified in the related prospectus supplement.
Following the initial issuance of the certificates of a series and until
the balance of the reserve fund first equals or exceeds the Required Reserve,
the servicer will retain specified distributions on the mortgage loans or
contracts, and/or on the mortgage loans or contracts in a subordinated pool,
otherwise distributable to the holders of subordinated certificates and deposit
those amounts in the reserve fund. After the amounts in the reserve fund for a
series first equal or exceed the applicable Required Reserve, the servicer will
retain such distributions and deposit so
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much of those amounts in the reserve fund as may be necessary, after the
application of distributions to amounts due and unpaid on the certificates or on
the certificates of that series to which the applicable class or subclass of
subordinated certificates are subordinated and the reimbursement of unreimbursed
Advances and liquidation expenses, to maintain the reserve fund at the Required
Reserve. The balance in the reserve fund in excess of the Required Reserve shall
be paid to the applicable class or subclass of subordinated certificates, or to
another specified person or entity, as set forth in the related prospectus
supplement, and shall be unavailable thereafter for future distribution to
certificateholders of any class. The prospectus supplement for each series will
set forth the amount of the Required Reserve applicable from time to time. The
Required Reserve may decline over time in accordance with a schedule which will
also be set forth in the related prospectus supplement.
Amounts held in the reserve fund for a series from time to time will
continue to be the property of the subordinated certificateholders of the
classes or subclasses specified in the related prospectus supplement until
withdrawn from the reserve fund and transferred to the Certificate Account as
described below. If on any distribution date the amount in the Certificate
Account available to be applied to distributions on the senior certificates of
that series, after giving effect to any Advances made by the subservicers or the
servicer on the related distribution date, is less than the amount required to
be distributed to the senior certificateholders on that distribution date, the
servicer will withdraw from the reserve fund and deposit into the Certificate
Account the lesser of:
o the entire amount on deposit in the reserve fund available for distribution
to the senior certificateholders, which amount will not in any event exceed
the Required Reserve; or
o the amount necessary to increase the funds in the Certificate Account
eligible for distribution to the senior certificateholders on that
distribution date to the amount required to be distributed to the senior
certificateholders on that distribution date;
provided, however, that in no event will any amount representing investment
earnings on amounts held in the reserve fund be transferred into the Certificate
Account or otherwise used in any manner for the benefit of the senior
certificateholders.
Generally, whenever amounts on deposit in the reserve fund are less than
the Required Reserve, holders of the subordinated certificates of the applicable
class or subclass will not receive any distributions with respect to the
mortgage loans or contracts other than amounts attributable to any income
resulting from investment of the reserve fund as described below, however, if
stated in the related prospectus supplement, holders of the subordinated
certificates of the applicable class or subclass may receive distributions with
respect to the mortgage loans or contracts when amounts on deposit in the
reserve fund are less than the Required Reserve. If specified in the applicable
prospectus supplement, whether or not amounts on deposit in the reserve fund
exceed the Required Reserve on any distribution date, the holders of the
subordinated certificates of the applicable class or subclass are entitled to
receive from the Certificate Account their share of the proceeds of any mortgage
loan or contract, or any property acquired in respect thereof, repurchased by
reason of defective documentation or the breach of a representation or warranty
pursuant to the pooling and servicing agreement.
If specified in the applicable prospectus supplement, amounts in the
reserve fund shall be applied in the following order:
(1) to the reimbursement of Advances determined by the servicer and the
subservicers to be otherwise unrecoverable, other than Advances of interest
in connection with prepayments in full, repurchases and liquidations, and
the reimbursement of liquidation expenses incurred by the subservicers and
the servicer if sufficient funds for reimbursement are not otherwise
available in the related Servicing Accounts and Certificate Account;
(2) to the payment to the holders of the senior certificates of that series of
amounts distributable to them on the related distribution date in respect
of scheduled payments of principal and interest due on the related due date
to the extent that sufficient funds in the Certificate Account are not
available therefor; and
(3) to the payment to the holders of the senior certificates of that series of
the principal balance or purchase price, as applicable, of mortgage loans
or contracts repurchased, liquidated or foreclosed during the period ending
on the day prior to the due date to which that distribution relates and
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interest thereon at the related Pass-Through Rate, to the extent that
sufficient funds in the Certificate Account are not available therefor.
Amounts in the reserve fund in excess of the Required Reserve, including
any investment income on amounts in the reserve fund, as set forth below, shall
then be released to the holders of the subordinated certificates, or to some
other person as is specified in the applicable prospectus supplement, as set
forth above.
Funds in the reserve fund for a series shall be invested as provided in the
related pooling and servicing agreement in Eligible Investments. The earnings on
those investments will be withdrawn and paid to the holders of the applicable
class or subclass of subordinated certificates in accordance with their
respective interests in the reserve fund in the priority specified in the
related prospectus supplement. Investment income in the reserve fund is not
available for distribution to the holders of the senior certificates of that
series or otherwise subject to any claims or rights of the holders of the
applicable class or subclass of senior certificates. Eligible Investments for
monies deposited in the reserve fund will be specified in the pooling and
servicing agreement for a series of certificates for which a reserve fund is
established and generally will be limited to investments acceptable to the
related Rating Agency from time to time as being consistent with its outstanding
rating of the certificates. With respect to a reserve fund, Eligible Investments
will be limited, however, to obligations or securities that mature at various
time periods according to a schedule in the related pooling and servicing
agreement based on the current balance of the reserve fund at the time of the
investment or the contractual commitment providing for the investment.
The time necessary for the reserve fund of a series to reach and maintain
the applicable Required Reserve at any time after the initial issuance of the
certificates of that series and the availability of amounts in the reserve fund
for distributions on the related certificates will be affected by the
delinquency, foreclosure and prepayment experience of the mortgage loans or
contracts in the related trust fund and/or in the subordinated pool and
therefore cannot be accurately predicted.
Performance Bond
If stated in the related prospectus supplement, the servicer may be
required to obtain a performance bond that would provide a guarantee of the
performance by the servicer of one or more of its obligations under the related
pooling and servicing agreement, including its obligation to advance delinquent
installments of principal and interest on mortgage loans or contracts and its
obligation to repurchase mortgage loans or contracts in the event of a breach by
the servicer of a representation or warranty contained in the related pooling
and servicing agreement. In the event that the outstanding credit rating of the
obligor of the performance bond is lowered by the related Rating Agency, with
the result that the outstanding rating on the certificates would be reduced by
the related Rating Agency, the servicer will be required to secure a substitute
performance bond issued by an entity with a rating sufficient to maintain the
outstanding rating on the certificates or to deposit and maintain with the
trustee cash in the amount specified in the applicable prospectus supplement.
Description of Insurance
To the extent that the applicable prospectus supplement does not expressly
provide for a form of credit support specified above or for Alternative Credit
Support in lieu of some or all of the insurance mentioned below, the following
paragraphs on insurance shall apply with respect to the mortgage loans included
in the related trust fund. To the extent described in the related prospectus
supplement, each manufactured home that secures a contract will be covered by a
standard hazard insurance policy and other insurance policies. Any material
changes in insurance from the description that follows or the description of any
Alternative Credit Support will be set forth in the applicable prospectus
supplement.
Primary Mortgage Insurance Policies
To the extent specified in the related prospectus supplement, each pooling
and servicing agreement will require the subservicer to cause a primary mortgage
insurance policy to be maintained in full force and effect with respect to each
mortgage loan that is secured by a single family property requiring the
insurance and to act on behalf of the related insured with respect to all
actions required to be taken by the insured under each primary mortgage
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insurance policy. Generally, a primary mortgage insurance policy covers the
amount of the unpaid principal balance of the mortgage loan over 75% of the
value of the mortgaged property at origination. Primary mortgage insurance
policies are generally permitted or required to be terminated when the unpaid
principal balance of the mortgage loan is reduced to 80% of the value of the
mortgaged property at the time of origination. Any primary credit insurance
policies relating to the contracts underlying a series of certificates will be
described in the related prospectus supplement.
The amount of a claim for benefits under a primary mortgage insurance
policy covering a mortgage loan in the related mortgage pool generally will
consist of the insured portion of the unpaid principal amount of the covered
mortgage loan and accrued and unpaid interest thereon and reimbursement of
certain expenses, less:
o all rents or other payments collected or received by the related insured,
other than the proceeds of hazard insurance, that are derived from or in
any way related to the mortgaged property;
o hazard insurance proceeds in excess of the amount required to restore the
mortgaged property and which have not been applied to the payment of the
related mortgage loan;
o amounts expended but not approved by the primary mortgage insurer;
o claim payments previously made by the primary mortgage insurer; and
o unpaid premiums.
As conditions precedent to the filing of or payment of a claim under a
primary mortgage insurance policy covering a mortgage loan in the related
mortgage pool, the related insured generally will be required to, in the event
of default by the mortgagor:
(1) advance or discharge:
(A) all hazard insurance premiums; and
(B) as necessary and approved in advance by the primary mortgage
insurer:
o real estate property taxes;
o all expenses required to preserve, repair and prevent waste to the
mortgaged property so as to maintain the mortgaged property in at least as
good a condition as existed at the effective date of such primary mortgage
insurance policy, ordinary wear and tear excepted;
o property sales expenses;
o any outstanding liens, as defined in the related primary mortgage insurance
policy, on the mortgaged property; and
o foreclosure costs, including court costs and reasonable attorneys' fees;
(2) in the event of a physical loss or damage to the mortgaged property,
have the mortgaged property restored and repaired to at least as good
a condition as existed at the effective date of the related primary
mortgage insurance policy, ordinary wear and tear excepted; and
(3) tender to the primary mortgage insurer good and merchantable title to
and possession of the mortgaged property.
Other provisions and conditions of each primary mortgage insurance policy
covering a mortgage loan in the related mortgage pool generally will provide
that:
(1) no change may be made in the terms of the related mortgage loan
without the consent of the primary mortgage insurer;
(2) written notice must be given to the primary mortgage insurer within
10 days after the related insured becomes aware that a mortgagor is
delinquent in the payment of a sum equal to the aggregate of two
scheduled monthly payments due under the related mortgage loan or
that any
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proceedings affecting the mortgagor's interest in the mortgaged
property securing the mortgage loan have commenced, and thereafter the
insured must report monthly to the primary mortgage insurer the status
of any mortgage loan until the mortgage loan is brought current, those
proceedings are terminated or a claim is filed;
(3) the primary mortgage insurer will have the right to purchase the
related mortgage loan, at any time subsequent to the 10 days' notice
described in (2) above and prior to the commencement of foreclosure
proceedings, at a price equal to the unpaid principal amount of the
mortgage loan, plus accrued and unpaid interest and reimbursable
amounts expended by the related insured for the real estate taxes and
fire and extended coverage insurance on the mortgaged property for a
period not exceeding 12 months, and less the sum of any claim
previously paid under the primary mortgage insurance policy and any
due and unpaid premiums with respect to that policy;
(4) the insured must commence proceedings at certain times specified in
the primary mortgage insurance policy and diligently proceed to
obtain good and merchantable title to and possession of the mortgaged
property;
(5) the related insured must notify the primary mortgage insurer of the
price specified in (3) above at least 15 days prior to the sale of
the mortgaged property by foreclosure, and bid that amount unless the
primary mortgage insurer specifies a lower or higher amount; and
(6) the related insured may accept a conveyance of the mortgaged property
in lieu of foreclosure with written approval of the primary mortgage
insurer provided the ability of the insured to assign specified
rights to the primary mortgage insurer are not thereby impaired or
the specified rights of the primary mortgage insurer are not thereby
adversely affected.
Any rents or other payments collected or received by the related insured
which are derived from or are in any way related to the mortgaged property will
be deducted from any claim payment.
FHA Insurance and VA Guarantees
The FHA is responsible for administering various federal programs,
including mortgage insurance, authorized under the National Housing Act, as
amended, and the United States Housing Act of 1937, as amended. Any FHA
insurance or VA guarantees relating to contracts underlying a series of
certificates will be described in the related prospectus supplement.
The insurance premiums for FHA Loans are collected by HUD approved lenders
or by the servicers of the FHA Loans and are paid to the FHA. The regulations
governing FHA single-family mortgage insurance programs provide that insurance
benefits are payable either upon foreclosure, or other acquisition of
possession, and conveyance of the mortgaged premises to HUD or upon assignment
of the defaulted FHA Loan to HUD. With respect to a defaulted FHA Loan, the
servicer of that FHA Loan will be limited in its ability to initiate foreclosure
proceedings. When it is determined, either by the servicer or HUD, that default
was caused by circumstances beyond the mortgagor's control, the servicer will be
expected to make an effort to avoid foreclosure by entering, if feasible, into
one of a number of available forms of forbearance plans with the mortgagor.
Forbearance plans may involve the reduction or suspension of scheduled mortgage
payments for a specified period, with payments to be made upon or before the
maturity date of the mortgage, or the recasting of payments due under the
mortgage up to or beyond the scheduled maturity date. In addition, when a
default caused by circumstances beyond the mortgagor's control is accompanied by
certain other criteria, HUD may provide relief by making payments to the
servicer of the related mortgage loan in partial or full satisfaction of amounts
due thereunder, which payments are to be repaid by the mortgagor to HUD, or by
accepting assignment of the mortgage loan from the servicer. With certain
exceptions, at least three full monthly installments must be due and unpaid
under the mortgage loan, and HUD must have rejected any request for relief from
the mortgagor before the servicer may initiate foreclosure proceedings.
HUD has the option, in most cases, to pay insurance claims in cash or in
debentures issued by HUD. Presently, claims are being paid in cash, and claims
have not been paid in debentures since 1965. HUD debentures issued in
satisfaction of FHA insurance claims bear interest at the applicable HUD
debenture interest rate. The servicer of each FHA Loan in a mortgage pool will
be obligated to purchase any debenture issued in satisfaction of a defaulted FHA
Loan serviced by it for an amount equal to the principal amount of the FHA Loan.
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The amount of insurance benefits generally paid by the FHA is equal to the
entire unpaid principal balance of the defaulted FHA Loan, adjusted to reimburse
the servicer of that FHA Loan for certain costs and expenses and to deduct
certain amounts received or retained by the servicer after default. When
entitlement to insurance benefits results from foreclosure, or other acquisition
of possession, and conveyance to HUD, the related servicer is compensated for no
more than two-thirds of its foreclosure costs, and is compensated for interest
accrued and unpaid prior to that date in general only to the extent it was
allowed pursuant to a forbearance plan approved by HUD. When entitlement to
insurance benefits results from assignment of the FHA Loan to HUD, the insurance
payment includes full compensation for interest accrued and unpaid to the
assignment date. The insurance payment itself, upon foreclosure of an FHA Loan,
bears interest from a date 30 days after the mortgagor's first uncorrected
failure to perform any obligation or make any payment due under the mortgage
loan and, upon assignment, from the date of assignment, to the date of payment
of the claim, in each case at the same interest rate as the applicable HUD
debenture interest rate as described above.
The maximum guarantee that may be issued by the VA under a VA Loan is 50%
of the principal amount of the VA Loan if the principal amount of the mortgage
loan is $45,000 or less, the lesser of $36,000 and 40% if the principal amount
of the VA Loan if the principal amount of that VA Loan is greater than $45,000
but less than or equal to $144,000, and the lesser of $46,000 and 25% of the
principal amount of the mortgage loan if the principal amount of the mortgage
loan is greater than $144,000. The liability on the guarantee is reduced or
increased pro rata with any reduction or increase in the amount of indebtedness,
but in no event will the amount payable on the guarantee exceed the amount of
the original guarantee. The VA may, at its option and without regard to the
guarantee, make full payment to a mortgage holder of unsatisfied indebtedness on
a mortgage upon its assignment to the VA.
With respect to a defaulted VA Loan, the servicer is, absent exceptional
circumstances, authorized to announce its intention to foreclose only when the
default has continued for three months. Generally, a claim for the guarantee is
submitted after liquidation of the mortgaged property.
The amount payable under the guarantee will be the percentage of the VA
Loan originally guaranteed applied to indebtedness outstanding as of the
applicable date of computation specified in the VA regulations. Payments under
the guarantee will be equal to the unpaid principal amount of the VA Loan,
interest accrued on the unpaid balance of the VA Loan to the appropriate date of
computation and limited expenses of the mortgagee, but in each case only to the
extent that those amounts have not been recovered through liquidation of the
mortgaged property. The amount payable under the guarantee may in no event
exceed the amount of the original guarantee.
Standard Hazard Insurance Policies on Mortgage Loans
The pooling and servicing agreement will require that standard hazard
insurance policies covering the mortgage loans in a mortgage pool provide for
coverage at least equal to the applicable state standard form of fire insurance
policy with extended coverage. In general, the standard form of fire and
extended coverage policy will cover physical damage to, or destruction of, the
improvements on the mortgaged property caused by fire, lightning, explosion,
smoke, windstorm, hail, riot, strike and civil commotion, subject to the
conditions and exclusions particularized in each policy. Because the standard
hazard insurance policies relating to mortgage loans will be underwritten by
different insurers and will cover mortgaged properties located in various
states, those policies will not contain identical terms and conditions. The most
significant terms thereof, however, generally will be determined by state law
and generally will be similar.
Most standard hazard insurance policies typically will not cover any
physical damage resulting from the following: war, revolution, governmental
actions, floods and other water- related causes, earth movement, including
earthquakes, landslides and mudflows, nuclear reaction, wet or dry rot, vermin,
rodents, insects or domestic animals, theft and, in certain cases, vandalism.
The foregoing list is merely indicative of certain kinds of uninsured risks and
is not intended to be all-inclusive.
The standard hazard insurance policies covering mortgaged properties
securing mortgage loans typically will contain a "coinsurance" clause which, in
effect, will require the insured at all times to carry insurance of a specified
percentage, generally 80% to 90%, of the full replacement value of the
dwellings, structures and other improvements on the mortgaged property in order
to recover the full amount of any partial loss. If the insured's
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coverage falls below this specified percentage, the coinsurance clause will
provide that the insurer's liability in the event of partial loss will not
exceed the greater of:
o the actual cash value, the replacement cost less physical depreciation, of
the dwellings, structures and other improvements damaged or destroyed; or
o the proportion of the loss, without deduction for depreciation, as the
amount of insurance carried bears to the specified percentage of the full
replacement cost of the related dwellings, structures and other
improvements.
The depositor will not require that a standard hazard or flood insurance
policy be maintained on the Cooperative Dwelling relating to any Cooperative
Loan. Generally, the Cooperative itself is responsible for maintenance of hazard
insurance for the property owned by the Cooperative and the tenant-stockholders
of that Cooperative do not maintain individual hazard insurance policies. To the
extent, however, that a Cooperative and the related borrower on a Cooperative
Loan do not maintain insurance or do not maintain adequate coverage or any
insurance proceeds are not applied to the restoration of damaged property, any
damage to that borrower's Cooperative Dwelling or that Cooperative's building
could significantly reduce the value of the collateral securing the related
Cooperative Loan to the extent not covered by other credit support.
Any losses incurred with respect to mortgage loans due to uninsured risks,
including earthquakes, mudflows and, with respect to mortgaged properties
located in areas other than HUD designated flood areas, floods, or insufficient
hazard insurance proceeds and any hazard losses incurred with respect to
Cooperative Loans could affect distributions to the certificateholders.
With respect to mortgage loans secured by commercial property, Mixed-Use
Property and multifamily property, certain additional insurance policies may be
required; for example, general liability insurance for bodily injury and
property damage, steam boiler coverage where a steam boiler or other pressure
vessel is in operation, business interruption insurance and rent loss insurance
to cover income losses following damage or destruction of the mortgaged
property. The related prospectus supplement will specify the required types and
amounts of additional insurance that may be required in connection with mortgage
loans secured by commercial property, Mixed-Use Property and multifamily
property and will describe the general terms of such insurance and conditions to
payment thereunder.
Standard Hazard Insurance Policies on the Manufactured Homes
The terms of the pooling and servicing agreement will require the servicer
to cause to be maintained with respect to each contract one or more standard
hazard insurance policies which provide, at a minimum, the same coverage as a
standard form file and extended coverage insurance policy that is customary for
manufactured housing, issued by a company authorized to issue those policies in
the state in which the manufactured home is located, and in an amount which is
not less than the maximum insurable value of that manufactured home or the
principal balance due from the obligor on the related contract, whichever is
less; provided, however, that the amount of coverage provided by each standard
hazard insurance policy shall be sufficient to avoid the application of any
coinsurance clause contained in the related standard hazard insurance policy.
When a manufactured home's location was, at the time of origination of the
related contract, within a federally designated flood area, the servicer also
shall cause such flood insurance to be maintained, which coverage shall be at
least equal to the minimum amount specified in the preceding sentence or such
lesser amount as may be available under the federal flood insurance program.
Each standard hazard insurance policy caused to be maintained by the servicer
shall contain a standard loss payee clause in favor of the servicer and its
successors and assigns. If any obligor is in default in the payment of premiums
on its standard hazard insurance policy or policies, the servicer shall pay the
premiums out of its own funds, and may add separately the premium to the
obligor's obligation as provided by the contract, but may not add the premium to
the remaining principal balance of the contract.
The servicer may maintain, in lieu of causing individual standard hazard
insurance policies to be maintained with respect to each manufactured home, and
shall maintain, to the extent that the related contract does not require the
obligor to maintain a standard hazard insurance policy with respect to the
related manufactured home, one or more blanket insurance policies covering
losses on the obligor's interest in the contracts resulting from
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the absence or insufficiency of individual standard hazard insurance policies.
Any blanket policy shall be substantially in the form and in the amount carried
by the servicer as of the date of the pooling and servicing agreement. The
servicer shall pay the premium for the policy on the basis described in that
policy and shall pay any deductible amount with respect to claims under the
policy relating to the contracts. If the insurer thereunder shall cease to be
acceptable to the servicer, the servicer shall exercise its best reasonable
efforts to obtain from another insurer a replacement policy comparable to the
original policy.
If the servicer shall have repossessed a manufactured home on behalf of the
trustee, the servicer shall either:
o maintain hazard insurance with respect to the related manufactured home,
which expenses will be reimbursable to the servicer out of the trust fund;
or
o indemnify the trustee against any damage to the related manufactured home
prior to resale or other disposition.
Pool Insurance Policies
If stated in the related prospectus supplement, the servicer will obtain a
pool insurance policy for a mortgage pool underlying certificates of that
series. The pool insurance policy will be issued by the pool insurer named in
the applicable prospectus supplement. Each pool insurance policy will cover any
loss, subject to the limitations described below, by reason of default to the
extent the related mortgage loan is not covered by any primary mortgage
insurance policy, FHA insurance or VA guarantee. The amount of the pool
insurance policy, if any, with respect to a series will be specified in the
related prospectus supplement. A pool insurance policy, however, will not be a
blanket policy against loss, because claims thereunder may only be made for
particular defaulted mortgage loans and only upon satisfaction of certain
conditions precedent described below. Any pool insurance policies relating to
the contracts will be described in the related prospectus supplement.
The pool insurance policy generally will provide that as a condition
precedent to the payment of any claim the insured will be required
(1) to advance hazard insurance premiums on the mortgaged property
securing the defaulted mortgage loan;
(2) to advance, as necessary and approved in advance by the pool
insurer,
o real estate property taxes;
o all expenses required to preserve and repair the mortgaged property, to
protect the mortgaged property from waste, so that the mortgaged property
is in at least as good a condition as existed on the date upon which
coverage under the pool insurance policy with respect to the related
mortgaged property first became effective, ordinary wear and tear excepted;
o property sales expenses;
o any outstanding liens on the mortgaged property; and
o foreclosure costs including court costs and reasonable attorneys' fees; and
(3) if there has been physical loss or damage to the mortgaged property,
to restore the mortgaged property to its condition, reasonable wear
and tear excepted, as of the issue date of the pool insurance policy.
It also will be a condition precedent to the payment of any claim under the pool
insurance policy that the related insured maintain a primary mortgage insurance
policy that is acceptable to the pool insurer on all mortgage loans that have
loan-to-value ratios at the time of origination in excess of 80%. FHA insurance
and VA guarantees will be considered to be an acceptable primary mortgage
insurance policy under the pool insurance policy.
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Assuming satisfaction of these conditions, the related pool insurer will
pay to the related insured the amount of loss, but not more than the remaining
amount of coverage under the pool insurance policy determined as follows:
(1) the amount of the unpaid principal balance of the related mortgage loan
immediately prior to the Approved Sale of the mortgaged property;
(2) the amount of the accumulated unpaid interest on the related mortgage loan
to the date of claim settlement at the applicable mortgage rate; and
(3) advances as described above, less:
o all rents or other payments, excluding proceeds of fire and extended
coverage insurance, collected or received by the related insured, which are
derived from or in any way related to the mortgaged property;
o amounts paid under applicable fire and extended coverage policies which are
in excess of the cost of restoring and repairing the mortgaged property and
which have not been applied to the payment of the related mortgage loan;
o any claims payments previously made by the pool insurer on the related
mortgage loan;
o due and unpaid premiums payable with respect to the pool insurance policy;
and
o all claim payments received by the related insured pursuant to any primary
mortgage insurance policy.
The related pool insurer must be provided with good and merchantable title
to the mortgaged property as a condition precedent to the payment of any amount
of a claim for benefits under a primary mortgage insurance policy. If any
mortgaged property securing a defaulted mortgage loan is damaged and the
proceeds, if any, from the related standard hazard insurance policy or the
applicable special hazard insurance policy are insufficient to restore the
mortgaged property to a condition sufficient to permit recovery under the pool
insurance policy, the servicer or the subservicer of the related mortgage loan
will not be required to expend its own funds to restore the damaged mortgaged
property unless it is determined:
o that the restoration will increase the proceeds to the certificateholders
of the related series on liquidation of the mortgage loan, after
reimbursement of the expenses of the servicer or the subservicer, as the
case may be; and
o that the expenses will be recoverable by it through payments under the
financial guaranty insurance policy, surety bond or letter of credit, if
any, with respect to that series, Liquidation Proceeds, Insurance Proceeds,
amounts in the reserve fund, if any, or payments under any Alternative
Credit Support, if any, with respect to that series.
No pool insurance policy will insure, and many primary mortgage insurance
policies may not insure, against loss sustained by reason of a default arising
from, among other things:
(1) fraud or negligence in the origination or servicing of a mortgage
loan, including misrepresentation by the mortgagor, any unaffiliated
seller, the originator or other persons involved in the origination
thereof; or
(2) the exercise by the related insured of a "due-on-sale" clause or
other similar provision in the mortgage loan.
Depending upon the nature of the event, a breach of representation made by
the depositor or a seller may also have occurred. Such a breach, if it
materially and adversely affects the interests of the certificateholders of that
series and cannot be cured, would give rise to a repurchase obligation on the
part of the depositor or seller as more fully described under "The Trust
Fund--Mortgage Loan Program--Representations by Unaffiliated Sellers;
Repurchases" and "Description of the Certificates--Assignment of Mortgage
Loans."
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The original amount of coverage under the pool insurance policy will be
reduced over the life of the certificates of the related series by the aggregate
dollar amount of claims paid less the aggregate of the net amounts realized by
the pool insurer upon disposition of all foreclosed mortgaged properties covered
thereby.
The amount of claims paid will include certain expenses incurred by the
servicer or by the subservicer of the defaulted mortgage loan as well as accrued
interest on delinquent mortgage loans to the date of payment of the claim.
Accordingly, if aggregate net claims paid under a pool insurance policy reach
the original policy limit, coverage under the pool insurance policy will lapse
and any further losses will be borne by the holders of the certificates of that
series. In addition, unless the servicer or the related subservicer could
determine that an Advance in respect of a delinquent mortgage loan would be
recoverable to it from the proceeds of the liquidation of that mortgage loan or
otherwise, neither the subservicer nor the servicer would be obligated to make
an Advance respecting any delinquency, since the Advance would not be ultimately
recoverable to it from either the pool insurance policy or from any other
related source. See "Description of the Certificates--Advances."
Any pool insurance policy for a contract pool underlying a series of
certificates will be described in the related prospectus supplement.
Special Hazard Insurance Policies
If stated in the related prospectus supplement, the servicer shall obtain a
special hazard insurance policy for the mortgage pool underlying a series of
certificates. A special hazard insurance policy for a mortgage pool underlying
the certificates of a series will be issued by the special hazard insurer named
in the applicable prospectus supplement. Each special hazard insurance policy
will, subject to the limitations described below, protect against loss by reason
of damage to mortgaged properties caused by certain hazards, including vandalism
and earthquakes and, except where the mortgagor is required to obtain flood
insurance, floods and mudflows, not insured against under the standard form of
hazard insurance policy for the respective states in which the mortgaged
properties are located. See "Description of the Certificates--Maintenance of
Insurance Policies" and "--Standard Hazard Insurance." The special hazard
insurance policy will not cover losses occasioned by war, certain governmental
actions, nuclear reaction and certain other perils. Coverage under a special
hazard insurance policy will be at least equal to the amount set forth in the
related prospectus supplement.
Subject to the foregoing limitations, each special hazard insurance policy
will provide that, when there has been damage to the mortgaged property securing
a defaulted mortgage loan and to the extent the damage is not covered by the
standard hazard insurance policy, if any, maintained by the mortgagor, the
servicer or the subservicer, the special hazard insurer will pay the lesser of:
o the cost of repair or replacement of the mortgaged property; or
o upon transfer of the mortgaged property to the special hazard insurer, the
unpaid balance of the related mortgage loan at the time of acquisition of
the mortgaged property by foreclosure or deed in lieu of foreclosure, plus
accrued interest to the date of claim settlement, excluding late charges
and penalty interest, and certain expenses incurred in respect of the
mortgaged property.
No claim may be validly presented under a special hazard insurance policy
unless:
o hazard insurance on the mortgaged property has been kept in force and other
reimbursable protection, preservation and foreclosure expenses have been
paid, all of which must be approved in advance as necessary by the related
insurer; and
o the related insured has acquired title to the mortgaged property as a
result of default by the mortgagor.
If the sum of the unpaid principal balance plus accrued interest and certain
expenses is paid by the special hazard insurer, the amount of further coverage
under the related special hazard insurance policy will be reduced by that amount
less any net proceeds from the sale of the mortgaged property. Any amount paid
as the cost of repair of the mortgaged property will further reduce coverage by
that amount.
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The terms of the related pooling and servicing agreement will require the
subservicer to maintain the special hazard insurance policy in full force and
effect throughout the term of the pooling and servicing agreement. If a pool
insurance policy is required to be maintained pursuant to the related pooling
and servicing agreement, the special hazard insurance policy will be designed to
permit full recoveries under the pool insurance policy in circumstances where
recoveries would otherwise be unavailable because the related mortgaged property
has been damaged by a cause not insured against by a standard hazard insurance
policy. In that event, the related pooling and servicing agreement will provide
that, if the related pool insurance policy shall have terminated or been
exhausted through payment of claims, the servicer will be under no further
obligation to maintain the special hazard insurance policy.
Any special hazard insurance policies for a contract pool underlying a
series of certificates will be described in the related prospectus supplement.
Mortgagor Bankruptcy Bond
In the event of a personal bankruptcy of a mortgagor, a bankruptcy court
may establish the value of the related mortgaged property or Cooperative
Dwelling at an amount less than the then outstanding principal balance of the
related mortgage loan. The amount of the secured debt could be reduced to that
lesser value, and the holder of the mortgage loan thus would become an unsecured
creditor to the extent the outstanding principal balance of that mortgage loan
exceeds the value so assigned to the related mortgaged property or Cooperative
Dwelling by the bankruptcy court. In addition, certain other modifications of
the terms of a mortgage loan can result from a bankruptcy proceeding. If stated
in the related prospectus supplement, losses resulting from a bankruptcy
proceeding affecting the mortgage loans in a mortgage pool will be covered under
a mortgagor bankruptcy bond, or any other instrument that will not result in a
downgrading of the rating of the certificates of a series by the related Rating
Agency. Any mortgagor bankruptcy bond will provide for coverage in an amount
acceptable to the related Rating Agency, which will be set forth in the related
prospectus supplement. Subject to the terms of the mortgagor bankruptcy bond,
the issuer thereof may have the right to purchase any mortgage loan with respect
to which a payment or drawing has been made or may be made for an amount equal
to the outstanding principal amount of that mortgage loan plus accrued and
unpaid interest thereon. The coverage of the mortgagor bankruptcy bond with
respect to a series of certificates may be reduced as long as any reduction will
not result in a reduction of the outstanding rating of the certificates of that
series by the related Rating Agency.
Certain Legal Aspects of the Mortgage Loans and Contracts
The following discussion contains summaries of some legal aspects of the
mortgage loans and contracts that are general in nature. Because these legal
aspects are governed in part by state law, which laws may differ substantially
from state to state, the summaries do not purport to be complete, to reflect the
laws of any particular state or to encompass the laws of all states in which the
mortgaged properties may be situated. These legal aspects are in addition to the
requirements of any applicable FHA regulations described in "Description of FHA
Insurance" in this prospectus and in the accompanying prospectus supplement
regarding the contracts partially insured by FHA under Title I of the National
Housing Act, or Title I. The summaries are qualified in their entirety by
reference to the applicable federal and state laws governing the mortgage loans
and contracts.
The Mortgage Loans
General. The mortgage loans, other than Cooperative Loans, will be secured
by deeds of trust, mortgages or deeds to secure debt depending on the prevailing
practice in the state in which the related mortgaged property is located. In
some states, a mortgage, deed of trust or deed to secure debt creates a lien on
the related real property. In other states, the mortgage, deed of trust or deed
to secure debt conveys legal title to the property to the mortgagee subject to a
condition subsequent, for example, the payment of the indebtedness secured
thereby. These instruments are not prior to the lien for real estate taxes and
assessments and other charges imposed under governmental police powers. Priority
with respect to these instruments depends on their terms and in some cases on
the terms of separate subordination or inter-creditor agreements, and in most
cases on the order of recordation of the mortgage deed of trust or deed to
secure debt in the appropriate recording office.
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There are two parties to a mortgage, the mortgagor, who is the borrower and
homeowner, and the mortgagee, who is the lender. Under the mortgage instrument,
the mortgagor delivers to the mortgagee a note or bond and the mortgage. In some
states, three parties may be involved in a mortgage financing when title to the
property is held by a land trustee under a land trust agreement of which the
borrower is the beneficiary; at origination of a mortgage loan, the land
trustee, as fee owner of the property, executes the mortgage and the borrower
executes a separate undertaking to make payments on the related Mortgage Note.
Although a deed of trust is similar to a mortgage, a deed of trust has three
parties: the grantor, who is the borrower/homeowner; the beneficiary, who is the
lender; and a third-party grantee called the trustee. Under a deed of trust, the
borrower grants the mortgaged property to the trustee for the benefit of the
beneficiary, irrevocably until satisfaction of the debt. A deed to secure debt
typically has two parties, under which the borrower, or grantor, conveys title
to the real property to the grantee, or lender, typically with a power of sale,
until the time when the debt is repaid. The trustee's authority under a deed of
trust and the mortgagee's or grantee's authority under a mortgage or a deed to
secure debt, as applicable, are governed by the law of the state in which the
real property is located, the express provisions of the deed of trust, mortgage
or deed to secure debt and, in some deed of trust transactions, the directions
of the beneficiary.
Cooperative Loans. If stated in the prospectus supplement relating to a
series of securities, the loans may include Cooperative Loans. Each note
evidencing a Cooperative Loan will be secured by a security interest in shares
issued by the Cooperative that owns the related apartment building and in the
related proprietary lease or occupancy agreement granting exclusive rights to
occupy a specific dwelling unit in the Cooperative's building. The security
agreement will create a lien on, or grant a security interest in, the
Cooperative shares and proprietary leases or occupancy agreements, the priority
of which will depend on, among other things, the terms of the particular
security agreement as well as the order of recordation of the agreement, or the
filing of the financing statements related thereto, in the appropriate recording
office or the taking of possession of the Cooperative shares, depending on the
law of the state in which the Cooperative is located. This type of lien or
security interest is not, in general, prior to liens in favor of the cooperative
corporation for unpaid assessments or common charges.
In most cases, each Cooperative owns in fee or has a leasehold interest in
all the real property and owns in fee or leases the building and all separate
dwelling units in the Cooperative. The Cooperative is directly responsible for
property management and, in most cases, payment of real estate taxes, other
governmental impositions and hazard and liability insurance. If there is an
underlying mortgage or mortgages on the Cooperative's building or underlying
land, as is typically the case, or an underlying lease of the land, as is the
case in some instances, the Cooperative, as mortgagor or lessee, as the case may
be, is also responsible for fulfilling the mortgage or rental obligations.
An underlying mortgage loan is ordinarily obtained by the Cooperative in
connection with either the construction or purchase of the Cooperative's
building or the obtaining of capital by the Cooperative. The interest of the
occupant under proprietary leases or occupancy agreements as to which that
Cooperative is the landlord is usually subordinate to the interest of the holder
of an underlying mortgage and to the interest of the holder of a land lease. If
the Cooperative is unable to meet the payment obligations:
o arising under an underlying mortgage, the mortgagee holding an underlying
mortgage could foreclose on that mortgage and terminate all subordinate
proprietary leases and occupancy agreements; or
o arising under its land lease;
the holder of the landlord's interest under the land lease could terminate it
and all subordinate proprietary leases and occupancy agreements. In addition, an
underlying mortgage on a Cooperative may provide financing in the form of a
mortgage that does not fully amortize, with a significant portion of principal
being due in one final payment at maturity. The inability of the Cooperative to
refinance a mortgage and its consequent inability to make the final payment
could lead to foreclosure by the mortgagee. Similarly, a land lease has an
expiration date and the inability of the Cooperative to extend its term or, in
the alternative, to purchase the land, could lead to termination of the
Cooperative's interest in the property and termination of all proprietary leases
and occupancy agreements. In either event, a foreclosure by the holder of an
underlying mortgage or the termination of the underlying lease could eliminate
or significantly diminish the value of any collateral held by the lender who
financed the purchase by an
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individual tenant-stockholder of shares of the Cooperative, or in the case of
the loans, the collateral securing the Cooperative Loans.
Each Cooperative is owned by shareholders, referred to as
tenant-stockholders, who, through ownership of stock or shares in the
Cooperative, receive proprietary leases or occupancy agreements which confer
exclusive rights to occupy specific dwellings. In most instances, a
tenant-stockholder of a Cooperative must make a monthly maintenance payment to
the Cooperative under the proprietary lease, which rental payment represents the
tenant-stockholder's pro rata share of the Cooperative's payments for its
underlying mortgage, real property taxes, maintenance expenses and other capital
or ordinary expenses. An ownership interest in a Cooperative and accompanying
occupancy rights may be financed through a Cooperative Loan evidenced by a note
and secured by an assignment of and a security interest in the occupancy
agreement or proprietary lease and a security interest in the related shares of
the related Cooperative. The lender usually takes possession of the stock
certificate and a counterpart of the proprietary lease or occupancy agreement
and a financing statement covering the proprietary lease or occupancy agreement
and the Cooperative shares is filed in the appropriate state or local offices to
perfect the lender's interest in its collateral. In accordance with the
limitations discussed below, on default of the tenant-stockholder, the lender
may sue for judgment on the related note, dispose of the collateral at a public
or private sale or otherwise proceed against the collateral or
tenant-stockholder as an individual as provided in the security agreement
covering the assignment of the proprietary lease or occupancy agreement and the
pledge of Cooperative shares. See "--Foreclosure on Shares of Cooperatives" in
this prospectus.
Tax Aspects of Cooperative Ownership. In general, a "tenant-stockholder,"
as defined in Section 216(b)(2) of the 216(b)(1) of the Code is allowed a
deduction for amounts paid or accrued within his or her taxable year to the
corporation representing his or her proportionate share of certain interest
expenses and real estate taxes allowable as a deduction under Section 216(a) of
the Code to the corporation under Sections 163 and 164 of the Code. In order for
a corporation to qualify under Section 216(b)(1) of the Code for its taxable
year in which those items are allowable as a deduction to the corporation, the
section requires, among other things, that at least 80% of the gross income of
the corporation be derived from its tenant-stockholders. By virtue of this
requirement, the status of a corporation for purposes of Section 216(b)(1) of
the Code must be determined on a year-to-year basis. Consequently, there can be
no assurance that Cooperatives relating to the Cooperative Loans will qualify
under this section for any particular year. If a Cooperative fails to qualify
for one or more years, the value of the collateral securing any related
Cooperative Loans could be significantly impaired because no deduction would be
allowable to tenant-stockholders under Section 216(a) of the Code with respect
to those years. In view of the significance of the tax benefits accorded
tenant-stockholders of a corporation that qualifies under Section 216(b)(1) of
the Code, the likelihood that this type of failure would be permitted to
continue over a period of years appears remote.
Foreclosure on Mortgage Loans. Although a deed of trust or a deed to secure
debt may also be foreclosed by judicial action, foreclosure of a deed of trust
or a deed to secure debt is typically accomplished by a non-judicial sale under
a specific provision in the deed of trust or deed to secure debt which
authorizes the trustee or grantee, as applicable, to sell the property on
default by the borrower under the terms of the note or deed of trust or deed to
secure debt. In addition to any notice requirements contained in a deed of trust
or deed to secure debt, in some states, the trustee or grantee, as applicable,
must record a notice of default and send a copy to the borrower and to any
person who has recorded a request for a copy of notice of default and notice of
sale. In addition, in some states, the trustee or grantee, as applicable, must
provide notice to any other individual having an interest of record in the real
property, including any junior lienholders. If the deed of trust or deed to
secure debt is not reinstated within a specified period, a notice of sale must
be posted in a public place and, in most states, published for a specific period
of time in one or more newspapers. In addition, some states' laws require that a
copy of the notice of sale be posted on the property and sent to all parties
having an interest of record in the real property.
Foreclosure of a mortgage usually is accomplished by judicial action. In
most cases, the action is initiated by the service of legal pleadings on all
parties having an interest of record in the real property. Delays in completion
of the foreclosure may result from difficulties in locating and serving
necessary parties, including borrowers, such as international borrowers, located
outside the jurisdiction in which the mortgaged property is located.
Difficulties in foreclosing on mortgaged properties owned by international
borrowers may result in increased foreclosure costs, which may reduce the amount
of proceeds from the liquidation of the related loan available to be distributed
to the certificateholders of the related series. In addition, delays in
completion of the foreclosure and additional losses may
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result where loan documents relating to the loan are missing. If the mortgagee's
right to foreclose is contested, the legal proceedings necessary to resolve the
issue can be time-consuming.
In some states, the borrower has the right to reinstate the loan at any
time following default until shortly before the trustee's sale. In general, in
those states, the borrower, or any other person having a junior encumbrance on
the real estate, may, during a reinstatement period, cure the default by paying
the entire amount of defaulted payments and all other sums owing lender due to
the default, plus the costs and expenses incurred in enforcing the obligation.
In the case of foreclosure under a mortgage, a deed of trust or deed to
secure debt, the sale by the referee or other designated officer or by the
trustee or grantee, as applicable, is a public sale. However, because of the
difficulty a potential buyer at the sale may have in determining the exact
status of title and because the physical condition of the property may have
deteriorated during the foreclosure proceedings, it is uncommon for a third
party to purchase the property at a foreclosure sale. Rather, it is common for
the lender to purchase the property from the trustee or grantee, as applicable,
or referee for a credit bid less than or equal to the unpaid principal amount of
the loan, accrued and unpaid interest and the expense of foreclosure, in which
case the mortgagor's debt will be extinguished unless the lender purchases the
property for a lesser amount and preserves its right against a borrower to seek
a deficiency judgment if such remedy is available under state law and the
related loan documents. In some states, there is a statutory minimum purchase
price that the lender may offer for the property and in most cases, state law
controls the amount of foreclosure costs and expenses, including attorneys'
fees, which may be recovered by a lender. Thereafter, subject to the right of
the borrower in some states to remain in possession during the redemption
period, the lender will assume the burdens of ownership, including obtaining
hazard insurance, paying taxes and making repairs at its own expense that are
necessary to render the property suitable for sale. In most cases, the lender
will obtain the services of a real estate broker and pay the broker's commission
in connection with the sale of the property. Depending on market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property and, in some states, the lender may be entitled to a
deficiency judgment. In some cases, a deficiency judgment may be pursued in lieu
of foreclosure. Any loss may be reduced by the receipt of any mortgage insurance
proceeds or other forms of credit enhancement for a series of securities. See
"Description of Credit Enhancement" in this prospectus.
Foreclosure on Junior Mortgage Loans. A junior mortgagee may not foreclose
on the property securing a junior loan unless it forecloses subject to the
senior mortgages, in which case it must either pay the entire amount due on the
senior mortgages to the senior mortgagees prior to or at the time of the
foreclosure sale or undertake the obligation to make payments on the senior
mortgages if the mortgagor is in default thereunder, in either event adding the
amounts expended to the balance due on the junior loan. In addition, if the
foreclosure by a junior mortgagee triggers the enforcement of a "due-on-sale"
clause in a senior mortgage, the junior mortgagee may be required to pay the
full amount of the senior mortgages to the senior mortgagees, to avoid a default
with respect thereto. Accordingly, if the junior lender purchases the property,
the junior lender's title will be subject to all senior liens and claims and
certain governmental liens. The proceeds received by the referee or trustee from
the sale are applied first to the costs, fees and expenses of sale and then in
satisfaction of the indebtedness secured by the mortgage or deed of trust that
is being foreclosed. Any remaining proceeds are typically payable to the holders
of junior mortgages or deeds of trust and other liens and claims in order of
their priority, whether or not the borrower is in default. Any additional
proceeds are usually payable to the mortgagor or trustor. The payment of the
proceeds to the holders of junior mortgages may occur in the foreclosure action
of the senior mortgagee or may require the institution of separate legal
proceedings. See "Description of the Securities--Servicing and Administration of
Loans--Realization Upon Defaulted Loans" in this prospectus.
Foreclosure on Shares of Cooperatives. The Cooperative shares owned by the
tenant-stockholder, together with the rights of the tenant-stockholder under the
proprietary lease or occupancy agreement, are pledged to the lender and are, in
almost all cases, in accordance with restrictions on transfer as set forth in
the Cooperative's certificate of incorporation and by-laws, as well as in the
proprietary lease or occupancy agreement. The proprietary lease or occupancy
agreement, even while pledged, may be cancelled by the Cooperative for failure
by the tenant-stockholder to pay rent or other obligations or charges owed by
the tenant-stockholder, including mechanics' liens against the Cooperative's
building incurred by the tenant-stockholder.
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In most cases, rent and other obligations and charges arising under a
proprietary lease or occupancy agreement which are owed to the Cooperative are
made liens on the shares to which the proprietary lease or occupancy agreement
relates. In addition, the proprietary lease or occupancy agreement in most cases
permits the Cooperative to terminate the lease or agreement if the borrower
defaults in the performance of covenants thereunder. Typically, the lender and
the Cooperative enter into a recognition agreement which, together with any
lender protection provisions contained in the proprietary lease or occupancy
agreement, establishes the rights and obligations of both parties in the event
of a default by the tenant-stockholder on its obligations under the proprietary
lease or occupancy agreement. A default by the tenant-stockholder under the
proprietary lease or occupancy agreement will usually constitute a default under
the security agreement between the lender and the tenant-stockholder.
The recognition agreement in most cases provides that, if the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the Cooperative will take no action to terminate the lease or
agreement until the lender has been provided with notice of and an opportunity
to cure the default. The recognition agreement typically provides that if the
proprietary lease or occupancy agreement is terminated, the Cooperative will
recognize the lender's lien against proceeds from a sale of the shares and the
proprietary lease or occupancy agreement allocated to the dwelling, subject,
however, to the Cooperative's right to sums due under the proprietary lease or
occupancy agreement or which have become liens on the shares relating to the
proprietary lease or occupancy agreement. The total amount owed to the
Cooperative by the tenant-stockholder, which the lender in most cases cannot
restrict and does not monitor, could reduce the amount realized upon a sale of
the collateral below the outstanding principal balance of the Cooperative Loan
and accrued and unpaid interest thereon.
Recognition agreements also typically provide that if the lender succeeds
to the tenant-shareholder's shares and proprietary lease or occupancy agreement
as the result of realizing upon its collateral for a Cooperative Loan, the
lender must obtain the approval or consent of the board of directors of the
Cooperative as required by the proprietary lease before transferring the
Cooperative shares and assigning the proprietary lease. This approval or consent
is usually based on the prospective purchaser's income and net worth, among
other factors, and may significantly reduce the number of potential purchasers,
which could limit the ability of the lender to sell and realize upon the value
of the collateral. In most cases, the lender is not limited in any rights it may
have to dispossess the tenant-stockholder.
Because of the nature of Cooperative Loans, lenders do not require the
tenant-stockholder, the borrower, to obtain title insurance of any type.
Consequently, the existence of any prior liens or other imperfections of title
affecting the Cooperative's building or real estate also may adversely affect
the marketability of the shares allocated to the dwelling unit in the event of
foreclosure.
A foreclosure on the Cooperative shares is accomplished by public sale in
accordance with the provisions of Article 9 of the Uniform Commercial Code, or
UCC, and the security agreement relating to those shares. Article 9 of the UCC
requires that a sale be conducted in a "commercially reasonable" manner. Whether
a sale has been conducted in a "commercially reasonable" manner will depend on
the facts in each case. In determining commercial reasonableness, a court will
look to the notice given the debtor and the method, manner, time, place and
terms of the sale and the sale price. In most instances, a sale conducted
according to the usual practice of creditors selling similar collateral in the
same area will be considered reasonably conducted.
Where the lienholder is the junior lienholder, any foreclosure may be
delayed until the junior lienholder obtains actual possession of such
Cooperative shares. Additionally, if the lender does not have a first priority
perfected security interest in the Cooperative shares, any foreclosure sale
would be subject to the rights and interests of any creditor holding senior
interests in the shares. Also, a junior lienholder may not be able to obtain a
recognition agreement from a Cooperative since many cooperatives do not permit
subordinate financing. Without a recognition agreement, the junior lienholder
will not be afforded the usual lender protections from the Cooperative which are
in most cases provided for in recognition agreements.
Article 9 of the UCC provides that the proceeds of the sale will be applied
first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. The recognition
agreement, however, in most cases provides that the lender's right to
reimbursement is subject to the right of the Cooperative corporation to receive
sums due under the proprietary lease or occupancy agreement. If there are
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proceeds remaining, the lender must account to the tenant-stockholder for the
surplus. On the other hand, if a portion of the indebtedness remains unpaid, the
tenant-stockholder is in most cases responsible for the deficiency. See
"--Anti-Deficiency Legislation and Other Limitations on Lenders" in this
prospectus.
Rights of Redemption. In some states, after sale under a deed of trust, or
a deed to secure debt or foreclosure of a mortgage, the borrower and foreclosed
junior lienors or other parties are given a statutory period, typically ranging
from six months to two years, in which to redeem the property from the
foreclosure sale. In some states, redemption may occur only on payment of the
entire principal balance of the mortgage loan, accrued interest and expenses of
foreclosure. In other states, redemption may be authorized if the former
borrower pays only a portion of the sums due. In some states, the right to
redeem is an equitable right. The equity of redemption, which is a non-statutory
right, should be distinguished from statutory rights of redemption. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property. The rights of redemption would defeat the title of
any purchaser subsequent to foreclosure or sale under a deed of trust or a deed
to secure debt. Consequently, the practical effect of the redemption right is to
force the lender to maintain the property and pay the expenses of ownership
until the redemption period has expired.
Anti-Deficiency Legislation and Other Limitations on Lenders. Some states
have imposed statutory prohibitions which limit the remedies of a beneficiary
under a deed of trust, a mortgagee under a mortgage or a grantee under a deed to
secure debt. In some states, including California, statutes limit the right of
the beneficiary, mortgagee or grantee to obtain a deficiency judgment against
the borrower following foreclosure. A deficiency judgment is a personal judgment
against the former borrower equal in most cases to the difference between the
net amount realized upon the public sale of the real property and the amount due
to the lender. In the case of a mortgage loan secured by a property owned by a
trust where the Mortgage Note is executed on behalf of the trust, a deficiency
judgment against the trust following foreclosure or sale under a deed of trust
or deed to secure debt, even if obtainable under applicable law, may be of
little value to the beneficiary, grantee or mortgagee if there are no mortgage
loans against which the deficiency judgment may be executed. Some state statutes
require the beneficiary, grantee or mortgagee to exhaust the security afforded
under a deed of trust, deed to secure debt or mortgage by foreclosure in an
attempt to satisfy the full debt before bringing a personal action against the
borrower.
In other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting the security; however,
in some of these states, the lender, following judgment on the personal action,
may be deemed to have elected a remedy and may be precluded from exercising
remedies for the security. Consequently, the practical effect of the election
requirement, in those states permitting this election, is that lenders will
usually proceed against the security first rather than bringing a personal
action against the borrower. Finally, in some states, statutory provisions limit
any deficiency judgment against the borrower following a foreclosure to the
excess of the outstanding debt over the fair value of the property at the time
of the public sale. The purpose of these statutes is in most cases to prevent a
beneficiary, grantee or mortgagee from obtaining a large deficiency judgment
against the borrower as a result of low or no bids at the judicial sale.
In most cases, Article 9 of the UCC governs foreclosure on Cooperative
shares and the related proprietary lease or occupancy agreement. Some courts
have interpreted Article 9 to prohibit or limit a deficiency award in some
circumstances, including circumstances where the disposition of the collateral,
which, in the case of a Cooperative Loan, would be the shares of the Cooperative
and the related proprietary lease or occupancy agreement, was not conducted in a
commercially reasonable manner.
In addition to laws limiting or prohibiting deficiency judgments, numerous
other federal and state statutory provisions, including the federal bankruptcy
laws and state laws affording relief to debtors, may interfere with or affect
the ability of the secured mortgage lender to realize upon its collateral and/or
enforce a deficiency judgment. For example, under the federal bankruptcy law,
all actions against the debtor, the debtor's property and any co-debtor are
automatically stayed upon the filing of a bankruptcy petition. Moreover, a court
having federal bankruptcy jurisdiction may permit a debtor through its Chapter
11 or Chapter 13 rehabilitative plan to cure a monetary default relating to a
mortgage loan or revolving credit loan on the debtor's residence by paying
arrearages within a reasonable time period and reinstating the original loan
payment schedule, even though the lender accelerated the mortgage loan or
revolving credit loan and final judgment of foreclosure had been entered in
state court. Some courts with federal bankruptcy jurisdiction have approved
plans, based on the particular facts of
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the reorganization case, that effected the curing of a mortgage loan or
revolving credit loan default by paying arrearages over a number of years.
Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a mortgage loan or revolving credit loan secured by property of the
debtor may be modified. These courts have allowed modifications that include
reducing the amount of each monthly payment, changing the rate of interest,
altering the repayment schedule, forgiving all or a portion of the debt and
reducing the lender's security interest to the value of the residence, thus
leaving the lender a general unsecured creditor for the difference between the
value of the residence and the outstanding balance of the mortgage loan or
revolving credit loan. In most cases, however, the terms of a mortgage loan or
revolving credit loan secured only by a mortgage on real property that is the
debtor's principal residence may not be modified under a plan confirmed under
Chapter 13, as opposed to Chapter 11, except for mortgage payment arrearages,
which may be cured within a reasonable time period. Courts with federal
bankruptcy jurisdiction similarly may be able to modify the terms of a
Cooperative Loan.
Certain tax liens arising under the Code may, in some circumstances, have
priority over the lien of a mortgage, deed to secure debt or deed of trust. This
may have the effect of delaying or interfering with the enforcement of rights
for a defaulted mortgage loan or revolving credit loan.
In addition, substantive requirements are imposed on mortgage lenders in
connection with the origination and the servicing of mortgage loans or revolving
credit loans by numerous federal and some state consumer protection laws. These
laws include the federal Truth-in-Lending Act, Real Estate Settlement Procedures
Act, Equal Credit Opportunity Act, Fair Credit Billing Act, Fair Credit
Reporting Act and related statutes. These federal laws impose specific statutory
liabilities on lenders who originate mortgage loans or revolving credit loans
and who fail to comply with the provisions of the law. In some cases, this
liability may affect assignees of the mortgage loans or revolving credit loans.
Some of the mortgage loans or revolving credit loans may be High Cost
Loans. Purchasers or assignees of any High Cost Loan, including any trust, could
be liable for all claims and subject to all defenses arising under any
applicable law that the borrower could assert against the originator of the High
Cost Loan. Remedies available to the borrower include monetary penalties, as
well as rescission rights if the appropriate disclosures were not given as
required.
Alternative Mortgage Instruments. Alternative mortgage instruments,
including adjustable rate mortgage loans and early ownership mortgage loans or
revolving credit loans, originated by non-federally chartered lenders, have
historically been subjected to a variety of restrictions. These restrictions
differed from state to state, resulting in difficulties in determining whether a
particular alternative mortgage instrument originated by a state-chartered
lender was in compliance with applicable law. These difficulties were alleviated
substantially as a result of the enactment of Title VIII of the Garn-St Germain
Act, or Title VIII. Title VIII provides that, regardless of any state law to the
contrary:
o state-chartered banks may originate alternative mortgage instruments in
accordance with regulations promulgated by the Comptroller of the Currency
for the origination of alternative mortgage instruments by national banks;
o state-chartered credit unions may originate alternative mortgage
instruments in accordance with regulations promulgated by the National
Credit Union Administration for origination of alternative mortgage
instruments by federal credit unions; and
o all other non-federally chartered housing creditors, including
state-chartered savings and loan associations, state-chartered savings
banks and mutual savings banks and mortgage banking companies, may
originate alternative mortgage instruments in accordance with the
regulations promulgated by the Federal Home Loan Bank Board, predecessor to
the OTS, for origination of alternative mortgage instruments by federal
savings and loan associations.
Title VIII also provides that any state may reject applicability of the
provisions of Title VIII by adopting, prior to October 15, 1985, a law or
constitutional provision expressly rejecting the applicability of these
provisions. Some states have taken this action.
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Junior Mortgages; Rights of Senior Mortgagees. The mortgage loans or
revolving credit loans included in the trust may be junior to other mortgages,
deeds to secure debt or deeds of trust held by other lenders. Absent an
intercreditor agreement, the rights of the trust, and therefore the
certificateholders, as mortgagee under a junior mortgage, are subordinate to
those of the mortgagee under the senior mortgage, including the prior rights of
the senior mortgagee to receive hazard insurance and condemnation proceeds and
to cause the property securing the mortgage loan or revolving credit loan to be
sold on default of the mortgagor. The sale of the mortgaged property may
extinguish the junior mortgagee's lien unless the junior mortgagee asserts its
subordinate interest in the property in foreclosure litigation and, in certain
cases, either reinstates or satisfies the defaulted senior mortgage loan or
revolving credit loan or mortgage loans or revolving credit loans. A junior
mortgagee may satisfy a defaulted senior mortgage loan or revolving credit loan
in full or, in some states, may cure the default and bring the senior mortgage
loan or revolving credit loan current thereby reinstating the senior mortgage
loan or revolving credit loan, in either event usually adding the amounts
expended to the balance due on the junior mortgage loan or revolving credit
loan. In most states, absent a provision in the mortgage, deed to secure debt or
deed of trust, or an intercreditor agreement, no notice of default is required
to be given to a junior mortgagee. Where applicable law or the terms of the
senior mortgage, deed to secure debt or deed of trust do not require notice of
default to the junior mortgagee, the lack of any notice may prevent the junior
mortgagee from exercising any right to reinstate the mortgage loan or revolving
credit loan which applicable law may provide.
The standard form of the mortgage, deed to secure debt or deed of trust
used by most institutional lenders confers on the mortgagee the right both to
receive all proceeds collected under any hazard insurance policy and all awards
made in connection with condemnation proceedings, and to apply the proceeds and
awards to any indebtedness secured by the mortgage, deed to secure debt or deed
of trust, in the order as the mortgagee may determine. Thus, if improvements on
the property are damaged or destroyed by fire or other casualty, or if the
property is taken by condemnation, the mortgagee or beneficiary under underlying
senior mortgages will have the prior right to collect any insurance proceeds
payable under a hazard insurance policy and any award of damages in connection
with the condemnation and to apply the same to the indebtedness secured by the
senior mortgages. Proceeds in excess of the amount of senior mortgage
indebtedness, in most cases, may be applied to the indebtedness of junior
mortgages in the order of their priority.
Another provision sometimes found in the form of the mortgage, deed to
secure debt or deed of trust used by institutional lenders obligates the
mortgagor to pay before delinquency all taxes and assessments on the property
and, when due, all encumbrances, charges and liens on the property which are
prior to the mortgage, deed to secure debt or deed of trust, to provide and
maintain fire insurance on the property, to maintain and repair the property and
not to commit or permit any waste thereof, and to appear in and defend any
action or proceeding purporting to affect the property or the rights of the
mortgagee under the mortgage or deed of trust. After a failure of the mortgagor
to perform any of these obligations, the mortgagee or beneficiary is given the
right under certain mortgages, deeds to secure debt or deeds of trust to perform
the obligation itself, at its election, with the mortgagor agreeing to reimburse
the mortgagee for any sums expended by the mortgagee on behalf of the mortgagor.
All sums so expended by a senior mortgagee become part of the indebtedness
secured by the senior mortgage. Also, since most senior mortgages require the
related mortgagor to make escrow deposits with the holder of the senior mortgage
for all real estate taxes and insurance premiums, many junior mortgagees will
not collect and retain the escrows and will rely on the holder of the senior
mortgage to collect and disburse the escrows.
The form of credit line trust deed or mortgage used by most institutional
lenders that make revolving credit loans typically contains a "future advance"
clause, which provides, in essence, that additional amounts advanced to or on
behalf of the borrower by the beneficiary or lender are to be secured by the
deed of trust or mortgage. The priority of the lien securing any advance made
under the clause may depend in most states on whether the deed of trust or
mortgage is designated as a credit line deed of trust or mortgage. If the
beneficiary or lender advances additional amounts, the advance is entitled to
receive the same priority as amounts initially advanced under the trust deed or
mortgage, regardless of the fact that there may be junior trust deeds or
mortgages and other liens that intervene between the date of recording of the
trust deed or mortgage and the date of the future advance, and regardless that
the beneficiary or lender had actual knowledge of these intervening junior trust
deeds or mortgages and other liens at the time of the advance. In most states,
the trust deed or mortgage lien securing mortgage loans or revolving credit
loans of the type that includes revolving credit loans applies retroactively to
the date of the original recording of the trust deed or mortgage, provided that
the total amount of advances under the credit limit does not
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exceed the maximum specified principal amount of the recorded trust deed or
mortgage, except as to advances made after receipt by the lender of a written
notice of lien from a judgment lien creditor of the trustor.
The Manufactured Housing Contracts
General. A manufactured housing contract evidences both:
o the obligation of the mortgagor to repay the loan evidenced thereby; and
o the grant of a security interest in the manufactured home to secure
repayment of the loan.
Certain aspects of both features of the manufactured housing contracts are
described below.
Security Interests in Manufactured Homes. The law governing perfection of a
security interest in a manufactured home varies from state to state. Security
interests in manufactured homes may be perfected either by notation of the
secured party's lien on the certificate of title or by delivery of the required
documents and payments of a fee to the state motor vehicle authority, depending
on state law. In some non-title states, perfection under the provisions of the
UCC is required. The lender, the subservicer or the servicer may effect the
notation or delivery of the required documents and fees, and obtain possession
of the certificate of title, as appropriate under the laws of the state in which
any manufactured home securing a manufactured housing contract is registered. If
the servicer, the subservicer or the lender fails to effect the notation or
delivery, or files the security interest under the wrong law, for example, under
a motor vehicle title statute rather than under the UCC, in a few states, the
certificateholders may not have a first priority security interest in the
manufactured home securing a manufactured housing contract. As manufactured
homes have become larger and often have been attached to their sites without any
apparent intention to move them, courts in many states have held that
manufactured homes, under certain circumstances, may become subject to real
estate title and recording laws. As a result, a security interest in a
manufactured home could be rendered subordinate to the interests of other
parties claiming an interest in the home under applicable state real estate law.
In order to perfect a security interest in a manufactured home under real estate
laws, the holder of the security interest must record a mortgage, deed of trust
or deed to secure debt, as applicable, under the real estate laws of the state
where the manufactured home is located. These filings must be made in the real
estate records office of the county where the manufactured home is located. In
some cases, a security interest in the manufactured home will be governed by the
certificate of title laws or the UCC, and the notation of the security interest
on the certificate of title or the filing of a UCC financing statement will be
effective to maintain the priority of the seller's security interest in the
manufactured home. If, however, a manufactured home is permanently attached to
its site or if a court determines that a manufactured home is real property,
other parties could obtain an interest in the manufactured home which is prior
to the security interest originally retained by the mortgage collateral seller
and transferred to the depositor. In certain cases, the servicer or the
subservicer, as applicable, may be required to perfect a security interest in
the manufactured home under applicable real estate laws. If the real estate
recordings are not required and if any of the foregoing events were to occur,
the only recourse of the related certificateholders would be against the
mortgage collateral seller under its repurchase obligation for breach of
representations or warranties.
The depositor will assign its security interests in the manufactured homes
to the trustee on behalf of the certificateholders. See "Description of the
Securities--Assignment of Loans" in this prospectus. If stated in the
accompanying prospectus supplement, if a manufactured home is governed by the
applicable motor vehicle laws of the relevant state the depositor or the trustee
will amend the certificates of title to identify the trustee as the new secured
party. In most cases however, if a manufactured home is governed by the
applicable motor vehicle laws of the relevant state neither the depositor nor
the trustee will amend the certificates of title to identify the trustee as the
new secured party. Accordingly, the depositor or any other entity as may be
specified in the prospectus supplement will continue to be named as the secured
party on the certificates of title relating to the manufactured homes. However,
there exists a risk that, in the absence of an amendment to the certificate of
title, the assignment of the security interest may not be held effective against
subsequent purchasers of a manufactured home or subsequent lenders who take a
security interest in the manufactured home or creditors of the assignor.
If the owner of a manufactured home moves it to a state other than the
state in which the manufactured home initially is registered and if steps are
not taken to re-perfect the trustee's security interest in the state, the
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security interest in the manufactured home will cease to be perfected. While in
many circumstances the trustee would have the opportunity to re-perfect its
security interest in the manufactured home in the state of relocation, there can
be no assurance that the trustee will be able to do so.
When a mortgagor under a manufactured housing contract sells a manufactured
home, the trustee, the subservicer or the servicer on behalf of the trustee,
must surrender possession of the certificate of title or will receive notice as
a result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related lien before release of the lien. The ability
to accelerate the maturity of the related contract will depend on the
enforceability under state law of the clause permitting acceleration on
transfer. The Garn-St. Germain Depository Institutions Act of 1982 preempts,
subject to certain exceptions and conditions, state laws prohibiting enforcement
of these clauses applicable to manufactured homes. To the extent the exceptions
and conditions apply in some states, the servicer may be prohibited from
enforcing the clause in respect of certain manufactured homes.
Under the laws of most states, liens for repairs performed on a
manufactured home take priority over a perfected security interest. The
applicable mortgage collateral seller typically will represent that it has no
knowledge of any liens for any manufactured home securing payment on any
manufactured housing contract. However, the liens could arise at any time during
the term of a manufactured housing contract. No notice will be given to the
trustee or certificateholders if a lien arises and the lien would not give rise
to a repurchase obligation on the part of the party specified in the related
agreement.
To the extent that manufactured homes are not treated as real property
under applicable state law, manufactured housing contracts in most cases are
"chattel paper" as defined in the UCC in effect in the states in which the
manufactured homes initially were registered. Under the UCC, the sale of chattel
paper is treated in a manner similar to perfection of a security interest in
chattel paper. Under the related agreement, the servicer, the subservicer or the
depositor, as the case may be, will transfer physical possession of the
manufactured housing contracts to the trustee or its custodian. In addition, the
servicer or the subservicer will make an appropriate filing of a financing
statement in the appropriate states to give notice of the trustee's ownership of
the manufactured housing contracts. If stated in the accompanying prospectus
supplement, the manufactured housing contracts will be stamped or marked
otherwise to reflect their assignment from the depositor to the trustee. In most
cases however, the manufactured housing contracts will not be stamped or marked
otherwise to reflect their assignment from the depositor to the trustee.
Therefore, if a subsequent purchaser were able to take physical possession of
the manufactured housing contracts without notice of the assignment, the
trustee's interest in the manufactured housing contracts could be defeated. Even
if unsuccessful, these claims could delay payments to the related trust fund and
certificateholders. If successful, losses to the related trust fund and
certificateholders also could result. To the extent that manufactured homes are
treated as real property under applicable state law, contracts will be treated
in a manner similar to that described above with regard to mortgage loans. See
"--The mortgage loans" in this prospectus.
Land Home and Land-in-Lieu Contracts. To the extent described in the
applicable prospectus supplement, the related contract pool may contain land
home contracts or land-in-lieu contracts. The land home contracts and the
land-in-lieu contracts will be secured by either first mortgages or deeds of
trust, depending upon the prevailing practice in the state in which the
underlying property is located. See "Certain Legal Aspects of the Mortgage Loans
and Contracts--The Mortgage Loans" for a description of mortgages, deeds of
trust and foreclosure procedures.
Enforcement of Security Interests in Manufactured Homes. The subservicer or
the servicer on behalf of the trustee, to the extent required by the related
agreement, may take action to enforce the trustee's security interest for
manufactured housing contracts in default by repossession and sale of the
manufactured homes securing the defaulted manufactured housing contracts. So
long as the manufactured home has not become subject to real estate law, a
creditor in most cases can repossess a manufactured home securing a contract by
voluntary surrender, by "self-help" repossession that is "peaceful" or, in the
absence of voluntary surrender and the ability to repossess without breach of
the peace, by judicial process. The UCC and consumer protection laws in most
states place restrictions on repossession sales, including requiring prior
notice to the debtor and commercial reasonableness in effecting the sale. The
debtor may also have a right to redeem the manufactured home at or before
resale.
Certain statutory provisions, including federal and state bankruptcy and
insolvency laws and general equitable principles, may limit or delay the ability
of a lender to repossess and resell collateral or enforce a
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deficiency judgment. For a discussion of deficiency judgments, see "--The
Mortgage Loans--Anti-Deficiency Legislation and Other Limitations on Lenders" in
this prospectus.
Enforceability of Certain Provisions
If stated in accompanying prospectus supplement indicates otherwise, some
or all of the loans will not contain due-on-sale clauses. In most cases however,
all of the loans will contain due-on-sale clauses. These clauses permit the
lender to accelerate the maturity of the loan if the borrower sells, transfers
or conveys the property. The enforceability of these clauses has been the
subject of legislation or litigation in many states, and in some cases the
enforceability of these clauses has been limited or denied. However, the Garn-St
Germain Depository Institutions Act of 1982, or Garn-St Germain Act, preempts
state constitutional, statutory and case law that prohibit the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms, subject to limited exceptions. The Garn-St Germain Act does
"encourage" lenders to permit assumption of loans at the original rate of
interest or at some other rate less than the average of the original rate and
the market rate.
The Garn-St Germain Act also sets forth nine specific instances in which a
mortgage lender covered by the Garn-St Germain Act may not exercise a
due-on-sale clause, regardless of the fact that a transfer of the property may
have occurred. These include intra-family transfers, certain transfers by
operation of law, leases of fewer than three years and the creation of a junior
encumbrance. Regulations promulgated under the Garn-St Germain Act also prohibit
the imposition of a prepayment penalty on the acceleration of a loan under a
due-on-sale clause.
The inability to enforce a due-on-sale clause may result in a loan bearing
an interest rate below the current market rate being assumed by a new home buyer
rather than being paid off, which may have an impact on the average life of the
loans and the number of loans which may be outstanding until maturity.
On foreclosure, courts have imposed general equitable principles. These
equitable principles are designed to relieve the borrower from the legal effect
of its defaults under the loan documents. Examples of judicial remedies that
have been fashioned include judicial requirements that the lender undertake
affirmative and expensive actions to determine the causes for the borrower's
default and the likelihood that the borrower will be able to reinstate the loan.
In some cases, courts have required that lenders reinstate loans or recast
payment schedules in order to accommodate borrowers who are suffering from
temporary financial disability. In other cases, courts have limited the right of
the lender to foreclose if the default under the mortgage instrument is not
monetary, including the borrower failing to adequately maintain the property.
Finally, some courts have been faced with the issue of whether or not federal or
state constitutional provisions reflecting due process concerns for adequate
notice require that borrowers under deeds of trust, deeds to secure debt or
mortgages receive notices in addition to the statutorily prescribed minimum. For
the most part, these cases have upheld the notice provisions as being reasonable
or have found that the sale by a trustee under a deed of trust, or under a deed
to secure a debt or a mortgagee having a power of sale, does not involve
sufficient state action to afford constitutional protections to the borrower.
Consumer Protection Laws
Numerous federal and state consumer protection laws impose requirements
applicable to the origination of loans, including the Truth in Lending Act, the
Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection
Practices Act and the Uniform Consumer Credit Code. In the case of some of these
laws, the failure to comply with their provisions may affect the enforceability
of the related loan.
If the transferor of a consumer credit contract is also the seller of goods
that give rise to the transaction, and, in certain cases, related lenders and
assignees, the "Holder-in-Due-Course" rule of the Federal Trade Commission is
intended to defeat the ability of the transferor to transfer the contract free
of notice of claims by the debtor thereunder. The effect of this rule is to
subject the assignee of the contract to all claims and defenses that the debtor
could assert against the seller of goods. Liability under this rule is limited
to amounts paid under a contract; however, the borrower also may be able to
assert the rule to set off remaining amounts due as a defense against a claim
brought against the borrower.
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Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, or Title V, provides that state usury limitations shall not apply
to some types of residential first mortgage loans, including Cooperative Loans
originated by some lenders. Title V also provides that, subject to certain
conditions, state usury limitations shall not apply to any loan that is secured
by a first lien on certain kinds of manufactured housing. Title V also provides
that, subject to the following conditions, state usury limitations shall not
apply to any home improvement contract that is secured by a first lien on some
kinds of consumer goods. The contracts would be covered if they satisfy some
conditions, among other things, governing the terms of any prepayments, late
charges and deferral fees and requiring a 30-day notice period prior to
instituting any action leading to repossession of the related unit.
Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional
provision that expressly rejects application of the federal law. Fifteen states
adopted this type of prior to the April 1, 1983 deadline. In addition, even
where Title V was not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on loans covered by Title V.
Usury limits apply to junior mortgage loans in many states. Any applicable
usury limits in effect at origination will be reflected in the maximum interest
rates for the mortgage loans, as described in the accompanying prospectus
supplement.
In most cases, each seller of a loan will have represented that the loan
was originated in compliance with then applicable state laws, including usury
laws, in all material respects. However, the interest rates on the loans will be
subject to applicable usury laws as in effect from time to time.
Environmental Legislation
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or CERCLA, and under state law in some
states, a secured party which takes a deed-in-lieu of foreclosure, purchases a
mortgaged property at a foreclosure sale, or operates a mortgaged property may
become liable in some circumstances for the costs of cleaning up hazardous
substances regardless of whether they have contaminated the property. CERCLA
imposes strict, as well as joint and several, liability on several classes of
potentially responsible parties, including current owners and operators of the
property who did not cause or contribute to the contamination. Furthermore,
liability under CERCLA is not limited to the original or unamortized principal
balance of a loan or to the value of the property securing a loan. Lenders may
be held liable under CERCLA as owners or operators unless they qualify for the
secured creditor exemption to CERCLA. This exemption exempts from the definition
of owners and operators those who, without participating in the management of a
facility, hold indicia of ownership primarily to protect a security interest in
the facility.
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996,
as amended, or the Conservation Act, amended, among other things, the provisions
of CERCLA for lender liability and the secured creditor exemption. The
Conservation Act offers substantial protection to lenders by defining the
activities in which a lender can engage and still have the benefit of the
secured creditor exemption. For a lender to be deemed to have participated in
the management of a mortgaged property, the lender must actually participate in
the operational affairs of the mortgaged property. The Conservation Act provides
that "merely having the capacity to influence, or unexercised right to control"
operations does not constitute participation in management. A lender will lose
the protection of the secured creditor exemption only if it exercises
decision-making control over the mortgagor's environmental compliance and
hazardous substance handling and disposal practices, or assumes day-to-day
management of substantially all operational functions of the mortgaged property.
The Conservation Act also provides that a lender will continue to have the
benefit of the secured creditor exemption even if it forecloses on a mortgaged
property, purchases it at a foreclosure sale or accepts a deed-in-lieu of
foreclosure provided that the lender seeks to sell the mortgaged property at the
earliest practicable commercially reasonable time on commercially reasonable
terms.
Other federal and state laws in some circumstances may impose liability on
a secured party which takes a deed-in-lieu of foreclosure, purchases a mortgaged
property
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at a foreclosure sale, or operates a mortgaged property on which contaminants
other than CERCLA hazardous substances are present, including petroleum,
agricultural chemicals, hazardous wastes, asbestos, radon, and lead-based paint.
These cleanup costs may be substantial. It is possible that the cleanup costs
could become a liability of a trust and reduce the amounts otherwise
distributable to the holders of the related series of securities. Moreover, some
federal statutes and some states by statute impose an Environmental Lien. All
subsequent liens on that property are usually subordinated to an Environmental
Lien and, in some states, even prior recorded liens are subordinated to
Environmental Liens. In the latter states, the security interest of the trustee
in a related parcel of real property that is subject to an Environmental Lien
could be adversely affected.
Traditionally, many residential mortgage lenders have not taken steps to
evaluate whether contaminants are present for any mortgaged property prior to
the origination of the loan or prior to foreclosure or accepting a deed-in-lieu
of foreclosure. Neither the depositor nor any servicer or subservicer will be
required by any agreement to undertake any of these evaluations prior to
foreclosure or accepting a deed-in-lieu of foreclosure. The depositor does not
make any representations or warranties or assume any liability for the absence
or effect of contaminants on any mortgaged property or any casualty resulting
from the presence or effect of contaminants. However, the servicer or the
subservicer will not be obligated to foreclose on any mortgaged property or
accept a deed-in-lieu of foreclosure if it knows or reasonably believes that
there are material contaminated conditions on the property. A failure so to
foreclose may reduce the amounts otherwise available to certificateholders of
the related series.
If stated in the applicable prospectus supplement, at the time the loans
were originated, an environmental assessment of the mortgaged properties will
have been conducted. In most cases however, at the time the loans were
originated, no environmental assessment or a very limited environment assessment
of the mortgaged properties will have been conducted.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Relief Act a borrower who enters military service
after the origination of the borrower's loan, including a borrower who was in
reserve status and is called to active duty after origination of the loan, may
not be charged interest, including fees and charges, above an annual rate of 6%
during the period of the borrower's active duty status, unless a court orders
otherwise on application of the lender. The Relief Act applies to borrowers who
are members of the Air Force, Army, Marines, Navy, National Guard, Reserves or
Coast Guard, and officers of the U.S. Public Health Service assigned to duty
with the military.
Because the Relief Act applies to borrowers who enter military service,
including reservists who are called to active duty, after origination of the
related loan, no information can be provided as to the number of loans that may
be affected by the Relief Act. For loans included in a trust, application of the
Relief Act would adversely affect, for an indeterminate period of time, the
ability of the subservicer or the servicer, as applicable, to collect full
amounts of interest on the loans. Any shortfall in interest collections
resulting from the application of the Relief Act or similar legislation or
regulations, which would not be recoverable from the related loans, would result
in a reduction of the amounts distributable to the holders of the related
securities, and would not be covered by Advances or any form of credit
enhancement provided in connection with the related series of securities. In
addition, the Relief Act imposes limitations that would impair the ability of
the subservicer or the servicer, as applicable, to foreclose on an affected loan
during the mortgagor's period of active duty status, and, under some
circumstances, during an additional three month period thereafter. Thus, if the
Relief Act or similar legislation or regulations applies to any loan which goes
into default, there may be delays in payment and losses on the related
securities in connection therewith. Any other interest shortfalls, deferrals or
forgiveness of payments on the loans resulting from similar legislation or
regulations may result in delays in payments or losses to certificateholders of
the related series.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments on the borrower's payment of prepayment fees or yield
maintenance penalties. In some states, there are or may be specific limitations
on the late charges which a lender may collect from a borrower for delinquent
payments. Some states also limit the amounts that a lender may collect from a
borrower as an additional charge if the loan is prepaid. In addition, the
enforceability of provisions that provide for prepayment
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fees or penalties on an involuntary prepayment is unclear under the laws of many
states. Most conventional single-family mortgage loans may be prepaid in full or
in part without penalty. The regulations of the Federal Home Loan Bank Board, as
succeeded by the OTS, prohibit the imposition of a prepayment penalty or
equivalent fee for or in connection with the acceleration of a loan by exercise
of a due-on-sale clause. A mortgagee to whom a prepayment in full has been
tendered may be compelled to give either a release of the mortgage or an
instrument assigning the existing mortgage. The absence of a restraint on
prepayment, particularly for mortgage loans having higher loan rates, may
increase the likelihood of refinancing or other early retirements of the
mortgage loans.
Forfeitures in Drug and RICO Proceedings
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations, or RICO statute can be seized by the government if the
property was used in, or purchased with the proceeds of, those crimes. Under
procedures contained in the Comprehensive Crime Control Act of 1984, the
government may seize the property even before conviction. The government must
publish notice of the forfeiture proceeding and may give notice to all parties
"known to have an alleged interest in the property," including the holders of
mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that:
o its mortgage was executed and recorded before commission of the crime on
which the forfeiture is based; or
o the lender was, at the time of execution of the mortgage, "reasonably
without cause to believe" that the property was used in, or purchased with
the proceeds of, illegal drug or RICO activities.
Negative Amortization Loans
A recent case held that state restrictions on the compounding of interest
are not preempted by the provisions of the depository Institutions Deregulation
and Monetary Control Act of 1980, or DIDMC, and as a result, a mortgage loan
that provided for negative amortization violated New Hampshire's requirement
that first mortgage loans provide for computation of interest on a simple
interest basis. The court did not address the applicability of the Alternative
Mortgage Transaction Parity Act of 1982, which authorizes a lender to make
residential mortgage loans that provide for negative amortization. As a result,
the enforceability of compound interest on mortgage loans that provide for
negative amortization is unclear. The case, which was decided by the First
Circuit Court of Appeals, is binding authority only on Federal District Courts
in Maine, New Hampshire, Massachusetts, Rhode Island and Puerto Rico.
Material Federal Income Tax Consequences
General
The following is a discussion of the material, and certain other, federal
income tax consequences of the purchase, ownership and disposition of the
securities. Where appropriate, additional consequences will be discussed in the
prospectus supplement relating to a particular series. This discussion is
intended as an explanatory discussion of the consequences of holding the
securities generally and does not purport to furnish information with the level
of detail that would be expected to be provided by an investor's own tax
advisor, or with consideration of an investor's specific tax circumstances.
Accordingly, it is recommended that each prospective investor consult with its
own tax advisor regarding the application of United States federal income tax
laws, as well as any state, local, foreign or other tax laws, to their
particular situation. Orrick, Herrington & Sutcliffe LLP, counsel to the
depositor, rendered an opinion generally that the discussion in this section is
correct in all material respects. In addition, counsel to the depositor has
rendered an opinion to the effect that: (1) with respect to each series of REMIC
or FASIT certificates, issued as described in this prospectus and the related
prospectus supplement, the related mortgage pool, or portion thereof, will be
classified as one or more REMICs or FASITs and not an association taxable as a
corporation - or publicly traded partnership treated as a corporation - and each
class of securities will represent either a "regular" interest or a "residual"
interest in the REMIC or FASIT and (2) with respect to each other series of
securities, issued
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as described in this prospectus and the related prospectus supplement, the
related trust fund will be a grantor trust for federal income tax purposes and
not an association taxable as a corporation - or publicly traded partnership
treated as a corporation - and each holder of a security will be treated as
holding an equity interest in that grantor trust. Prospective investors should
be aware that counsel to the depositor has not rendered any other tax opinions.
Further, if with respect to any series of securities Orrick, Herrington &
Sutcliffe LLP is not counsel to the depositor, depositor's then current counsel
will be identified in the related prospectus supplement and will confirm or
supplement the aforementioned opinions. Prospective investors should be further
aware that no rulings have been sought from the Internal Revenue Service, known
as the IRS, and that legal opinions are not binding on the IRS or the courts.
Accordingly, there can be no assurance that the IRS or the courts will agree
with counsel to the depositor's opinions. If, contrary to those opinions, the
trust fund related to a series of securities is characterized or treated as a
corporation for federal income tax purposes, among other consequences, that
trust fund would be subject to federal income tax and similar state income or
franchise taxes on its income and distributions to holders of the securities
could be impaired.
The following summary is based on the Code as well as Treasury regulations
and administrative and judicial rulings and practice. Legislative, judicial and
administrative changes may occur, possibly with retroactive effect, that could
alter or modify the continued validity of the statements and conclusions set
forth in this prospectus. This summary does not purport to address all federal
income tax matters that may be relevant to particular holders of securities. For
example, it generally is addressed only to original purchasers of the securities
that are United States investors, deals only with securities held as capital
assets within the meaning of Section 1221 of the Code, and does not address tax
consequences to holders that may be relevant to investors subject to special
rules, such as non-U.S. investors, banks, insurance companies, tax-exempt
organizations, electing large partnership, dealers in securities or currencies,
mutual funds, REITs, S corporations, estates and trusts, investors that hold the
securities as part of a hedge, straddle, integrated or conversion transaction,
or holders whose "functional currency" is not the United States dollar. Further,
it does not address alternative minimum tax consequences or the indirect effects
on the holders of equity interests in any entity that is a beneficial owner of
the securities. Further, this discussion does not address the state or local tax
consequences of the purchase, ownership and disposition of those securities. It
is recommended that investors consult their own tax advisors in determining the
federal, state, local, or other tax consequences to them of the purchase,
ownership and disposition of the securities offered under this prospectus and
the related prospectus supplement.
The following discussion addresses REMIC and FASIT certificates
representing interests in a trust for which the transaction documents require
the making of an election to have the trust, or a portion thereof, be treated as
one or more REMICs or FASITs and grantor trust certificates representing
interests in a grantor trust. The prospectus supplement for each series of
securities will indicate whether a REMIC or FASIT election or elections will be
made for the related trust fund and, if that election is to be made, will
identify all "regular interests" and "residual interests" in the REMIC or the
"regular interests" and "high yield regular interests" in the FASIT, as the case
may be. If interests in a FASIT ownership interest are offered for sale the
federal income consequences of the purchase, ownership and disposition of those
interests will be described in the accompanying prospectus supplement. For
purposes of this tax discussion, references to a "certificateholder" or a
"holder" are to the beneficial owner of a certificate.
Regulations specifically addressing certain of the issues discussed in this
prospectus have not been issued or have been issued only in proposed form and
this discussion is based in part on regulations that do not adequately address
some issues relevant to, and in some instances provide that they are not
applicable to, securities similar to the securities.
Classification of REMICs and FASITs
Upon the issuance of each series of REMIC or FASIT certificates, Orrick,
Herrington & Sutcliffe LLP, counsel to the depositor, will deliver its opinion
to the effect that, assuming compliance with all provisions of the related
pooling and servicing agreement, or trust agreement, the related trust fund, or
each applicable portion of the related trust fund, will qualify as a REMIC or
FASIT, as the case may be, and the certificates offered with respect thereto
will be considered to be, or evidence the ownership of, "regular interests," in
the related REMIC or FASIT or, solely in the case of REMICs, "residual
interests," in that REMIC. If with respect to any series, Orrick, Herrington &
Sutcliffe LLP is not counsel to the depositor, then depositor's counsel for such
series will be identified
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in the related prospectus supplement and will confirm, or supplement, the
aforementioned opinions. Opinions of counsel only represent the views of that
counsel and are not binding on the IRS or the courts. Accordingly, there can be
no assurance that the IRS and the courts will not take a differing position.
The IRS published proposed Treasury regulations, known as the Proposed
FASIT Regulations, supplementing the FASIT provisions of the Code on February 7,
2000, but many issues remain unresolved. The Proposed FASIT Regulations are
subject to change with potentially retroactive effect before being adopted as
final regulations. The Proposed FASIT Regulations contain an "anti-abuse" rule
that, among other things, enables the IRS to disregard a FASIT election, treat
one or more of the assets of a FASIT as held by a person other than the holder
of the ownership interest in the FASIT, treat a FASIT regular interest as other
than a debt instrument or treat a regular interest held by any person as having
the tax characteristics of one or more of the assets held by the FASIT, if a
principal purpose of forming or using the FASIT was to achieve results
inconsistent with the intent of the FASIT provisions and the Proposed FASIT
Regulations based on all the facts and circumstances. Among the requirements
that the Proposed FASIT Regulations state for remaining within the intent of the
FASIT provisions is that no FASIT provision be used to obtain a federal tax
result that could not be obtained without the use of that provision unless the
provision clearly contemplates that result. The only general intent that the
Proposed FASIT Regulations attribute to the FASIT provisions is to promote the
spreading of credit risk on debt instruments by facilitating their
securitization. The "anti-abuse" provisions of the Proposed FASIT Regulations
are proposed to be effective as of February 4, 2000. Although any FASIT whose
certificates are offered pursuant to this prospectus will be structured to
reduce the likelihood that the IRS would recharacterize the tax treatment of the
offered certificates, the anti-abuse provisions of the Proposed FASIT
Regulations are sufficiently broad and vague that the avoidance of
recharacterization cannot be assured. Investors should be cautious in purchasing
any of the certificates and should consult with their tax advisors in
determining the federal, state, local and other tax consequences to them for the
purchase, holding and disposition of the certificates.
In addition, certain FASIT regular interests, or FASIT Regular
Certificates, may be treated as "high-yield regular interests." Special rules,
discussed below apply to those securities. Although the accompanying prospectus
supplement will indicate which FASIT securities are expected to be treated as
"high-yield regular interests," in many cases it will not be clear as of the
date of the prospectus supplement, and possibly not even after the issuance of
the securities, whether any particular class will actually be so treated.
If an entity electing to be treated as a REMIC or FASIT fails to comply
with one or more of the ongoing requirements of the Code for that status during
any taxable year, the Code provides that the entity will not be treated as a
REMIC or FASIT for that year and thereafter. In that event, the entity may be
taxable as a separate corporation under Treasury regulations, and the related
certificates may not be accorded the status or given the tax treatment described
in this prospectus under "Material Federal Income Tax Consequences." The IRS
may, but is not compelled to provide relief but any relief may be accompanied by
sanctions, including the imposition of a corporate tax on all or a portion of
the trust's income for the period in which the requirements for that status are
not satisfied. The proposed FASIT regulations provide that, upon the termination
of a FASIT, FASIT regular interest holders are treated as exchanging their FASIT
regular interests for new interests in the trust. The new interests are
characterized under general tax principals, and the deemed exchange of the FASIT
regular interests for new interests in the trust may require the FASIT regular
interest holders to recognize gain, but not loss. The resulting non-FASIT trust
could be characterized as a partnership or as a publicly traded partnership or
association taxable as a corporation, with adverse tax consequences for
investors. The pooling and servicing agreement, indenture or trust agreement for
each REMIC or FASIT will include provisions designed to maintain the related
trust fund's status as a REMIC or FASIT. It is not anticipated that the status
of any trust fund as a REMIC or FASIT will be terminated, but, as noted in the
discussion of the FASIT "anti-abuse" provisions above, it is not possible to
assure against recharacterization of a FASIT by the IRS.
Taxation of Owners of REMIC and FASIT Regular Certificates
General. In general, REMIC and FASIT Regular Certificates will be treated
for federal income tax purposes as debt instruments and not as ownership
interests in the REMIC or FASIT or its assets. Moreover, holders of Regular
Certificates that otherwise report income under a cash method of accounting will
be required to report income for Regular Certificates under an accrual method.
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Original Issue Discount. Some REMIC or FASIT Regular Certificates may be
issued with "original issue discount," or OID, within the meaning of Section
1273(a) of the Code. Any holders of Regular Certificates issued with original
issue discount typically will be required to include original issue discount in
income as it accrues, in accordance with the method described below, in advance
of the receipt of the cash attributable to that income. In addition, Section
1272(a)(6) of the Code provides special rules applicable to Regular Certificates
and certain other debt instruments issued with original issue discount.
Regulations have not been issued under that section.
The Code requires that a prepayment assumption be used for loans held by a
REMIC or FASIT in computing the accrual of original issue discount on Regular
Certificates issued by that issuer, and that adjustments be made in the amount
and rate of accrual of the discount to reflect differences between the actual
prepayment rate and the prepayment assumption. The prepayment assumption is to
be determined in a manner prescribed in Treasury regulations; as noted above,
those regulations have not been issued. The conference committee report
accompanying the Tax Reform Act of 1986 indicates that the regulations will
provide that the prepayment assumption used for a Regular Certificate must be
the same as that used in pricing the initial offering of the Regular
Certificate. The prepayment assumption used by the servicer, the subservicer, or
the REMIC or FASIT administrator, as applicable, in reporting original issue
discount for each series of Regular Certificates will be consistent with this
standard and will be disclosed in the accompanying prospectus supplement.
However, none of the depositor, the REMIC or FASIT administrator, as applicable,
or the servicer or subservicer will make any representation that the loans will
in fact prepay at a rate conforming to the prepayment assumption or at any other
rate.
The original issue discount, if any, on a REMIC or FASIT Regular
Certificate will be the excess of its stated redemption price at maturity over
its issue price. The issue price of a particular class of Regular Certificates
will be the first cash price at which a substantial amount of Regular
Certificates of that class is sold, excluding sales to bond houses, brokers and
underwriters. If less than a substantial amount of a particular class of Regular
Certificates is sold for cash on or prior to the date of their initial issuance,
or the closing date, the issue price for that class will be treated as the fair
market value of the class on the closing date. Under the OID regulations, the
stated redemption price of a REMIC or FASIT Regular Certificate is equal to the
total of all payments to be made on that certificate other than "qualified
stated interest." Qualified stated interest includes interest that is
unconditionally payable at least annually at a single fixed rate, or in the case
of a variable rate debt instrument, at a "qualified floating rate," an
"objective rate," a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate," or a
combination of "qualified floating rates" that in most cases does not operate in
a manner that accelerates or defers interest payments on a Regular Certificate.
In the case of Regular Certificates bearing adjustable interest rates, the
determination of the total amount of original issue discount and the timing of
the inclusion of the original issue discount will vary according to the
characteristics of the Regular Certificates. If the original issue discount
rules apply to the certificates, the accompanying prospectus supplement will
describe the manner in which the rules will be applied by the servicer, the
subservicer, or REMIC or FASIT administrator, as applicable, for those
certificates in preparing information returns to the certificateholders and the
IRS.
Some classes of the Regular Certificates may provide for the first interest
payment with respect to their certificates to be made more than one month after
the date of issuance, a period which is longer than the subsequent monthly
intervals between interest payments. Assuming the "accrual period," as defined
below, for original issue discount is each monthly period that begins or ends on
a distribution date, in some cases, as a consequence of this "long first accrual
period," some or all interest payments may be required to be included in the
stated redemption price of the Regular Certificate and accounted for as original
issue discount. Because interest on Regular Certificates must in any event be
accounted for under an accrual method, applying this analysis would result in
only a slight difference in the timing of the inclusion in income of the yield
on the Regular Certificates.
In addition, if the accrued interest to be paid on the first distribution
date is computed for a period that begins prior to the closing date, a portion
of the purchase price paid for a Regular Certificate will reflect the accrued
interest. In these cases, information returns to the certificateholders and the
IRS will be based on the position that the portion of the purchase price paid
for the interest accrued for periods prior to the closing date is treated as
part of the overall cost of the Regular Certificate, and not as a separate asset
the cost of which is recovered entirely out of interest received on the next
distribution date, and that portion of the interest paid on the first
distribution date in
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excess of interest accrued for a number of days corresponding to the number of
days from the closing date to the first distribution date should be included in
the stated redemption price of the Regular Certificate. However, the OID
regulations state that all or some portion of the accrued interest may be
treated as a separate asset the cost of which is recovered entirely out of
interest paid on the first distribution date. It is unclear how an election to
do so would be made under the OID regulations and whether that election could be
made unilaterally by a certificateholder.
Regardless of the general definition of original issue discount, original
issue discount on a Regular Certificate will be considered to be de minimis if
it is less than 0.25% of the stated redemption price of the Regular Certificate
multiplied by its weighted average life. For this purpose, the weighted average
life of the Regular Certificate is computed as the sum of the amounts
determined, as to each payment included in the stated redemption price of the
Regular Certificate, by multiplying:
o the number of complete years, rounding down for partial years, from the
issue date until the payment is expected to be made, presumably taking into
account the prepayment assumption;
by
o a fraction, the numerator of which is the amount of the payment, and the
denominator of which is the stated redemption price at maturity of the
Regular Certificate.
Under the OID regulations, original issue discount of only a de minimis amount,
other than de minimis original issue discount attributable to a so-called
"teaser" interest rate or an initial interest holiday, will be included in
income as each payment of stated principal is made, based on the product of the
total amount of the de minimis original issue discount and a fraction, the
numerator of which is the amount of the principal payment and the denominator of
which is the outstanding stated principal amount of the Regular Certificate. The
OID regulations also would permit a certificateholder to elect to accrue de
minimis original issue discount into income currently based on a constant yield
method. See "--Market Discount" in this prospectus for a description of that
election under the OID regulations.
If original issue discount on a Regular Certificate is in excess of a de
minimis amount, the holder of the certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held the Regular Certificate, including the
purchase date but excluding the disposition date. In the case of an original
holder of a Regular Certificate, the daily portions of original issue discount
will be determined as follows.
The "accrual period" as used in this section will be:
o the period that begins or ends on a date that corresponds to a distribution
date and begins on the first day following the immediately preceding
accrual period, or in the case of the first accrual period, begins on the
closing date; or
o such other period as described in the related prospectus supplement.
As to each accrual period, a calculation will be made of the portion of the
original issue discount that accrued during that accrual period. The portion of
original issue discount that accrues in any accrual period will equal the
excess, if any, of:
(1) the sum of:
o the present value, as of the end of the accrual period, of all of the
distributions remaining to be made on the Regular Certificate, if any, in
future periods; and
o the distributions made on the Regular Certificate during the accrual period
of amounts included in the stated redemption price;
over
(2) the adjusted issue price of the Regular Certificate at the
beginning of the accrual period.
The present value of the remaining distributions referred to in the
preceding sentence will be calculated:
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(1) assuming that distributions on the Regular Certificate will be
received in future periods based on the loans being prepaid at a rate
equal to the prepayment assumption; and
(2) using a discount rate equal to the original yield to maturity of
the certificate.
For these purposes, the original yield to maturity of the certificate will be
calculated based on its issue price and assuming that distributions on the
certificate will be made in all accrual periods based on the loans being prepaid
at a rate equal to the prepayment assumption. The adjusted issue price of a
Regular Certificate at the beginning of any accrual period will equal the issue
price of the certificate, increased by the aggregate amount of original issue
discount that accrued for that certificate in prior accrual periods, and reduced
by the amount of any distributions made on that Regular Certificate in prior
accrual periods of amounts included in its stated redemption price. The original
issue discount accruing during any accrual period, computed as described above,
will be allocated ratably to each day during the accrual period to determine the
daily portion of original issue discount for that day.
The OID regulations suggest that original issue discount for securities
that represent multiple uncertificated regular interests, in which ownership
interests will be issued simultaneously to the same buyer and which may be
required under the related pooling and servicing agreement to be transferred
together, should be computed on an aggregate method. In the absence of further
guidance from the IRS, original issue discount for securities that represent the
ownership of multiple uncertificated regular interests will be reported to the
IRS and the certificateholders on an aggregate method based on a single overall
constant yield and the prepayment assumption stated in the accompanying
prospectus supplement, treating all uncertificated regular interests as a single
debt instrument as set forth in the OID regulations, so long as the pooling and
servicing agreement requires that the uncertificated regular interests be
transferred together.
A subsequent purchaser of a Regular Certificate that purchases the
certificate at a cost, excluding any portion of that cost attributable to
accrued qualified stated interest, less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount for that certificate. However, each daily portion will
be reduced, if the cost is in excess of its "adjusted issue price," in
proportion to the ratio that excess bears to the aggregate original issue
discount remaining to be accrued on the Regular Certificate. The adjusted issue
price of a Regular Certificate on any given day equals:
o the adjusted issue price or, in the case of the first accrual period, the
issue price, of the certificate at the beginning of the accrual period
which includes that day;
plus
o the daily portions of original issue discount for all days during the
accrual period prior to that day;
minus
o any principal payments made during the accrual period prior to that day for
the certificate.
Market Discount. A certificateholder that purchases a Regular Certificate
at a market discount, that is, in the case of a Regular Certificate issued
without original issue discount, at a purchase price less than its remaining
stated principal amount, or in the case of a Regular Certificate issued with
original issue discount, at a purchase price less than its adjusted issue price
will recognize income on receipt of each distribution representing stated
redemption price. In particular, under Section 1276 of the Code such a
certificateholder in most cases will be required to allocate the portion of each
distribution representing stated redemption price first to accrued market
discount not previously included in income, and to recognize ordinary income to
that extent.
A certificateholder may elect to include market discount in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, the election will apply to all market
discount bonds acquired by the certificateholder on or after the first day of
the first taxable year to which the election applies. In addition, the OID
regulations permit a certificateholder to elect to accrue all interest,
discount, including de minimis market or original issue discount, and premium in
income as interest, based on a constant yield method. If the election were made
for a Regular Certificate with market discount, the certificateholder would be
deemed to have made an election to include currently market discount in income
for all other debt instruments having market discount that the certificateholder
acquires during the taxable year of the election or thereafter.
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Similarly, a certificateholder that made this election for a certificate that is
acquired at a premium would be deemed to have made an election to amortize bond
premium for all debt instruments having amortizable bond premium that the
certificateholder owns or acquires. See "--Premium" in this prospectus. Each of
these elections to accrue interest, discount and premium for a certificate on a
constant yield method or as interest may not be revoked without the consent of
the IRS.
However, market discount for a Regular Certificate will be considered to be
de minimis for purposes of Section 1276 of the Code if the market discount is
less than 0.25% of the remaining stated redemption price of the Regular
Certificate multiplied by the number of complete years to maturity remaining
after the date of its purchase. In interpreting a similar rule for original
issue discount on obligations payable in installments, the OID regulations refer
to the weighted average maturity of obligations, and it is likely that the same
rule will be applied for market discount, presumably taking into account the
prepayment assumption. If market discount is treated as de minimis under this
rule, it appears that the actual discount would be treated in a manner similar
to original issue discount of a de minimis amount. See "-- Original Issue
Discount" in this prospectus. This treatment may result in discount being
included in income at a slower rate than discount would be required to be
included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on Regular Certificates should
accrue, at the certificateholder's option:
o on the basis of a constant yield method;
o in the case of a Regular Certificate issued without original issue
discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to
the total amount of stated interest remaining to be paid on the Regular
Certificate as of the beginning of the accrual period; or
o in the case of a Regular Certificate issued with original issue discount,
in an amount that bears the same ratio to the total remaining market
discount as the original issue discount accrued in the accrual period bears
to the total original issue discount remaining on the Regular Certificate
at the beginning of the accrual period.
Moreover, the prepayment assumption used in calculating the accrual of original
issue discount is to be used in calculating the accrual of market discount.
Because the regulations referred to in this paragraph have not been issued, it
is not possible to predict what effect those regulations might have on the tax
treatment of a Regular Certificate purchased at a discount in the secondary
market.
To the extent that Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which the discount would accrue if it were
original issue discount. Moreover, in any event a holder of a Regular
Certificate in most cases will be required to treat a portion of any gain on the
sale or exchange of that certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
In addition, under Section 1277 of the Code, a holder of a Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a Regular Certificate purchased with market discount. For
these purposes, the de minimis rule referred to above applies. Any deferred
interest expense would not exceed the market discount that accrues during that
taxable year and is, in general, allowed as a deduction not later than the year
in which the market discount is includible in income. If the holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by that holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
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Premium. A Regular Certificate purchased at a cost, excluding any portion
of that cost attributable to accrued qualified stated interest, greater than its
remaining stated redemption price will be considered to be purchased at a
premium. The holder of a Regular Certificate may elect under Section 171 of the
Code to amortize that premium under the constant yield method over the life of
the certificate. If made, this election will apply to all debt instruments
having amortizable bond premium that the holder owns or subsequently acquires.
Amortizable premium will be treated as an offset to interest income on the
related Regular Certificate, rather than as a separate interest deduction. The
OID regulations also permit certificateholders to elect to include all interest,
discount and premium in income based on a constant yield method, further
treating the certificateholder as having made the election to amortize premium
generally. See "--Market Discount" in this prospectus. The conference committee
report states that the same rules that apply to accrual of market discount,
which rules will require use of a prepayment assumption in accruing market
discount for Regular Certificates without regard to whether those certificates
have original issue discount, will also apply in amortizing bond premium under
Section 171 of the Code.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the Regular Certificates and noncorporate holders of the Regular Certificates
that acquire those certificates in connection with a trade or business should be
allowed to deduct, as ordinary losses, any losses sustained during a taxable
year in which their certificates become wholly or partially worthless as the
result of one or more Realized Losses on the loans. However, it appears that a
noncorporate holder that does not acquire a Regular Certificate in connection
with a trade or business will not be entitled to deduct a loss under Section 166
of the Code until the holder's certificate becomes wholly worthless, until its
outstanding principal balance has been reduced to zero, and that the loss will
be characterized as a short-term capital loss.
Each holder of a Regular Certificate will be required to accrue interest
and original issue discount for that certificate, without giving effect to any
reductions in distributions attributable to defaults or delinquencies on the
loans or the underlying certificates until it can be established that any
reduction ultimately will not be recoverable. As a result, the amount of taxable
income reported in any period by the holder of a Regular Certificate could
exceed the amount of economic income actually realized by the holder in that
period. Although the holder of a Regular Certificate eventually will recognize a
loss or reduction in income attributable to previously accrued and included
income that, as the result of a Realized Loss, ultimately will not be realized,
the law is unclear with respect to the timing and character of the loss or
reduction in income.
Special Rules for FASIT High-Yield Regular Interests.
General. A high-yield interest in a FASIT is a subcategory of a FASIT
regular interest. A FASIT high-yield regular interest is a FASIT regular
interest that either:
o has an issue price that exceeds 125% of its stated principal amount;
o has a yield to maturity equal to or greater than a specified amount,
generally 500 basis points above the appropriate applicable federal rate;
o is an interest-only obligation whose interest payments consist of a
non-varying specified portion of the interest payments on permitted assets.
A holder of a FASIT high-yield regular interest is subject to treatment,
described above, applicable to FASIT Regular Interests, generally.
Limitations on Utilization of Losses. The holder of a FASIT high-yield
regular interest may not offset its income derived thereon by any unrelated
losses. Thus, the taxable income of a holder of a FASIT high-yield regular
interest will be at least equal to the taxable income derived from that
interest, which includes gain or loss from the sale of those interests, any
FASIT ownership interests and any excess inclusion income derived from REMIC
residual interests. Thus, income from those interests generally cannot be offset
by current net operating losses or net operating loss carryovers. Similarly, the
alternative minimum taxable income of the holder of a high-yield regular
interest cannot be less than that holder's taxable income determined solely for
those interests. For purposes of these provisions, all members of an affiliated
group filing a consolidated return are treated as one taxpayer. Accordingly, the
consolidated taxable income of the group cannot be less than the group's
"tainted" income, thereby preventing losses of one member from offsetting the
tainted income of another member. However, to avoid doubly penalizing income,
net
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operating loss carryovers are determined without regard to that income for both
regular tax and alternative minimum tax purposes.
Transfer Restrictions. Transfers of FASIT high-yield Regular Certificates
to certain "disqualified holders" will, absent the satisfaction of certain
conditions, be disregarded for federal income tax purposes. In that event, the
most recent eligible holder, generally the transferring holder, will continue to
be taxed as if it were the holder of the certificate, although the disqualified
holder, and not the most recent eligible holder, would be taxable on any gain
recognized by that holder for the related interest. Although not free from
doubt, the tax ownership of a FASIT high-yield Regular Certificate may, absent
the satisfaction of certain conditions, revert to a prior holder even if the
transferee becomes a disqualified holder after the relevant transfer.
Each applicable pooling and servicing agreement, trust agreement or
indenture requires, as a prerequisite to any transfer of a FASIT high-yield
Regular Certificate, the delivery to the trustee of an affidavit of the
transferee to the effect that it is not a disqualified holder and contains
certain other provisions designed to preclude the automatic reversion of the tax
ownership of that certificate. For these purposes, a "disqualified holder' is
any person other than a:
o FASIT; or
o domestic C corporation, other than a corporation that is exempt from, or
not subject to, federal income tax; provided, however, that all of the
following are also "disqualified holders":
o regulated investment companies subject to the provisions of Part I of
subchapter M of the Code;
o real estate investment trusts subject to the provisions of Part II of
subchapter M of the Code;
o REMICs; and
o cooperatives described in Section 1381(a) of the Code.
Pass-through Entities Holding FASIT Regular Certificates. If a Pass-Through
Entity issues a high-yielding debt or equity interest that is supported by any
FASIT Regular Interest, that entity will be subject to an excise tax unless no
principal purpose of the resecuritization was the avoidance of the rules
relating to FASIT high-yield interests, pertaining to eligible holders of those
interests. See "Taxation of Owners of REMIC and FASIT Regular
Certificates--Taxation of Holders of FASIT High-yield Regular
Interests--Transfer Restrictions" in this prospectus. The tax will apply if the
original yield to maturity of the debt or equity interest in the Pass-Through
Entity exceeds the greater of:
(1) the sum of:
o the applicable federal rate in effect for the calendar month in which the
debt or equity interest is issued; and
o five percentage points; or
(2) the yield to maturity to such entity on the FASIT Regular Interest,
determined as of the date that the entity acquired its interest.
The Code provides that Treasury regulations will be issued to provide the
manner in which to determine the yield to maturity of any equity interest,
however no regulations have yet been issued. If a tax did apply, the tax would
equal the product of:
o the highest corporate tax rate; and
o the income of the holder of the debt or equity interest that is
properly attributable to the FASIT Regular Interest supporting the
equity interest.
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Taxation of Owners of REMIC Residual Certificates
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the loans or as debt instruments issued by the
REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, in accordance with the
limitations noted in this discussion, the net loss of the REMIC for each day
during a calendar quarter that the holder owned the REMIC Residual Certificate.
For this purpose, the taxable income or net loss of the REMIC will be allocated
to each day in the calendar quarter ratably using a "30 days per month/90 days
per quarter/360 days per year" convention or some other convention if stated in
the accompanying prospectus supplement. The daily amounts will then be allocated
among the REMIC residual certificateholders in proportion to their respective
ownership interests on that day. Any amount included in the gross income or
allowed as a loss of any REMIC residual certificateholder by virtue of this
allocation will be treated as ordinary income or loss. The taxable income of the
REMIC will be determined under the rules described in this prospectus in
"--Taxable Income of the REMIC" and will be taxable to the REMIC residual
certificateholders without regard to the timing or amount of cash distributions
by the REMIC. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers in accordance with
limitations under Section 469 of the Code on the deductibility of "passive
losses."
A holder of a REMIC Residual Certificate that purchased the certificate
from a prior holder of that certificate also will be required to report on its
federal income tax return amounts representing its daily portion of the taxable
income or net loss of the REMIC for each day that it holds the REMIC Residual
Certificate. These daily portions generally will equal the amounts of taxable
income or net loss determined as described above. The committee report indicates
that modifications of the general rules may be made, by regulations, legislation
or otherwise, to reduce, or increase, the income or loss of a REMIC residual
certificateholder that purchased the REMIC Residual Certificate from a prior
holder of the certificate at a price greater than, or less than, the adjusted
basis, as defined below, that REMIC Residual Certificate would have had in the
hands of an original holder of that certificate. The REMIC regulations, however,
do not provide for any such modifications.
Any payments received by a REMIC residual certificateholder in connection
with the acquisition of that REMIC Residual Certificate will be taken into
account in determining the income of the holder for federal income tax purposes.
Although it appears likely that any payment would be includible in income
immediately on its receipt, the IRS might assert that the payment should be
included in income over time according to an amortization schedule or according
to some other method. Because of the uncertainty concerning the treatment of
these payments, holders of REMIC Residual Certificates should consult their tax
advisors concerning the treatment of these payments for income tax purposes.
The amount of income REMIC residual certificateholders will be required to
report, or the tax liability associated with that income, may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC residual certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions" and
"noneconomic" residual interests discussed below. The fact that the tax
liability associated with the income allocated to REMIC residual
certificateholders may exceed the cash distributions received by the REMIC
residual certificateholders for the corresponding period may significantly
adversely affect the REMIC residual certificateholders after-tax rate of return.
Taxable Income of the REMIC. The taxable income of the REMIC will equal the
income from the loans and other assets of the REMIC plus any cancellation of
indebtedness income due to the allocation of Realized Losses to Regular
Certificates, less the deductions allowed to the REMIC for interest, including
original issue discount and reduced by the amortization of any premium received
on issuance, on the Regular Certificates, and any other class of REMIC
certificates constituting "regular interests" in the REMIC not offered hereby,
amortization of any premium on the loans, bad debt deductions for the loans and,
except as described below, for servicing, administrative and other expenses.
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For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to their fair market value
immediately after their transfer to the REMIC. For this purpose, the servicer,
the subservicer, or REMIC administrator, as applicable, intends to treat the
fair market value of the loans as being equal to the aggregate issue prices of
the Regular Certificates and REMIC Residual Certificates. The aggregate basis
will be allocated among the loans collectively and the other assets of the REMIC
in proportion to their respective fair market values. The issue price of any
REMIC certificates offered hereby will be determined in the manner described in
this prospectus under "--Taxation of Owners of REMIC and FASIT Regular
Certificates--Original Issue Discount." Accordingly, if one or more classes of
REMIC certificates are retained initially rather than sold, the servicer, the
subservicer, or REMIC administrator, as applicable, may be required to estimate
the fair market value of those interests in order to determine the basis of the
REMIC in the loans and other property held by the REMIC.
Subject to the possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income for loans that it holds will be equivalent to the method of accruing
original issue discount income for regular certificateholders; under the
constant yield method taking into account the prepayment assumption. However, a
REMIC that acquires collateral at a market discount must include the discount in
income currently, as it accrues, on a constant interest basis. See "-- Taxation
of Owners of REMIC and FASIT Regular Certificates" in this prospectus, which
describes a method of accruing discount income that is analogous to that
required to be used by a REMIC as to loans with market discount that it holds.
A loan will be deemed to have been acquired with discount or premium to the
extent that the REMIC's basis in that loan, determined as described in the
preceding paragraph, is less than or greater than its stated redemption price.
Any discount will be includible in the income of the REMIC as it accrues, in
advance of receipt of the cash attributable to that income, under a method
similar to the method described above for accruing original issue discount on
the Regular Certificates. It is anticipated that each REMIC will elect under
Section 171 of the Code to amortize any premium on the loans. Premium on any
loan to which the election applies may be amortized under a constant yield
method, presumably taking into account a prepayment assumption.
A REMIC will be allowed deductions for interest, including original issue
discount, on the Regular Certificates, including any other class of REMIC
certificates constituting "regular interests" in the REMIC not offered hereby,
equal to the deductions that would be allowed if the Regular Certificates,
including any other class of REMIC certificates constituting "regular interests"
in the REMIC not offered hereby, were indebtedness of the REMIC. Original issue
discount will be considered to accrue for this purpose as described in this
prospectus under "--Taxation of Owners of REMIC and FASIT Regular
Certificates--Original Issue Discount," except that the de minimis rule and the
adjustments for subsequent holders of Regular Certificates, including any other
class of certificates constituting "regular interests" in the REMIC not offered
hereby, described in this prospectus under "--Taxation of Owners of REMIC and
FASIT Regular Certificates--Original Issue Discount," will not apply.
If a class of Regular Certificates is issued at an Issue Premium, the net
amount of interest deductions that are allowed the REMIC in each taxable year
for the Regular Certificates of that class will be reduced by an amount equal to
the portion of the Issue Premium that is considered to be amortized or repaid in
that year. Although the matter is not entirely certain, it is likely that Issue
Premium would be amortized under a constant yield method in a manner analogous
to the method of accruing original issue discount described in this prospectus
under "--Taxation of Owners of REMIC and FASIT Regular Certificates--Original
Issue Discount."
As a general rule, the taxable income of the REMIC will be determined in
the same manner as if the REMIC were an individual having the calendar year as
its taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions and Other Taxes" in this
prospectus. Further, the limitation on miscellaneous itemized deductions imposed
on individuals by Section 67 of the Code, which allows those deductions only to
the extent they exceed in the aggregate two percent of the taxpayer's adjusted
gross income, will not be applied at the REMIC level so that the REMIC will be
allowed deductions for servicing, administrative and other non-interest expenses
in determining its taxable income. All of these expenses will be allocated as a
separate item to the holders of REMIC Residual Certificates, subject to the
limitation of Section 67 of the Code. See "--Possible Pass-Through of
Miscellaneous Itemized Deductions" in this prospectus. If the deductions allowed
to the REMIC exceed its gross income for a calendar quarter, the excess will be
the net loss for the REMIC for that calendar quarter.
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Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for that REMIC Residual
Certificate, increased by amounts included in the income of the related
certificateholder and decreased, but not below zero, by distributions made, and
by net losses allocated, to the related certificateholder.
A REMIC residual certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent the net loss exceeds the REMIC
residual certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of that calendar quarter, determined without regard to the net
loss. Any loss that is not currently deductible by reason of this limitation may
be carried forward indefinitely to future calendar quarters and, in accordance
with the same limitation, may be used only to offset income from the REMIC
Residual Certificate. The ability of REMIC residual certificateholders to deduct
net losses in accordance with additional limitations under the Code, as to which
the certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
non-taxable return of capital to the extent it does not exceed the holder's
adjusted basis in the REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds the adjusted basis, it will be treated
as gain from the sale of the REMIC Residual Certificate. Holders of REMIC
Residual Certificates may be entitled to distributions early in the term of the
related REMIC under circumstances in which their basis in the REMIC Residual
Certificates will not be sufficiently large that distributions will be treated
as nontaxable returns of capital. Their basis in the REMIC Residual Certificates
will initially equal the amount paid for those REMIC Residual Certificates and
will be increased by their allocable shares of taxable income of the related
trust fund. However, their basis increases may not occur until the end of the
calendar quarter, or perhaps the end of the calendar year, for which the REMIC
taxable income is allocated to the REMIC residual certificateholders. To the
extent the REMIC residual certificateholders initial basis are less than the
distributions to the REMIC residual certificateholders, and increases in the
initial basis either occur after distributions or, together with their initial
basis, are less than the amount of the distributions, gain will be recognized to
the REMIC residual certificateholders on those distributions and will be treated
as gain from the sale of their REMIC Residual Certificates.
The effect of these rules is that a certificateholder may not amortize its
basis in a REMIC Residual Certificate, but may only recover its basis through
distributions, through the deduction of its share of any net losses of the REMIC
or on the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates" in this prospectus. For a discussion of possible modifications of
these rules that may require adjustments to income of a holder of a REMIC
Residual Certificate other than an original holder in order to reflect any
difference between the cost of the REMIC Residual Certificate to its holder and
the adjusted basis the REMIC Residual Certificate would have had in the hands of
the original holder, see "--General" in this prospectus
Excess Inclusions. Any "excess inclusions" for a REMIC Residual Certificate
will be subject to federal income tax in all events.
In general, the "excess inclusions" for a REMIC Residual Certificate for
any calendar quarter will be the excess, if any, of:
o the sum of the daily portions of REMIC taxable income allocable to the
REMIC Residual Certificate;
over
o the sum of the "daily accruals," as described in the following sentence,
for each day during that quarter that the REMIC Residual Certificate was
held by the REMIC residual certificateholder.
The daily accruals of a REMIC residual certificateholder will be determined by
allocating to each day during a calendar quarter its ratable portion of the
product of the "adjusted issue price" of the REMIC Residual Certificate at the
beginning of the calendar quarter and 120% of the "long-term Federal rate" in
effect on the closing date. For this purpose, the adjusted issue price of a
REMIC Residual Certificate as of the beginning of any calendar quarter will be
equal to the issue price of the REMIC Residual Certificate, increased by the sum
of the daily accruals for all prior quarters and decreased, but not below zero,
by any distributions made on the REMIC Residual Certificate before the beginning
of that quarter. The issue price of a REMIC Residual Certificate is the initial
offering price to
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the public, excluding bond houses, brokers and underwriters, at which a
substantial amount of the REMIC Residual Certificates were sold. If less than a
substantial amount of a particular class of REMIC Residual Certificates is sold
for cash on or prior to the closing date, the issue price of that class will be
treated as the fair market value of that class on the closing date. The
"long-term Federal rate" is an average of current yields on Treasury securities
with a remaining term of greater than nine years, computed and published monthly
by the IRS.
For REMIC residual certificateholders, an excess inclusion:
o will not be permitted to be offset by deductions, losses or loss carryovers
from other activities;
o will be treated as "unrelated business taxable income" to an otherwise
tax-exempt organization; and
o will not be eligible for any rate reduction or exemption under any
applicable tax treaty for the 30% United States withholding tax imposed on
distributions to REMIC residual certificateholders that are foreign
investors.
See, however, "--Foreign Investors in Regular Certificates" in this prospectus.
Furthermore, for purposes of the alternative minimum tax, (1) excess
inclusions will not be permitted to be offset by the alternative tax net
operating loss deduction and (2) alternative minimum taxable income may not be
less than the taxpayer's excess inclusions; provided, however, that for purposes
of (2), alternative minimum taxable income is determined without regard to the
special rule that taxable income cannot be less than excess inclusions. The
latter rule has the effect of preventing nonrefundable tax credits from reducing
the taxpayer's income tax to an amount lower than the alternative minimum tax on
excess inclusions.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions allocated to the REMIC
Residual Certificates, reduced, but not below zero, by the real estate
investment trust taxable income, within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain, will be allocated among the shareholders
of the trust in proportion to the dividends received by the shareholders from
the trust, and any amount so allocated will be treated as an excess inclusion
from a REMIC Residual Certificate as if held directly by the shareholder.
Treasury regulations yet to be issued could apply a similar rule to regulated
investment companies, common trust funds and some cooperatives; the REMIC
regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax." If the
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on the "noneconomic" REMIC Residual
Certificate. The REMIC regulations provide that a REMIC Residual Certificate is
noneconomic unless, based on the prepayment assumption and on any required or
permitted clean up calls, or required qualified liquidation provided for in the
REMIC's organizational documents:
(1) the present value of the expected future distributions, discounted
using the "applicable federal rate" for obligations whose term ends
on the close of the last quarter in which excess inclusions are
expected to accrue on the REMIC Residual Certificate, which rate is
computed and published monthly by the IRS, on the REMIC Residual
Certificate equals at least the present value of the expected tax on
the anticipated excess inclusions; and
(2) the transferor reasonably expects that the transferee will receive
distributions on the REMIC Residual Certificate at or after the time
the taxes accrue on the anticipated excess inclusions in an amount
sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may constitute
noneconomic residual interests will be subject to restrictions under the terms
of the related pooling and servicing agreement or trust agreement that are
intended to reduce the possibility of any transfer being disregarded. The
restrictions will require each party to a transfer to provide an affidavit that
no purpose of the transfer is to impede the assessment or collection of tax,
including representations as to the financial condition of the prospective
transferee, as to which the transferor also is required to make a reasonable
investigation to determine the transferee's historic payment of its debts and
ability to
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continue to pay its debts as they come due in the future. The IRS has issued
proposed changes to the REMIC regulations that would add to the conditions
necessary to assure that a transfer of a noneconomic residual interest would be
respected. The proposed additional condition would require that the amount
received by the transferee be no less on a present value basis than the present
value of the net tax detriment attributable to holding residual interest reduced
by the present value of the projected payments to be received on the residual
interest. The change is proposed to be effective for transfers of residual
interests occurring after February 4, 2000. Prior to purchasing a REMIC Residual
Certificate, prospective purchasers should consider the possibility that a
purported transfer of the REMIC Residual Certificate by the purchaser to another
purchaser at some future date may be disregarded in accordance with the
above-described rules which would result in the retention of tax liability by
the first purchaser.
The accompanying prospectus supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC regulations. Any disclosure that a REMIC Residual Certificate will not
be considered "noneconomic" will be based on some assumptions, and the depositor
will make no representation that a REMIC Residual Certificate will not be
considered "noneconomic" for purposes of the above-described rules. See
"--Foreign Investors in Regular Certificates" for additional restrictions
applicable to transfers of certain REMIC Residual Certificates to foreign
persons.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of those fees and expenses should be allocated to the
holders of the related Regular Certificates. Fees and expenses will be allocated
to holders of the related REMIC Residual Certificates in their entirety and not
to the holders of the related Regular Certificates or if stated in the related
prospectus supplement, some or all of the fees and expenses will be allocated to
the holders of the related Regular Certificates.
For REMIC Residual Certificates or Regular Certificates the holders of
which receive an allocation of fees and expenses in accordance with the
preceding discussion, if any holder thereof is an individual, estate or trust,
or a Pass-Through Entity beneficially owned by one or more individuals, estates
or trusts:
o an amount equal to the individual's, estate's or trust's share of fees and
expenses will be added to the gross income of that holder; and
o the individual's, estate's or trust's share of fees and expenses will be
treated as a miscellaneous itemized deduction allowable in accordance with
the limitation of Section 67 of the Code, which permits those deductions
only to the extent they exceed in the aggregate two percent of a taxpayer's
adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over that
amount; or
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
The amount of additional taxable income reportable by REMIC certificateholders
that are in accordance with the limitations of either Section 67 or Section 68
of the Code may be substantial. Furthermore, in determining the alternative
minimum taxable income of the holder of a REMIC certificate that is an
individual, estate or trust, or a Pass-Through Entity beneficially owned by one
or more individuals, estates or trusts, no deduction will be allowed for that
holder's allocable portion of servicing fees and other miscellaneous itemized
deductions of the REMIC, even though an amount equal to the amount of those fees
and other deductions will be included in the holder's gross income. Accordingly,
the REMIC certificates may not be appropriate investments for individuals,
estates, or trusts, or Pass-Through Entities beneficially owned by one or more
individuals, estates or trusts. Any prospective investors should consult with
their tax advisors prior to making an investment in these certificates.
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Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a Disqualified
Organization, a tax would be imposed in an amount, determined under the REMIC
regulations, equal to the product of:
o the present value, discounted using the "applicable federal rate" for
obligations whose term ends on the close of the last quarter in which
excess inclusions are expected to accrue on the certificate, which rate is
computed and published monthly by the IRS, of the total anticipated excess
inclusions on the REMIC Residual Certificate for periods after the
transfer; and
o the highest marginal federal income tax rate applicable to corporations.
The anticipated excess inclusions must be determined as of the date that
the REMIC Residual Certificate is transferred and must be based on events that
have occurred up to the time of transfer, the prepayment assumption and any
required or permitted clean up calls or required liquidation provided for in the
REMIC's organizational documents. This tax generally would be imposed on the
transferor of the REMIC Residual Certificate, except that where the transfer is
through an agent for a Disqualified Organization, the tax would instead be
imposed on that agent. However, a transferor of a REMIC Residual Certificate
would in no event be liable for the tax on a transfer if the transferee
furnishes to the transferor an affidavit that the transferee is not a
Disqualified Organization and, as of the time of the transfer, the transferor
does not have actual knowledge that the affidavit is false. Moreover, an entity
will not qualify as a REMIC unless there are reasonable arrangements designed to
ensure that:
o residual interests in the entity are not held by Disqualified
Organizations; and
o information necessary for the application of the tax described in this
prospectus will be made available.
Restrictions on the transfer of REMIC Residual Certificates and other
provisions that are intended to meet this requirement will be included in the
pooling and servicing agreement, including provisions:
(1) requiring any transferee of a REMIC Residual Certificate to provide an
affidavit representing that it is not a Disqualified Organization and is
not acquiring the REMIC Residual Certificate on behalf of a Disqualified
Organization, undertaking to maintain that status and agreeing to obtain a
similar affidavit from any person to whom it shall transfer the REMIC
Residual Certificate;
(2) providing that any transfer of a REMIC Residual Certificate to a
Disqualified Organization shall be null and void; and
(3) granting to the servicer or the subservicer the right, without notice to
the holder or any prior holder, to sell to a purchaser of its choice any
REMIC Residual Certificate that shall become owned by a Disqualified
Organization despite (1) and (2) above.
In addition, if a Pass-Through Entity includes in income excess inclusions
on a REMIC Residual Certificate, and a Disqualified Organization is the record
holder of an interest in that entity, then a tax will be imposed on the entity
equal to the product of:
o the amount of excess inclusions on the REMIC Residual Certificate that are
allocable to the interest in the Pass-Through Entity held by the
Disqualified Organization; and
o the highest marginal federal income tax rate imposed on corporations.
A Pass-Through Entity will not be subject to this tax for any period, however,
if each record holder of an interest in the Pass-Through Entity furnishes to
that Pass-Through Entity:
o the holder's social security number and a statement under penalties of
perjury that the social security number is that of the record holder; or
o a statement under penalties of perjury that the record holder is not a
Disqualified Organization.
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For taxable years beginning after December 31, 1997, regardless of the preceding
two sentences, in the case of a REMIC Residual Certificate held by an "electing
large partnership," all interests in that partnership shall be treated as held
by Disqualified Organizations, without regard to whether the record holders of
the partnership furnish statements described in the preceding sentence, and the
amount that is subject to tax under the second preceding sentence is excluded
from the gross income of the partnership allocated to the partners, in lieu of
allocating to the partners a deduction for the tax paid by the partners.
Sales of certificates. If a certificate is sold, the selling
certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the certificate. The
adjusted basis of a Regular Certificate generally will equal the cost of that
Regular Certificate to that certificateholder, increased by income reported by
the certificateholder with respect to that Regular Certificate, including
original issue discount and market discount income, and reduced, but not below
zero, by distributions on the Regular Certificate received by the
certificateholder and by any amortized premium. The adjusted basis of a REMIC
Residual Certificate will be determined as described under "--Taxation of Owners
of REMIC Residual Certificates--Basis Rules, Net Losses and Distributions" in
this prospectus. Except as described below, any gain or loss generally will be
capital gain or loss.
Gain from the sale of a REMIC Regular Certificate, but not a FASIT regular
interest, that might otherwise be capital gain will be treated as ordinary
income to the extent the gain does not exceed the excess, if any, of:
o the amount that would have been includible in the seller's income for the
Regular Certificate had income accrued thereon at a rate equal to 110% of
the "applicable federal rate," which is typically a rate based on an
average of current yields on Treasury securities having a maturity
comparable to that of the certificate, which rate is computed and published
monthly by the IRS, determined as of the date of purchase of the Regular
Certificate;
over
o the amount of ordinary income actually includible in the seller's income
prior to the sale.
In addition, gain recognized on the sale of a Regular Certificate by a seller
who purchased the Regular Certificate at a market discount will be taxable as
ordinary income to the extent of any accrued and previously unrecognized market
discount that accrued during the period the certificate was held. See
"--Taxation of Owners of REMIC and FASIT Regular Certificates--Market Discount"
in this prospectus.
A portion of any gain from the sale of a Regular Certificate that might
otherwise be capital gain may be treated as ordinary income to the extent that
the certificate is held as part of a "conversion transaction" within the meaning
of Section 1258 of the Code. A conversion transaction generally is one in which
the taxpayer has taken two or more positions in certificates or similar property
that reduce or eliminate market risk, if substantially all of the taxpayer's
return is attributable to the time value of the taxpayer's net investment in the
transaction. The amount of gain so realized in a conversion transaction that is
recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of the
appropriate "applicable federal rate," which rate is computed and published
monthly by the IRS, at the time the taxpayer enters into the conversion
transaction, subject to appropriate reduction for prior inclusion of interest
and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include any net capital
gain in total net investment income for the taxable year, for purposes of the
limitation on the deduction of interest on indebtedness incurred to purchase or
carry property held for investment to a taxpayer's net investment income.
If the seller of a REMIC Residual Certificate reacquires the certificate,
any other residual interest in a REMIC or any similar interest in a "taxable
mortgage pool," as defined in Section 7701(i) of the Code, within six months of
the date of the sale, the sale will be subject to the "wash sale" rules of
Section 1091 of the Code. In that event, any loss realized by the REMIC residual
certificateholders on the sale will not be deductible, but instead will be added
to the REMIC residual certificateholders adjusted basis in the newly-acquired
asset.
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Prohibited Transactions and Other Taxes. The Code imposes a prohibited
transactions tax, which is a tax on REMICs equal to 100% of the net income
derived from prohibited transactions. In general, subject to specified
exceptions a prohibited transaction means the disposition of a loan, the receipt
of income from a source other than any loan or other Permitted Investments, the
receipt of compensation for services, or gain from the disposition of an asset
purchased with the payments on the loans for temporary investment pending
distribution on the REMIC certificates. It is not anticipated that any REMIC
will engage in any prohibited transactions in which it would recognize a
material amount of net income. In addition, some contributions to a REMIC made
after the day on which the REMIC issues all of its interests could result in the
imposition of a contributions tax, which is a tax on the REMIC equal to 100% of
the value of the contributed property. Each pooling and servicing agreement or
trust agreement will include provisions designed to prevent the acceptance of
any contributions that would be subject to the tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property," determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
It is not anticipated that any REMIC will recognize "net income from foreclosure
property" subject to federal income tax, however, if a REMIC may be required to
recognize "net income from foreclosure property" subject to federal income tax,
it will be stated in the related prospectus supplement.
It is not anticipated that any material state or local income or franchise
tax will be imposed on any REMIC, however if any material state or local income
or franchise tax may be imposed on a REMIC, it will be stated in the related
prospectus supplement.
To the extent permitted by then applicable laws, any prohibited
transactions tax, contributions tax, tax on "net income from foreclosure
property" or state or local income or franchise tax that may be imposed on the
REMIC will be borne by the related servicer, the subservicer, the REMIC
administrator, the trustee, or such other entity as stated in the applicable
prospectus supplement, in any case out of its own funds, provided that the
servicer, the subservicer, the REMIC administrator, the trustee, or other entity
as stated in the applicable prospectus supplement, as the case may be, has
sufficient assets to do so, and provided further that the tax arises out of a
breach of the servicer's, the subservicer's, the REMIC administrator's, the
trustee's, or other entity as stated in the applicable prospectus supplement,
obligations, as the case may be, under the related pooling and servicing
agreement or trust agreement and relating to compliance with applicable laws and
regulations. Any tax not borne by the servicer, the subservicer, the trustee, or
other entity as stated in the applicable prospectus supplement, will be payable
out of the related trust resulting in a reduction in amounts payable to holders
of the related REMIC certificates.
In the case of a FASIT, the holder of the ownership interest and not the
FASIT itself will be subject to any prohibited transaction taxes.
Termination. A REMIC will terminate immediately after the distribution date
following receipt by the REMIC of the final payment from the loans or on a sale
of the REMIC's assets following the adoption by the REMIC of a plan of complete
liquidation. The last distribution on a Regular Certificate will be treated as a
payment in retirement of a debt instrument. In the case of a REMIC Residual
Certificate, if the last distribution on the REMIC Residual Certificate is less
than the certificateholder's adjusted basis in the certificate, the
certificateholder should be treated as realizing a loss equal to the amount of
the difference, and the loss may be treated as a capital loss.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, a REMIC will be treated as a partnership
and REMIC residual certificateholders will be treated as partners. The servicer,
the subservicer, the REMIC administrator, or other entity as stated in the
applicable prospectus supplement, as applicable, will file REMIC federal income
tax returns on behalf of the related REMIC and will act as the "tax matters
person" for the REMIC in all respects, and may hold a nominal amount of REMIC
Residual Certificates.
As the tax matters person, the servicer, the subservicer, the REMIC
administrator, or other entity as stated in the applicable prospectus
supplement, as applicable, will have the authority to act on behalf of the REMIC
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and the REMIC residual certificateholders in connection with the administrative
and judicial review of items of income, deduction, gain or loss of the REMIC, as
well as the REMIC's classification. REMIC residual certificateholders will be
required to report the REMIC items consistently with their treatment on the
related REMIC's tax return and may in some circumstances be bound by a
settlement agreement between the servicer, the subservicer, the REMIC
administrator, or other entity as stated in the applicable prospectus
supplement, as applicable, as tax matters person, and the IRS concerning any
REMIC item.
Adjustments made to the REMIC tax return may require a REMIC residual
certificateholders to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from an audit, could
result in an audit of the certificateholder's return. No REMIC will be
registered as a tax shelter under Section 6111 of the Code because it is not
anticipated that any REMIC will have a net loss for any of the first five
taxable years of its existence. Any person that holds a REMIC Residual
Certificate as a nominee for another person may be required to furnish to the
related REMIC, in a manner to be provided in Treasury regulations, the name and
address of that person and other information.
Reporting of interest income, including any original issue discount, on
Regular Certificates is required annually, and may be required more frequently
under Treasury regulations. These information reports are required to be sent to
individual holders of regular interests and the IRS; holders of Regular
Certificates that are corporations, trusts, securities dealers and other
non-individuals will be provided interest and original issue discount income
information and the information in the following paragraph on request in
accordance with the requirements of the applicable regulations. The information
must be provided by the later of 30 days after the end of the quarter for which
the information was requested, or two weeks after the receipt of the request.
The REMIC must also comply with rules requiring a Regular Certificate issued
with original issue discount to disclose on its face information including the
amount of original issue discount and the issue date, and requiring that
information to be reported to the IRS. Reporting for the REMIC Residual
Certificates, including income, excess inclusions, investment expenses and
relevant information regarding qualification of the REMIC's assets will be made
as required under the Treasury regulations, typically on a quarterly basis.
As applicable, the Regular Certificate information reports will include a
statement of the adjusted issue price of the Regular Certificate at the
beginning of each accrual period. In addition, the reports will include
information required by regulations for computing the accrual of any market
discount. Because exact computation of the accrual of market discount on a
constant yield method requires information relating to the holder's purchase
price that the servicer or the subservicer will not have, the regulations only
require that information pertaining to the appropriate proportionate method of
accruing market discount be provided. See "--Taxation of Owners of REMIC and
FASIT Regular Certificates--Market Discount."
The responsibility for complying with the foregoing reporting rules will be
borne by the subservicer, the trustee, or the REMIC (or FASIT) administrator
named in the related prospectus supplement, as specified in the prospectus
supplement. Certificateholders may request any information with respect to the
returns described in Section 1.6049-7(e)(2) of the Treasury regulations.
Backup Withholding with Respect to Securities
Payments of interest and principal, as well as payments of proceeds from
the sale of securities, may be subject to the "backup withholding tax" under
Section 3406 of the Code at a rate of 31% if recipients of payments fail to
furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from the
tax. Any amounts deducted and withheld from a distribution to a recipient would
be allowed as a credit against the recipient's federal income tax. Furthermore,
penalties may be imposed by the IRS on a recipient of payments that is required
to supply information but that does not do so in the proper manner.
Foreign Investors in Regular Certificates
A regular certificateholder, other than a holder of a FASIT high-yield
regular interest, that is not a United States person and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a Regular Certificate will not be
subject to United States federal income or withholding tax on a distribution on
a Regular Certificate, provided that the holder complies to the extent necessary
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with certain identification requirements, including delivery of a statement,
signed by the certificateholder under penalties of perjury, certifying that the
certificateholder is not a United States person and providing the name and
address of the certificateholder.
For these purposes, United States person means:
o a citizen or resident of the United States;
o 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, except, in the case of a partnership, to the extent provided in
regulations;
o an estate whose income is subject to United States federal income tax
regardless of its source; or
o a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust. To the extent prescribed in regulations by the Secretary of the
Treasury, which regulations have not yet been issued, a trust which was in
existence on August 20, 1996, other than a trust treated as owned by the
grantor under subpart E of part I of subchapter J of chapter 1 of the Code,
and which was treated as a United States person on August 19, 1996, may
elect to continue to be treated as a United States person regardless of the
previous sentence.
It is possible that the IRS may assert that the foregoing tax exemption should
not apply to a REMIC Regular Certificate held by a REMIC residual
certificateholder that owns directly or indirectly a 10% or greater interest in
the REMIC Residual Certificates or a FASIT Regular Certificate held by a person
that owns directly or indirectly a 10% or greater interest in the holder of the
ownership interest in the FASIT. Further, the Proposed FASIT Regulations treat
all interest received by a foreign holder of a FASIT regular interest as
ineligible for the foregoing exemption from withholding tax if the FASIT
receives or accrues interest from a United States resident in which the foreign
holder has a 10% or more ownership interest or as to which the foreign holder is
a controlled foreign corporation to which the United States resident is related.
If the holder does not qualify for exemption, distributions of interest,
including distributions of accrued original issue discount, to the holder may be
subject to a tax rate of 30%, subject to reduction under any applicable tax
treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on the United
States shareholder's allocable portion of the interest income received by the
controlled foreign corporation.
Further, it appears that a Regular Certificate would not be included in the
estate of a non-resident alien individual and would not be subject to United
States estate taxes. However, certificateholders who are non-resident alien
individuals should consult their tax advisors concerning this question.
Generally, transfers of REMIC Residual Certificates and FASIT high-yield
regular interests to investors that are not United States persons will be
prohibited under the related pooling and servicing agreement or trust agreement,
however, if so stated in the applicable prospectus supplement transfers of REMIC
Residual Certificates and FASIT high-yield regular interests to investors that
are not United States persons will be allowed.
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New Withholding Regulations. The Treasury Department has issued new
regulations which make some modifications to the withholding, backup withholding
and information reporting rules described above. The new regulations attempt to
unify certification requirements and modify reliance standards. The new
regulations will be effective for most payments made after December 31, 2000.
The new regulations contain transaction rules applicable to some payments made
after December 31, 2000. Prospective investors are urged to consult their tax
advisors regarding the new regulations.
Non-REMIC Trust Funds
The discussion under this heading applies only to a series with respect to
which a REMIC or FASIT election is not made.
Characterization of the Trust Fund. Upon the issuance of any series with
respect to which no REMIC or FASIT election is made and which is described in
the related prospectus supplement as a grantor trust, Orrick, Herrington &
Sutcliffe LLP, if it is counsel to the depositor, will deliver its opinion that,
with respect to that series of securities, under then existing law and assuming
compliance by the depositor, the servicer and the trustee of the related series
with all of the provisions of the related pooling and servicing agreement, and
the agreement or agreements, if any, providing for a credit facility or a
liquidity facility, together with any agreement documenting the arrangement
through which a credit facility or a liquidity facility is held outside the
related trust fund, and the agreement or agreements with any underwriter, for
federal income tax purposes, the trust fund will be classified as a grantor
trust and not as a corporation or an association which is taxable as a
corporation (or publicly traded partnership treated as a corporation) and the
grantor trust certificates will be treated as equity in that trust fund.
Accordingly, each grantor trust certificateholder will be treated for federal
income tax purposes as the owner of an undivided equity interest in the assets
included in that trust fund. Further, if with respect to any series of
securities Orrick, Herrington & Sutcliffe LLP is not counsel to the depositor,
depositor's then current counsel will be identified in the related prospectus
supplement and will confirm or supplement the aforementioned opinions. As
further described below, each grantor trust certificateholder must therefore
report on its federal income tax return the gross income from the portion of the
assets of the related trust fund that is allocable to the related grantor trust
certificate and may deduct its share of the expenses paid by the trust fund that
are allocable to that grantor trust certificate, at the same time and to the
same extent as those items would be reported by that holder if it had purchased
and held directly such interest in the assets of the related trust fund and
received directly its share of the payments on the assets of the related trust
fund and paid directly its share of the expenses paid by the trust fund when
those amounts are received and paid by the trust fund. A grantor trust
certificateholder who is an individual will be allowed deductions for those
expenses only to the extent that the sum of those expenses and certain other of
the grantor trust certificateholder's miscellaneous itemized deductions exceeds
2% of that individual's adjusted gross income. In addition, the amount of
itemized deductions otherwise allowable for the taxable year of an individual
whose adjusted gross income exceeds certain thresholds will be reduced. It
appears that expenses paid by the trust fund, and the gross income used to pay
those expenses, should be allocated among the classes of grantor trust
certificates in proportion to their respective fair market values at issuance,
but because other reasonable methods of allocation exist and the allocation of
those items has not been the subject of a controlling court decision, regulation
or ruling by the IRS, no definitive advice concerning the allocation of those
items can be given.
Under current IRS interpretations of applicable Treasury regulations, the
depositor would be able to sell or otherwise dispose of any subordinated grantor
trust certificates. Accordingly, the depositor expects to offer subordinated
grantor trust certificates for sale to investors. In general, subordination
should not affect the federal income tax treatment of either the subordinated or
senior certificates, and holders of subordinated classes of certificates should
be able to recognize any losses allocated to the related class when and if
losses are realized.
To the extent that any of the mortgage loans, contracts or mortgage loans
underlying the Mortgage Certificates included in a trust fund were originated on
or after March 21, 1984 and under circumstances giving rise to original issue
discount, grantor trust certificateholders will be required to report annually
an amount of additional interest income attributable to the discount in those
mortgage loans, contracts or mortgage loans underlying the Mortgage Certificates
prior to receipt of cash related to the discount. See the discussion above under
"Taxation of Owners of REMIC and FASIT Regular Certificates--Original Issue
Discount." Similarly, Code provisions concerning market discount and amortizable
premium will apply to the mortgage loans, contracts or mortgage loans underlying
the Mortgage Certificates included in a trust fund to the extent that the
mortgage loans, contracts or
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mortgage loans underlying the Mortgage Certificates were originated after July
18, 1984 and September 27, 1985, respectively. See the discussions above under
"Taxation of Owners of REMIC and FASIT Regular Certificates--Market Discount"
and "--Premium."
Tax Status of Grantor Trust Certificates. In general, the grantor trust
certificates, other than premium grantor trust certificates as discussed below,
will be:
o "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code; and
o assets described in Section 7701(a)(19)(C) of the Code to the extent the
trust fund's assets qualify under those sections of the Code.
Any amount includible in gross income with respect to the grantor trust
certificates will be treated as "interest on obligations secured by mortgages on
real property or on interests in real property" within the meaning of Section
856(c)(3)(B) of the Code to the extent the income on the trust fund's assets
qualifies under that Code section. The IRS has ruled that obligations secured by
permanently installed mobile home units qualify as "real estate assets" under
Section 856(c)(4)(A) of the Code. Assets described in Section 7701(a)(19)(C) of
the Code include loans secured by mobile homes not used on a transient basis.
However, whether manufactured homes would be viewed as permanently installed for
purposes of Section 856 of the Code would depend on the facts and circumstances
of each case, because the IRS rulings on this issue do not provide facts on
which taxpayers can rely to achieve treatment as "real estate assets". No
assurance can be given that the manufactured homes will be so treated. A "real
estate investment trust," or REIT, will not be able to treat that portion of its
investment in certificates that represents ownership of contracts on
manufactured homes that are not treated as permanently attached as a "real
estate asset" for REIT qualification purposes. In this regard, investors should
note that generally, most contracts prohibit the related obligor from
permanently attaching the related manufactured home to its site if it were not
so attached on the date of the contract. If so specified in the related
prospectus supplement, contracts included in the related trust fund may permit
the obligor to permanently attach the related manufactured home to its site even
if not attached at the date of the contract. Grantor trust certificates that
represent the right solely to interest payments on contracts and grantor trust
certificates that are issued at prices that substantially exceed the portion of
the principal amount of the contracts allocable to those grantor trust
certificates, both types of non-REMIC certificates referred to as premium
grantor trust certificates, should qualify under the foregoing sections of the
Code to the same extent as other certificates, but the matter is not free from
doubt. Prospective purchasers of certificates who may be affected by the
foregoing Code provisions should consult their tax advisors regarding the status
of the certificates under those provisions.
Taxation of Grantor Trust Certificates Under Stripped Bond Rules. Certain
classes of grantor trust certificates may be subject to the stripped bond rules
of Section 1286 of the Code. In general, a grantor trust certificate will be
subject to the stripped bond rules where there has been a separation of
ownership of the right to receive some or all of the principal payments on a
mortgage loan, contract or mortgage loan underlying the Mortgage Certificates
from ownership of the right to receive some or all of the related interest
payments. Grantor trust certificates will constitute stripped certificates and
will be subject to these rules under various circumstances, including the
following:
(1) if any servicing compensation is deemed to exceed a reasonable amount;
(2) if the depositor or any other party retains a retained yield with
respect to the assets included in a trust fund;
(3) if two or more classes of grantor trust certificates are issued
representing the right to non-pro rata percentages of the interest or
principal payments on the assets included in a trust fund; or
(4) if grantor trust certificates are issued which represent the right to
interest only payments or principal only payments.
The grantor trust certificates will either (a) be subject to the "stripped bond"
rules of Section 1286 of the Code or, if the application of those rules to a
particular series of grantor trust certificates is uncertain, the trust fund
will take the position that they apply or (b) be subject to some other section
of the Code as described in the related prospectus supplement. There is some
uncertainty as to how Section 1286 of the Code will be applied to securities
such as the
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grantor trust certificates. Investors should consult their own tax advisors
regarding the treatment of the grantor trust certificates under the stripped
bond rules.
Although the matter is not entirely clear and alternative characterizations
could be imposed, it appears that each stripped grantor trust certificate should
be considered to be a single debt instrument issued on the day it is purchased
for purposes of calculating original issue discount. Thus, in each month the
holder of a grantor trust certificate, whether a cash or accrual method
taxpayer, will be required to report interest income from the grantor trust
certificate equal to the income that accrues on the grantor trust certificate in
that month, calculated, in accordance with the rules of the Code relating to
original issue discount, under a constant yield method. In general, the amount
of the income reported in any month would equal the product of the related
holder's adjusted basis in the grantor trust certificate at the beginning of
that month (see "--Sales of Certificates" below) and the yield of such grantor
trust certificate to that holder. The yield would be the monthly rate, assuming
monthly compounding, determined as of the date of purchase that, if used in
discounting the remaining payments on the portion of the assets in the related
trust fund that is allocable to that grantor trust certificate, would cause the
present value of those payments to equal the price at which the holder purchased
the grantor trust certificate.
With respect to certain categories of debt instruments, the Code requires
the use of a reasonable prepayment assumption in accruing original issue
discount and provides a method of adjusting those accruals to account for
differences between the assumed prepayment rate and the actual rate. These rules
apply to "regular interests" in a REMIC and are described under "--Taxation of
Owners of REMIC and FASIT Regular Certificates--Original Issue Discount."
Regulations could be adopted applying these rules to the grantor trust
certificates. Although the matter is not free from doubt, it appears that the
Taxpayer Relief Act of 1997 has expanded the requirement of the use of a
reasonable prepayment assumption to instruments such as the grantor trust
certificates. In the absence of regulations interpreting the application of this
requirement to those instruments particularly where those instruments are
subject to the stripped bond rules, it is uncertain whether the assumed
prepayment rate would be determined based on conditions at the time of the first
sale of the grantor trust certificates or, with respect to any holder, at the
time of purchase of the grantor trust certificate by that holder. Finally, if
these rules were applied to the grantor trust certificates, and the principles
used in calculating the amount of original issue discount that accrues in any
month would produce a negative amount of original issue discount, it is unclear
when the loss would be allowed.
In the case of a grantor trust certificate acquired at a price equal to the
principal amount of the assets in the related trust fund allocable to that
grantor trust certificate, the use of a reasonable prepayment assumption would
not have any significant effect on the yield used in calculating accruals of
interest income. In the case, however, of a grantor trust certificate acquired
at a discount or premium, that is, at a price less than or greater than its
principal amount, respectively, the use of a reasonable prepayment assumption
would increase or decrease the yield, and thus accelerate or decelerate the
reporting of interest income, respectively.
If the yield used by the holder of a grantor trust certificate in
calculating the amount of interest that accrues in any month is determined based
on scheduled payments on the mortgage loans, contracts, or mortgage loans
underlying the Mortgage Certificates included in the related trust fund, that
is, without using a reasonable prepayment assumption, and that grantor trust
certificate was acquired at a discount or premium, then the holder generally
will recognize a net amount of ordinary income or loss if a mortgage loan,
contract, or mortgage loan underlying the Mortgage Certificates prepays in full
in an amount equal to the difference between the portion of the prepaid
principal amount of the mortgage loan, contract, or mortgage loan underlying the
Mortgage Certificates that is allocable to the grantor trust certificate and the
portion of the adjusted basis of the grantor trust certificate, see "--Sales of
Certificates" below, that is allocable to the mortgage loan, contract, or
mortgage loan underlying the Mortgage Certificates. In general, basis would be
allocated among the mortgage loans, contracts, or mortgage loans underlying the
Mortgage Certificates in proportion to their respective principal balances
determined immediately before the prepayment. It is not clear whether any other
adjustments would be required or permitted to take account of prepayments of the
mortgage loans, contracts, or mortgage loans underlying the Mortgage
Certificates.
Solely for purposes of reporting income on the grantor trust certificates
to the IRS and to certain holders, as required under the Code, it is anticipated
that, unless provided otherwise in the related prospectus supplement, the yield
of the grantor trust certificates will be calculated based on:
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o a representative initial offering price of the grantor trust
certificates to the public; and
o a reasonable assumed prepayment rate, which will be the rate used in
pricing the initial offering of the grantor trust certificates.
The yield may differ significantly from the yield to any particular holder that
would be used in calculating the interest income of that holder. No
representation is made that the mortgage loans, contracts, or mortgage loans
underlying the Mortgage Certificates will in fact prepay at the assumed
prepayment rate or at any other rate.
Sales of Certificates. Upon the sale or exchange of a grantor trust
certificate, a grantor trust certificateholder will recognize gain or loss equal
to the difference between the amount realized in the sale and its aggregate
adjusted basis in the assets included in the related trust fund represented by
the grantor trust certificate. Generally, the aggregate adjusted basis will
equal the grantor trust certificateholder's cost for the grantor trust
certificate increased by the amount of any previously reported gain with respect
to the grantor trust certificate and decreased by the amount of any losses
previously reported with respect to the grantor trust certificate and the amount
of any distributions received on that grantor trust certificate. Except as
provided above with respect to the original issue discount and market discount
rules, any gain or loss would be capital gain or loss if the grantor trust
certificate was held as a capital asset.
Foreign Investors. Generally, interest or original issue discount paid to
or accruing for the benefit of a grantor trust certificateholder who is not a
United States person will be treated as "portfolio interest" and therefore will
be exempt from the 30% withholding tax. That grantor trust certificateholder
will be entitled to receive interest payments and original issue discount on the
grantor trust certificates free of United States federal income tax, but only to
the extent the mortgage loans, contracts, or mortgage loans underlying the
Mortgage Certificates included in the related trust fund were originated after
July 18, 1984 and provided that the grantor trust certificateholder periodically
provides the trustee, or other person who would otherwise be required to
withhold tax, with a statement certifying under penalty of perjury that the
grantor trust certificateholder is not a United States person and providing the
name and address of the grantor trust certificateholder. For additional
information concerning interest or original issue discount paid to a non-United
States person and the treatment of a sale or exchange of a grantor trust
certificate by a non-United States person, which will generally have the same
tax consequences as the sale of a Regular Certificate, see the discussion above
in "Foreign Investors in Regular Certificates."
State and Other Tax Consequences
In addition to the federal income tax consequences described under
"Material Federal Income Tax Consequences," potential investors should consider
the state and local tax consequences of the acquisition, ownership, and
disposition of the certificates offered hereunder. State tax law may differ
substantially from the corresponding federal tax law, and the discussion above
does not purport to describe any aspect of the tax laws of any state or other
jurisdiction. Therefore, prospective investors should consult their tax advisors
with respect to the various tax consequences of investments in the certificates
offered hereby.
ERISA Considerations
The Employee Retirement Income Security Act of 1974, as amended, or ERISA,
imposes certain restrictions on ERISA Plans and on those persons who are ERISA
fiduciaries with respect to the assets of those ERISA Plans. In accordance with
the general fiduciary standards of ERISA, an ERISA Plan fiduciary should
consider whether an investment in the certificates is permitted by the documents
and instruments governing the Plan, consistent with the Plan's overall
investment policy and appropriate in view of the composition of its investment
portfolio.
Employee benefit plans which are governmental plans and certain church
plans, if no election has been made under Section 410(d) of the Code, are not
subject to ERISA requirements. Accordingly, assets of those plans may be
invested in the certificates subject to the provisions of applicable federal and
state law and, in the case of any plan which is qualified under Section 401(a)
of the Code and exempt from taxation under Section 501(a) of the Code, the
restrictions imposed under Section 503 of the Code.
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In addition to imposing general fiduciary standards, ERISA and Section 4975
of the Code prohibit a broad range of transactions involving assets of Plans and
Parties in Interest and imposes taxes and/or other penalties on any such
transaction unless an exemption applies. If the assets of a trust fund are
treated for ERISA purposes as the assets of the Plans that purchase or hold
certificates of the applicable series, an investment in certificates of that
series by or with "plan assets" of a Plan might constitute or give rise to a
prohibited transaction under ERISA or Section 4975 of the Code, unless a
statutory, regulatory or administrative exemption applies. Violation of the
prohibited transaction rules could result in the imposition of excise taxes
and/or other penalties under ERISA and/or Section 4975 of the Code.
A number of prohibited transaction class exemptions issued by the DOL might
apply to exempt a prohibited transaction arising by virtue of the purchase of a
certificate by or on behalf of, or with "plan assets" of a Plan, i.e., PTCE
96-23 (class Exemption for Plan Asset Transactions Determined by In-House Asset
Managers), PTCE 95-60 (class Exemption for Certain Transactions Involving
Insurance Company General Accounts), PTCE 91-38 (class Exemption for Certain
Transactions Involving Bank Collective Investment Funds), PTCE 90-1 (class
Exemption for Certain Transactions Involving Insurance Company pooled Separate
Accounts) or PTCE 84-14 (class Exemption for Plan Asset Transactions Determined
by Independent Qualified Professional Asset Managers). There can be no assurance
that any of these class exemptions will apply with respect to any particular
Plan certificateholder or, even if it were to apply, that the available
exemptive relief would apply to all transactions involving the applicable trust
fund.
Plan Assets Regulation
The United States Department of Labor, or DOL, has issued the Plan Assets
Regulation. Unless the Plan Assets Regulation provides an exception from this
"plan asset" treatment, and if that exception is not otherwise available under
ERISA, an undivided portion of the assets of a trust fund will be treated, for
purposes of applying the fiduciary standards and prohibited transaction rules of
ERISA and Section 4975 of the Code, as an asset of each Plan which becomes a
certificateholder of the applicable series. As a result, transactions involving
the assets of the trust fund will be subject to the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and
Section 4975 of the Code. The prohibited transaction exemptions identified above
would not generally apply to prohibited transactions arising in transactions
involving "plan assets" held in the trust fund.
The Plan Assets Regulation provides an exception from "plan asset"
treatment for securities issued by an entity if, immediately after the most
recent acquisition of any equity interest in the entity, less than 25% of the
value of each class of equity interests in the entity, excluding interests held
by a person who has discretionary authority or control with respect to the
assets of the entity, or any affiliate of that person, are held by "benefit plan
investors" --e.g., Plans, governmental, foreign and other benefit plans not
subject to ERISA and entities holding assets deemed to be "plan assets." Because
the availability of this exemption to any trust fund depends upon the identity
of the certificateholders of the applicable series at any time, there can be no
assurance that any series or class of certificates will qualify for this
exemption.
Underwriter's PTE
Credit Suisse First Boston Corporation, or First Boston, is the recipient
of an Underwriter's PTE, which may accord protection from violations under
Sections 406 and 407 of ERISA and Section 4975 of the Code for Plans that
acquire certificates:
(a) which represent:
(1) a beneficial ownership interest in the assets of a trust and
entitle the holder to pass-through payments of principal,
interest and/or other payments made with respect to the assets
of the trust; or
(2) an interest in a REMIC if the certificates are issued by and
are obligations of a trust; and
(b) with respect to which the recipient underwriter or any of its
affiliates is either the sole underwriter, the manager or co-manager
or a selling or placement agent. The corpus of a trust to which the
Underwriter's PTE applies may consist of:
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(1) obligations which bear interest or are purchased at a discount
and which are secured by:
(A) single-family residential, multifamily residential or
commercial real property, including obligations secured by
leasehold interests on that real property; or
(B) shares issued by a cooperative housing association;
(2) secured consumer receivables that bear interest or are
purchased at a discount;
(3) secured credit instruments that bear interest or are purchased
at a discount in transactions by or between business entities;
and
(4) "guaranteed governmental mortgage pool certificates," as defined
in the Plan Assets Regulation.
Plans acquiring certificates may be eligible for protection under the
Underwriter's PTE if:
(a) assets of the type included as assets of a particular trust fund
have been included in other investment pools;
(b) certificates evidencing interests in those other pools have been
both:
(1) rated in one of the three highest generic rating categories by
Standard & Poor's Ratings Services, Moody's Investors Service,
Inc., Duff & Phelps Inc. or Fitch IBCA, Inc.; and
(2) purchased by investors other than Plans, for at least one year
prior to a Plan's acquisition of certificates in reliance upon
the Underwriter's PTE;
(c) at the time of the acquisition, the class of certificates acquired by
the Plan has received a rating in one of the rating categories
referred to in condition (b)(1) above;
(d) the trustee is not an affiliate of any member of the Restricted
Group;
(e) the applicable series of certificates evidences ownership in assets
of a particular trust fund which may include non-subordinated
Mortgage Certificates, whether or not interest and principal payable
with respect to the Mortgage Certificates are guaranteed by the GNMA,
FHLMC or FNMA, contracts or, if certain conditions specified in the
applicable prospectus supplement are satisfied, a Pre-Funding
Account, but may not include a swap agreement;
(f) the class of certificates acquired by the Plan is not subordinated to
other classes of certificates of that Trust with respect to the right
to receive payment in the event of defaults or delinquencies on the
underlying assets of the related trust fund;
(g) the Plan is an "accredited investor," as defined in Rule 501(a)(1)
of Regulation D under the Securities Act of 1933, as amended;
(h) the acquisition of the certificates by a Plan is on terms, including
the price for the certificates, that are at least as favorable to the
Plan as they would be in an arm's length transaction with an
unrelated party;
(i) the sum of all payments made to and retained by the related
underwriter or members of any underwriting syndicate in connection
with the distribution of the certificates represents not more than
reasonable compensation for underwriting the certificates; the sum of
all payments made to and retained by the seller pursuant to the sale
of the assets of the trust fund to the trust fund represents not more
than the fair market value of those assets; and
(j) the sum of all payments made to and retained by the servicer and all
subservicers represents not more than reasonable compensation for the
related subservicers' services under the pooling and servicing
agreement and reimbursement of the related subservicers' reasonable
expenses in connection herewith.
Each series of certificates generally is expected to satisfy condition (a)
above. If stated in the applicable prospectus supplement, the related series of
certificates will not satisfy condition (a) above. If a series includes a class
of subordinated certificates, that class will not satisfy condition (f) above.
Additionally, this prospectus permits the
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issuance of certificates rated in one of the four highest rating categories, so
a particular class of a series may not satisfy condition (c) above.
In addition, the Underwriter's PTE will not apply to a Plan's investment in
certificates if the Plan fiduciary responsible for the decision to invest in the
certificates is a mortgagor or obligor with respect to more than 5% of the fair
market value of the obligations constituting the assets of the related trust
fund or an affiliate of that person, unless:
o in the case of an acquisition in connection with the initial issuance
of any series of certificates, at least 50% of each class of
certificates in which Plans have invested is acquired by persons
independent of the Restricted Group and at least 50% of the aggregate
interest in the trust fund is acquired by persons independent of the
Restricted Group;
o the Plan's investment in any class of certificates does not exceed 25%
of the outstanding certificates of that class at the time of
acquisition;
o immediately after the acquisition, no more than 25% of the Plan assets
with respect to which the investing fiduciary has discretionary
authority or renders investment advice are invested in certificates
evidencing interests in trusts sponsored or containing assets sold or
serviced by the same entity; and
o the Plan is not sponsored by any of one the Restricted Group.
Whether the conditions in the Underwriter's PTE will be satisfied as to the
certificates of any particular class will depend upon the relevant facts and
circumstances existing at the time the Plan acquires the certificates. Any Plan
investor who proposes to use "plan assets" of a Plan to acquire certificates in
reliance upon the Underwriter's PTE should determine whether the Plan satisfies
all of the applicable conditions and consult with its counsel regarding other
factors that may affect the applicability of the Underwriter's PTE.
General Considerations
Any member of the Restricted Group, a mortgagor or obligor, or any of their
affiliates might be considered or might become a Party in Interest with respect
to a Plan. In that event, the acquisition or holding of certificates of the
applicable series or class by, on behalf of or with "plan assets" of that Plan
might be viewed as giving rise to a prohibited transaction under ERISA and
Section 4975 of the Code, unless the Underwriter's PTE or another exemption is
available. Accordingly, before a Plan investor makes the investment decision to
purchase, to commit to purchase or to hold certificates of any series or class,
the Plan investor should determine:
o whether the Underwriter's PTE is applicable and adequate exemptive
relief is available;
o whether any other prohibited transaction exemption, if required, is
available under ERISA and Section 4975 of the Code; or
o whether an exception from "plan asset" treatment is available to the
applicable trust fund.
The Plan investor should also consult the ERISA discussion, if any, in the
applicable prospectus supplement for further information regarding the
application of ERISA to any particular certificate.
Subordinated certificates are not available for purchase by or with "plan
assets" of any Plan, other than an insurance company general account which
satisfies the conditions set forth in Sections I and III of PTCE 95-60 or a
governmental or church plan which is not subject to ERISA or Section 4975 of the
Code, as described above, and any acquisition of subordinated certificates by,
on behalf of or with "plan assets" of any such Plan will be treated as null and
void for all purposes.
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Insurance Company General Accounts
In addition to any exemption that may be available under PTCE 95-60 for the
purchase and holding of the certificates by an insurance company general
account, the Small Business Job Protection Act of 1996 added a new Section
401(c) to ERISA, which provides certain exemptive relief from the provisions of
Part 4 of Title I of ERISA and Section 4975 of the Code, including the
prohibited transaction restrictions imposed by ERISA and the related excise
taxes imposed by Section 4975 of the Code, for transactions involving an
insurance company general account. The final regulations issued under Section
401(c) of ERISA, or the 401(c) Regulations, provide guidance for the purpose of
determining, in cases where insurance policies or annuity contracts supported by
an insurer's general account were issued to or for the benefit of a Plan on or
before December 31, 1998, which general account assets constitute "plan assets."
Pursuant to the 401(c) Regulations, when a Plan acquires one of these policies
or contracts, the Plan's assets include the policy or contract, but do not
include any of the underlying assets of the insurer's general account if the
requirements of the 401(c) Regulations are satisfied. The 401(c) Regulations
generally become effective on July 5, 2001, although earlier effective dates
apply with respect to some of the 401(c) Regulation's requirements. The 401(c)
Regulations generally provide that, until July 5, 2001, no person shall be
subject to liability under Part 4 of Title I of ERISA and Section 4975 of the
Code on the basis of a claim that the assets of an insurance company general
account constitute "plan assets," except in the following three circumstances:
o an action brought by the Secretary of Labor for certain breaches of
fiduciary duty which would also constitute a violation of federal or
state criminal law;
o the application of any federal criminal law; or
o a civil action commenced before November 7, 1995.
Any assets of an insurance company general account which support insurance
policies issued to a Plan after December 31, 1998 or issued to Plans on or
before December 31, 1998 for which the insurance company does not comply with
the 401(c) Regulations may be treated as "plan assets." In addition, because
Section 401(c) does not relate to insurance company separate accounts, separate
account assets are still treated as "plan assets" of any Plan invested in such
separate account. Insurance companies contemplating the investment of general
account assets in the certificates should consult with their legal counsel with
respect to the applicability of Sections I and III of PTCE 95-60 and Section
401(c) or ERISA, including the general account's ability to continue to hold the
certificates after July 5, 2001.
Any Plan investor who proposes to use "plan assets" of any Plan to purchase
certificates of any series or class should consult with its counsel with respect
to the potential consequences under ERISA and Section 4975 of the Code of the
acquisition and ownership of those certificates.
Legal Investment
The applicable prospectus supplement for a series of certificates will
specify whether a class or subclass of those certificates, as long as it is
rated in one of the two highest rating categories by one or more nationally
recognized statistical rating organizations, will constitute a "mortgage related
security" for purposes of the Secondary Mortgage Market Enhancement Act of 1984,
as amended, or SMMEA. That class or subclass, if any, constituting a "mortgage
related security" will be a legal investment for persons, trusts, corporations,
partnerships, associations, business trusts and business entities, including
depository institutions, insurance companies, trustees and state government
employee retirement systems, created pursuant to or existing under the laws of
the United States or of any state, including the District of Columbia and Puerto
Rico, whose authorized investments are subject to state regulation to the same
extent that, under applicable law, obligations issued by or guaranteed as to
principal and interest by the United States or any agency or instrumentality
thereof constitute legal investments for those entities.
Pursuant to SMMEA, a number of states enacted legislation, on or prior to
the October 3, 1991 cutoff for enactments, limiting to varying extents the
ability of certain entities, in particular, insurance companies, to invest in
"mortgage related securities," in most cases by requiring the affected investors
to rely solely upon existing state law,
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and not SMMEA. Accordingly, the investors affected by the legislation will be
authorized to invest in certificates qualifying as "mortgage related securities"
only to the extent provided in that legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in mortgage related
securities without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in those securities, and national
banks may purchase those securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
24 (Seventh), subject in each case to any regulations as the applicable federal
regulatory authority may prescribe. In this connection, federal credit unions
should review NCUA Letter to Credit Unions No. 96, as modified by Letter to
Credit Unions No. 108, which includes guidelines to assist federal credit unions
in making investment decisions for mortgage related securities. The NCUA has
adopted rules, codified as 12 C.F.R. Section 703.5(f)-(k), which prohibit
federal credit unions from investing in certain mortgage related securities
(including securities such as certain series, classes or subclasses of
certificates), except under limited circumstances.
The Office of Thrift Supervision, or the OTS, has issued Thrift Bulletin
13a, entitled "Management of Pass-Through Rate Risk, Investment Securities, and
Derivatives Activities," or "TB 13a," which is effective as of December 1, 1998
and applies to thrift institutions regulated by the OTS. One of the primary
purposes of TB 13a is to require thrift institutions, prior to taking any
investment position, to:
o conduct a pre-purchase portfolio sensitivity analysis for any
"significant transaction" involving securities or financial
derivatives; and
o conduct a pre-purchase price sensitivity analysis of any "complex
security" or financial derivative.
For the purposes of TB 13a, "complex security" includes among other things any
collateralized mortgage obligation or REMIC security, other than any "plain
vanilla" mortgage pass-through security, that is, securities that are part of a
single class of securities in the related pool that are non-callable and do not
have any special features. One or more classes of the certificates offered by
this prospectus and the accompanying prospectus supplement may be viewed as
"complex securities." The OTS recommends that while a thrift institution should
conduct its own in-house pre-acquisition analysis, it may rely on an analysis
conducted by an independent third-party as long as management understands the
analysis and its key assumptions. Further, TB 13a recommends that the use of
"complex securities with high price sensitivity" be limited to transactions and
strategies that lower a thrift institution's portfolio interest rate risk. TB
13a warns that investment in complex securities by thrift institutions that do
not have adequate risk measurement, monitoring and control systems may be viewed
by OTS examiners as an unsafe and unsound practice.
The predecessor to the OTS issued a bulletin entitled "Mortgage Derivative
Products and Mortgage Swaps" applicable to thrift institutions regulated by the
OTS. The bulletin established guidelines for the investment by savings
institutions in certain "high-risk" mortgage derivative securities and
limitations on the use of those securities by insolvent, undercapitalized or
otherwise "troubled" institutions. According to the bulletin, these "high-risk"
mortgage derivative securities include securities such as the Class B
Certificates. Similar policy statements have been issued by regulators having
jurisdiction over other types of depository institutions.
On April 23, 1998, the Federal Financial Institutions Examination Council
issued its 1998 Policy Statement. The 1998 Policy Statement has been adopted by
the Federal Reserve Board, the Office of the Comptroller of the Currency, the
FDIC, the National Credit Union Administration, or the NCUA, and the OTS with an
effective date of May 26, 1998. The 1998 Policy Statement rescinds a 1992 policy
statement that had required, prior to purchase, a depository institution to
determine whether a mortgage derivative product that it is considering acquiring
is high-risk, and, if so, that the proposed acquisition would reduce the
institution's overall interest rate risk. The 1998 Policy Statement eliminates
former constraints on investing in certain "high-risk" mortgage derivative
products and substitutes broader guidelines for evaluating and monitoring
investment risk.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by those authorities before purchasing any
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certificates, as certain series, classes or subclasses may be deemed unsuitable
investments, or may otherwise be restricted, under those rules, policies or
guidelines, in certain instances irrespective of SMMEA.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any certificates issued in
book-entry form, provisions which may restrict or prohibit investments in
securities which are issued in book-entry form.
Except as to the status of certain classes of certificates as "mortgage
related securities," no representation is made as to the proper characterization
of the certificates for legal investment purposes, financial institution
regulatory purposes, or other purposes, or as to the ability of particular
investors to purchase certificates under applicable legal investment
restrictions. The uncertainties described above, and any unfavorable future
determinations concerning legal investment or financial institution regulatory
characteristics of the certificates, may adversely affect the liquidity of the
certificates.
Investors should consult their own legal advisers in determining whether
and to what extent certificates offered by this prospectus and the accompanying
prospectus supplement constitute legal investments for them.
Plan of Distribution
Each series of certificates offered hereby and by means of the related
prospectus supplement may be sold directly by the depositor or may be offered
through Credit Suisse First Boston Corporation, an affiliate of the depositor,
or underwriting syndicates represented by Credit Suisse First Boston
Corporation. The prospectus supplement with respect to each series of
certificates will set forth the terms of the offering of that series of
certificates and each subclass within that series, including the name or names
of the underwriters, the proceeds to the depositor, and either the initial
public offering price, the discounts and commissions to the underwriters and any
discounts or concessions allowed or reallowed to certain dealers, or the method
by which the price at which the underwriters will sell the certificates will be
determined.
Generally, the underwriters will be obligated to purchase all of the
certificates of a series described in the prospectus supplement with respect to
that series if any certificates are purchased. The certificates may be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. If stated in
the applicable prospectus supplement, the underwriters will not be obligated to
purchase all of the certificates of a series described in the prospectus
supplement with respect to that series if any certificates are purchased.
If stated in the prospectus supplement, the depositor will authorize
underwriters or other persons acting as the depositor's agents to solicit offers
by certain institutions to purchase the certificates from the depositor pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which those contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases those institutions must be
approved by the depositor. The obligation of any purchaser under any contract
will be subject to the condition that the purchase of the offered certificates
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which that purchaser is subject. The underwriters and other
agents will not have any responsibility in respect of the validity or
performance of those contracts.
The depositor may also sell the certificates offered by means of this
prospectus and the related prospectus supplements from time to time in
negotiated transactions or otherwise, at prices determined at the time of sale.
The depositor may effect those transactions by selling certificates to or
through dealers, and those dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the depositor and any
purchasers of certificates for whom they may act as agents.
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The place and time of delivery for each series of certificates offered
hereby and by means of the related prospectus supplement will be set forth in
the prospectus supplement with respect to that series.
If and to the extent required by applicable law or regulation, this
prospectus and the attached prospectus supplement will also be used by the
underwriter after the completion of the offering in connection with offers and
sales related to market-making transactions in the offered certificates in which
the underwriter acts as principal. Sales will be made at negotiated prices
determined at the time of sales.
Legal Matters
Certain legal matters in connection with the certificates offered hereby
will be passed upon for the depositor and for the underwriters by Orrick,
Herrington & Sutcliffe LLP, New York, New York or by such other counsel as may
be identified in the related prospectus supplement.
Financial Information
The depositor has determined that its financial statements are not material
to the offering made hereby. The certificates do not represent an interest in or
an obligation of the depositor. The depositor's only obligations for a series of
certificates will be to repurchase certain loans on any breach of limited
representations and warranties made by the depositor, or as otherwise provided
in the applicable prospectus supplement.
Additional Information
The depositor has filed the registration statement with the Securities and
Exchange Commission. The depositor is also subject to some of the information
requirements of the Securities Exchange Act of 1934, as amended, or the Exchange
Act, and, accordingly, will file reports thereunder with the Securities and
Exchange Commission. The registration statement and the exhibits thereto, and
reports and other information filed by the depositor under the Exchange Act can
be inspected and copied at the public reference facilities maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at certain of its Regional Offices located as follows: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Northeast Regional Office, 7 World Trade Center, Suite
1300, New York, New York 10048 and electronically through the Securities and
Exchange Commission's Electronic Data Gathering, Analysis and Retrieval System
at the Securities and Exchange Commission's Web Site (http://www.sec.gov).
Reports to Certificateholders
Monthly reports which contain information concerning the trust fund for a
series of certificates will be sent by or on behalf of the servicer, the
subservicer or the trustee to each holder of record of the certificates of the
related series. See "Description of the Certificates--Reports to
Certificateholders." Reports forwarded to holders will contain financial
information that has not been examined or reported on by an independent
certified public accountant. The depositor will file with the Securities and
Exchange Commission those periodic reports relating to the trust fund for a
series of certificates as are required under the Exchange Act.
Incorporation of Certain Information by Reference
The SEC allows the depositor to "incorporate by reference" the information
filed with the SEC by the depositor, under Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, that relates to the trust fund for the certificates. This
means that the depositor can disclose important information to any investor by
referring the investor to these documents. The information incorporated by
reference is an important part of this prospectus, and information filed by the
depositor with the SEC that relates to the trust fund for any series of
certificates will automatically update and supersede this information. Documents
that may be incorporated by reference for a particular series of certificates
include an insurer's financials, a certificate policy, mortgage pool policy,
computational materials, collateral term sheets, the related pooling and
servicing agreement and amendments
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thereto, other documents on Form 8-K and Section 13(a), 13(c), 14 or 15(d) of
Exchange Act as may be required in connection with the related trust fund.
The depositor will provide or cause to be provided without charge to each
person to whom this prospectus and accompanying prospectus supplement is
delivered in connection with the offering of one or more classes of the related
series of certificates, on written or oral request of that person, a copy of any
or all reports incorporated in this prospectus by reference, in each case to the
extent the reports relate to one or more of the classes of the related series of
certificates, other than the exhibits to those documents, unless the exhibits
are specifically incorporated by reference in the documents. Requests should be
directed in writing to Credit Suisse First Boston Mortgage Securities Corp., 11
Madison Avenue, New York, New York 10010, Attention: Treasurer.
Ratings
It is a condition to the issuance of the certificates of each series
offered hereby that at the time of issuance they shall have been rated in one of
the four highest rating categories by the nationally recognized statistical
rating agency or agencies specified in the related prospectus supplement.
Ratings on conduit mortgage and manufactured housing contract pass-through
certificates address the likelihood of the receipt by certificateholders of
their allocable share of principal and interest on the underlying mortgage or
manufactured housing contract assets. These ratings address:
o structural and legal aspects associated with the certificates;
o the extent to which the payment stream on the underlying assets is
adequate to make payments required by the certificates; and
o the credit quality of the credit enhancer or guarantor, if any.
Ratings on the certificates do not, however, constitute a statement
regarding:
o the likelihood of principal prepayments by mortgagors or obligors;
o the degree by which prepayments made by mortgagors or obligors might
differ from those originally anticipated; or
o whether the yield originally anticipated by investors of any series of
certificates may be adversely affected as a result of those
prepayments.
As a result, investors of any series of certificates might suffer a lower
than anticipated yield.
A rating on any or all of the certificates of any series by certain other
rating agencies, if assigned at all, may be lower than the rating or ratings
assigned to the certificates by the rating agency or agencies specified in the
related prospectus supplement. A security rating is not a recommendation to buy,
sell or hold certificates and may be subject to revision or withdrawal at any
time by the assigning rating agency. Each security rating should be evaluated
independently of any other security rating.
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Glossary
Below are abbreviated definitions of significant capitalized terms used in
this prospectus and in the accompanying prospectus supplement. The pooling and
servicing agreement for the related series may contain more complete definitions
of the terms used in this prospectus and in the prospectus supplement and
reference should be made to the pooling and servicing agreement for the related
series for a more complete understanding of all such terms.
"1998 Policy Statement" means the revised supervisory statement listing the
guidelines for investments in "high risk mortgage securities," and adopted by
the Federal Reserve Board, the Office of the Comptroller of the Currency, the
FDIC, the National Credit Union Administration, or NCUA and the OTS with an
effective date of May 26, 1998.
"401(c) Regulations" means the regulations the DOL is required to issue
under Section 401(c) of ERISA, which were published in proposed form on December
22, 1997.
"Accrual Distribution Amount" means the amount of the interest, if any,
that has accrued but is not yet payable on the Compound Interest Certificates of
a particular series since the prior distribution date, or since the date
specified in the related prospectus supplement in the case of the first
distribution date.
"Advance" means as to a particular mortgage loan, contract or mortgage loan
underlying a Mortgage Certificate and any distribution date, an amount equal to
the scheduled payments of principal and interest at the applicable mortgage rate
or annual percentage rate, as applicable, which were delinquent as of the close
of business on the business day preceding the Determination Date on the mortgage
loan, contract or mortgage loan underlying a Mortgage Certificate.
"Alternative Credit Support" means additional or alternative forms of
credit support, including a guarantee or surety bond, acceptable to the related
Rating Agency.
"Approved Sale" means, with respect to a series which utilizes a pool
insurance policy:
o the sale of a mortgaged property acquired because of a default by the
mortgagor to which the related pool insurer has given prior approval;
o the foreclosure or trustee's sale of a mortgaged property at a price
exceeding the maximum amount specified by the related pool insurer;
o the acquisition of the mortgaged property under the primary insurance
policy by the primary mortgage insurer; or
o the acquisition of the mortgaged property by the pool insurer.
"Buy-Down Fund" means with respect to any series, a custodial account
established by the related subservicer, subservicer or trustee as described in
the related prospectus supplement, which contains amounts deposited by the
depositor, the seller of the related mortgaged property, the subservicer or
another source to cover shortfalls in payments created by Buy-Down Loans
included in the related mortgage pool.
"Buy-Down Loans" means single family mortgage loans pursuant to which the
monthly payments made by the related mortgagor during the early years of that
mortgage loan will be less than the scheduled monthly payments on that mortgage
loan.
"Certificate Account" means, with respect to each series, the separate
account or accounts in the name of the trustee, which must be maintained with a
depository institution and in a manner acceptable to the related Rating Agency.
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"Certificate Principal Balance" means, for any class of certificates, and
as of any distribution date, the initial principal balance of that class of
certificates, less all amounts previously distributed to holders of that class
of certificates, as applicable, on account of principal.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compound Interest Certificates" means certificates that accrue interest
during certain periods that is not paid to the holder but is added to the
Certificate Principal Balance of the certificate.
"Cooperative" means a corporation entitled to be treated as a housing
cooperative under federal tax law.
"Cooperative Dwelling" means a specific dwelling unit in a building owned
by a Cooperative.
"Cooperative Loan" means a cooperative apartment loan evidenced by a note
secured a by security interest in shares issued by a Cooperative and in the
related proprietary lease or occupancy agreement granting exclusive rights to
occupy a Cooperative Dwelling.
"Custodial Account" means, with respect to each series, the separate
account or accounts in the name of the trustee, meeting the requirements set
forth in this prospectus for the Certificate Account.
"Cut-off Date" means, the date specified in the related prospectus
supplement from which principal and interest payments on the assets of the trust
fund related to a series are transferred to that trust fund.
"Determination Date" means, with respect to each series and each
distribution date, the 20th day, or if the 20th day is not a business day, the
next preceding business day, of the month of in which the distribution date
occurs, or some other day if stated in the related prospectus supplement.
"Disqualified Organization" means:
o the United States, any state or political subdivision thereof, any
foreign government, any international organization, or any agency or
instrumentality of the foregoing, but does not include
instrumentalities described in Section 168(h)(2)(D) of the Code;
o any organization, other than a cooperative described in Section 521 of
the Code, that is exempt from federal income tax, unless it is subject
to the tax imposed by Section 511 of the Code; or
o any organization described in Section 1381(a)(2)(C) of the Code.
"Due Period" means, with respect to any distribution date, the calendar
month preceding the month of that distribution or some other period as defined
in the related prospectus supplement.
"Eligible Investments" means any of the following, in each case as
determined at the time of the investment or contractual commitment to invest in
that Eligible Investment:
o obligations which have the benefit of full faith and credit of the
United States of America, including depositary receipts issued by a
bank as custodian with respect to any such instrument or security held
by the custodian for the benefit of the holder of such depositary
receipt;
o demand deposits or time deposits in, or bankers' acceptances issued
by, any depositary institution or trust company incorporated under the
laws of the United States of America or any state thereof and subject
to supervision and examination by Federal or state banking or
depositary institution authorities; provided that at the time of the
trustee's investment or contractual commitment to invest in that
Eligible Investment, the certificates of deposit or short-term
deposits, if any, or long-term unsecured debt obligations, other than
obligations whose rating is based on collateral or on the credit of a
Person other than such institution or trust company, of that
depositary institution or trust company has a credit rating in the
highest rating category from the related Rating Agency;
o certificates of deposit having a rating in the highest rating from the
related Rating Agency;
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o investments in money market funds which are rated in the highest
category from the related Rating Agency or which are composed of
instruments or other investments which are rated in the highest
category from the related Rating Agency;
o commercial paper, having original or remaining maturities of no more
than 270 days, having credit rating in the highest rating category
from the related Rating Agency;
o repurchase agreements involving any Eligible Investment described in
any of the first three bullet points above, so long as the other party
to the repurchase agreement has its long-term unsecured debt
obligations rated in the highest rating category from the related
Rating Agency;
o any other investment with respect to which the related Rating Agency
indicates will not result in the reduction or withdrawal of its then
existing rating of the certificates; or
o other investments that are described in the applicable prospectus
supplement.
Except as otherwise provided in the applicable pooling and servicing agreement,
any Eligible Investment must mature no later than the business day prior to the
next distribution date.
"ERISA Plans" means employee benefit plans subject to the Employee
Retirement Income Security Act of 1974, or ERISA.
"FASIT" means a "financial asset securitization trust" as described in
section 860L of the Code.
"FASIT Regular Certificates" means certificates or notes representing
ownership of one or more regular interests in a FASIT.
"FHA Loans" means mortgage loans or contracts insured by the Federal
Housing Administration.
"GPM Fund" means with respect to any series, a custodial account
established by the related servicer, subservicer or trustee as described in the
related prospectus supplement, which contains amounts deposited by the depositor
or another source to cover shortfalls in payments created by GPM Loans included
in the related mortgage pool.
"GPM Loans" means single family mortgage loans pursuant to which the
monthly payments by the related mortgagor during the early years of the related
Mortgage Note are less than the amount of interest that would otherwise be
payable thereon, with that interest paid from amounts on deposit in a GPM Fund.
"High Cost Loans" means mortgage loans, contracts or mortgage loans
underlying Mortgage Certificates that are subject to the special rules,
disclosure requirements and other provisions that were added to the federal
Truth-in-Lending Act by the Homeownership and Equity Protection Act of 1994,
which were originated on or after October 1, 1995, are not loans made to finance
the purchase of the mortgaged property and have mortgage rates or annual
percentage rates, as applicable, or origination costs in excess of prescribed
levels.
"Initial Deposit" means, with respect to each series in which a reserve
fund has been established, the deposit of cash into the reserve fund in the
amount specified in the related prospectus supplement.
"Insurance Proceeds" means, with respect to each series, proceeds from any
special hazard insurance policy, primary mortgage insurance policy, FHA
insurance, VA guarantee, mortgagor bankruptcy bond or pool insurance policy with
respect to the related series of certificates and any title, hazard or other
insurance policy covering any of the mortgage loans included in the related
mortgage pool, to the extent those proceeds are not applied to the restoration
of the related property or released to the mortgagor in accordance with
customary servicing procedures.
"Issue Premium" means with respect to a class of REMIC Regular
Certificates, the issue price in excess of the stated redemption price of that
class.
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"Liquidating Loan" means:
o each mortgage loan with respect to which foreclosure proceedings have
been commenced and the mortgagor's right of reinstatement has expired;
o each mortgage loan with respect to which the related subservicer or
the servicer has agreed to accept a deed to the property in lieu of
foreclosure;
o each Cooperative Loan as to which the shares of the related
Cooperative and the related proprietary lease or occupancy agreement
have been sold or offered for sale; or
o each contract with respect to which repossession proceedings have been
commenced.
"Liquidation Proceeds" means, with respect to each series, all cash amounts
received and retained in connection with the liquidation of defaulted mortgage
loans, by foreclosure or otherwise, other than Insurance Proceeds, payments
under any applicable financial guaranty insurance policy, surety bond or letter
of credit or proceeds of any Alternative Credit Support, if any, with respect to
the related series.
"Mixed-Use Mortgage Loans" means mortgage loans secured by Mixed-Use
Property.
"Mixed-Use Property" means mixed residential and commercial properties.
"Mortgage Certificates" means certain conventional mortgage pass-through
certificates issued by one or more trusts established by one or more private
entities and evidencing the entire or a fractional interest in a pool of
mortgage loans.
"Mortgage Note" means with respect to each mortgage loan, the promissory
note secured by a first or more junior mortgage or deed of trust or other
similar security instrument creating a first or more junior lien, as applicable,
on the related mortgaged property.
"Parties in Interest" means certain persons who have certain specified
relationships to a Plan, as described in Section 3(14) of ERISA and Section 4975
of the Code.
"Pass-Through Entity" means any regulated investment company, real estate
investment trust, trust, partnership or other entities described in Section
860E(e)(6) of the Code. In addition, a person holding an interest in a
Pass-Through Entity as a nominee for another person will, for that interest, be
treated as a Pass-Through Entity.
"Pass-Through Rate" means with respect to each class of certificates in a
series, the rate of interest borne by that class as described in the related
prospectus supplement.
"Percentage Interest" means, as to any certificate of any class, the
percentage interest evidenced thereby in distributions required to be made on
the certificates in that class, which percentage interest will be based on the
original principal balance or notional amount of the certificates of that class.
"Permitted Investments" means United States government securities and other
investment grade obligations specified in the related pooling and servicing
agreement.
"Plan Assets Regulation" means the final regulation made by the United
States Department of Labor, or DOL, under which assets of an entity in which a
Plan makes an equity investment will be treated as assets of the investing Plan
in certain circumstances.
"Plans" means ERISA Plans and other plans subject to Section 4975 of the
Code.
"Rating Agency" means, collectively, the nationally recognized statistical
rating agency or agencies rating the related series of certificates.
107
<PAGE>
"Realized Loss" means any shortfall between the unpaid principal balance
and accrued interest on a mortgage loan, after application of all Liquidation
Proceeds, Insurance Proceeds and other amounts received in connection with the
liquidation of that mortgage loan, net of reimbursable costs and expenses,
including Advances.
"Record Date" means, with respect to each distribution date, the close of
business on the last day of the calendar month preceding the related
distribution date, or such other date as specified in the related prospectus
supplement.
"Regular Certificate" means a REMIC Regular Certificate or a FASIT Regular
Certificate, as applicable.
"REMIC" means a "real estate mortgage investment conduit" as defined in
the Code.
"REMIC Regular Certificates" means certificates or notes representing
ownership of one or more regular interests in a REMIC.
"Required Reserve" means the amount specified in the prospectus supplement
for a series of certificates which utilizes a reserve fund, to be deposited into
the reserve fund.
"Residual Certificates" means one or more classes or subclasses of
certificates of a series that evidence a residual interest in the related trust
fund.
"Restricted Group" means the depositor, any underwriter, the trustee, any
subservicer, any pool, special hazard or primary mortgage insurer or the obligor
under any other credit support mechanism, a mortgagor or obligor with respect to
obligations constituting more than 5% of the aggregate unamortized principal
balance of the assets of the related trust fund on the date of the initial
issuance of certificates, or any of their affiliates.
"Servicing Account" means the separate account or accounts established by
each subservicer for the deposit of amounts received in respect of the mortgage
loans, contracts or mortgage loans underlying the Mortgage Certificates,
serviced by that subservicer.
"Simple Interest Loans" means mortgage loans that provide that scheduled
interest and principal payments thereon are applied first to interest accrued
from the last date to which interest has been paid to the date the payment is
received and the balance thereof is applied to principal.
"Subordinated Amount" means the amount of subordination with respect to
subordinated certificates stated in the prospectus supplement relating to a
series of certificates that contains subordinate certificates.
"Trust Assets" means with respect to each series of certificates, the
mortgage loans, contracts or Mortgage Certificates conveyed to the related trust
fund.
"Underwriter's PTE" means the final prohibited transaction exemption issued
to First Boston, 54 Fed. Reg. 42597 (Oct. 17, 1989), as amended by PTE 97-34, 62
Fed. Reg. 39021 (July 21, 1997).
"VA Loans" means mortgage loans or contracts partially guaranteed by the
United States Department of Veterans Affairs.
108
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution (Item 14 of Form S-3).
The expenses expected to be incurred in connection with the issuance and
distribution of the Securities being registered, other than underwriting
compensation, are as set forth below. All such expenses, except for the
registration and filing fee, are estimated.
<TABLE>
<S> <C>
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Filing Fee for Registration Statement $ 264
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Legal Fees and Expenses $ 150,000
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Accounting Fees and Expenses $ 30,000
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Trustee's Fees and Expenses $ 25,000
(including counsel fees)
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Printing and Engraving Expenses $ 15,000
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Rating Agency Fees $ 80,000
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Miscellaneous $ 20,000
- - - - - - - - ------------------------------------------------- -----------------------------------------------
Total $ 320,264
- - - - - - - - ------------------------------------------------- -----------------------------------------------
</TABLE>
Indemnification of Directors and Officers (Item 15 of Form S-3).
Article 5 of the Restated Certificate of Incorporation of the Depositor and
Article X of the By-Laws of the Depositor provide for the indemnification,
within the limits permitted by the General Corporation Law of the State of
Delaware, of directors, officers, employees, and agents of the Corporation and
of persons who serve other enterprises in such or similar capacities at the
request of the Corporation, against expenses, including attorney's fees and
liabilities for actions they take in such capacities.
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of another
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and with respect to
any criminal action or proceeding, had no cause to believe his or her conduct
was unlawful.
II-1
<PAGE>
Subsection (b) of Section 145 empowers a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification may be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
that despite the adjudication of liability such person is fairly and reasonably
entitled to indemnify for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer, employee or
agent of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection therewith; that indemnification or advancement of expenses provided
for by Section 145 shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled; and empowers the corporation to purchase
and maintain insurance on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him or incurred by him in
any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145. Reference is made to Exhibit 3.1 of this Registration Statement for
the complete text of the Restated Certificate of Incorporation and reference is
made to Exhibit 3.2 of this Registration Statement for the complete text of the
By-laws.
The ultimate parent of the Depositor carries directors' and officers' liability
insurance that covers certain liabilities and expenses of the Depositor's
directors and officers.
Any underwriters who execute an Underwriting Agreement in the form filed as
Exhibit 1.1 to this Registration Statement will agree to indemnify the
Registrants' directors and its officers who signed this Registration Statement
against certain liabilities which might arise under the Securities Act of 1933
from certain information furnished to the Registrant by or on behalf of such
indemnifying party. For provisions regarding the indemnification of controlling
persons, directors and officers of the Depositor by Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
reference is made to the proposed form of Underwriting Agreement filed as
Exhibit 1.1 to this Registration Statement.
II-2
<PAGE>
Exhibits (Item 16 of Form S-3).
(a) Financial Statement filed as part of the Registration Statement: none
(b) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
- - - - - - - - --------- -----------
1.1 Form of Underwriting Agreement
3.1 Restated Certificate of Incorporation
of Depositor
3.2 By-laws of Depositor
4.1 Form of Pooling and Servicing Agreement
4.2 Form of Sale and Purchase Agreement
4.3 Form of Trust Agreement
5.1 Opinion of Orrick, Herrington &
Sutcliffe LLP with respect to certain
matters involving the Certificates
8.1 Opinion of Orrick, Herrington &
Sutcliffe LLP as to tax matters
23.1 Consent of Orrick, Herrington &
Sutcliffe LLP (included as part of
Exhibits 5.1 and 8.1)
24.1 Power of Attorney
24.2 Certified Copy of the Resolutions of
the Board of Directors of Depositor
II-3
<PAGE>
Undertakings
In accordance with Item 512 of Regulation S-K under the Securities Act of 1933,
the undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) As to documents subsequently filed that are incorporated by reference:
The undersigned registrant hereby undertakes that, for purpose of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Undertaking in respect of indemnification:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the
<PAGE>
foregoing provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement referred to in Transaction Requirement B.2 or B.5 of
Form S-3 will be met by the time of sale of the securities registered hereby,
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York, on May 23, 2000.
CREDIT SUISSE FIRST BOSTON
MORTGAGE SECURITIES CORP.
By: /s/ Patrick D.Coleman
---------------------------
Patrick D. Coleman
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated:
Signature Title Date
--------- ----- ----
/s/ Patrick D. Coleman Director and President May 23, 2000
- - - - - - - - --------------------------- (Principal Executive
PATRICK D. COLEMAN Officer)
/s/ Scott J. Ulm Director and Chairman May 23, 2000
- - - - - - - - --------------------------- of the Board
SCOTT J. ULM
/s/ William Pitofsky Director May 23, 2000
- - - - - - - - --------------------------- and Vice President
WILLIAM PITOFSKY
/s/ Carlos Onis Director May 23, 2000
- - - - - - - - ---------------------------
CARLOS ONIS
/s/ Zev Kindler Treasurer May 23, 2000
- - - - - - - - -------------------------- (Principal Financial Officer)
ZEV KINDLER
/s/ Thomas Zingalli Vice President May 23, 2000
- - - - - - - - --------------------------- and Controller
THOMAS ZINGALLI (Principal Accounting Officer)
Exhibit 1.1
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Depositor
[_________________________] Mortgage-Backed
Pass-Through Certificates, Series 200_-___
[__________, 200_]
FORM OF
UNDERWRITING AGREEMENT
----------------------
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
1. Introduction. Credit Suisse First Boston Mortgage Securities Corp., a
Delaware corporation (the "Depositor"), proposes to form one or more real estate
mortgage investment conduits (each, a "Trust"), which will issue, from time to
time, securities entitled [_________________] Mortgage-Backed Pass-Through
Certificates, Series 200_-___ (the "Certificates") in one or more series (each,
a "Series"). Each Certificate will evidence a fractional, undivided percentage
interest or beneficial interest in a Trust. The property of each Trust may
consist primarily of pools (the "Mortgage Loan Pools") of loans secured by
mortgages on residential properties (the "Mortgage Loans") and certain related
property to be conveyed to the Trust by the Depositor (the "Trust Fund"). The
Mortgage Loans may be sold to the Depositor pursuant to a Mortgage Loan Purchase
Agreement, dated as set forth in the applicable Terms Agreement (as hereinafter
defined) (each, a "Sale and Purchase Agreement"), between the Depositor, as
purchaser, and a third party seller (the "Seller"). The Certificates will be
issued pursuant to a Pooling and Servicing Agreement to be dated as set forth in
the applicable Terms Agreement (the "Pooling and Servicing Agreement" and,
together with this Agreement and the related Sale and Purchase Agreement, the
"Agreements"), among the Depositor, a servicer (the "Servicer") named in such
Terms Agreement and a trustee (the "Trustee") named in such Terms Agreement.
The Certificates are more fully described in the Registration Statement (as
such term is defined in Section 2(a)), which the Depositor has furnished to you.
Each Series of Certificates and any classes of Certificates (each, a "Class")
within such Series may vary, among other things, as to number and types of
Classes, aggregate principal balance or notional amount or aggregate stated
principal balance, the pass-through rate with respect to each Class, the
percentage interest, if any, evidenced by each Class in payments of principal
and interest on, or with respect to, the Mortgage Loans included in the related
Trust Fund, the stated principal
<PAGE>
balance and interest rate, if any, priority of payment among Classes, the method
of credit enhancement with respect to the Mortgage Loans in the Trust Fund for
such Series, the Classes of Certificates of such Series subject to this
Agreement, and any other variable terms contemplated by the Pooling and
Servicing Agreement and in the Certificates of such Series. The Depositor will
elect to treat the related Trust Fund as one or more "real estate mortgage
investment conduits" (each, a "REMIC") under the Internal Revenue Code of 1986
(the "Code").
Each offering of Certificates will be made through you, through you and
other underwriters from whom you are acting as representative or through an
underwriting syndicate managed by you. Whenever the Depositor determines to form
a Trust and to make such an offering of Certificates, it will enter into an
agreement (the "Terms Agreement") providing for the sale of such Certificates
to, and the purchase and offering thereof by, (i) you, (ii) you and such other
underwriters who execute the Terms Agreement and agree thereby to become
obligated to purchase Certificates from the Depositor, or (iii) you and such
other underwriters, if any, selected by you as have authorized you to enter into
such Terms Agreement on their behalf (in each case, the "Underwriters"). Such
Terms Agreement shall specify the fractional undivided interest, principal or
notional amount, or stated principal balance, of each Class of the Certificates
subject to this Agreement, the price at which such Certificates are to be
purchased by the Underwriters from the Depositor, the aggregate amount of
Certificates to be purchased by each Underwriter and any other Underwriter that
is a party to such Terms Agreement and the initial public offering price or the
method by which the price at which such Certificates are to be sold will be
determined. The Terms Agreement, which shall be substantially in the form of
Exhibit A hereto, which may take the form of an exchange of any standard form of
written telecommunication between you and the Depositor. Each offering of
Certificates will be governed by this Agreement, as supplemented by the
applicable Terms Agreement, and this Agreement and such Terms Agreement shall
inure to the benefit of and be binding upon the related Underwriters. Except as
otherwise required by the context, all references herein to a Terms Agreement,
Delivery Date, Pooling and Servicing Agreement and Underwriters shall refer to
the Terms Agreement, Delivery Date, Pooling and Servicing Agreement and
Underwriter or Underwriters, as the case may be, relating to the related
offering of Certificates.
2. Representations and Warranties of the Depositor. The Depositor
represents and warrants to the Underwriters as of the date hereof and as of the
date of the applicable Terms Agreement, as follows:
(a) A registration statement on Form S-3 (No. 333-______), including a
prospectus and such amendments thereto as may have been required to the
date hereof, relating to the Certificates and the offering of each Series
thereof from time to time in accordance with Rule 415 under the Securities
Act of 1933, as amended (the "Act"), has been filed with the Securities and
Exchange Commission (the "Commission") and such registration statement, as
amended, has become effective. For purposes of this Agreement, "Effective
Time" means the date and time as of which such registration statement, or
the most recent post-effective amendment thereto (if any) filed prior to
the execution and delivery of this Agreement, was declared effective by the
Commission and "Effective Date" means the date of the Effective Time. Such
registration statement, as amended, and the prospectus and related
prospectus supplement that the Depositor has filed with the Commission
pursuant to Rule 424(b) relating to the sale of the Certificates
2
<PAGE>
of the applicable Series offered thereby constituting a part thereof, as
from time to time amended or supplemented (including any prospectus filed
with the Commission pursuant to Rule 424(b) of the rules and regulations of
the Commission promulgated under the Act (the "Rules and Regulations")),
including all documents incorporated therein by reference, are respectively
referred to as the "Registration Statement", the "Prospectus" and the
"Prospectus Supplement"; provided, however, that a supplement to the
Prospectus prepared pursuant to Section 5(a) shall be deemed to have
supplemented the Prospectus only with respect to the offering of the Series
of Certificates to which it relates. The conditions to the use of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, and the conditions of Rule 415 under the
Act, have been satisfied with respect to the Registration Statement.
(b) The Registration Statement, on the Effective Date, and the
Prospectus, as of the date of the related Prospectus Supplement, conformed
in all material respects to the requirements of the Act and the Rules and
Regulations, and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and on the date of this
Agreement, at the time of the filing of the Prospectus pursuant to Rule
424(b) and at the Delivery Date (as such terms as defined in Section 3),
the Prospectus conforms and will conform in all material respects to the
requirements of the Act and the Rules and Regulations, and does not include
and will not include, any untrue statement of a material fact and does not
omit and will not omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Prospectus delivered to the
Underwriters for use in connection with the related offering was identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system,
except to the extent permitted by Regulation S-T. The two immediately
preceding sentences do not apply to statements or omissions from either of
such documents based upon written information (including Computational
Materials (as such term is defined in Section 8(a)) furnished to the
Depositor by any Underwriter specifically for use therein.
(c) The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
full corporate power and authority to own its assets and conduct its
business as described in the Prospectus, is duly qualified as a foreign
corporation in good standing in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Depositor, and is conducting its business so
as to comply in all material respects with the applicable statutes,
ordinances, rules and regulations of the jurisdictions in which it is
conducting business.
(d) The Pooling and Servicing Agreement and the Certificates conform,
or will conform as of the Delivery Date, to the description thereof
contained in the Registration Statement and the Prospectus; and the
Certificates, on the date of the Terms Agreement, will have been duly and
validly authorized and, when such Certificates are duly and validly
executed by the Depositor or the Trustee, authenticated
3
<PAGE>
by the Trustee and delivered in accordance with such Pooling and Servicing
Agreement and delivered and paid for as provided herein, will be validly
issued and outstanding and entitled to the benefits and security afforded
by the Pooling and Servicing Agreement.
(e) The execution and delivery by the Depositor of this Agreement, the
Terms Agreement, the Pooling and Servicing Agreement, the Sale and Purchase
Agreement and the Certificates are within the corporate power of the
Depositor and have been, or will have been, duly authorized by all
necessary corporate action on the part of the Depositor; and neither the
execution and delivery by the Depositor of such instruments, nor the
consummation by the Depositor of the transactions herein or therein
contemplated, nor the compliance by the Depositor with the provisions
hereof or thereof, will (i) conflict with or result in a breach of, or
constitute a default under, any of the provisions of the certificate of
incorporation or by-laws of the Depositor, (ii) conflict with any of the
provisions of any law, governmental rule, regulation, judgment, decree or
order binding on the Depositor or its properties, (iii) conflict with any
of the provisions of any indenture, mortgage, contract or other instrument
to which the Depositor is a party or by which it is bound, or (iv) result
in the creation or imposition of any lien, charge or encumbrance upon any
of its property pursuant to the terms of any such indenture, mortgage,
contract or other instrument.
(f) At the date thereof, the Pooling and Servicing Agreement will
constitute a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject, as
to enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting creditors' rights
generally from time to time in effect, and to general principles of equity.
(g) All approvals, authorizations, consents, orders or other actions
of any person, corporation or other organization, or of any court,
governmental agency or body or official (except with respect to the state
securities or Blue Sky laws of various jurisdictions), required in
connection with the valid and proper authorization, issuance and sale of
the Certificates pursuant to this Agreement, the Terms Agreement and the
Pooling and Servicing Agreement, has been or will be taken or obtained on
or prior to the applicable Delivery Date.
(h) At the applicable Delivery Date, each of the Mortgage Loans
included in the Trust Fund will meet the criteria for selection described
in the Prospectus.
(i) Certificates subject to this Agreement and offered by means of the
Registration Statement will, when issued pursuant to the Pooling and
Servicing Agreement, be "mortgage related securities", as such term is
defined in Section 3(a)(41) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), if, and for so long as, such Certificates are
rated in one of the two highest rating categories assigned by at least one
nationally recognized statistical rating organization.
(j) At the date of its execution and delivery, the Sale and Purchase
Agreement constituted a legal, valid and binding agreement, and as of the
Delivery Date
4
<PAGE>
will be enforceable by the Trustee, in accordance with its terms, subject,
as to enforcement of remedies, to applicable bankruptcy, reorganization
insolvency or other similar laws affecting creditors' rights generally from
time to time in effect, and to general principles of equity.
(k) The characteristics of the Trust Fund will not subject the related
Trust to registration as an investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act").
3. Purchase, Sale and Delivery of Certificates. Delivery of and payment for
the Certificates to which this Agreement applies will be made at the office of
[Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, New
York 10010] or such other place as specified in the Terms Agreement, at such
time as shall be specified in the Terms Agreement, or at such other time
thereafter as set forth in the Terms Agreement, or as you and the Depositor
shall agree upon, each such time being herein referred to as a "Delivery Date".
Delivery of such Certificates shall be made by the Depositor to the Underwriters
against payment of the purchase price specified in the applicable Terms
Agreement in same day funds wired to such bank as may be designated by the
Depositor, or by such other manner of payment as may be agreed upon by the
Depositor and you. Except as otherwise provided in the related Terms Agreement,
each Class of Certificates of a Series sold to the Underwriters pursuant to such
Terms Agreement will be represented initially by one or more certificates
registered in the name of Cede & Co., the nominee of The Depository Trust
Company ("DTC") (the "DTC Certificates"). The interests of the beneficial owners
of the DTC Certificates will be represented by book entries on the records of
DTC and participating members thereof. Definitive certificates for the DTC
Certificates will be made available only under the limited circumstances
specified in the Pooling and Servicing Agreement. Except as otherwise provided
in the related Terms Agreement, each Class of Certificates of a Series not sold
to the Underwriters pursuant to such Terms Agreement will be in definitive,
fully registered form, in such denominations and registered in such names as the
Underwriter shall request, and will be made available at least 24 hours prior to
the applicable Closing Date, for checking and packaging at the offices of [] in
such amounts as determined pursuant to the Terms Agreement.
Except as otherwise provided in the related Terms Agreement, pursuant to
Rule 15c6-1(d) under the Exchange Act, the Depositor and the Underwriters have
agreed that the Delivery Date will not be less than five business days following
the date hereof.
4. Offering by Underwriters. It is understood that the Underwriters propose
to offer the Certificates subject to this Agreement for sale to the public as
set forth in the Prospectus.
5. Covenants of the Depositor. The Depositor covenants and agrees with the
Underwriters participating in the applicable offering of the Certificates that:
(a) Immediately following the execution of the Terms Agreement, or at
such other time as the Depositor and the Underwriter shall mutually agree,
the Depositor will prepare a supplement to the Prospectus setting forth the
amount of Certificates covered thereby and the terms thereof not otherwise
specified in the
5
<PAGE>
Prospectus, the price at which such Certificates are to be purchased by the
Underwriters, from the Depositor, either the initial public offering price
or the method by which the price at which such Certificates are to be sold
will be determined, the selling concessions and reallowances, if any, and
such other information as you and the Depositor deem appropriate in
connection with the offering of such Certificates, but the Depositor will
not file, for so long as the delivery of a Prospectus is required in
connection with the offering or sale of such Certificates, any amendments
to the Registration Statement as in effect with respect to such
Certificates, or any amendments or supplements to the Prospectus, unless it
shall first have delivered copies of such amendments or supplements to you,
or if you shall have reasonably objected thereto promptly after receipt
thereof; the Depositor will, during such period, immediately advise you or
your counsel (i) when notice is received from the Commission that any
post-effective amendment to the Registration Statement has become or will
become effective and (ii) of any order or communications suspending or
preventing, or threatening to suspend or prevent, the offer and sale of the
Certificates or of any proceedings or examinations that may lead to such an
order or communication, whether by or of the Commission or any authority
administering any state securities or Blue Sky law, as soon as the
Depositor is advised thereof, and will use its best efforts to prevent the
issuance of any such order or communication and to obtain as soon as
possible its lifting, if issued. Subject to the Underwriters' compliance
with their obligations set forth in Section 8, the Depositor shall file
with the Commission a current report on Form 8-K including any
Computational Materials provided to it by the Underwriters pursuant to
Section 8 no later than the date that the Prospectus Supplement is filed.
(b) If, at any time when a Prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus to comply with
the Act or the Rules and Regulations, the Depositor will promptly prepare
and file with the Commission, an amendment or supplement that will correct
such statement or omission or an amendment that will effect such
compliance.
(c) The Depositor will make generally available to the holders of the
Certificates (the "Certificateholders"), and deliver to you, in each case
as soon as practicable, an earning statement which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 of the Commission with
respect to the Certificates; and the Depositor will cause the Trustee to
furnish or make available, within a reasonable time after the end of each
calendar year, to each Certificateholder at any time during such year, such
information as the Depositor deems necessary or desirable to assist
Certificateholders in preparing their federal income tax returns.
(d) The Depositor will furnish to you copies of the Registration
Statement (two of which will be signed and will include all documents and
exhibits thereto or incorporated by reference therein), each related
preliminary prospectus, the Prospectus and all amendments and supplements
to such documents relating to the
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Certificates, in each case as soon as available, but in no event later than
five business days after signing the related Terms Agreement, and in such
quantities as you reasonably request.
(e) The Depositor will arrange for the qualification of the
Certificates for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as you designate and will
continue such qualifications in effect so long as required for the
distribution of the Certificates; PROVIDED, HOWEVER, that neither the
Depositor nor the Trust shall be required to do business in any
jurisdiction where it is now not qualified or to take any action which
would subject it to general or unlimited service of process in any
jurisdiction in which it is now not subject to service of process.
(f) The Depositor will, while the Certificates of a Series are
outstanding furnish to you, and upon request of each other Underwriter,
other information with respect to the related Trust or its financial
condition or results of operations, as any Underwriter may reasonably
request, including but not limited to information necessary or appropriate
to the maintenance of a secondary market in the Certificates of such
Series.
(g) The Depositor will pay all expenses incident to the performance of
its obligations under this Agreement and the Terms Agreement and will
reimburse the Underwriters for any expenses (including fees and
disbursements of its counsel) incurred by them in connection with
qualification of the related Series of Certificates and determination of
their eligibility for investment under the laws of such jurisdictions as
you may designate and the reproduction of memoranda relating thereto, for
any fees charged by investment rating agencies for the rating of the
Certificates and, to the extent previously agreed upon with you, the
expenses incurred in distributing any preliminary prospectuses, the
Prospectus or any amendments or supplements thereto to the Underwriters.
(h) During the period when a prospectus is required by law to be
delivered in connection with the sale of Certificates pursuant to this
Agreement, the Depositor will file, or cause the Trustee to file on behalf
of the related Trust, on a timely and complete basis, all documents that
are required by the related Trust with the Commission pursuant to Sections
13, 14 or 15(d) of the Exchange Act.
(i) [The Depositor will prepare, or cause to be prepared, and file, or
cause to be filed, a timely election to treat each Trust REMIC as a REMIC
for federal income tax purposes and will file, or cause to be filed, such
tax returns and take such actions, all on a timely basis, as are required
to elect and maintain such status.]
6. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase and pay for the Certificates subject to this
Agreement will be subject to the accuracy of the representations and warranties
on the part of the Depositor as of the date hereof, the date of the Terms
Agreement and the applicable Delivery Date, to the accuracy of the statements of
the Depositor made pursuant to the provisions thereof, to the performance by the
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Depositor in all material respects of its obligations hereunder and to the
following additional conditions precedent:
(a) You shall have received a letter from the Officer of Deposition,
dated the date of the Prospectus Supplement and addressed to you each in
the forms heretofore agreed to.
(b) You shall have received a copy of the Prospectus for the related
Series.
(c) All actions required to be taken and all filings required to be
made by the Depositor under the Act prior to the sale of the Certificates
shall have been duly taken or made; and prior to the applicable Delivery
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted, or to the knowledge of the Depositor or any
Underwriter, shall be contemplated by the Commission.
(d) The Certificates subject to this Agreement and offered by means of
the Registration Statement shall be rated at the time of issuance as set
forth in the Terms Agreement.
(e) you shall have received an opinion of counsel for the Depositor,
dated the applicable Delivery Date, substantially to the effect that:
(i) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with full corporate power and corporate authority to
own its assets and operate its business as is necessary to carry
out the transactions contemplated by the Agreements, and is duly
qualified to do business as a foreign corporation in the State of
New York.
(ii) This Agreement and the Terms Agreement have been duly
authorized, executed and delivered by the Depositor.
(iii) The execution, delivery and performance of the
Agreements do not conflict with the Certificate of Incorporation
or the By-laws of the Depositor and, to the knowledge of such
counsel and based solely on its examination of the documents
referred to in such opinion, (A) do not conflict with or violate
or constitute a material breach of, or constitute a default
under, any material written contract, indenture, undertaking or
other agreement or instrument by which the Depositor is now bound
or to which it is now a party, or result in the imposition of any
material lien upon any of its material properties, and (B) do not
conflict with or violate any order, write, injunction or the
decree of any court or governmental authority against the
Depositor or by which any of its properties is bound.
(iv) Each of the Sale and Purchase Agreement and the Pooling
and Servicing Agreement has been duly authorized, executed and
delivered by the Depositor and, assuming the due authorization,
execution and delivery thereof by
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the other parties thereto, constitutes the legal, valid and
binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as enforcement
thereof may be subject to or limited by bankruptcy, insolvency,
moratorium, reorganization, arrangement, fraudulent conveyance or
other laws relating to or affecting creditors' rights generally
or by general equitable principles.
(v) The Certificates have been duly authorized by the
Depositor and, when executed and authenticated pursuant to the
Pooling and Servicing Agreement and paid for and delivered
pursuant to this Agreement and the Terms Agreement, will be
validly issued and outstanding and will be entitled to the
benefits afforded by the Pooling and Servicing Agreement.
(vi) No authorization, consent, approval of, notice to or
other filing with any federal or State of New York governmental
authority is required for the execution of, delivery of or
performance by the Depositor of any material obligation under the
Agreements or the Certificates except (a) such as have been
obtained under the Act and (b) such as may be required under the
blue sky laws of any jurisdiction in connection with the offer
and sale of the Certificates, as to which we express no opinion.
(vii) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939 and the Trust
Fund is not required to be registered under the Investment
Company Act.
(viii) The Registration Statement has become effective under
the Act, and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act; the
Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue
dates complied as to form in all material respects to the
requirements of the Act and the Rules and Regulations; such
counsel has no reason to believe that either the Registration
Statement, at the Effective Time, or any such amendment or
supplement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, at the
date of this Agreement, or any such amendment or supplement, as
of its respective date, or at the Delivery Date, included or
includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or
other financial or statistical data contained in the Registration
Statement or the Prospectus or with respect to the description in
the Prospectus Supplement under the headings "The Seller and
Servicer," "Description of the Mortgage Pool--General" and
"--Underwriting Standards".
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(ix) The statements in the Prospectus under the caption
"Description of Certificates", insofar as such statements
constitute a summary of certain terms of the Certificates, the
Sale and Purchase Agreement and the Pooling and Servicing
Agreement, while they do not purport to discuss all aspects of
such documents, constitute a fair summary of such documents in
all material respects; the statements in the Prospectus and the
Prospectus Supplement, as the case may be, under the captions
"Certain Legal Aspects of the Mortgage Loans and Contracts",
"ERISA Considerations" and "Federal Income Tax Consequences" to
the extent that they constitute matters of law or legal
conclusions with respect thereto, have been prepared or reviewed
by such counsel and are correct in all material respects.
(x) Assuming that, and for so long as, each Class of
Certificates offered pursuant to the Registration Statement are
rated by a nationally recognized statistical rating organization
in one of its two highest rating categories, each such Class of
Certificates constitutes "mortgage related securities" within the
meaning of Section 3(a)(41) of the Exchange Act.
(xi) [Assuming compliance with all provisions of the Pooling
and Servicing Agreement, under existing law, (a) the Trust REMIC
I and Trust REMIC II (as such terms are defined in the Pooling
and Servicing Agreement) will each be treated as a "real estate
mortgage investment conduit" (a "REMIC") as defined by Section
860D of the Internal Revenue Code of 1986 (the "Code"), (b) each
of the [Class A], [Class M] and [Class B] Certificates will be
treated as (or will be comprised of) "regular interests" in Trust
REMIC II, as the term "regular interest" is defined in the Code,
(c) the [Class R-1] Certificates will be treated as the sole
class of "residual interests" in Trust REMIC I, as the term
"residual interest" is defined in the Code, and (d) the [Class
R-2] Certificates will be treated as the sole class of "residual
interests" in Trust REMIC II, as the term "residual interest" is
defined in the Code. However, continuation of the status of Trust
REMIC I and Trust REMIC II as REMICs may entail compliance with
statutory changes in the future and with regulations not yet
issued.]
(f) You shall have received an opinion of counsel to the Seller,
addressed to the Underwriters and the Depositor, dated the applicable
Delivery Date, substantially to the effect that the statements in the
Prospectus Supplement prepared by the Depositor pursuant to Section 5(a)
under the captions ["___________,"] ["________"], ["___________"], and
["___________"] do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not render any opinion with respect to any financial or
statistical information contained therein).
(g) You shall have received an opinion of counsel to the Seller,
addressed to the Underwriters and the Depositor, dated the applicable
Delivery Date, and in a form agreed to on or prior to the date of the Terms
Agreement regarding (i) certain
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FDIA bankruptcy insolvency or FDIA matters, (ii) corporate matters relating
to the seller, (iii) enforceability matters relating to the Agreements as
to which the seller is a party, and (iv) the perfection of the security
interest of the Trustee in the Mortgage Notes.
(h) You shall have received an opinion of counsel to the Trustee,
dated the Delivery Date, and in the form agreed to on or prior to the date
of the Terms Agreement regarding (i) certain state tax matters, (ii)
corporate matters relating to the Trustee and (iii) enforceability matters
relating to the Agreements as to which the Trustee is a party.
(i) You shall have received from [__________], special counsel for the
Underwriters, such opinion or opinions, dated the Delivery Date, with
respect to the existence of the Depositor, the Registration Statement, the
Prospectus and other related matters as the Underwriters may require, and
the Depositor shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(j) You shall have received a certificate or certificates signed by
such of the principal executive, financial and accounting officers of the
Depositor as you may request, dated the applicable Delivery Date, in which
such officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the representations and warranties of
the Depositor in this Agreement are true and correct; (ii) the Depositor
has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date; (iii) no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
contemplated; (iv) subsequent to the respective dates as of which
information is given in the Prospectus, and except as otherwise set forth
in or contemplated by the Prospectus, there has not been any material
adverse change in the general affairs, capitalization, financial condition
or results of operations of the Depositor; (v) except as otherwise stated
in the Prospectus, there are no material actions, suits or proceedings
pending before any court or governmental agency, authority or body or, to
their knowledge, threatened, affecting the Depositor or the transactions
contemplated by this Agreement; and (vi) attached thereto are true and
correct copies of a letter from the rating agency or agencies rating the
Certificates subject to this Agreement confirming that the Certificates
have been rated in one of the four highest rating categories established by
such agency or agencies as set forth in the Terms Agreement and such rating
has not been lowered since the date of such letter.
(k) If applicable, you shall have received letters dated the
applicable Delivery Date from counsel rendering opinions to any nationally
recognized statistical rating organization rating the applicable Series of
Certificates, to the effect that you may rely upon their opinion to such
rating organization, as if such opinion were rendered to you.
(l) You shall have received a certificate of the Trustee, signed by
one or more duly authorized officers of the Trustee, dated the applicable
Delivery Date, as to
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the due acceptance of the Pooling and Servicing Agreement by the Trustee
and the due authorization and delivery of the Certificates of such Series
by the Trustee thereunder.
(m) To the extent, if any, that the ratings provided to the
Certificates by either [__________________] ("______") or
[_________________] ("____") is conditional upon the furnishing of
documents or the taking of any other actions by the Depositor or the
Servicer, the Depositor or the Servicer, as the case may be, shall furnish
such documents and take any such other actions.
(n) You shall have received letters from [______] and [_____]
confirming the ratings set forth in the related Terms Agreement.
The Depositor will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you reasonably request.
7. Indemnification
(a) The Depositor will indemnify and hold harmless each Underwriter and
each person, if any, who controls such Underwriter within the meaning of
the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such
Underwriter and each such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Depositor will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement in or omission or alleged omission made in any of such documents
in reliance upon and in conformity with written information furnished to
the Depositor by the relevant Underwriter specifically for use therein.
This indemnity agreement will be in addition to any liability which the
Depositor may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Depositor,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Depositor within the
meaning of the Act against any losses, claims, damages or liabilities to
which the Depositor or any such director, officer or controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the
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statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Depositor by such Underwriter
specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Depositor or any such director, officer
or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement
will be in addition to any liability that such Underwriter may otherwise
have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise in this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will
be entitled to participate therein, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party) and, after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Depositor on the one hand and the Underwriters on the other
from the offering of the Offered Certificates or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Depositor on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Depositor on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Depositor bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Depositor or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The
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amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection
(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified in connection with investigating or defending
any action or claim which is the subject to this subsection (d).
Notwithstanding the provisions of this subsection (d), no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Certificates underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion
to their respective underwriting obligations and not joint.
8. Computational Materials. (a) Each Underwriter agrees to provide to the
Depositor no less than two business days prior to the date on which the
Prospectus is proposed to be filed pursuant to Rule 424(b) under the Act, for
the purpose of permitting the Depositor to comply with the filing requirement
set forth in Section 5(a), all information (in such written or electronic format
as required by the Depositor) with respect to the Certificates which constitutes
"Computational Materials", as defined in the Commission's No-Action Letter,
dated May 20, 1994, addressed to Kidder, Peabody Acceptance Corporation I,
Kidder, Peabody & Co. Incorporated and Kidder Structured Asset Corporation, as
made applicable to other issuers and underwriters by the Commission in response
to the request of the Public Securities Association dated May 24, 1994
(collectively, the "Kidder/PSA Letter"), as well as the PSA Letter referred to
below, and that is required to be filed as described in the Kidder/PSA Letter.
Each Underwriter shall comply with all applicable laws and regulations in
connection with the use of ABS Term Sheets, including the No-Action Letter of
February 17, 1995 issued by the Commission to the Public Securities Association
(the "PSA Letter" and, together with the Kidder/PSA Letter, the "No-Action
Letters").
(b) The Underwriters shall provide to the Depositor, together with the
information required to be provided to the Depositor pursuant to Section
8(a) or 8(c)(iii) hereof, a letter, in form and substance acceptable to the
Depositor, of independent certified public accountants acceptable to the
Depositor, stating in effect that such independent certified public
accountants have performed certain specified procedures, all of which have
been agreed to by the Depositor, and that they have verified or confirmed,
as appropriate, the financial, numerical or statistical information to be
filed by the Depositor as part of the Computational Materials and ABS Term
Sheets and have found such information to be accurate without exception.
Such letter will be obtained at the sole expense of the Underwriters.
(c) (i) The relevant Underwriter represents and warrants to, and
covenants with, the Depositor that all information provided to the
Depositor pursuant to this Section, as of the date such information is so
provided and as of the date such information is filed by the Depositor with
the Commission will not include any untrue statement of a material fact and
will not omit to state any material facts required to be
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stated therein or necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
(ii) The relevant Underwriter further covenants with the
Depositor that if any Computational Materials or ABS Term Sheets
required to be provided to the Depositor pursuant to Section 8(a) are
determined to contain any information that is inaccurate or
misleading, the relevant Underwriter (whether or not such
Computational Materials or ABS Term Sheets are provided to the
Depositor or filed by the Depositor with the Commission) shall
promptly prepare and deliver to the Depositor and each prospective
investor which received such information, corrected Computational
Materials or ABS Term Sheets, as applicable. All information provided
to the Depositor pursuant to this Section 8(c)(ii) shall be provided
within the time periods set forth in Section 8(a) hereof.
(iii) The Underwriters represent and warrant to the Depositor
that the Underwriters have taken all necessary and required steps to
ensure that no written material of any kind relating to the
Certificates (or any certificates similar to the Certificates) will be
delivered to potential investors other than Computational Materials or
ABS Term Sheets required to be filed pursuant to the No-Action Letters
and that all Computational Materials and ABS Term Sheets will be
provided to the Depositor, and to ensure that all such Computational
Materials and ABS Term Sheets are accurate and not misleading.
(iv) The Underwriters covenant with the Depositor that all
Computational Materials and ABS Term Sheets delivered to prospective
investors shall contain a legend substantially to the following
effect:
"THIS INFORMATION IS FURNISHED TO YOU SOLELY BY [CREDIT SUISSE
FIRST BOSTON CORPORATION] AND/OR THE OTHER UNDERWRITERS AND NOT
BY [CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.] (THE
"DEPOSITOR") OR ANY OF ITS AFFILIATES (OTHER THAN [CREDIT SUISSE
FIRST BOSTON CORPORATION] IN ITS CAPACITY AS AN UNDERWRITER).
THE UNDERWRITERS ARE NOT ACTING AS AGENTS FOR THE DEPOSITOR OR
ITS AFFILIATES IN CONNECTION WITH THE PROPOSED TRANSACTION."
In the case of Collateral Term Sheets, such legend shall also
include the following statement:
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"THE INFORMATION CONTAINED HEREIN WILL BE SUPERSEDED BY THE
DESCRIPTION OF THE MORTGAGE POOL CONTAINED IN THE PROSPECTUS
SUPPLEMENT RELATING TO THE CERTIFICATES AND [EXCEPT WITH RESPECT
TO THE INITIAL COLLATERAL TERM SHEET PREPARED BY THE
UNDERWRITER] SUPERSEDES ALL INFORMATION CONTAINED IN ANY
COLLATERAL TERM SHEETS RELATING TO THE MORTGAGE POOL PREVIOUSLY
PROVIDED BY [___________________] [NAME OF UNDERWRITER]."
(d) The relevant Underwriter agrees to indemnify and hold
harmless the Depositor, each of the Depositor's officers and directors
and each person who controls the Depositor within the meaning of
either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they may become
subject under the Act, the Exchange Act, or other Federal or State
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) (i) are based on, result from or arise out of: (A) the
relevant Underwriter's use or delivery to any prospective investor in
the Certificates of any Computational Materials; (B) the relevant
Underwriter's failure to comply with Sections 8(a) or 8(c); (C) the
filing by the Depositor with the Commission of any information
pursuant to the last sentence of Section 5(a); or (ii) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in any information required to be delivered to
the Depositor pursuant to a Section 8(a) or 8(c)(ii) hereof, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each
such indemnified party for any legal or other expenses reasonably
incurred by him, her or it in connection with investigating or
defending any such loss, claim, damage, liability or action. The
obligations of such Underwriter under this Section shall be in
addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section 7(c) and 7(d) shall be
equally applicable to this Section.
(e) Notwithstanding any other provision herein, (a) the
Underwriter shall not be required to be responsible for any amount in
excess of the amount by which the total re-offering price at which the
Certificates underwritten by it and distributed and offered to the
public exceeds the amount paid hereunder by the Underwriter for the
Certificates. For the purposes of this Section 8(e), each person, if
any, who controls the Underwriter within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as
the Underwriter and each director of the Depositor, each officer of
the Depositor who signed the Registration Statement, and each person,
if any, who controls the Depositor within the meaning of the
Securities Act or the Exchange Act shall have the same rights to
contribution as the Depositor and (b) the relevant Underwriter agrees
to pay all costs and expenses of the Depositor incurred in connection
with (i) the filing by the Depositor of any Computational Material or
ABS Term Sheets
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with the Commission and (ii) any action by the Depositor against the
relevant Underwriter to enforce any of its rights set forth in this
Section, including, without limitation, legal fees and expenses.
9. Default of Underwriters. If any Underwriter or Underwriters
participating in an offering of Certificates default in their obligations to
purchase Certificates hereunder and under the Terms Agreement and the aggregate
principal amount of such Certificates which such defaulting Underwriter or
Underwriters agreed, but failed, to purchase does not exceed [10]% of the total
principal amount of the Certificates set forth in such Terms Agreement, you may
make arrangements satisfactory to the Depositor for the purchase of such
Certificates by other persons, including any of the Underwriters participating
in such offering, but regardless of whether such arrangements are made the
non-defaulting Underwriters shall remain obligated severally to purchase the
Certificates which they committed to purchase in accordance with the terms
hereunder and under the Terms Agreement. If any Underwriter or Underwriters so
default and the aggregate principal amount of Certificates with respect to which
such default or defaults occur is more than [10]% of the total principal amount
of the Certificates set forth in such Terms Agreement and arrangements
satisfactory to you and the Depositor for the purchase of such Certificates by
other persons are not made, this Agreement will terminate without liability on
the part of any nondefaulting Underwriter, except as provided in Section 10. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
10. Termination of the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Certificates on the Delivery Date shall be
terminable by the Underwriters if (a) at any time on or prior to the Delivery
Date (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or materially limited, or there shall have been any setting
of minimum prices for trading on such exchange, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, (iii) there shall have occurred any
material outbreak or escalation of hostilities or other calamity or crisis, the
effect of which on the financial markets of the United States is such as to make
it, in your judgment as representative of the Underwriters, impracticable to
consummate the transactions contemplated herein or is such as would materially
and adversely affect the marketability of or the market price for the
Certificates or (iv) any change or any development involving a prospective
change, materially and adversely affecting (A) the Trust Fund taken as a whole
or (B) the business or properties of the Depositor occurs, which, in your
reasonable judgment as representative of the Underwriters, in the case of either
clause (A) or (B), materially impairs the investment quality of the Certificates
or (b) any representation or warranty of another party shall be incorrect in any
material respect.
11. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements by the
Depositor or its officers and of the Underwriters set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriters, the Depositor or any of its officers or directors or any
controlling person, and will survive delivery of and payment of the
Certificates.
17
<PAGE>
If this Agreement is terminated pursuant to Section 9 or if for any reason
the purchase of the Certificates by the Underwriters is not consummated, the
Depositor shall remain responsible for the expenses to be paid or reimbursed by
them pursuant to Section 5(g), and the obligations of the Depositor and the
Underwriters pursuant to Sections 7 and 8 shall remain in effect.
12. Notices. All communications hereunder will be in writing and, if sent
to an Underwriter will be mailed, delivered or telegraphed and confirmed to you
at [Eleven Madison Avenue, New York, New York 10010] or if sent to the
Depositor, will be mailed, delivered or telegraphed and confirmed to it at
[Eleven Madison Avenue, New York, New York 10010 Attention: President];
provided, however, that any notice to an Underwriter pursuant to Section 7 or 8
will be mailed, delivered or telegraphed to such Underwriter at the address
furnished by it.
13. Successors. This Agreement and the Terms Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors and controlling persons referred to in
Sections 7 and 8, and their successors and assigns, and no other person will
have any right or obligations hereunder.
14. Representation of Underwriters. You will act for the several
Underwriters set forth in the applicable Terms Agreement in connection with the
transactions described in this Agreement and such Terms Agreement, and any
action taken by you under this Agreement will be binding upon all the
Underwriters.
15. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
18
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon, it will become a
binding agreement among the Depositor and the several Underwriters in accordance
with its terms.
Very truly yours,
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.,
as Depositor
By:________________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
as representative of the Underwriters
By:___________________________________
Name:
Title:
19
<PAGE>
EXHIBIT A
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
(DEPOSITOR)
[_____________________] Mortgage-Backed Pass-Through Certificates
Series 200_-___
TERMS AGREEMENT
[__________, 200_]
To: Credit Suisse First Boston Mortgage
Securities Corp., as Depositor under the
Pooling and Servicing Agreement dated as of
[_______ 1, 20__].
Re: Underwriting Agreement dated
[___________, 20__].
Title: [_______________] Mortgage-Backed Pass-Through
- - - - - - - - ----- Certificates Series 200_-___,
[Class A and Class M]
Underwriter: Credit Suisse First Boston Corporation is the
- - - - - - - - ----------- sole Underwriter.
Principal Amount: $[________] (approximate)
- - - - - - - - ----------------
Pass-Through Rate: Weighted average pass-through rate.
- - - - - - - - -----------------
Certificate Rating:
- - - - - - - - ------------------
Servicer: _____________________ (in such capacity, the
- - - - - - - - -------- "Servicer").
Trustee: _____________________ (in such capacity, the
- - - - - - - - ------- "Trustee").
Terms of Sale: The purchase price payable by the Underwriter
- - - - - - - - ------------- for the [Class A] Certificates is [__]% of
the principal amount thereof, plus accrued
interest at the Pass-Through Rate from the
date of initial issuance. The purchase price
payable by the Underwriter for the [Class M]
Certificates is [__]% of the principal amount
thereof, plus accrued interest at the
Pass-Through Rate from the date of initial
issuance Payment of the purchase price shall
be in immediately available Federal funds
wired to such bank as may be designated by
the Depositor.
The [Class R] Certificates issued pursuant to
the Pooling and Servicing Agreement are not
subject to this Agreement.
A-1
<PAGE>
Underwriting Notwithstanding anything to the contrary in
Commissions: the Underwriting Agreement, no additional
- - - - - - - - ----------- underwriting commission shall be payable by
the Depositor to the Underwriter in
connection with the purchase of the
Certificates.
Public offering price and/or method of determin-
ing price at which the Underwriter will sell the
[Class A] and [Class M] Certificates is at vary-
ing prices to be determined at the time of sale
in one or more negotiated transactions.
Mortgage Loans: The mortgage loans (the "Mortgage Loans")
- - - - - - - - -------------- sold by [__________] (the "Seller") to the
Depositor pursuant to the Mortgage Loan
Purchase Agreement, dated as of [________1,
200_], between the Depositor, the Seller and
the Underwriter and conveyed by the Depositor
to the Trust pursuant to the Pooling and
Servicing Agreement, dated as of [________1,
200_] (the "Pooling and Servicing
Agreement"), among the Depositor, the Seller,
the Servicer and the Trustee.
Distribution Dates: The [__] day (or, if such day is not a
- - - - - - - - ------------------ business day, the next succeeding business
day) of each month, commencing with
[__________], 20__.
Delivery Date and [______], New York Time, on or about
Location: [________, 20__], or at such other time not
- - - - - - - - -------- later than seven full business days
thereafter as may be agreed upon, at the
offices of [_____________].
A-2
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon, it will become a
binding agreement among the Depositor and the several Underwriters in accordance
with its terms.
CREDIT SUISSE FIRST BOSTON CORPORATION,
By:____________________________________
Name:
Title:
Accepted:
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.,
as Depositor
By:________________________________
Name:
Title:
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
-----------------------------------------
CS First Boston Mortgage Securities Corp. (the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the original Certificate of Incorporation of the Corporation
was filed in the office of the Secretary of State of the State of Delaware on
December 31, 1985.
SECOND: That a Restated Certificate of Incorporation of the Corporation was
filed in the Office of the Secretary of State of the State of Delaware on July
28, 1986, September 18, 1986, March 6, 1987, October 6, 1988 and January 25,
1989.
THIRD: That the Restated Certificate of Incorporation of the Corporation is
hereby amended so as:
(A) To amend Article 3 to expand the nature of the business or
purposes to be conducted or promoted by the Corporation; and
FOURTH: That the text of the Corporation's Restated Certificate of
Incorporation is hereby restated and integrated and amended to read in its
entirety as follows:
<PAGE>
RESTATED CERTIFICATE OF INCORPORAITON
OF
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
-----------------------------------------
1. The name of the corporation is CS First Boston Mortgage Securities Corp.
(the "Corporation").
2. The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, Wilmington, County of New Castle. The name of the
registered agent of the Corporation at that address is The Prentice-Hall
Corporation System, Inc.
3. The nature of the business or purposes to be conducted or promoted by
the Corporation is: (a)(i) to engage in the establishment of one or more trusts
to hold pools of (A) whole mortgage loans, (B) manufactured housing conditional
sales contracts and installment loan agreements, (C) loans made to finance the
purchase of cooperatively owned properties secured by assignments of shares of a
cooperative corporation and a proprietary lease or occupancy agreement on a
cooperative apartment, (D) "fully-modified pass-through" mortgage-backed
certificates, fully guaranteed as to principal and interest by the Government
National Mortgage Association ("GNMA"), Mortgage Participation Certificates
issued and guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"),
Guaranteed Mortgage Pass-Through Certificates issued and guaranteed by the
Federal National Mortgage Association ("FNMA") ("Agency Certificates") or
securities ("Agency Stripped Certificates") issued and/or guaranteed by GNMA,
FHLMC or FNMA and each of which evidences a specified undivided fractional
interest in monthly principal and/or interest distributions on a pool of
mortgage loans or of Agency Certificates (Agency Certificates and Agency
Stripped Certificates, collectively, "Agency Securities"), (E) other mortgage
pass-through certificates and (F) participations in, or
<PAGE>
obligations secured by, whole mortgage loans or mortgage pass-through
certificates, including but not limited to Agency Securities (subsections (A)
through (F) above are referred to collectively as "Mortgage Securities"), which
trusts will, in exchange for such pools of Mortgage Securities, deliver to the
Corporation series of pass-through certificates ("Certificates") each of which
series (1) represents the undivided ownership interest in the related pool of
Mortgage Securities and (2) may be structured to contain one or more classes,
each class having the characteristics specified in the related trust agreement;
and, in connection therewith, (ii) to acquire, own, hold, sell, transfer,
assign, pledge, finance, refinance and otherwise deal with such Mortgage
Securities; (iii) to sell, transfer, assign, pledge, finance, refinance or
otherwise deal with the series of Certificates; and (iv) to engage in any other
acts and activities and to exercise any powers permitted to corporations under
the General Corporation Law of Delaware which are incidental and necessary or
convenient to the foregoing; and (b)(i) to engage in the establishment of one or
more trusts to issue and sell series of bonds which are governed by indentures
and collateralized by Mortgage Securities and/or Certificates created by the
Corporation or by any other entity; and, in connection therewith, (ii) to
acquire, own, hold, sell, transfer, assign, pledge, finance, refinance and
otherwise deal with such Mortgage Securities and/or Certificates; (iii) to sell,
transfer, assign and otherwise deal with any or all of its ownership interest in
any trust that it establishes; (iv) to acquire, own, hold, sell, transfer,
assign and otherwise deal with any or all of the ownership interest in trusts
established by other entities, institutions or individuals; and (v) to engage in
any other acts and activities and to exercise any powers permitted to
corporations under the General Corporation Law of Delaware which are incidental
and necessary or convenient to the foregoing.
2
<PAGE>
4. Notwithstanding any other provision of this Certificate of Incorporation
and any provision of law that otherwise so empowers the Corporation, the
Corporation shall not take any of the following actions, if the effect of any
such action would be to adversely affect the rating that a nationally recognized
statistical rating agency has given to a series of bonds issued by a trust which
has been established by the Corporation and at least 50% of which is owned by
the Corporation: (a) dissolve or liquidate, in whole or in part; (b) merge or
consolidate with any other corporation other than a corporation wholly owned,
directly or indirectly, by CS First Boston, Inc., a Delaware corporation, and
having a certificate of incorporation containing provisions identical to the
provisions of Article 3 of this Certificate of Incorporation and this Article 4;
(c) incur or assume any indebtedness except indebtedness which may be incurred
to or assumed from a corporation wholly owned, directly or indirectly, by CS
First Boston, Inc. (an "Affiliate") or guarantee any indebtedness except
indebtedness of an Affiliate; provided, however, that the Corporation shall not
incur, assume or guarantee any such indebtedness except in connection with its
activities specified in Article 3; or (d) amend this Certificate of
Incorporation to alter in any manner or delete Article 3 or this Article 4.
5. No director of the Corporation shall be personally liable to the
Corporation or to its stockholders for monetary damages for breach of such
director's fiduciary duty as a director, provided that this Article 5 shall not
eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the General Corporation Law
of Delaware, or (d) for any transaction from which the director derived an
improper personal benefit.
3
<PAGE>
6. The total number of shares which the Corporation shall have authority to
issue is one thousand (1,000) shares of Common Stock, par value One Dollar
($1.00) per share.
7. The name and mailing address of the incorporator is as follows:
George S. Springsteen, Esq.
c/o Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
8. In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is expressly authorized to adopt,
amend or repeal the by-laws of the Corporation.
9. Election of directors of the Corporation need not be by written ballot
unless the by-laws of the Corporation shall so provide.
10. Subject to the limitations in Article 4 of this Certificate of
Incorporation, the Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
4
<PAGE>
FIFTH: That the Restated Certificate of Incorporation of the Corporation,
set forth hereinabove in Paragraph FOURTH, was duly adopted by the sole
stockholder of the Corporation in an Action by Written Consent of the Sole
Stockholder in accordance with Section 3.10 of the by-laws of the Corporation
and Sections 228, 242 and 245 of the General Corporation Law of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed to the certificate and the certificate to be assigned by William S.
Pitofsky, Vice President of the Corporation and attested to by Lori M. Russo,
Secretary of the Corporation as of the 24th day of September, 1996.
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
By /s/ William S. Pitofsky
------------------------------------------
William S. Pitofsky,
Vice President
ATTEST:
/s/ Lori M. Russo
- - - - - - - - ----------------------
Lori M. Russo
Secretary
5
<PAGE>
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is CS
FIRST BOSTON MORTGAGE SECURITIES CORP.
2. The certificate of incorporation of the corporation is hereby amended by
striking out Article FIRST thereof and by substituting in lieu of said Article
the following new Article:
"FIRST: The name of the corporation is CREDIT SUISSE FIRST BOSTON
MORTGAGE SECURITIES CORP."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted and written consent has been given in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed on December 10, 1996.
/s/ Lori M. Russo
-----------------
Lori M. Russo, Secretary
Exhibit 3.2
First Boston Mortgage Securities Corp.
(Delaware Corporation)
BY-LAWS
----------------------
ARTICLE I
---------
OFFICES
-------
Section 1.1. REGISTERED OFFICE.
The registered office of the Corporation in the State of Delaware shall be
located at the principal place of business in that state of the corporation or
individual acting as the Corporation's registered agent in the State of
Delaware.
Section 1.2. OTHER OFFICES.
The Corporation may have other offices, either within or without the State
of Delaware, at such place or places as the Board of Directors from time to time
may designate or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. DATE, TIME, AND PLACE.
Meetings of stockholders of the Corporation shall be held on such date and
at such time and place, either within or without the State of Delaware, as shall
be designated by the Board of Directors and stated in the written notice of the
meeting or in a duly executed written waiver of notice of the meeting.
Section 2.2. ANNUAL MEETINGS.
Annual meetings of stockholders for the election of directors to the Board
of Directors and for the transaction of such other business as may be stated in
the written notice of
<PAGE>
the meeting or as may properly come before the meeting shall be held on such
date and at such time and place, either within or without the State of Delaware,
as shall be designated by the Board of Directors and stated in the written
notice of the meeting or in a duly executed written waiver of notice of the
meeting.
Section 2.3. SPECIAL MEETINGS.
Special meetings of stockholders for any purpose or purposes, unless
otherwise prescribed by the General Corporation Law of the State of Delaware,
the Certificate of Incorporation, or these By-laws, may be called by the Board
of Directors, the Chairman of the Board, or the President. Special meetings of
stockholders shall be called by the Chairman of the Board or the Secretary at
the written request of stockholders holding a majority of the aggregate number
of shares of common stock of the Corporation issued and outstanding and entitled
to vote at such meeting. Such written request shall state the purpose or
purposes for which the special meeting is called. The place, date, and time of a
special meeting shall be fixed by the Board of Directors or the officer calling
the meeting and shall be stated in the written notice of such meeting, which
notice shall state the purpose or purposes for which the meeting is called.
Business transacted at a special meeting shall be confined to the purpose or
purposes stated in the written notice of meeting and matters germane thereto.
Section 2.4. NOTICE OF MEETINGS.
Written notice of the place, date, and time of, and the general nature of
the business to be transacted at, a meeting of stockholders shall be given to
each stockholder of record entitled to vote at such meeting, in the manner
prescribed by Section 6.1 of these By-laws, not less than ten (10) nor more than
sixty (60) days prior to the date of the meeting, except that where the matter
to be acted upon at the meeting is a merger or consolidation of the Corporation,
2
<PAGE>
or a sale, lease, or exchange of all or substantially all of the Corporation's
assets, such notice shall be given not less than twenty (20) nor more than sixty
(60) days prior to such meeting.
Section 2.5. STOCKHOLDER LIST.
The Secretary or other officer in charge of the stock ledger of the
Corporation shall prepare and make, at least ten (10) days prior to a meeting of
stockholders, a complete list of stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each stockholder and
the number and class of shares of stock of the Corporation registered in the
name of each stockholder. Such list shall be open to examination by any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list also shall be produced and kept at the
place and time of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 2.6. VOTING RIGHTS.
In order that the Corporation may determine the stockholders entitled to
notice of, and to vote at, a meeting of stockholders or at any adjournment(s)
thereof or to express consent or dissent to corporate action in writing without
a meeting, the Board of Directors may fix a record date in the manner prescribed
by Section 9.1 of these By-laws. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy in the manner prescribed by Section 2.7 of these By-laws.
Except as specifically provided otherwise by the General Corporation Law of the
State of Delaware, the Certificate of Incorporation, or these By-laws, each
holder of common stock entitled to vote at a meeting of
3
<PAGE>
stockholders or to express consent or dissent to corporate action in writing
without a meeting shall be entitled to one vote for each share of stock
registered in such stockholder's name on the books and records of the
Corporation as of the record date.
Section 2.7. PROXIES.
Each proxy shall be in writing and shall be executed by the stockholder
giving the proxy or by such stockholder's duly authorized attorney. No proxy
shall be voted or acted upon after three (3) years from its date, unless the
proxy expressly provides for a longer period. Unless and until voted, every
proxy shall be revocable at the pleasure of the person who executed it or of his
legal representative or assigns, except in those cases where an irrevocable
proxy permitted by the General Corporation Law of the State of Delaware shall
have been given.
Section 2.8. QUORUM AND ADJOURNMENT(S) OF MEETINGS.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, the Certificate of Incorporation, or these By-laws, a
majority of the aggregate number of shares of common stock issued and
outstanding and entitled to vote, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at a meeting of
stockholders. If such majority shall not be present in person or represented by
proxy at a meeting of stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time until holders of the requisite number of shares of
stock entitled to vote at the meeting shall be present in person or represented
by proxy. When a meeting of stockholders is adjourned to another place, date, or
time, notice need not be given of the adjourned meeting if the place, date, and
time of such adjourned meeting are announced at the meeting at which the
adjournment is taken. At any such adjourned meeting at which a quorum shall be
present in person or represented by proxy, stockholders may transact any
business that might have been transacted at the meeting as
4
<PAGE>
originally noticed, but only those stockholders entitled to vote at the meeting
as originally noticed shall be entitled to vote at any adjournment(s) thereof.
If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 2.9. REQUIRED VOTE.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, the Certificate of Incorporation, or these By-laws, the
affirmative vote of a majority of the shares of common stock present in person
or represented by proxy at a meeting of stockholders at which a quorum is
present and entitled to vote on the subject matter (including, but not limited
to, the election of directors to the Board of Directors) shall be the act of the
stockholders with respect to the matter voted upon.
Section 2.10. ACTION WITHOUT MEETING.
Notwithstanding contrary provisions of these By-laws covering notices and
meetings, any action required or permitted to be taken at an annual or special
meeting of stockholders may be taken by stockholders without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by the holders of shares of stock issued and
outstanding and entitled to vote on the subject matter having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting of stockholders at which all such shares of stock entitled to vote
thereon were present and voted. Prompt notice of the taking of corporate or
other action by stockholders without a meeting by less than unanimous written
consent of stockholders shall be given to those stockholders who have not
consented in writing.
5
<PAGE>
ARTICLE III
-----------
DIRECTORS
---------
Section 3.1. BOARD OF DIRECTORS.
The business and affairs of the Corporation shall be managed by, or under
the direction of, a Board of Directors. The Board of Directors may exercise all
such powers of the Corporation and do all such lawful acts and things on its
behalf as are not by the General Corporation Law of the State of Delaware, the
Certificate of Incorporation, or these By-laws directed or required to be
exercised or done by stockholders.
Section 3.2. NUMBER, ELECTION, AND TENURE.
The number of directors which shall constitute the whole Board of Directors
shall be fixed from time to time by resolution of the Board of Directors. In no
event shall the total number of directors which shall constitute the whole Board
of Directors be fixed by the Board of Directors at less than one (1). The Board
of Directors shall not at any time decrease the total number of directors which
shall constitute the whole Board of Directors if to do so would shorten the term
of any incumbent director. With the exception of the first Board of Directors
which shall be elected by the incorporator of the Corporation, and except as
provided otherwise in these By-laws, directors shall be elected at the annual
meeting of stockholders. Each director shall hold office until the annual
meeting of stockholders next succeeding his election or appointment and until
his successor is elected and qualified or until his earlier resignation or
removal.
Section 3.3. RESIGNATION AND REMOVAL.
Any director, or member of a committee of the Board of Directors, may
resign at any time upon written notice to the Board of Directors, the Chairman
of the Board, or the President. Unless specified otherwise in the notice, such
resignation shall take effect upon
6
<PAGE>
receipt of the notice by the Board of Directors, the Chairman of the Board, or
the President. The acceptance of a resignation shall not be necessary to make it
effective. Any director may be removed, either with or without cause, as
provided by the General Corporation Law of the State of Delaware.
Section 3.4. VACANCIES AND NEWLY-CREATED DIRECTORSHIPS.
Vacancies occurring for any reason and newly-created directorships
resulting from an increase in the authorized number of directors which shall
constitute the whole Board of Directors, as fixed pursuant to Section 3.2 of
these By-laws, may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director, and any director
so chosen shall hold office until the annual meeting of stockholders next
succeeding his election or appointment and until his successor shall be elected
and qualified or until his earlier resignation or removal.
Section 3.5. COMPENSATION.
Each director on the Board of Directors and on any committee thereof shall
receive for services rendered as a director and committee member such
compensation as may be fixed from time to time by the Board of Directors. The
directors and committee members also may be paid their expenses, if any, in
attending meetings of the Board of Directors or any committee thereof. Nothing
in these By-laws shall be construed to preclude any director from serving the
Corporation in any other capacity as an officer, agent, or otherwise and
receiving compensation therefor.
7
<PAGE>
ARTICLE IV
----------
MEETINGS OF THE BOARD OF DIRECTORS
-----------------------------------
Section 4.1. DATE, TIME, AND PLACE.
Meetings of the Board of Directors shall be held on such date and at such
time and place, either within or without the State of Delaware, as shall be
determined by the Board of Directors pursuant to these By-laws.
Section 4.2. ANNUAL MEETINGS.
After the annual meeting of stockholders, the newly-elected Board of
Directors may hold a meeting, on such date and at such time and place as shall
be determined by the Board of Directors, for the purpose of organization,
election of officers, and such other business that may properly come before the
meeting. Such meeting may be held without notice.
Section 4.3. REGULAR MEETINGS.
Regular meetings of the Board of Directors may be held without notice on
such date and at such time and place as shall be determined from time to time by
the Board of Directors.
Section 4.4. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be held at any time upon the
call of the Chairman of the Board, the President, or the Secretary by means of
oral, telephonic, written, telegraphic, cable, or other similar notice, duly
given, delivered, sent, or mailed to each director, in the manner prescribed by
Section 6.1 of these By-laws, not less than two (2) days prior to such meeting.
Special meetings of the Board of Directors may be held at any time without
notice if all of the directors are present or if those directors not present
waive notice of the meeting in writing either before or after the date of the
meeting.
8
<PAGE>
Section 4.5. QUORUM.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, a majority of the whole Board of Directors, as fixed
pursuant to Section 3.2 of these By-laws, shall constitute a quorum for the
transaction of business at a meeting of the Board of Directors. If a quorum
shall not be present at a meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 4.6. REQUIRED VOTE.
Except as specifically provided otherwise by the General Corporation law of
the State of Delaware, the affirmative vote of a majority of the directors
present at a meeting of the Board of Directors at which a quorum is present
shall be the act of the Board of Directors with respect to the matter voted
upon.
Section 4.7. ACTION WITHOUT MEETING.
Any action required or permitted to be taken at a meeting of the Board of
Directors, or committee thereof, may be taken by directors without a meeting if
all of the members of the Board of Directors, or committee thereof, consent
thereto in writing and such writing is filed with the minutes of proceedings of
the Board of Directors, or committee thereof.
Section 4.8. TELEPHONE MEETINGS.
Members of the Board of Directors, or any committee thereof, may
participate in a meeting of the Board of Directors, or committee thereof, by
means of conference telephone or similar communications equipment by means of
which all of the members participating in the meeting can hear each other.
Participation by members of the Board of Directors, or committee thereof, by
such means shall constitute presence in person of such members at such meeting.
9
<PAGE>
ARTICLE V
---------
COMMITTEES OF THE BOARD OF DIRECTORS
------------------------------------
Section 5.1. DESIGNATION AND POWERS.
The Board of Directors may designate one or more committees from time to
time in its discretion, by resolution passed by the affirmative vote of a
majority of the whole Board of Directors, as fixed pursuant to Section 3.2 of
these By-laws. Each committee shall consist of one or more of the directors on
the Board of Directors. The Board of Directors may designate one or more
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all of the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation and may authorize the corporate seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation or these By-laws, adopting an agreement of merger
or consolidation, recommending to stockholders the sale, lease, or exchange of
all or substantially all of the Corporation's property and assets, or
recommending to stockholders a dissolution of the Corporation or a revocation of
a dissolution; and, unless the resolution of the Board of Directors expressly so
provides, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock of the Corporation or any class
or series of stock. Each
10
<PAGE>
committee shall keep regular minutes of its meetings and shall report the same
to the Board of Directors when requested to do so.
ARTICLE VI
----------
NOTICES
-------
Section 6.1. DELIVERY OF NOTICE.
Notices to stockholders and, except as permitted below, to directors on the
Board of Directors shall be in writing and may be delivered by mail or by
messenger. Notice by mail shall be deemed to be given at the time when such
notice is deposited in a United States post office or letter box, enclosed in a
post-paid sealed wrapper, and addressed to a stockholder or director at his
respective address appearing on the books and records of the Corporation, unless
such stockholder or director shall have filed with the Secretary a written
request that notices intended for such stockholder or director be mailed or
delivered to some other address, in which case the notice shall be mailed to or
delivered at the address designated in such request. Notice by messenger shall
be deemed to be given when such notice is delivered to the address of a
stockholder or director as specified above. Notices to directors also may be
given orally in person or by telephone, or by telex, telegram, cable, or other
similar means, or by leaving the notice at the residence or usual place of
business of a director. Notice by oral communication, telex, telegram, cable, or
other similar means shall be deemed to be given upon dispatch of such notice.
Notice by messenger shall be deemed to be given when such notice is delivered to
a director's residence or usual place of business. Notices, requests, and other
communications required or permitted to be given or communicated to the
Corporation by the Certificate of Incorporation, these By-laws, or any other
agreement shall be in writing and may be delivered by messenger, United States
mail, telex, telegram, cable, or other similar means. Notice to the Corporation
shall be deemed to be given upon actual receipt of such notice by the
Corporation.
11
<PAGE>
Section 6.2. WAIVER OF NOTICE.
Whenever notice is required to be given by the General Corporation Law of
the State of Delaware, the Certificate of Incorporation, or these By-laws, a
written waiver of notice, signed by the person entitled thereto, whether before
or after the time stated in the notice, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of
stockholders, Board of Directors, or committee of the Board of Directors need be
specified in any written waiver of notice.
ARTICLE VII
-----------
OFFICERS
--------
Section 7.1. OFFICERS.
At its annual meeting, or at such other meeting as it may determine, or by
unanimous written consent of the directors without meeting, the Board of
Directors shall elect a Chairman of the Board, a President, one or more Vice
Presidents, a Treasurer, and a Secretary, and may elect one or more Assistant
Treasurers, Assistant Secretaries, and such other officers as the Board of
Directors from time to time may designate or the business of the Corporation may
require. The Chairman of the Board shall be selected from among the directors on
the Board of Directors, but no other executive officer need be a member of the
Board of Directors. Any number of offices may be held by the same person.
Section 7.2. OTHER OFFICERS AND AGENTS.
The Board of Directors also may elect such other officers and agents as the
Board of Directors from time to time may determine to be advisable. Such
officers and agents shall
12
<PAGE>
serve for such terms, exercise such powers, and perform such duties as shall be
specified from time to time by the Board of Directors.
Section 7.3. TENURE, RESIGNATION, REMOVAL, AND VACANCIES.
Each officer of the Corporation shall hold his office until his successor
is elected and qualified, or until his earlier resignation or removal; provided,
that if the term of office of any officer elected pursuant to Section 7.2 of
these By-laws shall have been fixed by the Board of Directors, such person shall
cease to hold such office no later than the date of expiration of such term,
regardless of whether any other person shall have been elected or appointed to
succeed him. Any officer elected by the Board of Directors may be removed at any
time, with or without cause, by the Board of Directors; provided, that any such
removal shall be without prejudice to the rights, if any, of the officer so
employed under any employment contract or other agreement with the Corporation.
Any officer may resign at any time upon written notice to the Board of
Directors, the Chairman of the Board, or the President. Unless specified
otherwise in the notice, such resignation shall take effect upon receipt of the
notice by the Board of Directors, the Chairman of the Board, or the President.
The acceptance of the resignation shall not be necessary to make it effective.
Any vacancy occurring in any office of the Corporation by death, resignation,
removal, or otherwise shall be filled by the Board of Directors and such
successor or successors shall hold office for such term as may be specified by
the Board of Directors.
Section 7.4. COMPENSATION.
The salaries or other compensation of officers and agents of the
Corporation elected by the Board of Directors shall be fixed from time to time
by the Board of Directors.
Section 7.5. AUTHORITY AND DUTIES.
All officers and agents, as between themselves and the Corporation, shall
have such authority and perform such duties in the management of the Corporation
as may be
13
<PAGE>
provided in these By-laws and as generally pertain or are necessarily incidental
to the particular office or agency. In addition to the powers and duties
hereinafter specifically prescribed for certain officers of the Corporation, the
Board of Directors from time to time may impose or confer upon any of the
officers such additional duties and powers as the Board of Directors may see
fit, and the Board of Directors from time to time may impose or confer any or
all of the duties and powers hereinafter specifically prescribed for any officer
upon any other officer or officers. The Board of Directors may give general
authority to any officer to affix the corporate seal of the Corporation and to
attest the affixing by his signature.
Section 7.6. THE CHAIRMAN OF THE BOARD.
The Chairman of the Board shall be the chief executive officer of the
Corporation. He shall preside at all meetings of stockholders and of the Board
of Directors, and shall be a member of all standing committees of the Board of
Directors. The Chairman of the Board shall have general management of the
business of the Corporation, shall see that all resolutions and orders of the
Board of Directors are carried into effect, shall vote, in the name of the
Corporation, stock or securities in other corporations or associations held by
the Corporation unless another officer is designated by the Board of Directors
for that purpose, and in connection with all of the foregoing shall be
authorized to delegate to the President and the other officers such of his
powers and such of his duties as he may deem to be advisable.
Section 7.7. THE PRESIDENT.
The President shall be the chief operating officer of the Corporation and
shall have general and active management, supervision, direction, and control of
the business of the Corporation. He shall assist the Chairman of the Board in
the management of the Corporation and in the absence or disability of or upon
the delegation by the Chairman of the Board he shall preside at all meetings of
stockholders and of the Board of Directors. He shall report from time to time
14
<PAGE>
to the Board of Directors all matters within his knowledge which the interest of
the Corporation may require to be brought to the attention of the Board of
Directors. The President shall have the general powers and duties of supervision
and management usually vested in the office of president of a corporation and
shall exercise such powers and perform such duties as generally pertain or are
necessarily incidental to his office and shall have such other powers and
perform such other duties as may be specifically assigned to him from time to
time by the Board of Directors or the Chairman of the Board. Except as the Board
of Directors shall authorize the execution thereof in some other manner, he
shall execute bonds, mortgages, and other contracts for and on behalf of the
Corporation and shall cause the corporate seal of the Corporation to be affixed
to any instrument requiring it, and when so affixed the seal shall be attested
by the signature of the Secretary or the Treasurer or an Assistant Secretary or
an Assistant Treasurer.
Section 7.8. THE VICE PRESIDENT(S).
The Vice President, or if there be more than one, the Vice Presidents,
shall perform such duties as may be specifically assigned to them from time to
time by the Board of Directors, the Chairman of the Board, or the President. In
case of the absence or disability of the President, and if the Board of
Directors, the Chairman of the Board, or the President has so authorized, the
Vice President, or if there be more than one Vice President, such Vice President
as the Board of Directors, the Chairman of the Board or the President shall
designate, shall perform the duties of the Office of the President.
Section 7.9. THE TREASURER.
The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books and records belonging to the Corporation. He shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
15
<PAGE>
Directors or any officer of the Corporation authorized by the Board of Directors
to make such designation. The Treasurer shall exercise such powers and perform
such duties as generally pertain or are necessarily incidental to his office and
shall perform such other duties as may be specifically assigned to him from time
to time by the Board of Directors, the Chairman of the Board, or the President.
The Treasurer shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, the Chairman of the Board, or the President, taking
proper vouchers for such disbursements. He shall render to the Chairman of the
Board, the President, and the Board of Directors (at its regular and special
meetings), or whenever any of them may request it, an account of all of his
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he shall give the Corporation a bond in such
sum and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement,
or removal from office, of all books, papers, vouchers, moneys, and other
property of whatever kind in his possession or under his control belonging to
the Corporation.
Section 7.10. THE ASSISTANT TREASURER(S).
The Assistant Treasurer, or if there be more than one, the Assistant
Treasurers, shall perform such duties as may be specifically assigned to them
from time to time by the Board of Directors, the Chairman of the Board, or the
President. In case of the absence or disability of the Treasurer, and if the
Board of Directors, the Chairman of the Board, or the President has so
authorized, the Assistant Treasurer, or if there be more than one Assistant
Treasurer, such Assistant Treasurer as the Board of Directors, the Chairman of
the Board, or the President shall designate, shall perform the duties of the
office of the Treasurer.
16
<PAGE>
Section 7.11. THE SECRETARY.
The Secretary shall attend all meetings of the Board of Directors and all
meetings of stockholders and record all votes and record the proceedings of such
meetings in a book to be kept for that purpose. He shall perform like duties for
any committees of the Board of Directors when required or requested. He shall
give, or cause to be given, notice of all meetings of stockholders and, when
necessary, of the Board of Directors. The Secretary shall exercise such powers
and perform such duties as generally pertain or are necessarily incidental to
his office and shall perform such other duties as may be specifically assigned
to him from time to time by the Board of Directors, the Chairman of the Board,
or the President. The Secretary shall have custody of the corporate seal of the
Corporation and he, or an Assistant Secretary, shall have authority to affix the
corporate seal to any instrument requiring it, and when so affixed it shall be
attested by his signature or by the signature of an Assistant Secretary.
Section 7.12. THE ASSISTANT SECRETARY(IES).
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries, shall perform such duties as may be specifically assigned to them
from time to time by the Board of Directors, the Chairman of the Board, or the
President. In case of the absence or disability of the Secretary, and if the
Board of Directors, the Chairman of the Board, or the President has so
authorized, the Assistant Secretary, or if there be more than one Assistant
Secretary, such Assistant Secretary as the Board of Directors, the Chairman of
the Board or the President shall designate, shall perform the duties of the
office of the Secretary.
17
<PAGE>
ARTICLE VIII
------------
CERTIFICATES OF STOCK
---------------------
Section 8.1. FORM AND SIGNATURE.
The stock certificates representing common stock of the Corporation shall
be in such form or forms not inconsistent with the Certificate of Incorporation
and these By-laws as the Board of Directors shall approve from time to time.
Stock certificates shall be numbered, the certificates for the shares of stock
of each class to be numbered consecutively, and shall be entered in the books
and records of the Corporation as such certificates are issued. No certificate
shall be issued for any share until the consideration therefor has been fully
paid. Stock certificates shall exhibit the holder's name, certify the class of
stock and the number of shares in such class of stock owned by the holder, and
shall be signed (a) by the Chairman of the Board, or any Vice Chairman of the
Board, or the President, or any Vice President, and (b) by the Treasurer, or any
Assistant Treasurer, or the Secretary, or any Assistant Secretary. Any or all of
the signatures on a stock certificate may be facsimiles. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed on a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, such certificate may be
issued by the Corporation with the same effect as if he were such officer,
transfer agent, or registrar on the date of issuance.
Section 8.2. LOST, STOLEN, OR DESTROYED CERTIFICATES.
The Board of Directors may direct that a new stock certificate be issued in
place of any certificate theretofore issued by the Corporation which is alleged
to have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the person, or his legal representative, claiming the certificate of
stock to be lost, stolen, or destroyed. When authorizing such issuance of a new
certificate, the Board of Directors, in its discretion and as a condition
18
<PAGE>
precedent to the issuance thereof, may require the owner of the lost, stolen, or
destroyed certificate, or his legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as the Board of Directors shall direct as
indemnity against any claim that may be made against the Corporation, any
transfer agent, or any registrar on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of such new certificate.
Section 8.3. REGISTRATION OF TRANSFER.
Shares of common stock of the Corporation shall be transferable only upon
the Corporation's books by the holders thereof in person or by their duly
authorized attorneys or legal representatives, and upon such transfer the old
certificates shall be surrendered to the Corporation by the delivery thereof to
the person in charge of the stock and transfer books and ledgers of the
Corporation, or to such other person as the Board of Directors may designate.
Upon surrender to the Corporation of a certificate for shares, duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction on its books and
records.
ARTICLE IX
----------
GENERAL PROVISIONS
------------------
Section 9.1. RECORD DATE.
In order that the Corporation may determine the stockholders entitled to
notice of, and to vote at, a meeting of stockholders, or to express consent or
dissent to corporate action in writing without meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix,
19
<PAGE>
in advance, a record date which shall not be more than sixty (60) nor less than
ten (10) days prior to the date of such meeting nor more than sixty (60) days
prior to any other action. A determination of stockholders of record entitled to
notice of, and to vote at, a meeting of stockholders shall apply to any
adjournment(s) of such meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 9.2. REGISTERED STOCKHOLDERS.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, the Corporation shall be entitled to recognize the
exclusive right of a person registered on its books and records as the owner of
shares of stock of the Corporation to receive dividends and to vote as such
owner, shall be entitled to hold such person liable for calls and assessments,
and shall not be bound to recognize any equitable or other claim to, or interest
in, such stock on the part of any other person, whether or not the Corporation
shall have express or other notice thereof.
Section 9.3. DIVIDENDS.
The Board of Directors, in its sole and absolute discretion from time to
time, may declare and pay dividends upon the shares of the Corporation's capital
stock out of funds legally available therefor. Before declaring or paying any
dividend, the Board of Directors may set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors,
from time to time in its absolute discretion, shall think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Board of Directors shall think conducive to the interests of the Corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
in which it was created.
20
<PAGE>
Section 9.4. CHECKS AND NOTES.
All checks and drafts on the bank accounts of the Corporation, all bills of
exchange and promissory notes of the Corporation, and all acceptances,
obligations, and other instruments for the payment of money drawn, signed, or
accepted by the Corporation shall be signed or accepted, as the case may be, by
such officer or officers, agent or agents, and in such manner as shall be
thereunto authorized from time to time by the Board of Directors or by officers
of the Corporation designated by the Board of Directors to make such
authorization.
Section 9.5. FISCAL YEAR.
The fiscal year of the Corporation shall commence on January 1 and end on
December 31 of each year, unless otherwise fixed by resolution of the Board of
Directors.
Section 9.6. CORPORATE SEAL.
The corporate seal shall be circular in form and shall have inscribed
thereon the name of the Corporation, the year of its organization, and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed, affixed, or otherwise reproduced.
SECTION 9.7. VOTING OF SECURITIES OF OTHER ISSUERS.
In the event that the Corporation shall own and/or have power to vote any
securities (including, but not limited to, shares of stock) of any other issuer,
such securities shall be voted by the Chairman of the Board as provided in
Section 7.6 of these By-laws, or by such other person or persons, to such
extent, and in such manner as may be determined by the Board of Directors.
Section 9.8. TRANSFER AGENTS.
The Board of Directors may make such rules and regulations as it may deem
expedient concerning the issuance, transfer, and registration of securities
(including, but not
21
<PAGE>
limited to, stock) of the Corporation. The Board of Directors may appoint one or
more transfer agents and/or one or more registrars and may require all stock
certificates and other certificates evidencing securities of the Corporation to
bear the signature of either or both.
Section 9.9. BOOKS AND RECORDS.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, the books and records of the Corporation may be kept at
such place or places, either within or without the State of Delaware, as may be
designated by the Board of Directors.
ARTICLE X
---------
INDEMNIFICATION
---------------
Section 10.1. INDEMNIFICATION.
The Corporation shall provide for the indemnification, within the limits
permitted by the General Corporation Law of the State of Delaware, of directors,
officers, employees, and agents of the Corporation, and of persons who serve
other enterprises in such or similar capacities at the request of the
Corporation, against expenses, including attorney's fees, and liabilities for
actions they take in such capacities. Such indemnification shall not exclude any
other rights to which a person seeking indemnification may be entitled under any
agreement, vote of stockholders or disinterested directors or otherwise. The
corporation shall have power to purchase and maintain insurance on behalf of
directors, officers, employees, and agents of the Corporation, and of persons
who serve other enterprises in such or similar capacities at the request of the
Corporation, against any liability asserted against them and incurred by them in
such capacities, whether or not the Corporation would have the power to
indemnify them against such liability under the General Corporation Law of the
State of Delaware and any other laws of the State of Delaware in effect from
time to time.
22
<PAGE>
ARTICLE XI
----------
AMENDMENTS TO THESE BY-LAWS
---------------------------
Section 11.1. BY THE STOCKHOLDERS.
These By-laws may be amended or repealed in whole or in part and new
By-laws may be adopted by the affirmative vote of a majority of the shares of
common stock present in person or represented by proxy at a meeting of
stockholders at which a quorum is present and entitled to vote on the subject
matter, provided that notice thereof is stated in the written notice of the
meeting.
Section 11.2. BY THE BOARD OF DIRECTORS.
These By-laws may be amended or repealed in whole or in part and new
By-laws may be adopted by unanimous written consent of the directors on the
Board of Directors without meeting or by the affirmative vote of a majority of
the directors present at a meeting of the Board of Directors at which a quorum
is present, provided that notice thereof be contained in the notice of the
meeting.
ARTICLE XII
-----------
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
----------------------------------------------
Section 12.1. BY THE STOCKHOLDERS.
Any amendment to the Certificate of Incorporation shall require the
affirmative vote of a majority of the aggregate number of shares of common stock
issued and outstanding and entitled to vote on the subject matter, present in
person or represented by proxy at a meeting of stockholders, provided that
notice thereof is stated in the written notice of the meeting. If any amendment
to the Certificate of Incorporation would increase or decrease the aggregate
number of authorized shares of any class, increase or decrease the par value of
shares of any class, or alter, change, qualify, limit, or restrict the powers,
preferences, or rights of shares of any class so
23
<PAGE>
as to affect them adversely, such amendment shall require, in addition, the
affirmative vote of a majority of the aggregate number of shares of each such
class issued and outstanding and entitled to vote on the subject matter, present
in person or represented by proxy at a meeting of stockholders, provided that
notice thereof is stated in the written notice of the meeting.
Exhibit 4.1
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.,
Depositor,
[----------------------------],
Seller and Servicer,
and
[----------------------------],
Trustee
FORM OF
POOLING AND SERVICING AGREEMENT
Dated as of [_________], 200_
relating to
[----------------------------]
MORTGAGE-BACKED PASS-THROUGH CERTIFICATES, SERIES 200_-___
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...................................................3
ARTICLE II CONVEYANCE OF TRUST FUND; REPRESENTATIONS AND WARRANTIES.....27
SECTION 2.01 Conveyance of Trust Fund..............................27
SECTION 2.02 Acceptance by Trustee.................................29
SECTION 2.03 Representations, Warranties and Covenants of
the Servicer and Seller..............................30
SECTION 2.04 Representations, Warranties and Covenants of the
Servicer and the Seller with respect to the
Mortgage Loans........................................31
SECTION 2.05 Issuance of Certificates..............................39
SECTION 2.06 REMIC Provisions......................................39
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............44
SECTION 3.01 Servicing Standard....................................44
SECTION 3.02 Enforcement of the Obligations of Sub-Servicers.......45
SECTION 3.03 Termination of the Rights of Sub-Servicers............46
SECTION 3.04 Liability of the Servicer.............................46
SECTION 3.05 Rights of the Depositor and the Trustee in Respect
of the Servicer.......................................47
SECTION 3.06 Trustee to Act as Servicer...........................47
SECTION 3.07 Collection of Mortgage Loan Payments.................47
SECTION 3.08 Collection of Taxes, Assessments and Similar Items;
Escrow Accounts......................................49
SECTION 3.09 Permitted Withdrawals from the Custodial Account.....50
SECTION 3.10 Maintenance of Primary Mortgage Insurance Policies;
Collections Thereunder...............................51
SECTION 3.11 Maintenance of Hazard Insurance and Other Insurance. 52
SECTION 3.12 Enforcement of Due-On-Sale Clauses; Assumption
Agreements...........................................53
SECTION 3.13 Realization Upon Defaulted Mortgage Loans............55
SECTION 3.14 Trustee to Cooperate; Release of Trustee Mortgage
Files................................................56
SECTION 3.15 Documents, Records and Funds in Possession of Servicer
to be Held for the Depositor and the Trustee for the
Benefit of the Certificateholders....................57
SECTION 3.16 Servicing Compensation...............................57
SECTION 3.17 Reports to the Depositor; Account Statements.........58
SECTION 3.18 Annual Statement as to Compliance....................58
SECTION 3.19 Annual Independent Public Accountants' Servicing
Report...............................................58
SECTION 3.20 Reports to Trustee...................................59
SECTION 3.21 Converted Mortgage Loans; Certain Procedures and
Purchases............................................59
ARTICLE IV PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS..............61
SECTION 4.01 Certificate Account..................................61
SECTION 4.02 Distributions........................................61
SECTION 4.03 Allocation of Realized Losses........................63
SECTION 4.04 Monthly Statements to Certificateholders.............64
SECTION 4.05 Prepayment Interest Shortfalls and Relief Act
Shortfalls...........................................65
SECTION 4.06 The Policy...........................................65
ARTICLE V ADVANCES...................................................67
SECTION 5.01 Monthly Advances by the Servicer.....................67
SECTION 5.02 Advances for Attorneys' Fees.........................67
SECTION 5.03 Nonrecoverable Advances..............................68
SECTION 5.04 Advance Procedures...................................68
ARTICLE VI THE CERTIFICATES...........................................69
SECTION 6.01 The Certificates.....................................69
SECTION 6.02 Registration of Transfer and Exchange of
Certificates.........................................69
SECTION 6.03 Mutilated, Destroyed, Lost or Stolen Certificates....74
SECTION 6.04 Persons Deemed Owners................................75
SECTION 6.05 Access to List of Certificateholders' Names
and Addresses........................................75
SECTION 6.06 Maintenance of Office or Agency......................75
SECTION 6.07 Book-Entry Certificates..............................75
SECTION 6.08 Notices to Clearing Agency...........................76
SECTION 6.09 Definitive Certificates..............................76
ARTICLE VII THE DEPOSITOR AND THE SERVICER.............................78
SECTION 7.01 Liabilities of the Depositor and the Servicer........78
SECTION 7.02 Merger or Consolidation of the Depositor or the
Servicer.............................................78
SECTION 7.03 Limitation on Liability of the Depositor,
the Servicer and Others..............................79
SECTION 7.04 Servicer Not to Resign...............................79
SECTION 7.05 Errors and Omissions Insurance; Fidelity Bonds.......80
SECTION 7.06 Servicer May Own Certificates........................80
ARTICLE VIII DEFAULT....................................................81
SECTION 8.01 Events of Default....................................81
SECTION 8.02 Trustee to Act; Appointment of Successor.............82
.
SECTION 8.03 Notification to Certificateholders...................84
SECTION 8.04 Waiver of Events of Default..........................84
ARTICLE IX CONCERNING THE TRUSTEE.....................................85
SECTION 9.01 Duties of Trustee....................................85
SECTION 9.02 Certain Matters Affecting the Trustee................86
SECTION 9.03 Trustee Not Liable for Certificates or Mortgage
Loans................................................88
SECTION 9.04 Trustee May Own Certificates.........................88
SECTION 9.05 Trustee's Fees and Expenses..........................88
SECTION 9.06 Eligibility Requirements for Trustee.................88
SECTION 9.07 Resignation and Removal of Trustee...................89
SECTION 9.08 Successor Trustee....................................89
SECTION 9.09 Merger or Consolidation of Trustee...................90
SECTION 9.10 Appointment of Co-Trustee or Separate Trustee........90
SECTION 9.11 Office of the Trustee................................91
SECTION 9.12 Tax Returns..........................................91
ARTICLE X TERMINATION................................................92
SECTION 10.01 Termination upon Liquidation or Repurchase
of all Mortgage Loans...............................92
SECTION 10.02 Procedure Upon Optional Termination.................92
SECTION 10.03 Additional Termination Requirements.................93
ARTICLE XI MISCELLANEOUS PROVISIONS...................................95
SECTION 11.01 Amendment...........................................95
SECTION 11.02 Recordation of Agreement; Counterparts..............96
SECTION 11.03 Governing Law.......................................96
SECTION 11.04 Intention of Parties................................96
SECTION 11.05 Notices.............................................98
SECTION 11.06 Severability of Provisions..........................98
SECTION 11.07 Limitation on Rights of Certificateholders..........98
SECTION 11.08 Certificates Nonassessable and Fully Paid...........99
SECTION 11.09 Rights of the Insurer...............................99
<PAGE>
EXHIBITS
Exhibit A: Form of Class A Certificate A-1
Exhibit B: Form of Class S Certificate B-1
Exhibit C: Form of Class R Certificate C-1
Exhibit D: Schedule of Mortgage Loans D-1
Exhibit E: Form of Initial Certification of Trustee E-1
Exhibit F: Form of Final Certification of Trustee F-1
Exhibit G: Form of Request for Release G-1
Exhibit H: Form of Investor Representation Letter H-1
Exhibit I: Form of Transferor Representation Letter I-1
Exhibit J: Form of Investor Transfer Affidavit and Agreement J-1
Exhibit K: Form of Transfer Certificate K-1
Exhibit L: Certificate Guaranty Insurance Policy L-1
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of [___________],
200_, is hereby executed by and between CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP., depositor (the "Depositor"), [____________________________]
("[_______]"), in its capacity as seller (the "Seller") and in its capacity as
servicer (the "Servicer") and [____________________________], a national banking
association, as trustee (the "Trustee"). Capitalized terms used in this
Agreement and not otherwise defined will have the meanings assigned to them in
Article I below.
PRELIMINARY STATEMENT
The Depositor is the owner of the Mortgage Loans and the other
property being conveyed by it to the Trustee in its capacity as trustee of the
Trust Fund, in accordance with this Agreement, and the Depositor has duly
authorized the execution and delivery of this Agreement to provide for the
conveyance to the Trustee of the Trust Fund. As provided herein, the Depositor
will make an election to treat the assets consisting of Mortgage Loans and
certain other assets as described herein as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes and such pool of assets will
be designated as "REMIC I". The Class R-I Certificates will represent the sole
class of "residual interests" in REMIC I for purposes of the REMIC Provisions
(as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation, the REMIC I Remittance Rate, the initial
Uncertificated Balance, and solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC I Regular Interests. None of the REMIC I Regular Interests
will be certificated.
REMIC I INITIAL LATEST
DESIGNATION REMITTANCE UNCERTIFICATED POSSIBLE
DATE RATE BALANCE MATURITY(1)
- - - - - - - - -------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance Rate"
herein.
As provided herein, the Depositor will elect to treat the segregated
pool of assets consisting of the REMIC I Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as REMIC II. The Class R-II Certificates will represent the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, Certificate Rate, aggregate Initial Certificate Principal Balance
and Maturity Date
1
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for each Class of Certificates comprising the interests representing "regular
interests" in REMIC II (the "REMIC II Regular Certificates"). The "latest
possible maturity date" (determined solely for purposes of satisfying Treasury
Regulation Section 1.860G-1(a)(4)(iii)) for each Class of REMIC II Regular
Certificates shall be the first Distribution Date that follows the stated
maturity date for the Mortgage Loan included in the Trust Fund as of the Closing
Date with the longest remaining term to stated maturity.
AGGREGATE
INITIAL
CERTIFICATE
CERTIFICATE PRINCIPAL MATURITY
DESIGNATION TYPE RATE BALANCES DATE
- - - - - - - - -------------------------------------------------------------------------------
Class A Senior
Class S Subordinate
- - - - - - - - ---------------
* As set forth in the definition of "Certificate Rate" herein.
All covenants and agreements made by the Depositor herein are for the
benefit and security of the Certificateholders [and the Insurer]. The Depositor
is entering into this Agreement, and the Trustee is accepting the trusts created
hereby and thereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged. The principal balance of the
Mortgage Loans as of the Cut-off Date is $[__________].
The parties hereto intend to effect an absolute sale and assignment
of the Mortgage Loans to the Trustee for the benefit of Certificateholders [and
the Insurer] under the Mortgage Loan Purchase Agreement and this Agreement.
However, the Seller will hereunder absolutely assign and, as a precautionary
matter grant a security interest, in and to its rights, if any, in the Mortgage
Loans to the Trustee on behalf of Certificateholders [and the Insurer] to ensure
that the interest of the Insurer hereunder in the Mortgage Loans is fully
protected.
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Seller and the Trustee agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
ADJUSTMENT DATE: As to each Mortgage Loan, each date set forth in the
related Mortgage Note on which an adjustment to the interest rate on such
Mortgage Loan becomes effective.
ADVERSE REMIC EVENT: As defined in Section 2.06(f).
AGREEMENT: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto.
APPRAISED VALUE: The appraised value of the Mortgaged Property based upon
the appraisal made for the originator at the time of the origination of the
related Mortgage Loan or the sales price of the Mortgaged Property at the time
of such origination, whichever is less, or with respect to any Mortgage Loan
that represents a refinancing, the lower of the appraised value at origination
or the appraised value of the Mortgaged Property based upon the appraisal made
at the time of such refinancing.
AVAILABLE DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
excess of (a) the sum of (i) the aggregate amount of payments and collections
received by the Servicer in respect of each Mortgage Loan on or prior to the
related Determination Date and not previously remitted, from any source,
including amounts received from the related Mortgagor, Insurance Proceeds,
Liquidation Proceeds (net of related Liquidation Expenses) and condemnation
awards, and amounts received in connection with the purchase of any Mortgage
Loans by the Seller or Servicer and the substitution of Replacement Mortgage
Loans, and excluding interest and other earnings on amounts on deposit in the
Custodial Account and the Certificate Account, (ii) the aggregate amount of
Monthly Advances required to be remitted by the Servicer relating to such
Distribution Date and (iii) Insured Payments payable pursuant to the Policy;
over (b) the sum of (i) the aggregate amount of the servicing compensation to be
paid to the Servicer pursuant to the terms hereof (including, without
limitation, Servicing Fees, prepayment penalties, fees or premiums, late payment
charges and assumption fees and any excess interest charges payable by the
Mortgagor by virtue of any default or other non-compliance by the Mortgagor with
the terms of the Mortgage Loan or any other instrument or document executed in
connection therewith or otherwise), (ii) any amount included therein
representing late payments or other recoveries of principal or interest
(including Liquidation Proceeds (net of Liquidation Expenses), Insurance
Proceeds and condemnation awards) with respect to any Mortgage Loans in respect
of which the Servicer has made a previously unreimbursed Monthly Advance to the
extent of such Monthly Advance, (iii) amounts included therein representing
reimbursement of Nonrecoverable Advances and other amounts permitted to be
withdrawn from the Custodial Account or the Certificate Account, (iv) all
Monthly Payments or portions thereof (other than Principal Prepayments and other
unscheduled collections of principal) received in respect of scheduled principal
and interest on any Mortgage Loan due after
3
<PAGE>
the related Due Period and included therein, (v) all payments due on any
Mortgage Loan on or prior to the Cut-off Date and included therein, (vi) an
amount equal to the Principal Balance of each Mortgage Loan immediately prior to
such Distribution Date multiplied by one-twelfth of the Trustee Fee Rate, (vii)
Principal Prepayments and other unscheduled collections of principal received
after the related Prepayment Period and included therein and (viii) the
Certificate Insurer Premium payable as of such Distribution Date.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended from time to
time (11 U.S.C.).
BENEFICIAL HOLDER: A Person holding a beneficial interest in any
Certificate through a Participant or an Indirect Participant or a Person holding
a beneficial interest in any Definitive Certificate, as defined in Section 6.07.
BOOK-ENTRY CERTIFICATES: Certificates evidencing a beneficial interest in
the Trust Fund, ownership and transfers of which shall be made through book
entries, as described in Section 6.07.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which the Insurer or banking institutions in New York or the state in which
the Servicer or the Corporate Trust Office are located are authorized or
obligated by law or executive order to be closed.
CERTIFICATE: Any Class A, [Class S] or Class R Certificate executed and
authenticated by the Trustee for the benefit of the Certificateholders in
substantially the form or forms attached as Exhibits hereto.
CERTIFICATE ACCOUNT: The separate account or accounts created and
maintained by the Trustee pursuant to Section 4.01, in the name of the Trustee
for the benefit of the Certificateholders [and the Insurer] for deposit of
payments and collections in respect of the Mortgage Loans pursuant to Section
4.01 hereof, which account or accounts must be an Eligible Account or Accounts.
CERTIFICATE PRINCIPAL BALANCE: On any date and with respect to the Class A
Certificates, the Initial Certificate Principal Balance of such Class less the
sum of (i) all amounts previously distributed to Holders of such Class with
respect to principal pursuant to Section 4.02 and (ii) all amounts of Realized
Losses previously allocated to such Class pursuant to Section 4.03, unless an
Insured Payment in respect of such amount has been paid by the Insurer and is
included in clause (i) above.
CERTIFICATE RATE: In the case of the Class A Certificates a per annum rate
equal to the weighted average, expressed as a percentage, of the Net Mortgage
Rates of the Mortgage Loans, weighted on the basis of the respective Principal
Balances of such Mortgage Loans at the close of business on the Due Date
immediately preceding the related Due Period after giving effect to
distributions on such date allocable to principal. [With respect to the Class S
Certificates and any Distribution Date, a rate per annum equal to the sum of the
following components:
4
<PAGE>
(A) the REMIC I Remittance Rate for REMIC I Regular Interest [____]
minus two (2) times the weighted average of the REMIC I Remittance Rates
for REMIC I Regular Interest [____] and [____] applied to a notional
amount equal to the Uncertificated Balance of [____].
(B) the REMIC I Remittance Rate for REMIC I Regular Interest [____]
minus two (2) times the weighted average of the REMIC I Remittance Rates
for REMIC I Regular Interests [____] and [____] applied to a notional
amount equal to the Uncertificated Balance of [____].
(C) the REMIC I Remittance Rate for REMIC I Regular Interest [____]
minus four (4) times the weighted average of the REMIC I Remittance Rates
for REMIC I Regular Interests [____] and [____] applied to a notional
amount equal to the Uncertificated Balance of [____].]
Interest on the Certificates will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
CERTIFICATE REGISTER: The register maintained pursuant to Section 6.02(a)
hereof.
CERTIFICATEHOLDER or HOLDER: The Person in whose name a Certificate is
registered in the Certificate Register.
CLASS: Each of the Class A, [Class S] or Class R Certificates, as
appropriate.
CLASS A CERTIFICATE: A Certificate executed and authenticated by the
Trustee in substantially the form set forth in EXHIBIT A hereto and designated
as a Class A Certificate and evidencing ownership of interests designated as
"regular interests" in REMIC II for purposes of the REMIC Provisions.
CLASS A CUMULATIVE INTEREST SHORTFALL AMOUNT: On any Distribution Date, an
amount equal to (i) any portion of a Class A Interest Distribution Amount that
was not distributed to the Holders of the Class A Certificates on any preceding
Distribution Date less (ii) any amount described in clause (i) hereof that is
included in a Realized Loss that has been allocated to the Class A Certificates
on or prior to such Distribution Date.
CLASS A INTEREST DISTRIBUTION AMOUNT: On any Distribution Date, (a)
one-twelfth of the product of (i) the Certificate Principal Balance of the Class
A Certificates immediately prior to such Distribution Date and (ii) the
applicable Certificate Rate, minus (b) the Insurer Premium and the aggregate
amount of Prepayment Interest Shortfalls and Relief Act Shortfalls allocated to
such Certificates pursuant to Section 4.05 on such Distribution Date.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: (a) On any Distribution Date, the
sum of (i) the principal due on the related Due Date for each Mortgage Loan and
received during the related Due Period or with respect to which a Monthly
Advance was made with respect to the related Due Period, (ii) for each Mortgage
Loan that was prepaid during the related Prepayment Period, the amount of the
Principal Prepayment including, with respect to any Mortgage Loan that was the
subject of a Debt Service Reduction in any prior Prepayment Period, the amount
of
5
<PAGE>
any such Principal Prepayment that exceeds the Principal Balance of such
Mortgage Loan as of the date of the prepayment, (iii) for each Mortgage/ Loan
that was purchased by the Seller or Servicer during the related Prepayment
Period pursuant to Section 2.01, 2.02, 2.04, 3.12, 3.21 or 10.01 hereof, the
principal amount of the Purchase Price (net of any amounts with respect to which
a distribution of principal has already been made) and the amount of any
shortfall deposited in the Custodial Account in connection with the substitution
of a Deleted Mortgage Loan pursuant to Section 2.01, 2.02 or 2.04 hereof during
the related Prepayment Period, (iv) the aggregate amount of the principal
portion of Liquidation Proceeds and the principal portion of Insurance Proceeds
received with respect to such Mortgage Loan net of any withdrawals permitted
hereunder to be made by the Servicer from the Custodial Account with respect to
such Mortgage Loan, (v) for each Mortgage Loan with respect to which any other
unscheduled recovery of principal has been received during the related
Prepayment Period, the amount of such unscheduled recovery, (vi) the amount of
any related Overcollateralization Increase Amount for such Distribution Date,
and (vii) the payment of any Overcollateralization Deficit pursuant to the
Policy; MINUS (viii) the amount of any related Overcollateralization Reduction
Amount for such Distribution Date and (b) on the Scheduled Final Distribution
Date, the outstanding Certificate Principal Balance of the Class A Certificates.
CLASS R CERTIFICATE: Any one of the Class R-I or Class R-II Certificates.
CLASS R-I CERTIFICATE: A Certificate executed and authenticated by the
Trustee in substantially the form set forth in Exhibit C and designated as a
Class R-I Certificate and evidencing an interest designated as a "residual
interest" in REMIC I for purposes of the REMIC Provisions.
CLASS R-II CERTIFICATE: A Certificate executed and authenticated by the
Trustee in substantially the form set forth in Exhibit C and designated as a
Class R-II Certificate and evidencing an interest designated as a "residual
interest" in REMIC II for purposes of the REMIC Provisions.
CLASS S CERTIFICATE: A Certificate executed and authenticated by the
Trustee in substantially the form set forth in Exhibit C hereto and designated
as a Class S Certificate and evidencing ownership of interests designated as
"regular interests" in REMIC II for purposes of the REMIC Provisions.
CLASS S CUMULATIVE INTEREST SHORTFALL AMOUNT: On any Distribution Date, an
amount equal to (i) any portion of a Class S Interest Distribution Amount that
was not distributed to the Holders of the Class S Certificates on any preceding
Distribution Date less (ii) any amount described in clause (i) hereof that is
included in a Realized Loss that has been allocated to the Class S Certificates
on or prior to such Distribution Date.
CLASS S INTEREST DISTRIBUTION AMOUNT: On any Distribution Date, (a) the
aggregate of the product of (i) the Principal Balance of each Mortgage Loan
immediately after the Distribution Date preceding such Distribution Date (or,
with respect to the first Distribution Date, immediately prior to the Closing
Date) and (ii) one-twelfth of 0.70%, plus (b) the product of (i) the Class S
Cumulative Interest Shortfall Amount and (ii) the Certificate Rate for the Class
A Certificates (the sum of (a) and (b) being equal to the sum, for each of the
components of the
6
<PAGE>
Certificate Rate with respect to the Class S Certificates of the product of such
Certificate Rate and the applicable notional amount as specified in the
definition of Certificate Rate), minus (c) the aggregate amount of Prepayment
Interest Shortfalls and Relief Act Shortfalls allocated to the Class S
Certificates pursuant to Section 4.05 on such Distribution Date.
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.
CODE: The Internal Revenue Code of 1986, as amended.
CONVERTIBLE MORTGAGE LOAN: Any Mortgage Loan which by its terms grants to
the related Mortgagor the option to convert the interest rate borne by such
Mortgage Loan from an adjustable interest rate to a fixed interest rate.
CONVERTING MORTGAGE LOAN: Any Convertible Mortgage Loan with respect to
which the related Mortgagor has given notice of its intent to convert from an
adjustable interest rate to a fixed interest rate and prior to the conversion of
such Convertible Mortgage Loan.
CORPORATE TRUST OFFICE: The designated office of the Trustee in the State
of ------------- Minnesota at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of
this Agreement is located at [-------------------------].
CUMULATIVE INSURANCE PAYMENTS: As of any time of determination, the
aggregate amount of all Insured Payments previously made by the Insurer under
the Policy plus any unpaid Insurer Premium, plus interest thereon from the date
such amounts became due until paid in full, at a rate of interest equal to the
Late Payment Rate and in accordance with Section 3.03(a) of the Insurance
Agreement, minus the sum of the aggregate of all payments previously made to the
Insurer pursuant to Section 4.02 hereof as reimbursement for such amounts.
CUSTODIAL ACCOUNT: The deposit account or accounts created and maintained
by the Servicer pursuant to Section 3.07 hereof in the name of a depository
institution which may be the Servicer for the benefit of the Certificateholders
[and the Insurer], which account or accounts must be Eligible Accounts.
CUT-OFF DATE: [_________ 1, 200_].
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
DEFICIENCY AMOUNT: With respect to the Class A Certificates as of any
Distribution Date, the sum of (i) any shortfall in the Available Distribution
Amount to pay the interest portion of a Realized Loss, net of any interest
shortfalls relating to any Prepayment Interest Shortfalls and Relief Act
Shortfalls allocated to the Class A Certificates and (ii) the
Overcollateralization Deficit.
7
<PAGE>
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, or that results in a
permanent forgiveness of principal, which valuation in either case results from
a proceeding under the Bankruptcy Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
DELINQUENCY AMOUNT: As of any Distribution Date, the product of the Rolling
Three Month Delinquency Percentage and the aggregate Principal Balances of the
Mortgage Loans as of the close of business on the last day of the related Due
Period immediately preceding such Distribution Date.
DELINQUENCY PERCENTAGE: With respect to any Distribution Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are 90 or more days
delinquent, in foreclosure or converted to REO Properties as of the close of
business on the last day of the related Due Period and (b) the denominator of
which is the aggregate Principal Balance of the Mortgage Loans as of the close
of business on the last day of such Due Period.
DELIVERY DATE: [_________ 1, 200_].
DEPOSITOR: Credit Suisse First Boston Mortgage Securities Corp., a Delaware
corporation, or its successor in interest.
DEPOSITORY AGREEMENT: The Letter of Representation dated as of [_________
1, 200_] by and among DTC, the Depositor and the Trustee.
DETERMINATION DATE: The [___] day (or if such 15th day is not a Business
Day, the Business Day immediately preceding such [___] day) of the month of the
related Distribution Date.
DISQUALIFIED ORGANIZATION: Any organization defined as a "disqualified
organization" under Section 860E(e)(5) of the Code, which includes any of the
following: (i) the United States, any State or political subdivision thereof,
any possession of the United States, or any agency or instrumentality of any of
the foregoing (other than an instrumentality which is a corporation if all of
its activities are subject to tax and, except for the FHLMC, a majority of its
board of directors is not selected by such governmental unit), (ii) a foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code and (v)
any other Person so designated by the Trustee based upon an Opinion of Counsel
that the holding of an Ownership Interest in a Class R-I Certificate or Class
R-II Certificate by such Person may cause the related REMIC or any Person having
an Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Class
R-I Certificate or Class R-II
8
<PAGE>
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
DISTRIBUTION DATE: The [___] day of each calendar month, or if such [___]
day is not a Business Day, the next succeeding Business Day, commencing
[_________, 200_].
DTC: The Depository Trust Company.
DUE DATE: The first day of the calendar month in which the related
Distribution Date occurs.
DUE PERIOD: The period from and including the second day of the calendar
month preceding the calendar month in which any Distribution Date occurs to and
including the first day of the calendar month in which such Distribution Date
occurs.
ELIGIBLE ACCOUNT: Either (i) an account or accounts maintained with a
federal or state-chartered depository institution or trust company (which may be
the Servicer or an affiliate of the Servicer or which may be the Trustee or an
affiliate of the Trustee) the short-term unsecured debt obligations of which
(or, in the case of a depository institution or trust company that is the
principal subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated by each Rating Agency not lower
than P-1 in the case of Moody's and A-1+ in the case of Standard & Poor's, (ii)
an account or accounts the deposits in which are fully insured by the FDIC,
provided that any such deposits not so insured shall be otherwise maintained
such that (as evidenced by an Opinion of Counsel delivered to the Trustee and
the Rating Agencies) the applicable Certificateholders have a claim with respect
to the funds in such account or a perfected first priority security interest
against any collateral (which shall be limited to Eligible Investments) securing
such funds that is superior to claims of any other depositors or creditors of
the depository institution or trust company with which such account is
maintained, (iii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity, provided that any such state chartered
depository institution is subject to regulation regarding funds on deposit
substantially similar to the regulations set forth in 12 C.F.R. ` 9.10(b), or
(iv) any account maintained at any Federal Home Loan Bank.
ELIGIBLE INVESTMENTS: At any time, any one or more of the following
obligations, instruments and securities:
(i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United
States;
(ii) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the highest
long-term rating of Moody's and Standard & Poor's, or such lower ratings
as are acceptable to the Insurer and will not result in the downgrading or
withdrawal of the rating, if any, then assigned to the Class A
Certificates by each applicable Rating Agency;
(iii)commercial paper (having original maturities of not more than
270 days) which is then rated in the highest commercial paper rating
category of Moody's and
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Standard & Poor's, or such lower category as is acceptable to the Insurer and
will not result in the downgrading or withdrawal of the rating then assigned to
the Class A Certificates by each applicable Rating Agency;
(iv) certificates of deposit, demand or time deposits, federal funds or
bankers' acceptances (in each case having maturities of not more than 365 days)
issued by any depository institution or trust company incorporated under the
laws of the United States or of any state thereof and subject to supervision and
examination by federal and/or state banking authorities, provided that the
commercial paper and/or long-term debt obligations of such depository
institution or trust company (or in the case of a depository institution or
trust company that is the principal subsidiary of a holding company, the
commercial paper or long-term debt obligations of such holding company) are then
rated in the highest rating category of Moody's and Standard & Poor's, in the
case of commercial paper, and in the highest category in the case of long-term
debt obligations, or such lower categories as is acceptable to the Insurer and
will not result in the downgrading or withdrawal of the rating then assigned to
the Class A Certificates by each applicable Rating Agency, and, in the case of
short-term debt obligations which have maturities of 30 days or less, a rating
of P-1 by Moody's, and a rating of A-1+ by Standard & Poor's;
(v) demand or time deposits or certificates of deposit issued by (a) any
Federal Home Loan Bank or (b) any bank or trust company or savings association
which is rated at least "A" by Standard & Poor's which has combined capital,
surplus and undistributed profits of not less than $50 million and fully insured
by the FDIC;
(vi) repurchase obligations with respect to any security described in (i)
and (ii) above or any other security issued or guaranteed by an agency or
instrumentality of the United States, in either case entered into with a
depository institution or trust company (acting as principal) described in (iv)
above;
(vii)securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any state
thereof which, at the time of such investment or contractual commitment
providing for such investments are then rated in the highest rating category of
Moody's and Standard & Poor's or in such lower rating category as will not
result in the downgrading or withdrawal of the rating, if any, then assigned to
the Class A Certificates by each applicable Rating Agency;
(viii) such other investments which are acceptable to the Insurer and do
not adversely affect the rating, if any, on the Class A Certificates by each
applicable Rating Agency; and
(ix) units of taxable money-market portfolios rated in the highest rating
category by Moody's and Standard & Poor's and not restricted to obligations
issued or guaranteed by any agency or instrumentality of the United States or
entities whose obligations are backed by the full faith and credit of the United
States and repurchase agreements collateralized by such obligations.
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PROVIDED that (A) such obligation or security is held for a temporary period
pursuant to Treasury Regulations Section 1.860G-2(g)(1), and (B) Eligible
Investments shall include only such obligations or securities that mature on or
before the (i) Business Day immediately preceding the next Distribution Date
with respect to amounts on deposit in the Certificate Account and (ii) the
second Business Day immediately preceding the next Distribution Date with
respect to amounts on deposit in the Custodial Account. In addition, no Eligible
Investment which incorporates a penalty for early withdrawal will be used unless
the maturity of such Eligible Investment is on or before the Business Day
immediately preceding the next Distribution Date.
ESCROW ACCOUNT: As defined in Section 3.08.
EVENT OF DEFAULT: As defined in Section 8.01 hereof.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FINAL DISTRIBUTION DATE: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
10.01, which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 10.03.
FNMA: The Federal National Mortgage Association, a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act, or any successor thereto.
[INDEX: With respect to any Mortgage Loan and as to any Adjustment Date
therefor, a per annum rate equal to the weekly average yield on U.S. Treasury
securities adjusted to a constant maturity of one year as reported by the
Federal Reserve Board in statistical Release No. H.15(519) as of the date
specified in the related Mortgage Note, or, in the event that such index is no
longer available, an index selected by the Servicer and reasonably acceptable to
the Trustee that is based on comparable information.]
INDIRECT PARTICIPANTS: Entities, such as banks, brokers, dealers and trust
companies, that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to the Class A
Certificates, $[_______________].
[INSURANCE ACCOUNT: The account or accounts created and maintained pursuant
to Section 4.06, which shall be entitled "[________________________], as
trustee, in trust for the registered holders of [______________],
Mortgage-Backed Pass-Through Certificates, Series 200_-___, Class A," and which
must be an Eligible Account.
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[INSURANCE AGREEMENT: The Insurance Agreement dated as of [__________,
200_] among the Insurer, the Trustee, the Servicer, the Seller and the
Depositor.]
INSURANCE PROCEEDS: Amounts paid pursuant to any insurance policy
with respect to a Mortgage Loan that have not been used to restore the related
property.
INSURED PAYMENT: With respect to the Class A Certificates, as of any
Distribution Date, the Deficiency Amount, if any, for such Distribution Date.
[INSURER: [___________________] or its successors in interest.]
INSURER DEFAULT: The existence and continuance of any of the following: (a)
a failure by the Insurer to make a payment required under the Policy in
accordance with its terms; or (b)(i) the Insurer (A) files any petition or
commences any case or proceeding under any provision or chapter of the
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes
a general assignment for the benefit of its creditors, or (C) has an order for
relief entered against it under the Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or (ii) a court of competent
jurisdiction, the New York Department of Insurance or other competent regulatory
authority enters a final and nonappealable order, judgment or decree (A)
appointing a custodian, trustee, agent or receiver for the Insurer or for all or
any material portion of its property or (B) authorizing the taking of possession
by a custodian, trustee, agent or receiver of the Insurer (or the taking of
possession of all or any material portion of the property of the Insurer).
INSURER PREMIUM: With respect to any Distribution Date, an amount equal to
one-twelfth of the product of the Insurer Premium Rate and the aggregate
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date.
INSURER PREMIUM RATE: The rate set forth in the Insurance Agreement.
LATE PAYMENT RATE: As defined in the Insurance Agreement.
LIQUIDATED LOAN: With respect to any Distribution Date, a Mortgage
Loan which, as of the close of business on the Business Day next preceding the
related Determination Date, (a) has been liquidated through deed in lieu of
foreclosure, sale in foreclosure, trustee's sale or other realization as
provided by applicable law of real property subject to the related Mortgage and
any security agreements or (b) with respect to which payment under related
private mortgage insurance or hazard insurance and/or from any public or
governmental authority on account of a taking or condemnation of any such
property has been received; PROVIDED, HOWEVER, that any REO Property shall not
be treated as a Liquidated Loan until such property has been finally liquidated.
LIQUIDATION EXPENSES: Customary and reasonable "out of pocket" expenses
incurred by the Servicer (or the related Sub-Servicer) in connection with the
liquidation of any defaulted Mortgage Loan and not recovered by the Servicer (or
the related Sub-Servicer) under a Primary Mortgage Insurance Policy for reasons
other than the Servicer's failure to comply with Section 3.10 hereof, such
expenses including, without limitation, legal fees and expenses, any
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unreimbursed amount expended by the Servicer pursuant to Section 3.11 hereof
respecting the related Mortgage and any related and unreimbursed expenditures
for real estate property taxes or for property restoration or preservation to
the extent not previously reimbursed under any hazard insurance policy for
reasons other than the Servicer's failure to comply with Section 3.11 hereof.
LIQUIDATION PROCEEDS: Amounts other than Insurance Proceeds received in
connection with the liquidation of a defaulted Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise or amounts received in connection
with any condemnation or partial release of a Mortgaged Property.
LOAN-TO-VALUE RATIO: As of any date, the fraction, expressed as a
percentage, the numerator of which is the Principal Balance of the related
Mortgage Loan at the date of determination and the denominator of which is the
Appraised Value of the Mortgaged Property or, in the case of a Replacement
Mortgage Loan, is the appraised value of the Mortgaged Property based upon an
appraisal made within 180 days prior to the date of substitution of such
Replacement Mortgage Loan for a Deleted Mortgage Loan.
MARGIN: As to each Mortgage Loan, the fixed percentage set forth in the
related Mortgage Note, which percentage is added to the Index on each Adjustment
Date to determine (subject to rounding in accordance with the related Mortgage
Note, the applicable Periodic Cap, Maximum Interest Rate and Minimum Interest
Rate) the interest rate to be borne by such Mortgage Loan until the next
Adjustment Date thereof.
MATURITY DATE: The latest possible maturity date, solely for purposes of
Section 1.860G-1(a)(4)(iii) of the Treasury regulations, by which the
Certificate Principal Balance, if any, of each Class of Regular Certificates
would be reduced to zero as determined under a hypothetical scenario which
assumes that such date is the Distribution Date in the month of the maturity
date of the Mortgage Loan with the latest scheduled maturity date. The Maturity
Date for each Class of Regular Certificates is [___________, 20__].
MAXIMUM INTEREST RATE: As to any Mortgage Loan, the maximum interest rate
that may be borne by such Mortgage Loan as set forth in the related Mortgage
Note, which rate may be applicable to such Mortgage Loan at any time during the
life of such Mortgage Loan.
MINIMUM INTEREST RATE: As to any Mortgage Loan, the minimum interest rate
that may be borne by such Mortgage Loan as set forth in the related Mortgage
Note, which rate may be applicable to such Mortgage Loan at any time during the
life of such Mortgage Loan.
MONTHLY ADVANCE: The aggregate of the advances made by or on behalf of the
Servicer with respect to any Distribution Date pursuant to Section 5.01 hereof,
the amount of any such advances being equal to the regular monthly installments
of principal and interest on the Mortgage Loans that were due on the related Due
Date and delinquent as of the close of business on the related Determination
Date, after adjustment of any delinquent interest payment to be equal to
interest at a rate equal to the Mortgage Rate less the Servicing Fee Rate on the
Principal Balance of the Mortgage Loans, less the aggregate amount of any such
delinquent payments that the Servicer has determined would constitute a
Nonrecoverable Advance if made.
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MONTHLY PAYMENT: The scheduled monthly payment of principal and interest on
a Mortgage Loan.
MOODY'S: Moody's Investors Service or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first lien on a fee simple or leasehold estate in real property securing a
Mortgage Note.
MORTGAGE FILE: For each Mortgage Loan, the Trustee Mortgage File and the
Servicer Mortgage File.
MORTGAGE LOAN: Each of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund, evidenced by a Mortgage Note and secured by a Mortgage,
the mortgage loans so held being identified in the Mortgage Loan Schedule, as
amended from time to time.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of [____________, 200_] between the Depositor, Credit Suisse First
Boston Corporation and the Seller, pursuant to which the Depositor purchased the
Mortgage Loans from the Seller.
MORTGAGE LOAN REPURCHASE PRICE: The price, calculated as set forth in
Section 10.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to an Optional Termination of the Trust Fund.
MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans transferred to the
Trustee as part of the Trust Fund for the Certificates and from time to time
subject to this Agreement (as from time to time amended by the Servicer to
reflect the addition of Replacement Mortgage Loans and the deletion of Deleted
Mortgage Loans pursuant to the provisions of this Agreement), attached hereto as
EXHIBIT D, setting forth the following information with respect to each Mortgage
Loan:
(i) the loan number;
(ii) the city, state and zip code for each Mortgaged Property;
(iii) the Index or the Mortgage Rate;
[(iv) the Margin;
(v) the Maximum Interest Rate;
(vi) the Minimum Interest Rate;
(vii) the original term to maturity;
(viii) the remaining term to maturity;]
(ix) the original principal balance;
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(x) the Principal Balance as of the Cut-off Date;
(xi) the first Due Date;
(xii) the Monthly Payment in effect as of the Cut-off Date;
(xiii) the Loan-to-Value Ratio at origination;
(xiv) the Appraised Value of the Mortgaged Property;
[(xv) the Net Mortgage Rate;]
(xvi) a code indicating whether the Mortgaged Property is either (a) a
detached single-family dwelling or a de minimis planned unit development, (b) a
condominium unit or a dwelling in a planned unit development, or (c) a two- to
four-family residential property;
(xvii) a code indicating whether the Mortgaged Property at the time of
origination was represented to be owner-occupied; and
(xviii) the purpose for which the financing was made.
Such schedule shall also set forth the total of the amounts described under (ix)
above for all of the Mortgage Loans. Such schedule may be in the form of more
than one list collectively setting forth all of the information required and
shall also be in a computer-readable format acceptable to the Trustee [and the
Insurer].
MORTGAGE NOTE: The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note, which
is set forth in the related Mortgage Note. [The Mortgage Rate for each Mortgage
Loan as of the Cut-off Date will be adjusted on each Adjustment Date to a rate
equal to the sum of the Index applicable to such Adjustment Date and the Margin,
rounded to or up to the nearest multiple of [____]%, as specified in the related
Mortgage Note, subject to the application of the applicable Periodic Cap,
Maximum Interest Rate and Minimum Interest Rate.]
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.
MORTGAGOR: The obligor on a Mortgage Note.
NET MORTGAGE RATE: As to each Mortgage Loan, with respect to any
Distribution Date, a rate per annum equal to (a) the Mortgage Rate in effect as
of the Due Date in the preceding calendar month minus (b) the Servicing Fee Rate
minus (c) the Trustee Fee Rate minus (d) [___]% per annum.
1933 ACT: The Securities Act of 1933, as amended.
NONRECOVERABLE ADVANCE: The portion of any Monthly Advance previously made
or proposed to be made by the Servicer or other advance previously made by the
Servicer that,
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in the good faith judgment of the Servicer, will not or, in the case of a
current delinquency, would not be, ultimately recoverable by the Servicer from
Insurance Proceeds or Liquidation Proceeds (net of Liquidation Expenses) with
respect to the related Mortgage Loan.
OFFICERS' CERTIFICATE: A certificate signed by the Chairman of the Board,
any Vice Chairman of the Board, the President, an Executive Vice President,
Senior Vice President, a Vice President, or other authorized officer, and by the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor, the Seller, the Servicer, a Sub-Servicer or the
Trustee, as the case may be, and delivered to the Insurer, the Depositor, the
Servicer or the Trustee, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to the Trustee [and the
Insurer]. With respect to the definition of Eligible Account in this Article I
and Sections 2.04 and 7.04 hereof and any opinion dealing with the qualification
of a REMIC or compliance with the REMIC Provisions, such counsel must (i) in
fact be independent of the Depositor and the Servicer, (ii) not have any direct
financial interest in the Depositor or the Servicer or in any affiliate of
either of them and (iii) not be connected with the Depositor or the Servicer as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.
OPTIONAL TERMINATION: The purchase of the Mortgage Loans pursuant to
Section 10.01.
OPTIONAL TERMINATION DATE: The date fixed by the Servicer for the purchase
of the Mortgage Loans pursuant to Section 10.01.
ORIGINAL OVERCOLLATERALIZATION AMOUNT: $[__________].
OVERCOLLATERALIZATION AMOUNT: As of any Distribution Date, the excess, if
any, of (a) the aggregate Principal Balances of the Mortgage Loans immediately
following such Distribution Date over (b) the Certificate Principal Balance of
the Class A Certificates as of such Distribution Date (after taking into account
the payment of the amounts described in clauses (i) through (v) of the
definition of Class A Principal Distribution Amount on such Distribution Date).
OVERCOLLATERALIZATION DEFICIENCY AMOUNT: With respect to any Distribution
Date, the excess, if any, of (a) the Specified Overcollateralization Amount
applicable to such Distribution Date over (b) the related Overcollateralization
Amount applicable to such Distribution Date prior to taking into account the
payment of any related Overcollateralization Increase Amounts on such
Distribution Date.
OVERCOLLATERALIZATION DEFICIT: With respect to any Distribution Date, the
excess of (x) the aggregate outstanding Class A Certificate Principal Balance
(after giving effect to all distributions to be made on such Distribution Date)
as of such Distribution Date over (y) the aggregate outstanding Principal
Balance of the Mortgage Loans as of the close of business on the last day of the
related Due Period (after giving effect to all distributions during such
period).
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OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any Distribution
Date, the lesser of (a) the Overcollateralization Deficiency Amount as of such
Distribution Date (after taking into account the payment of the related Class A
Principal Distribution Amount on such Distribution Date (exclusive of the
payment of any related Overcollateralization Increase Amount)) and (b) the Class
S Interest Distribution Amount with respect to such Distribution Date as reduced
by (i) the interest portion of any Realized Losses and (ii) Cumulative Insurance
Payments for such Distribution Date.
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to any Distribution
Date, an amount equal to the lesser of (a) the excess, if any, of (x) the
related Overcollateralization Amount that would exist following such
Distribution Date following payment of the related Class A Principal
Distribution Amount (exclusive of any reductions thereto attributable to the
related Overcollateralization Reduction Amount) over (y) the related Specified
Overcollateralization Amount for such Distribution Date and (b) the sum of the
amounts for such Distribution Date specified in clauses (i)-(v) of the
definition of Class A Principal Distribution Amount.
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.
PASS-THROUGH ENTITY: (a) a regulated investment company described in
Section 851 of the Code, a real estate investment trust described in Section 856
of the Code, a common trust fund or an organization described in Section 1381(a)
of the Code, (b) any partnership, trust or estate or (c) any person holding a
Class A Certificate as nominee for another person.
PERCENTAGE INTEREST: The percentage interest (which may be expressed as a
fraction) evidenced by any Certificate, which (a) in the case of the Class A
Certificates, is equal to a fraction, the numerator of which is the Initial
Certificate Principal Balance of such Certificate, and the denominator of which
is equal to the aggregate Initial Certificate Principal Balances of all
Certificates of the same Class and (b) in the case of the Class S or Class R
Certificates, is set forth on the face thereof.
[PERIODIC CAP: With respect to each Mortgage Loan, the maximum increase or
decrease in the Mortgage Rate on any Adjustment Date (other than with respect to
certain of the Mortgage Loans, the first Adjustment Date for such Mortgage
Loan), as specified in the related Mortgage Note.]
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
[POLICY: The Certificate Guaranty Insurance Policy No. [______] issued by
the Insurer in respect of the Class A Certificates, a copy of which is attached
hereto as Exhibit L.]
PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date and any Mortgage
Loan (other than a Mortgage Loan secured by an REO Property) that was the
subject of a Principal Prepayment during the related Prepayment Period, an
amount equal to the excess of one month's interest at the Mortgage Rate on the
Principal Balance of such Mortgage Loan over
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the amount of interest paid by the Mortgagor for such Prepayment Period to the
date of such Principal Prepayment.
PREPAYMENT PERIOD: With respect to any Distribution Date, the calendar
month prior to the month in which such Distribution Date occurs.
PRIMARY MORTGAGE INSURANCE POLICY: Each primary policy of mortgage guaranty
insurance with respect to the Mortgage Loans or any replacement policy therefor.
PRINCIPAL BALANCE: With respect to any Mortgage Loan, as of the date of any
determination, the principal balance of such Mortgage Loan remaining to be paid
by the Mortgagor as of the Cut-off Date after deduction of all payments due on
or before the Cut-off Date, reduced (but not below zero) by the sum of (i) all
amounts previously received or collected by the Servicer in respect of principal
of such Mortgage Loan subsequent to the Cut-off Date, other than amounts
representing payments due on such Mortgage Loan on or prior to the Cut-off Date;
(ii) all Liquidation Proceeds (net of Liquidation Expenses) and Insurance
Proceeds allocated to principal; (iii) all amounts allocable to the principal of
such Mortgage Loan previously paid by the Servicer as part of a Monthly Advance,
in each case which were distributed to Certificateholders pursuant to Section
4.02; and (iv) all Realized Losses allocated to Certificateholders with respect
thereto on any previous Distribution Date. In the case of a Replacement Mortgage
Loan, "Principal Balance" shall mean, at the time of any determination, the
principal balance of such Replacement Mortgage Loan on the date of substitution
after deduction of all payments due on or before the Due Date in the month of
substitution, reduced by the sums described in (i) through (iv), above, after
such Due Date.
PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of principal
on a Mortgage Loan that is received in advance of its scheduled Due Date and is
not accompanied by an amount as to interest representing scheduled interest due
on any date or dates in any month or months subsequent to the month of
prepayment.
PURCHASE PRICE: With respect to any Mortgage Loan required to be purchased
by the Seller or Servicer pursuant to Section 2.01, 2.02, 2.04 or 3.12 or which
the Servicer purchases pursuant to Section 3.21 the sum of (i) 100% of the
Principal Balance of the Mortgage Loan on the date of such purchase, (ii)
accrued and unpaid interest on the Mortgage Loan at a rate equal to the sum of
the Net Mortgage Rate, the Trustee Fee Rate and 0.70% per annum to the next Due
Date and (iii) the amount of any unreimbursed Monthly Advances and other
advances made by the Servicer with respect to such Mortgage Loan and
reimbursable to the Servicer hereunder. With respect to any Mortgage Loan
required or allowed to be purchased, the Servicer or Seller, as applicable,
shall deliver to the Trustee an Officers' Certificate as to the calculation of
the Purchase Price.
QUALIFIED INSURER: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each other state having jurisdiction over such insurer in connection with
the insurance policy issued by such insurer, duly authorized and licensed by the
insurance regulatory authority of the state of its principal place of business
and, to the extent required by applicable law, each such other state, to
transact a mortgage guaranty insurance business in such state and each such
other state and to write the
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insurance provided by the insurance policy issued by it and approved as an
insurer by FHLMC or FNMA and whose claims-paying ability will not adversely
affect the rating on the Certificates.
RATING AGENCY: Moody's and Standard & Poor's or any successor thereto.
REALIZED LOSS: An amount determined by the Servicer and evidenced by an
Officers' Certificate delivered to the Trustee, in connection with any Mortgage
Loan equal to (a) with respect to any Liquidated Loan, the excess of the
Principal Balance of such Liquidated Loan plus interest thereon at a rate equal
to the sum of the applicable Net Mortgage Rate and the Trustee Fee Rate from the
Due Date as to which interest was last paid up to the Due Date next succeeding
such liquidation over proceeds, if any, received in connection with such
liquidation, after application of all withdrawals permitted to be made by the
Servicer from the related Custodial Account with respect to such Mortgage Loan,
(b) with respect to any Mortgage Loan which has become the subject of a
Deficient Valuation, the excess of the Principal Balance of the Mortgage Loan
over the principal amount as reduced in connection with the proceedings
resulting in the Deficient Valuation or (c) with respect to any Mortgage Loan
which has become the subject of a Debt Service Reduction, the present value of
all monthly Debt Service Reductions on such Mortgage Loan, assuming that the
Mortgagor pays each Monthly Payment on the applicable Due Date and that no
Principal Prepayments are received with respect to such Mortgage Loan,
discounted monthly at the applicable Mortgage Rate.
RECORD DATE: With respect to any Distribution Date, the close of business
on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs.
REGULAR CERTIFICATES: All of the Certificates other than the Class R
Certificates.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
RELIEF ACT SHORTFALLS: With respect to any Distribution Date and any
Mortgage Loan, the amount of any interest that is not collectible from the
Mortgagor during the related Due Period pursuant to the Relief Act or similar
legislation or regulations as in effect from time to time.
REMIC: A "real estate mortgage investment conduit", within the meaning of
Section 860D of the Code.
REMIC ELECTION: An election, for federal income tax purposes, to treat
certain assets as a REMIC.
REMIC I: The corpus of the trust created by this Agreement consisting of
(a) the Mortgage Loans listed in the Mortgage Loan Schedule, including all
interest and principal received or receivable by the Depositor on or with
respect to the Mortgage Loans after the Cut-off Date, but not including payments
of principal and interest due and payable on the Mortgage Loans on or before the
Cut-off Date, together with the Mortgage Files relating to the Mortgage Loans,
(b) REO Property, (c) the Custodial Account and the Certificate Account and all
amounts deposited therein pursuant to the applicable provisions of this
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Agreement, (d) any insurance policies with respect to the Mortgage Loans and (e)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
REMIC I REALIZED LOSSES: For any Distribution Date, Realized Losses on the
Mortgage Loans for the prior calendar month shall be allocated as follows: The
interest portion of Realized Losses, if any, shall be allocated among the
classes of REMIC I Certificates pro-rata according to the interest accruing
thereon at the REMIC I Remittance Rate thereon to the extent of such interest
accruing thereon at the REMIC I Remittance Rate in reduction thereof. Any
interest Realized Losses in excess of the amount allocated pursuant to the
preceding sentence shall be treated as principal Realized Losses not
attributable to any specific Mortgage Loan and allocated pursuant to the
succeeding sentences. The principal Realized Losses shall be allocated (i) to
the Class [____], Class [____], Class [____] and Class [____] Certificates
pro-rata according to their respective principal balances, provided that such
allocation to each of the Class [____], Class [____] and Class [____]
Certificates shall not exceed their respective Class [____] Principal Reduction
Amounts for such Distribution Date, and (ii) any principal Realized Losses not
allocated to either the Class [____], Class [____], or Class [____] Certificates
pursuant to the proviso of clause (i) shall be allocated to the Class [____]
Certificates.
REMIC I REGULAR INTEREST: Any of the four separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I. Each REMIC I Regular Interest shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the preliminary statement hereto. The designations for
the respective REMIC I Regular Interests are set forth in the Preliminary
Statement hereto.
REMIC I REMITTANCE RATE: With respect to REMIC I Regular Interests [____]
and [____], the weighted average of Net Mortgage Rates on the then outstanding
Mortgage Loans and REO Properties, plus 0.70% per annum. With respect to REMIC I
Regular Interest [____], zero. With respect to REMIC I Regular Interest [____],
twice the weighted average of Net Mortgage Rates on the then outstanding
Mortgage Loans and REO Properties, plus 1.40% per annum.
REMIC II: The segregated pool of assets consisting of all of the REMIC I
Regular Interests, with respect to which a separate REMIC election is to be
made.
REMIC II REGULAR INTEREST: Any of the Class A Certificates and Class S
Certificates. The Class A Certificates shall accrue interest at the related
Certificate Rate in effect from time to time, minus the Insurer Premium Rate,
and shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to their initial Certificate
Principal Balance as set forth in the preliminary statement hereto. The Class S
Certificates shall accrue interest at the related Certificate Rate, and shall
not be entitled to any distributions of principal.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
REMICs, which appear at Section 860A through 860G of the Subchapter M of
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Chapter 1 of the Code and related provisions, and regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
REO PROPERTY: Any Mortgaged Property acquired by or in the name of the
Trustee for the benefit of the Certificateholders [and the Insurer] in
foreclosure or by deed-in-lieu of foreclosure.
REPLACEMENT MORTGAGE LOAN: A Mortgage Loan substituted by the Servicer or
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in an Officers' Certificate delivered to the Trustee, (i) have an
outstanding Principal Balance, after deduction of the principal portion of the
Monthly Payment due in the month of substitution (or in the case of a
substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate Principal Balance, after such deduction), not in excess of the
Principal Balance of the Deleted Mortgage Loan (the amount of any shortage to be
deposited by the Servicer or Seller, as the case may be, in the Certificate
Account in the month of substitution as set forth in Section 2.03 of this
Agreement); (ii) at the time of substitution have a Net Mortgage Rate equal to
or exceeding the Net Mortgage Rate of the Deleted Mortgage Loan; (iii) have a
Loan-to-Value Ratio no higher than the Loan-to-Value Ratio of the Deleted
Mortgage Loan; (iv) have a remaining term to maturity no greater than (and not
more than one year less than) the Deleted Mortgage Loan; (v) be of the same or
better credit quality classification as that of the Deleted Mortgage Loan; and
(vi) comply with each representation and warranty relating to the Mortgage Loans
set forth in Section 2.04 hereof.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any insurance
policy that is required to be maintained from time to time under this Agreement
in respect of such Mortgage Loan, including each standard hazard and, if
applicable, flood insurance policy.
RESPONSIBLE OFFICER: When used with respect to the Trustee, the Chairman or
Vice Chairman of the Board of Directors or Trustees, the Chairman or Vice
Chairman of the Executive or Standing Committee of the Board of Directors or
Trustees, the President, the Chairman of the Committee on Trust Matters, any
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant
Cashier, any Trust Officer or Assistant Trust Officer, the Controller and any
Assistant Controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
ROLLING THREE-MONTH DELINQUENCY PERCENTAGE: As of any Distribution Date,
the fraction, expressed as a percentage, equal to the average of the Delinquency
Percentage for each of the three (or one and two in the case of the first and
second Distribution Dates) immediately preceding Due Periods.
RULE 144A: Rule 144A under the 1933 Act, as in effect from time to time.
SCHEDULED FINAL DISTRIBUTION DATE: [__________, 20__].
SELLER: [_______________________] or its successor in interest.
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SERVICER: [_______________________] or any successor under the terms of
this Agreement.
SERVICER ADVANCE DATE: The date on which the Servicer is required to make a
Monthly Advance pursuant to Section 5.04 hereof.
SERVICER MORTGAGE FILE: All documents pertaining to a Mortgage Loan not
required to be included in the Trustee Mortgage File and held by the Servicer or
any Sub-Servicer.
SERVICING FEE: For each calendar month, as to each Mortgage Loan, (i) an
amount equal to one month's interest (or in the event of any payment of interest
which accompanies a Principal Prepayment in full made by the Mortgagor, interest
for the number of days covered by such payment of interest) at the applicable
Servicing Fee Rate on the Principal Balance of such Mortgage Loan immediately
preceding the Distribution Date occurring in such month and (ii) increased by
any late payment charges, assumption fees and other usual and customary fees
collected from the Mortgagor and by any net income on Eligible Investments held
in the Custodial Account.
SERVICING FEE RATE: [____]% per annum.
SERVICING OFFICER: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished to the Trustee [and the Insurer] on
the Delivery Date by the Servicer pursuant to this Agreement, as such list may
from time to time be amended.
STANDARD & POOR'S: Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, or its successor in interest.
SUB-SERVICER: Any other entity with respect to any Mortgage Loan under any
Sub-Servicing Agreement applicable to such Mortgage Loan and any successors and
assigns under such Sub-Servicing Agreement.
SUB-SERVICING AGREEMENT: Any servicing agreement between the Servicer and a
Sub-Servicer pursuant to which the Servicer delegates any of its servicing
responsibilities with respect to any of the Mortgage Loans.
TRANSFEREE AFFIDAVIT AND AGREEMENT: As defined in Section 6.02(g)(i)(B).
TRUST FUND: Collectively, the assets of REMIC I and REMIC II.
TRUSTEE: U.S. Bank National Association, a national banking association,
not in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders [and the Insurer] under this Agreement, and
any successor thereto, as provided herein.
TRUSTEE FEE: The fee payable to the Trustee on each Distribution Date for
its services as Trustee hereunder, in an amount equal to one-twelfth of the
Trustee Fee Rate
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multiplied by the Principal Balance of the Mortgage Loans immediately prior to
such Distribution Date.
TRUSTEE FEE RATE: [____]% per annum.
TRUSTEE MORTGAGE FILE: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Trustee Mortgage File pursuant to this Agreement.
UNCERTIFICATED BALANCE: The amount of any REMIC I Regular Interest
outstanding as of any date of determination. As of the Closing Date, the
Uncertificated Balance of each REMIC I Regular Interest shall equal the amount
set forth in the Preliminary Statement hereto as its initial Uncertificated
Balance. On each Distribution Date, the Uncertificated Balance of each REMIC I
Regular Interest shall be reduced by all distributions of principal made on such
REMIC I Regular Interest on such Distribution Date pursuant to Section 4.02 and,
if, and to the extent, necessary and appropriate, shall be further reduced on
such Distribution Date by Realized Losses as provided in Section 4.05. The
Uncertificated Balance of each REMIC I Regular Interest shall never be less than
zero.
UNCERTIFICATED INTEREST: With respect to any REMIC I Regular Interest for
any Distribution Date, one month's interest at the REMIC I Remittance Rate
applicable to such REMIC I Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance thereof immediately prior to such Distribution
Date. Uncertificated Interest in respect of any REMIC I Regular Interest [____],
[____], [____] or [____] shall accrue on the basis of a 360-day year consisting
of twelve 30-day months. Uncertificated Interest with respect to each
Distribution Date, as to any REMIC I Regular Interest, shall be reduced by any
interest shortfalls with respect to the Mortgage Loans to time. In addition,
Uncertificated Interest with respect to each Distribution Date, as to any REMIC
I Regular Interest shall be reduced by the interest portion of Realized Losses
allocable to such REMIC I Regular Interest, if any, pursuant to Section 4.05(b)
hereof.
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 or any political subdivision thereof, or an estate or trust whose
income from sources without the United States is includable 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.
VOTING RIGHTS: The portion of the aggregate voting rights of all the
Certificates evidenced by a Certificate. [___]% of all Voting Rights will be
allocated to the Class A Certificates in proportion to their Certificate
Principal Balances, [__]% of all Voting Rights will be allocated among the Class
S Certificates in proportion to their Percentage Interests and [__]% and [__]%
of all Voting Rights will be allocated to the Class R-I and Class R-II
Certificates, respectively.
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ARTICLE II
CONVEYANCE OF TRUST FUND;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 CONVEYANCE OF TRUST FUND.
The Depositor hereby sells, transfers, assigns, delivers, sets over
and otherwise conveys to the Trustee for the benefit of the Certificateholders
[[and the Insurer]], without recourse, the Depositor's right, title and interest
in and to (a) the Mortgage Loans listed in the Mortgage Loan Schedule, including
all interest and principal received or receivable by the Depositor on or with
respect to the Mortgage Loans after the Cut-off Date, but not including payments
of principal and interest due and payable on the Mortgage Loans on or before the
Cut-off Date, which Mortgage Loans the Depositor shall cause to be delivered to
the Trustee on or prior to the Delivery Date, together with the Trustee Mortgage
Files relating to the Mortgage Loans, (b) REO Property, (c) the Custodial
Account, the Certificate Account and all amounts deposited therein pursuant to
the applicable provisions of this Agreement, (d) any insurance policy with
respect to the Mortgage Loans and (e) all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing into cash or other liquid property.
The Seller hereby sells, transfers, assigns, delivers, sets over and
otherwise conveys to the Trustee for the benefit of the Insurer and
Certificateholders, without recourse, any and all right, title and interest of
the Seller, if any, in and to (a) the Mortgage Loans listed in the Mortgage Loan
Schedule, including all interest and principal received or receivable by the
Seller on or with respect to the Mortgage Loans after the Cut-off Date, but not
including payments of principal and interest due and payable on the Mortgage
Loans on or before the Cut-off Date, (b) REO Property, (c) the Custodial
Account, the Certificate Account and all amounts deposited therein pursuant to
the applicable provisions of this Agreement, (d) any insurance policy with
respect to the Mortgage Loans and (e) all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing into cash or other liquid property.
In connection with any such transfer and assignment, the Depositor
shall deliver to, and deposit with, the Trustee the following documents or
instruments with respect to each Mortgage Loan so assigned:
(i) the Mortgage Note, endorsed without recourse to the order of the Trustee,
with all intervening endorsements showing a complete chain of endorsement
from the originator to the last endorser, and if the Mortgage Note or
Mortgage or any other material document or instrument relating to the
Mortgage Loan has been signed on behalf of the Mortgagor by another person,
the original power of attorney or other instrument that authorized and
empowered such person to sign, or a copy of the original power of attorney
or other instrument certified by the relevant public recording office in
those instances in which the public recording office retains the original;
(ii) the original Mortgage, and any intervening assignment thereof, in each case
as recorded, with evidence of recording indicated thereon;
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(iii) an original assignment or assignments of Mortgage showing an unbroken
chain of title from the originator to the preceding assignee to the
Trustee with evidence of recording indicated thereon; and
(iv) the original copy of each assumption, modification, written assurance or
substitution agreement, if any, with respect to such Mortgage Loan, as
identified on the Mortgage Loan Schedule.
Notwithstanding the foregoing, in the event that in connection with
any Mortgage Loan the Depositor cannot deliver an original recorded counterpart
of any of the documents required to be delivered pursuant to clauses (ii) or
(iii) above with evidence of recording thereon concurrently with the execution
and delivery hereof, the Depositor shall deliver, or cause the Servicer to
deliver, to the Trustee a duplicate original or true copy of such document
certified by the Depositor or the Servicer or the applicable public recording
office to be a true and complete duplicate original or copy of the original
thereof submitted for recording, or a copy of the Mortgage certified by a title
insurance or escrow company or companies reasonably acceptable to the Insurer,
evidencing that such Mortgage or assignment of Mortgage has been delivered to
the appropriate public recording office for recordation. In the event that the
Depositor cannot deliver a duplicate original or true copy certified as stated
above of such document required to be delivered pursuant to clauses (ii) or
(iii) above, within 45 days of the Delivery Date, the Servicer shall purchase
the related Mortgage Loan at the Purchase Price therefor. The Depositor shall
promptly deliver, or cause the Servicer to deliver, to the Trustee (A) such
original document with evidence of recording indicated thereon or a photocopy of
such document certified by the appropriate county recorder's office to be a true
and complete copy of the original thereof, upon receipt thereof from the public
recording official or from the Servicer, and (B) upon discovery of any defect or
omission in the deliveries of any of items (ii) through (iv) above with respect
to any Mortgage Loan, a correct and complete document or instrument meeting the
requirements of such item or a certified copy thereof, certified by the relevant
recording office, but in no event shall any such delivery be made later than 90
days following the Delivery Date (unless such document has not been returned
from the relevant recording office at such time, in which case the Servicer
shall make such delivery within 270 days of the Delivery Date). From time to
time the Servicer may forward or cause to be forwarded to the Trustee for the
benefit of the Certificateholders [[and the Insurer]] additional original
documents evidencing an assumption or modification of a Mortgage Loan.
The Trustee shall promptly complete the endorsement of the Mortgage
Note referred to in (i) above and the assignment of Mortgage referred to in
(iii) above to the Trustee for the benefit of the Holders of the
[________________] Mortgage-Backed Pass-Through Certificates, Series 200_-____
and [________________________]. The Trustee on behalf of the Servicer shall
promptly record in the appropriate public office for real property records each
original assignment referred to in (iii) above with respect to each Mortgaged
Property, and the Trustee shall release any such assignment to the Depositor or
the Servicer, as applicable, for such purpose. The Depositor or the Servicer
shall promptly deliver to the Trustee each original assignment with evidence of
recording indicated thereon or a photocopy thereof certified by the appropriate
county recorder's office to be a true and complete copy of the original thereof,
upon receipt thereof from the public recording official. If any assignment is
returned unrecorded to the Depositor or the Servicer because of any defect
therein, the Depositor or the Servicer shall
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cure or correct such defect and cause such assignment to be recorded in
accordance with this paragraph and if such defect is not cured the Servicer
shall purchase the Mortgage Loan at the Purchase Price therefor.
SECTION 2.02 ACCEPTANCE BY TRUSTEE.
The Trustee will hold the documents referred to in Section 2.01 above
and the other documents constituting a part of the Trustee Mortgage Files
delivered to it in trust for the use and benefit of all present and future
Certificateholders [[and the Insurer]]. Upon execution and delivery of this
Agreement and within 45 days after the execution and delivery of this Agreement,
the Trustee shall ascertain whether all documents required to be delivered to it
pursuant to Section 2.01 hereof are in its possession, and shall deliver to the
Depositor, the Insurer and the Servicer a certification (upon execution and
delivery of this Agreement, the "Initial Certification" and within 45 days
thereof, the "Final Certification", respectively) in the forms set forth as
EXHIBITS E and F hereto to the effect that, as to each Mortgage Loan listed in
the Mortgage Loan Schedule: (a) all documents required to be delivered to the
Trustee pursuant to this Agreement are in its possession, (b) such documents
have been reviewed by it and have not been mutilated, damaged, defaced, torn or
otherwise physically altered, and such documents relate to such Mortgage Loan,
(c) based on its examination and only as to the foregoing documents, the
information set forth in items (i) through (vi) of the definition of Mortgage
Loan Schedule respecting such Mortgage Loan accurately reflects the information
contained in the documents in the Trustee Mortgage File and (d) each Mortgage
Note has been endorsed and each assignment of Mortgage has been delivered as
provided in Section 2.01 hereof. The Trustee shall deliver to the Depositor, the
Insurer and the Servicer a copy of such Final Certification. If, in the course
of such review, the Trustee finds any document or documents constituting a part
of a Mortgage File which do not meet the requirements of (a)-(d) above, the
Trustee shall promptly notify the Servicer, the Insurer and the Depositor in
writing, and request that the Servicer correct or cure such defect. The Trustee
shall promptly notify the Depositor in writing if any original assignment
referred to in clause (iii) above has not been received by it prior to
[__________, 200_]. In the event the Servicer or Depositor shall fail to cure
any document deficiency or defect reflected in the Final Certification or as
otherwise required under Section 2.01, it shall not be the obligation of the
Trustee hereunder to cure the same, and the Servicer shall purchase the Mortgage
Loan at the Purchase Price therefor.
The Depositor agrees that at any time and from time to time upon
written request of the Trustee or the Insurer, the Depositor shall promptly and
duly execute and deliver any and all such further documents and assurances, and
take such further actions as the Trustee reasonably may request in order to
obtain or more fully vest the benefits of the assignment intended hereunder (as
set forth hereinabove in Section 2.01 and hereinbelow in Section 2.03) and of
the rights and powers herein granted.
The Trustee shall retain possession and custody of each Trustee
Mortgage File in accordance with and subject to the terms and conditions set
forth herein.
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SECTION 2.03 REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE SERVICER AND SELLER.
[_______________], as Seller and Servicer, hereby represents and
warrants to, and covenants with, the Depositor, the Insurer and the Trustee
that, as of the date hereof:
(i) [___________] is a [____________], validly existing and in good standing
under the laws of [the United States of America] [__________] and is duly
authorized and qualified to transact any and all business contemplated by
this Agreement in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such State, to the extent necessary to ensure the enforceability of each
Mortgage Loan and the servicing of the Mortgage Loans in accordance with
the terms of this Agreement;
(ii) [___________] has the full corporate power and authority to service each
Mortgage Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of [___________]
the execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery thereof
by the Depositor and the Trustee, constitutes a legal, valid and binding
obligation of [___________], enforceable against [___________] in
accordance with its terms, except that (A) the enforceability thereof may
be limited to bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (B) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought;
(iii) the execution and delivery of this Agreement by [___________], the
servicing of the Mortgage Loans by [___________] hereunder, the
consummation of any other of the transactions herein contemplated, and the
fulfillment of or compliance with the terms hereof are in the ordinary
course of business of [___________] and will not (A) result in a material
breach of any term or provision of the charter or by-laws of [__________]
or (B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which [__________] is a party or
by which it may be bound, or any statute, order or regulation applicable
to [__________] of any court, regulatory body, administrative agency or
governmental body having jurisdiction over [__________]; and [__________]
is not a party to, bound by, or in breach or violation of any material
indenture or other material agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
it, which materially and adversely affects, or, to [__________]'s
knowledge would in the future materially and adversely affect, (1) the
ability of [__________] to perform its obligations under this Agreement or
(2) the business, operations, financial condition, properties or assets of
the Servicer taken as a whole;
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(iv) [__________] is, and will remain, subject to supervision and examination
by any state or federal authority as may be applicable and will remain in
good standing and qualified to do business where so required by applicable
law and is, and will remain an approved servicer of conventional mortgage
loans for FNMA or FHLMC;
(v) no litigation is pending or, to the best of [__________]'s knowledge,
threatened, against [__________] that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or the
ability of [__________] to service the Mortgage Loans or to perform any of
its other obligations hereunder in accordance with the terms hereof;
(vi) [__________] will at all times comply in the performance of its
obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy;
(vii) no written information, certificate of an officer, statement furnished in
writing or written report delivered to the Insurer, the Depositor, any
affiliate of the Depositor or the Trustee and prepared by [__________]
pursuant to this Agreement will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the information,
certificate, statement or report not misleading;
(viii)except for permits and similar authorizations required under the
securities or "blue sky" laws no consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by [__________] of, or compliance by [__________]
with, this Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, [__________] has obtained the same; and
(ix) [__________] will service the Mortgage Loans in accordance with the
standards set forth in this Agreement.
SECTION 2.04 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER AND THE
SELLER WITH RESPECT TO THE MORTGAGE LOANS.
The Seller and the Servicer hereby represents and warrants to, and
covenants with, the Depositor, the Insurer and the Trustee for the benefit of
the Certificateholders that, as to each Mortgage Loan, as of the Cut-off Date or
such other date specifically set forth herein, and with respect to
representation (i) listed below, as of the Delivery Date:
(i) The information set forth in the Mortgage Loan Schedule is complete, true
and correct.
(ii) All payments required to be made up to, but excluding, the Cut-off Date
for such Mortgage Loan under the terms of the Mortgage Note have been
made, except with respect to [___]% of the Mortgage Loans which are more
than 30 days but 60 days or less delinquent; [__________] has not advanced
funds, or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the
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Mortgaged Property subject to the Mortgage, directly or indirectly, for the
payment of any amount required by the Mortgage Loan.
(iii) To the best of the Servicer's knowledge, there are no delinquent taxes,
ground rents, water charges, sewer rents, assessments, insurance premiums,
leasehold payments, including assessments payable in future installments
or other outstanding charges affecting the related Mortgaged Property.
(iv) The terms of the Mortgage Note and the Mortgage have not been impaired,
waived, altered or modified in any respect, except by written instruments
which have been recorded, if necessary to protect the interests of the
Trustee, and which have been delivered to the Trustee or the Trustee's
designee, the substance of which waiver, alteration or modification has
been approved by the primary mortgage guaranty insurer, if any, and by the
title insurer, to the extent required by the related policy and is
reflected on the Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement approved by the primary mortgage insurer, if any, and title
insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage File and the terms of which are
reflected in the Mortgage Loan Schedule.
(v) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no
such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto.
(vi) All buildings upon the Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of extended coverage and
such other hazards as are customary in the area where the Mortgaged
Property is located. All such insurance policies contain a standard
mortgagee clause naming the Servicer, its successors and assigns as
mortgagee and all premiums thereon have been paid. If upon origination of
the Mortgage Loan, the Mortgaged Property was in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance has been made available) a
flood insurance policy meeting the requirements of the current guidelines
of the Federal Insurance Administration is in effect which policy conforms
to the requirements of FNMA and FHLMC. The Mortgage obligates the
Mortgagor thereunder to maintain all such insurance at Mortgagor's cost
and expense, and on the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to maintain such insurance at Mortgagor's cost and
expense and to seek reimbursement therefor from the Mortgagor.
(vii) Any and all requirements of any federal, state or local law including,
without limitation, environmental, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws
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applicable to the Mortgage Loan and the related Mortgaged Property have
been complied with.
(viii)The Mortgage has not been satisfied, canceled or subordinated, or
rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission.
(ix) The Mortgage is a valid, existing and enforceable first lien on the
Mortgaged Property, including all improvements on the Mortgaged Property
subject only to (A) the lien of current real property taxes and
assessments not yet due and payable, (B) covenants, conditions and
restrictions, rights of way, easements and other matters of the public
record as of the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in lender's title
insurance policy delivered to the originator of the Mortgage Loan and
which do not adversely affect the Appraised Value of the Mortgaged
Property, and (C) 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 or the use, enjoyment,
value or marketability of the related Mortgaged Property. Any security
agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a
valid, existing and enforceable first lien and first priority security
interest on the property described therein and the Seller has full right
to sell and assign the same to the Depositor. The Mortgaged Property was
not, as of the date of origination of the Mortgaged Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage.
(x) The Mortgage Note and the related Mortgage are genuine and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, or reorganization.
(xi) All parties to the Mortgage Note and the Mortgage had legal capacity to
enter into the Mortgage Loan and to execute and deliver the Mortgage Note
and the Mortgage, and the Mortgage Note and the Mortgage have been duly
and properly executed by such parties.
(xii) The proceeds of the Mortgage Loan have been fully disbursed and there is
no requirement for future advances thereunder and any and all requirements
as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan
and the recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage.
(xiii)The Mortgage Note and the Mortgage are not assigned or pledged, and
immediately prior to the sale of the Mortgage Loan to the Depositor the
Seller was the sole owner of record and holder thereof and with full right
to transfer and sell the
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Mortgage Loan to the Depositor free and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest and with full right and
authority subject to no interest or participation of, or agreement with,
any other party, to sell and assign each Mortgage Loan pursuant to the
Mortgage Loan Purchase Agreement.
(xiv) All parties which have had any interest in the Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (A) in compliance
with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (B) organized under
the laws of such state, or (C) qualified to do business in such state, or
(D) federal savings and loan associations or national banks having
principal offices in such state, or (E) not doing business in such state.
(xv) The Mortgage Loan is covered by an ALTA lender's title insurance policy
acceptable to FNMA or FHLMC, issued by a title insurer acceptable to FNMA
and FHLMC and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring (subject to the exceptions
contained in (ix)(A) and (B) above) the Seller, its successors and assigns
as to the first priority lien of the Mortgage in the original principal
amount of the Mortgage Loan. The original title policy and all riders
thereto are in the possession of the Servicer. Additionally, such lender's
title insurance policy affirmatively insures ingress and egress, and
against encroachments by or upon the Mortgaged Property or any interest
therein. The Seller is the sole insured of such lender's title insurance
policy, and such lender's title insurance policy is in full force and
effect and will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the Seller, has done, by act or omission,
anything which would impair the coverage of such lender's title insurance
policy.
(xvi) There is no default, breach, violation or event of acceleration existing
under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any default, breach, violation
or event of acceleration.
(xvii)There are no mechanics' or similar liens or claims which have been filed
for work, labor or material (and no rights are outstanding that under law
could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien
of the related Mortgage.
(xviii) All improvements which were considered in determining the Appraised
Value of the related Mortgaged Property lay wholly within the boundaries
and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property.
(xix) The Mortgage Loan was originated by the Seller or a subsidiary of the
Seller which is a FNMA-approved, FHLMC-approved or HUD-approved mortgage
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banker, or savings and loan association, a savings bank, a commercial bank
or similar banking institution which is supervised and examined by a
federal or state authority. Principal payments on the Mortgage Loan
commenced no more than sixty days after funds were disbursed in connection
with the Mortgage Loan. The Mortgage Note is payable on the [first] day of
each month in monthly installments of principal and interest, with interest
in arrears[, and requires Monthly Payments sufficient to amortize the
original principal balance of the Mortgage Loan over a term of 30 years,
except for fifteen Mortgage Loans with an amortization term and maturity of
40 years. No Mortgage Loans have provisions which will require negative
amortization. No Mortgage Loan requires a balloon payment at the end of its
term].
(xx) The origination practices used by the Seller and the collection practices
used by the Servicer with respect to each Mortgage Note and Mortgage have
been in all respects legal, proper, prudent and customary in the mortgage
origination and servicing business. With respect to escrow deposits and
escrow payments, if any, all such payments are in the possession of, or
under the control of, the Servicer and there exist no deficiencies in
connection therewith for which customary arrangements for repayment
thereof have not been made. No escrow deposits or escrow payments or other
charges or payments due the Seller have been capitalized under any
Mortgage or the related Mortgage Note.
(xxi) The Mortgaged Property is free of damage and waste and there is no
proceeding pending for the total or partial condemnation thereof.
(xxii)The Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (A) in the case of a Mortgage designated as a
deed of trust, by trustee's sale, and (B) otherwise by judicial
foreclosure. There is no other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage. The Mortgagor has
not notified the Servicer and the Servicer has no knowledge of any relief
requested or allowed to the Mortgagor under the Relief Act.
(xxiii) The Mortgage Loan was underwritten generally in accordance with the
Seller's underwriting standards in effect at the time the Mortgage Loan
was originated.
(xxiv)The Mortgage Note is not and has not been secured by any collateral
except the lien of the corresponding Mortgage and the security interest of
any applicable security agreement or chattel mortgage referred to in (ix)
above.
(xxv) The Mortgage File contains an appraisal of the related Mortgaged Property
signed prior to the approval of the Mortgage Loan application by a
qualified appraiser, duly appointed by the originator of the Mortgage
Loan, who had no interest, direct or indirect in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan.
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(xxvi)In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Depositor to the
trustee under the deed of trust, except, in connection with a trustee's
sale after default by the Mortgagor.
(xxvii) No Mortgage Loan contains provisions pursuant to which Monthly Payments
are (A) paid or partially paid with funds deposited in any separate account
established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, (B) paid by any source other than the Mortgagor or (C) contains
any other similar provisions which may constitute a "buydown" provision.
The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage
Loan does not have a shared appreciation or other contingent interest
feature.
(xxviii) The Seller does not expect, as to any particular Mortgage Loan included
in the Trust Fund, that such Mortgage Loan will become a defaulted
Mortgage Loan and that the related Mortgaged Property will be foreclosed
upon (or acquired by deed-in-lieu of foreclosure).
(xxix)No Mortgage Loan was made in connection with (A) the construction or
rehabilitation of a Mortgaged Property or (B) facilitating the trade-in or
exchange of a Mortgaged Property.
(xxx) The Seller has no knowledge of any circumstances or condition with respect
to the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's
credit standing that can reasonably be expected to cause the Mortgage Loan
to be an unacceptable investment, cause the Mortgage Loan to become
delinquent, or adversely affect the value of the Mortgage Loan.
(xxxi)Each such Mortgage Loan with a Loan-to-Value Ratio at origination in
excess of 80% is and will be subject to a Primary Mortgage Insurance
Policy, issued by a FNMA or FHLMC approved insurer, which insures that
portion of the Mortgage Loan over 75% of the Loan-to-Value Ratio. All
provisions of such Primary Mortgage Insurance Policy have been and are
being complied with, such policy is in full force and effect, and all
premiums due thereunder have been paid. Any Mortgage subject to any such
Primary Mortgage Insurance Policy obligates the Mortgagor thereunder to
maintain such insurance and to pay all premiums and charges in connection
therewith. The Mortgage Interest Rate for the Mortgage Loan is net of any
such insurance premium.
(xxxii) To the best of the Servicer's knowledge, the Mortgaged Property is
lawfully occupied under applicable law. All inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of
occupancy, have been made or obtained from the appropriate authorities.
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(xxxiii) No action has been taken or failed to be taken, no event has occurred
and no state of facts exists or has existed on or prior to the Cut-off
Date (whether or not known to the Seller on or prior to such date) which
has resulted or will result in an exclusion from, denial of, or defense
coverage under any private mortgage insurance (including, without
limitation, any exclusions, denials or defenses which would limit or
reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of
actions, representations, errors, omissions, negligence, or fraud of the
Seller, the related Mortgagor or any party involved in the application for
such coverage, including the appraisal, plans and specifications and other
exhibits or documents submitted therewith to the insurer under such
insurance policy, or for any other reason under such coverage, but not
including the failure of such insurer to pay by reason of such insurer's
breach of such insurance policy or such insurer's financial inability to
pay.
(xxxiv) The Assignment of Mortgage, is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged
Property is located.
(xxxv)Any future advances made to the Mortgagor prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having
consolidated principal amount is expressly insured as having first lien
priority by a title insurance policy, an endorsement to the policy
insuring the mortgagee's consolidated interest or by other title evidence
acceptable to FNMA and FHLMC. The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan.
(xxxvi) If the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimis planned unit development) such
condominium or planned unit development project meets FNMA or FHLMC
eligibility requirements.
(xxxvii) With respect to each Convertible Mortgage Loan, (x) the related
Mortgagor has the option to convert the interest rate borne by such
Mortgage Loan from an adjustable interest rate to a fixed interest rate
determined pursuant to the terms of the related Mortgage Note and (y) the
fixed interest rate to be borne by each such Convertible Mortgage Loan
upon the conversion of the interest rate on such Mortgage Loan is intended
to approximate a market rate of interest for newly originated mortgages at
the time of the conversion.
(xxxviii) Each Mortgage is a "qualified mortgage" for purposes of the REMIC
Provisions.
Upon the discovery by the Depositor, the Servicer, the Insurer or the
Trustee (or upon notice thereof in writing from a Certificateholder) of a breach
or breaches of any of the representations and warranties made in Section 2.04 in
respect of any Mortgage Loan, or any breach of a representation or warranty of
the Servicer set forth in Section 2.03, which breach or breaches, individually
or in the aggregate, materially and adversely affect the interests of the
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Certificateholders or the Insurer, the party discovering such breach shall give
prompt written notice to the other parties. The Trustee shall promptly notify
the Seller and Servicer of such breach and request that the Seller or Servicer,
as the case may be, cure such breach within 60 days from the date of such
notice, and if the Seller or Servicer does not cure such breach in all material
respects, the Seller or Servicer, as the case may be, shall either (i)
substitute a Replacement Mortgage Loan or Loans for the related Mortgage Loan,
which substitution must be made as specified in this Section or (ii) purchase
such Mortgage Loan held for the benefit of the Certificateholders [[and the
Insurer]] from the Trustee at the Purchase Price therefor.
The Seller or Servicer shall not have any right to substitute a
Replacement Mortgage Loan or Loans for the affected Mortgage Loan more than
three months after the Delivery Date (or more than two years after the Delivery
Date if the related Mortgage Loan is a "defective obligation" within the meaning
of Section 860G(a)(4)(B)(ii) of the Code), and any substitution must be
accompanied by an Officers' Certificate delivered to the Trustee [[and the
Insurer]], certifying that such Replacement Mortgage Loan conforms to the
requirements of this Agreement, and by an Opinion of Counsel to the effect that
such substitution will not cause either REMIC I or REMIC II to fail to qualify
as a REMIC and will not result in a prohibited transaction tax, which Opinion of
Counsel shall be paid for by the Seller or Servicer, as the case may be.
Notwithstanding the foregoing, if any such breach would cause a Mortgage Loan to
be other than a "qualified mortgage loan" as described in Section 860G(a)(3) of
the Code, any substitution shall occur within 90 days of the discovery of the
breach.
As to any Replacement Mortgage Loan or Loans, the Seller or Servicer
shall deliver to the Trustee for such Replacement Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such
other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed to the Trustee for the benefit of the Insurer and the
Holders of the [__________] Mortgage-Backed Pass-Through Certificates, Series
200_-____. No substitution will be made in any calendar month after the
Determination Date for such month. Monthly payments due with respect to
Replacement Mortgage Loans in the month of substitution shall not be part of the
Trust Fund and will be remitted by the Servicer or Seller to the Depositor on
the next succeeding Distribution Date. For the month of substitution,
distributions to Certificateholders will include the Monthly Payment due on such
Deleted Mortgage Loan for such month and thereafter the Seller or Servicer, as
the case may be, shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan.
Upon such substitution, the Servicer shall amend or cause to be
amended the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Replacement Mortgage Loan or Loans.
Upon such substitution, the Replacement Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all respects and the Seller shall be deemed to
have made, as of the date of substitution, with respect to the Replacement
Mortgage Loan or Loans, the representations and warranties pertaining to the
Mortgage Loans contained in Section 2.04 hereof. Upon receipt of the Trustee
Mortgage File pertaining to any Replacement Mortgage Loans, the Trustee shall
release the Trustee Mortgage File held for the benefit of the Certificateholders
[[and the Insurer]] relating to such Deleted Mortgage Loan to the Seller or
Servicer as applicable and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
vest title (to the extent that such title was transferred to the Trustee) in the
Seller or Servicer as
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applicable, or its designee to any Deleted Mortgage Loan substituted for
pursuant to this Section 2.04.
In any month in which the Seller or Servicer substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (if any) by which the aggregate Principal Balance of
all such Replacement Mortgage Loans as of the date of substitution is less than
the aggregate Principal Balance of all such Deleted Mortgage Loans (in each case
after application of scheduled principal portion of the monthly payments
received in the month of substitution). The amount of such shortage shall be
deposited into the Custodial Account by the Seller or Servicer in the month of
substitution pursuant to Section 3.07, without any reimbursement thereof. The
Servicer shall give notice in writing to the Trustee of such event, which notice
shall be accompanied by an Officers' Certificate as to the calculation of such
shortage.
In the event that the Seller or Servicer shall have repurchased a
Mortgage Loan, upon receipt by the Trustee of written notification of the
deposit of the Purchase Price, the Trustee shall release the related Trustee
Mortgage File held for the benefit of the Certificateholders [[and the Insurer]]
to the Seller or Servicer as applicable and the Trustee shall execute and
deliver the related instruments of transfer or assignment, in each case without
recourse, as shall be necessary to transfer title (to the extent that such title
was transferred to the Trustee) from the Trustee for the benefit of the
Certificateholders [[and the Insurer]] and vest title in the Seller or Servicer,
or the designee thereof, as the case may be, to any Mortgage Loan purchased
pursuant to this Section 2.04. It is understood and agreed that the obligation
under this Agreement of any Person to repurchase or substitute any Mortgage Loan
as to which such breach has occurred and is continuing shall constitute the sole
and exclusive remedy respecting such breach available to Certificateholders or
the Trustee on their behalf (except for the Insurer's rights under the Insurance
Agreement).
SECTION 2.05 ISSUANCE OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Mortgage Loans
together with the assignment to it of all other assets included in the Trust
Fund, receipt of which is hereby acknowledged. Concurrently with such assignment
and delivery and in exchange therefor, the Trustee, pursuant to the written
request of the Depositor executed by an officer of the Depositor, has executed
the Class A, Class S and Class R Certificates and caused them to be
authenticated and delivered to or upon the order of the Depositor in authorized
denominations which evidence ownership of the Trust Fund. The rights of the
Holders of such Certificates to receive distributions from the Trust Fund and
all ownership interests of the Holders of the Class A, Class S and Class R
Certificates in such distributions shall be as set forth in this Agreement.
SECTION 2.06 REMIC PROVISIONS.
(a) [The Depositor hereby elects and authorizes the Trustee to treat each of
REMIC I and REMIC II as a REMIC under the Code and, if necessary, under
applicable state law. Each such election will be made on Form 1066 or other
appropriate federal tax or information return (including Form 8811) or any
appropriate state return (x) for the taxable year ending on the last day of the
calendar year in which the Certificates are issued and (y) for the
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taxable year ending on the last day of the calendar year in which Certificates
are first sold by [__________] to a third party. The Delivery Date is hereby
designated as the "startup day" of each of REMIC I and REMIC II within the
meaning of Section 860G(a)(9) of the Code. The "regular interests" (within the
meaning of Section 860G of the Code) in REMIC I shall consist of the REMIC I
Regular Interests and the "residual interest" in REMIC I shall consist of the
Class R-I Certificates. The "regular interests" (within the meaning of Section
860G of the Code) in REMIC II shall consist of the Class A and Class S
Certificates and the "residual interest" in REMIC II shall consist of the Class
R-II Certificates. The Depositor and the Trustee shall not permit the creation
of any "interests" (within the meaning of Section 860G of the Code) in REMIC I
or REMIC II other than the REMIC I Regular Interests and Class R-I Certificates
and the Class A Certificates, Class S Certificates and Class R-II Certificates,
respectively.
(b) [__________] on behalf of the Holders of the Class R-I Certificates and
Class R-II Certificates, shall act as agent for the Class R-I Certificateholder
and Class R-II Certificateholder as the "tax matters person" (within the meaning
of the REMIC Provisions) for REMIC I and REMIC II, respectively, in the manner
provided under Treasury regulations section 1.860F-4(d) and temporary Treasury
regulations section 301.6231(a)(7)-1T. By its acceptance of a Class R
Certificate, each Holder thereof shall have agreed to such appointment and shall
have consented to the appointment of the Trustee as its agent to act on behalf
of REMIC I and REMIC II pursuant to the specific duties outlined herein.
(c) A Holder of the Class R-I or Class R-II Certificates, by the purchase
of such Certificates, shall be deemed to have agreed to timely pay, upon demand
by the Trustee, the amount of any minimum California state franchise taxes due
with respect to REMIC I or REMIC II, respectively, under Sections 23151(a) and
23153(a) of the California Revenue and Taxation Code. Notwithstanding the
foregoing, the Trustee shall be authorized to retain the amount of such tax from
amounts otherwise distributable to such Holder in the event such Holder does not
promptly pay such amount upon demand by the Trustee. In the event that any other
federal, state or local tax is imposed, including without limitation taxes
imposed on a "prohibited transaction" of a REMIC as defined in Section 860F of
the Code, such tax shall be charged against amounts otherwise available for
distribution to the applicable Holder of a Class R Certificate and then against
amounts otherwise available for distribution to the Holders of Regular
Certificates in accordance with the provisions set forth in Sections 4.02 and
4.03, respectively. The Trustee shall promptly deposit in the Certificate
Account any amount of "prohibited transaction" tax that results from a breach of
the Trustee's duties under this Agreement. The Servicer shall promptly deposit
in the Certificate Account any amount of "prohibited transaction" tax that
results from a breach of the Servicer's duties under this Agreement.
(d) The Trustee shall act as attorney-in-fact and as agent on behalf of the
tax matters person of REMIC I and REMIC II and in such capacity the Trustee
shall: (i) prepare, sign and file, or cause to be prepared, signed and filed,
federal and state tax returns using a calendar year as the taxable year for
REMIC I and REMIC II when and as required by the REMIC Provisions and other
applicable federal income tax laws as the direct representative of REMIC I and
REMIC II in compliance with the Code and shall provide copies of such returns as
required by the Code; (ii) make an election, on behalf of REMIC I and REMIC II,
to be treated as a REMIC on the federal tax return of such REMIC for its first
taxable year, in accordance with the REMIC Provisions; and (iii) prepare and
forward, or cause to be prepared and
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forwarded, to the Certificateholders and to any governmental taxing authority
all information reports as and when required to be provided to them in
accordance with the REMIC Provisions. The expenses of preparing and filing such
returns shall be borne by the Trustee. The Depositor and Servicer shall provide
on a prompt and timely basis to the Trustee or its designee such information
with respect to REMIC I and REMIC II as is in their possession and reasonably
required or requested by the Trustee to enable it to perform its obligations
under this subsection.
In its capacity as attorney-in-fact and as agent on behalf of the tax
matters person, [__________] shall also: (A) act on behalf of REMIC I and REMIC
II in relation to any tax matter or controversy involving the Trust Fund, (B)
represent the Trust Fund in any administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority with respect
thereto and (C) cause to be paid solely from the sources provided herein the
amount of any taxes imposed on REMIC I or REMIC II when and as the same shall be
due and payable (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings).
(e) The Trustee shall provide (i) to any transferor of a Class R
Certificate such information as is necessary for the application of any tax
relating to the transfer of a Class R Certificate to any Person who is not a
permitted transferee, (ii) to the Trustee and the Trustee shall forward to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of each of REMIC I and REMIC II.
(f) The Trustee, the Depositor and the Holder of the Class R Certificates
shall take any action or cause the Trust Fund to take any action necessary to
create or maintain the status of each of REMIC I and REMIC II as a REMIC under
the REMIC Provisions and shall assist each other as necessary to create or
maintain such status. Neither the Trustee nor the Holder of the Class R
Certificates shall take any action, cause the Trust Fund to take any action or
fail to take (or fail to cause the Trust Fund to take) any action that, under
the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of either REMIC I or REMIC II as a REMIC or (ii) result in
the imposition of a tax upon either REMIC I or REMIC II (including, but not
limited to, the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth in Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
has received an Opinion of Counsel (at the expense of the party seeking to take
such action) to the effect that the contemplated action will not endanger such
status or result in the imposition of such a tax.
The Trustee shall not take or fail to take any action (whether or not
authorized hereunder) as to which the Servicer or Depositor has advised it in
writing that it has received an Opinion of Counsel to the effect that an Adverse
REMIC Event could occur with respect to such action. In addition, prior to
taking any action with respect to REMIC I or REMIC II or their assets, or
causing REMIC I and REMIC II to take any action, which is not expressly
permitted under the terms of this Agreement, the Trustee will consult with the
Servicer and Depositor or
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their designees, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to REMIC I or REMIC II, and the
Trustee shall not take any such action or cause REMIC I or REMIC II to take any
such action as to which the Servicer or Depositor has advised it in writing that
an Adverse REMIC Event could occur.
In addition, prior to taking any action with respect to either REMIC
I or REMIC II or the assets therein, or causing either REMIC I or REMIC II to
take any action, which is not expressly permitted under the terms of this
Agreement, the Holder of the Class R Certificates will consult with the Trustee
or its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to either REMIC I or REMIC II, and no
such Person shall take any action or cause the Trust Fund to take any such
action as to which the Trustee has advised it in writing that an Adverse REMIC
Event could occur. The Trustee may consult with counsel to make such written
advice, and the cost of same shall be borne by the party seeking to take action
not permitted by this Agreement.
At all times as may be required by the Code, the Servicer will to the
extent within its control and the scope of its duties more specifically set
forth herein, maintain substantially all of the assets of REMIC I and REMIC II
as "qualified mortgages" as defined in Section 860G(a)(3) of the Code and
"permitted investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of
REMIC I or REMIC II, as defined in Section 860F(a)(2) of the Code, on "net
income from foreclosure property" of REMIC I or REMIC II, as defined in Section
860G(c) of the Code, on any contributions to REMIC I or REMIC II after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Servicer, if such tax arises out of or
results from a breach by the Servicer of any of its obligations under this
Agreement or if the Servicer has in its sole discretion determined to indemnify
the Trust Fund against such tax, (ii) to the Trustee, if such tax arises out of
or results from a breach by the Trustee of any of its obligations under this
Article II, or (iii) otherwise against amounts on deposit in the Custodial
Account as provided by Section 3.09 and on the Distribution Date(s) following
such reimbursement the aggregate of such taxes shall be allocated in reduction
of the Interest Distribution Amount on each Class entitled thereto in the same
manner as if such taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Servicer shall, for federal income tax purposes,
maintain books and records with respect to REMIC I and REMIC II on a calendar
year and on an accrual basis or as otherwise may be required by the REMIC
Provisions.
(i) Following the Startup Day, neither the Servicer nor the Trustee shall
accept any contributions of assets to REMIC I or REMIC II unless (subject to
2.06(f)) the Servicer and the Trustee shall have received an Opinion of Counsel
(at the expense of the party seeking to make such contribution) to the effect
that the inclusion of such assets in REMIC I or REMIC II will not cause either
REMIC I or REMIC II to fail to qualify as a REMIC at any time that any
Certificates are outstanding, or subject REMIC I or REMIC II to any tax under
the REMIC Provisions or other applicable provisions of federal, state and local
law or ordinances.
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(j) Neither the Servicer nor the Trustee shall (subject to Section 2.06(f))
enter into any arrangement by which REMIC I or REMIC II will receive a fee or
other compensation for services nor permit either such REMIC to receive any
income from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.
(k) Within 30 days after the Closing Date, the Trustee shall prepare and
file with the Internal Revenue Service Form 8811, "Information Return for Real
Estate Mortgage Investment Conduits (REMIC) and Issuers of Collateralized Debt
Obligations" for REMIC I and REMIC II.
(l) Neither the Trustee nor the Servicer shall sell, dispose of or
substitute for any of the Mortgage Loans (except in connection with (i) the
default, imminent default or foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of REMIC I or REMIC II, (iii) the
termination of REMIC I or REMIC II pursuant to Article X of this Agreement or
(iv) a purchase of Mortgage Loans pursuant to Article II or III of this
Agreement) nor acquire any assets for REMIC I or REMIC II, nor sell or dispose
of any investments in the Custodial Account or the Certificate Account for gain
nor accept any contributions to REMIC I or REMIC II after the Closing Date (a)
unless it has received an Opinion of Counsel that such sale, disposition,
substitution or acquisition will not affect adversely the status of REMIC I and
REMIC II as REMICs or (b) unless the Servicer has determined in its sole
discretion to indemnify the Trust Fund against such tax.
(m) In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided to the Trustee,
within ten days after the Delivery Date, all information or data that the
Trustee determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans and the Trustee shall be entitled to rely upon any and all
such information and data in the performance of its duties set forth herein.
Thereafter, the Servicer shall provide, promptly upon request therefor, any such
additional information or data that the Trustee may from time to time reasonably
request in order to enable the Trustee to perform its duties as set forth herein
and the Trustee shall be entitled to rely upon any and all such information and
data in the performance of its duties set forth herein. The Depositor shall
indemnify the Trustee and hold its harmless for any loss, liability, damage,
claim or expense of the Trustee arising from any failure of the Depositor to
provide, or to cause to be provided, accurate information or data to the Trustee
on a timely basis. The Servicer shall indemnify the Trustee and hold it harmless
for any loss, liability, damage, claim or expense of the Trustee arising from
any failure of the Servicer to provide, or to cause to be provided, accurate
information or data to the Trustee on a timely basis. The indemnification
provisions hereunder shall survive the termination of this Agreement and shall
extend to any co-trustee appointed pursuant to this Agreement.]
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01 SERVICING STANDARD.
For and on behalf of the Trustee, the Insurer and the
Certificateholders, the Servicer shall service and administer the Mortgage Loans
in accordance with prudent mortgage loan servicing standards and procedures
generally accepted in the mortgage banking industry and generally in a manner
consistent with FNMA guidelines except as otherwise expressly provided in this
Agreement. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through any
Sub-Servicer as provided in Section 3.02 hereof, to do or cause to be done any
and all things that it may deem necessary or desirable in connection with such
servicing and administration, including but not limited to, the power and
authority, subject to the terms hereof (a) to execute and deliver, on behalf of
the Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents (including, without limitation, estoppel
certificates), (b) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement), (c) to collect any Insurance Proceeds and
Liquidation Proceeds, (d) to consent to any subordinate financings to be secured
by any Mortgaged Property to the extent that such consent is required pursuant
to the terms of the related Mortgage, (e) to consent to the application of any
proceeds of insurance policies or condemnation awards to the restoration of the
applicable Mortgaged Property or otherwise, and (f) subject to the provisions of
Section 3.07 and 3.13, to effectuate foreclosure or other conversion of the
ownership of the Mortgage Property securing any Mortgage Loan; PROVIDED,
HOWEVER, that the Servicer shall take no action that is materially inconsistent
with or materially prejudices the interest of the Trustee, the Insurer or the
Certificateholders in any Mortgage Loan or the rights and interest of the
Depositor, the Insurer, the Trustee and the Certificateholders under the terms
of this Agreement unless such action is specifically called for by the terms
hereof.
Without limiting the generality of the foregoing, but subject to the
terms hereof, the Servicer, in its own name or in the name of the Depositor and
the Trustee, is hereby authorized and empowered by the Depositor and the
Trustee, when the Servicer believes it appropriate in its best judgment, to
execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of modification,
satisfaction, cancellation or assignment, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Servicer shall promptly notify the Trustee of any such
execution and delivery. The Depositor and the Trustee for the benefit of the
Certificateholders shall furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans.
In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the timely payment of taxes and assessments on each
Mortgaged Property or any related unpaid insurance premiums that are not timely
paid by the Mortgagors prior to any such time as a Mortgage Loan
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is in foreclosure; PROVIDED, HOWEVER, that the Servicer shall be required to
advance only to the extent that such advances, in the good faith judgment of the
Servicer, will be recoverable by the Servicer out of Insurance Proceeds,
Liquidation Proceeds (net of Liquidation Expenses) or otherwise; and PROVIDED
FURTHER, that such payments shall be advanced when the tax, premium or other
cost for which such payment is intended is due. Any such advances shall be
reimbursable in the first instance from related collections from the related
Mortgagors pursuant to Section 3.07 hereof, and further as Liquidation Expenses
as provided in Section 3.13 hereof and may be withdrawn from the Custodial
Account pursuant to Section 3.09 hereof. All costs incurred by the Servicer or
by the related Sub-Servicer in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Principal Balance under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loans so permit.
Notwithstanding anything in this Agreement to the contrary, the
Servicer shall not (unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Servicer, imminent)
permit any modification with respect to any Mortgage Loan that would change the
Net Mortgage Rate or, reduce or increase the principal balance (except for
reductions resulting from actual payments of principal), except for conversions
to a fixed rate in accordance with the terms of the Mortgage Loan.
SECTION 3.02 ENFORCEMENT OF THE OBLIGATIONS OF SUB-SERVICERS.
(a) For purposes of this Agreement, the Servicer shall be deemed to have
received the payments on the Mortgage Loans referred to in Sections 3.07 and
3.08 hereof when the related Sub-Servicer has received such payments and shall
remain obligated to deposit such payments in accordance with Sections 3.07 and
3.08 hereof, regardless of whether such payments are remitted by the
Sub-Servicer to the Servicer. The Servicer and the related Sub-Servicer may
enter into amendments to any applicable Sub-Servicing Agreement; PROVIDED,
HOWEVER, that any such amendments shall be consistent with and shall not violate
the provisions of this Agreement; and PROVIDED FURTHER, that the substance of
any such material amendment or material change shall be transmitted promptly to
the Depositor, the Trustee, the Insurer and the Rating Agencies.
(b) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Depositor, the Trustee, the Insurer and the Certificateholders,
shall supervise, administer, monitor and oversee the servicing of the Mortgage
Loans that are not serviced by it directly, and shall enforce the obligations of
each Sub-Servicer under the related Sub-Servicing Agreement. Such enforcement
shall include, without limitation, the legal prosecution of claims, termination
of Sub-Servicing Agreements, as appropriate, and the pursuit of other
appropriate remedies, and shall be in such form and carried out to such an
extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer
shall pay the costs of such enforcement at its own expense, but shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement only to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys fees against the party against whom such
enforcement is directed. The Servicer shall not waive any event of default by a
Sub-Servicer
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under a Sub-Servicing Agreement which is a failure to remit any payment required
to be made by such Sub-Servicer that would result in an Event of Default under
this Agreement.
(c) During the term of this Agreement, the Servicer shall consult fully
with each of the Sub-Servicers as may be necessary from time to time to perform
and carry out the Servicer's obligations hereunder and receive, review and
evaluate all reports, information and other data that are provided to the
Servicer by each Sub-Servicer and otherwise exercise reasonable efforts to cause
each Sub-Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by it under its Sub-Servicing Agreement.
If any Sub-Servicer materially breaches or fails to perform or observe any
material obligations or conditions of its Sub-Servicing Agreement, the Servicer
shall promptly deliver to the Depositor, the Insurer and to the Trustee an
Officers' Certificate certifying that such Sub-Servicer is in default and
describing the events and circumstances giving rise to the default and what
action (if any) has been, or is to be, taken by the Sub-Servicer to cure the
default and setting forth the action to be taken by the Servicer.
SECTION 3.03 TERMINATION OF THE RIGHTS OF SUB-SERVICERS.
If the Servicer terminates the rights of a Sub-Servicer under any
Sub-Servicing Agreement, the Servicer shall service the Mortgage Loans directly
pursuant to and in accordance with the terms of this Agreement, or at the
Servicer's election, enter into a substitute servicing agreement with another
mortgage loan servicing company reasonably acceptable to the Trustee and the
Servicer under which such mortgage loan servicing company shall assume, satisfy,
perform and carry out all liabilities, duties, responsibilities and obligations
that are to be, or otherwise were to have been, satisfied, performed and carried
out by the terminated Sub-Servicer, regardless of whether such liabilities,
duties, responsibilities or obligations shall have accrued before or after the
termination of the rights of such Sub-Servicer; PROVIDED, HOWEVER, that any such
substitute servicer and any such substitute servicing shall satisfy the
requirements of Sections 3.01 and 3.02. If the Servicer does not elect to enter
into a substitute servicing agreement with a successor servicer, the Servicer
shall nevertheless service the Mortgage Loans directly pursuant to and in
accordance with the terms of this Agreement, until a substitute Sub-Servicer has
been appointed and designated and a substitute servicing agreement has been
entered into by the Servicer and such substitute Sub-Servicer. The Servicer
shall give notice to the Trustee, the Insurer and the Rating Agencies of any
termination of a Sub-Servicer and any appointment or designation of a substitute
Sub-Servicer.
SECTION 3.04 LIABILITY OF THE SERVICER.
Notwithstanding the provisions of any Sub-Servicing Agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Servicer or a Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Servicer shall remain obligated and liable to the
Depositor, the Trustee, the Insurer and the Certificateholders for the servicing
and administering of the Mortgage Loans included in the Trust Fund in accordance
with (and subject to the limitations contained within) the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Servicer alone
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were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into any agreement with the Depositor or a Sub-Servicer for
indemnification of the Servicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
SECTION 3.05 RIGHTS OF THE DEPOSITOR AND THE TRUSTEE IN RESPECT OF THE SERVICER.
The Servicer shall afford the Depositor, the Insurer and the Trustee,
without charge but only upon reasonable notice and during normal business hours,
access to all records and documentation in the Servicer's possession regarding
the Mortgage Loans and to all accounts, insurance policies and other matters in
the Servicer's possession relating to this Agreement and access to officers of
the Servicer responsible for its obligations hereunder. The Depositor may, but
is not obligated to, enforce the obligations of the Servicer hereunder. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Servicer and is not obligated to supervise the performance
of the Servicer hereunder or otherwise.
SECTION 3.06 TRUSTEE TO ACT AS SERVICER.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee
shall thereupon assume all of the rights and obligations of the Servicer
hereunder arising thereafter (except that the Trustee shall not be liable for
losses of the Servicer pursuant to Section 3.07 hereof, obligated to make
Monthly Advances if prohibited by applicable law, nor to effectuate repurchases
or substitutions of Mortgage Loans hereunder as substitute Servicer, including
pursuant to Section 2.04 hereof and except that the Trustee makes no
representations and warranties hereunder, including pursuant to Section 2.04
hereof). If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee (or any other
successor servicer) shall succeed to any rights and obligations of the Servicer
under any Sub-Servicing Agreement and shall be deemed to have assumed the
Servicer's interest therein; PROVIDED, HOWEVER, that the Servicer shall not
thereby be relieved of any liability or obligations under this Agreement, any
Sub-Servicing or substitute servicing agreement arising prior to the date of
such succession.
The Servicer shall, upon request of the Trustee, but at the expense
of the Servicer, deliver to the assuming party all documents and records
relating to the Mortgage Loans then being serviced thereunder and an accounting
of amounts collected held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of servicing to the assuming party.
SECTION 3.07 COLLECTION OF MORTGAGE LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans and shall, to
the extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows with respect to mortgage loans comparable to
the Mortgage Loans held in its own portfolio and serviced by the Servicer.
Consistent with the foregoing, the Servicer may in its discretion (a) waive any
late payment charge or any prepayment charge or penalty interest in connection
with the prepayment of a Mortgage Loan and (b) only upon determining that the
coverage of such Mortgage Loan by
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any related Primary Mortgage Insurance Policy will not be affected, extend the
due dates for payments due on a Mortgage Note for a period not greater than 270
days, but in no event beyond the maturity date of any Mortgage Loan. In the
event of any such arrangement described in clause (b) of the preceding sentence,
the Servicer shall continue to make timely Monthly Advances on the related
Mortgage Loan, pursuant to and in accordance with Section 5.01 of this Agreement
(but subject to any limitations contained therein), during the scheduled period
in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements.
The Servicer shall establish and maintain, in its name on behalf of
the Certificateholders [and the Insurer], the Custodial Account. The Servicer
shall deposit into the Custodial Account within two Business Days of receipt by
the Servicer, or receipt from the Sub-Servicers except as otherwise specifically
provided herein, the following payments and collections received or made by it
subsequent to the Cut-off Date (other than in respect of principal of and
interest and any other payments on the Mortgage Loans due on or before the
Cut-off Date):
(i) all payments on account of principal, including Principal Prepayments, on
the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Insurance Proceeds and Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or released
to the Mortgagor in accordance with the Servicer's normal servicing
procedures, net of Liquidation Expenses, unpaid servicing compensation and
unreimbursed Monthly Advances;
(iv) all Monthly Advances made by the Servicer pursuant to Section 5.01 hereof;
(v) any amount of any losses required to be deposited by the Servicer pursuant
to the second succeeding paragraph of this Section 3.07 in connection with
any losses on Eligible Investments;
(vi) any amounts required to be deposited by the Servicer pursuant to Section
3.11 hereof;
(vii) all proceeds of any purchase by the Seller or the Servicer, as the case
may be, of any Mortgage Loans or property acquired in respect of the
Mortgage Loans pursuant to Sections 2.01, 2.02, 2.04, 3.12, 3.21 or 10.01
hereof and all amounts required to be deposited in connection with the
substitution of Replacement Mortgage Loans pursuant to Sections 2.01, 2.02
or 2.04 hereof; and
(viii)any other amounts required to be deposited in the Custodial Account
pursuant to this Agreement including, without limitation, the amounts
required to be deposited therein pursuant to Section 3.13 hereof.
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The foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment penalties, fees or
premiums, late payment charges, assumption fees and any excess interest charges
payable by the Mortgagor by virtue of any default or other non-compliance by the
Mortgagor with the terms of the Mortgage or any other instrument or document
executed in connection therewith or otherwise, if collected, need not be
remitted or deposited into the Custodial Account by the Servicer. In the event
that the Servicer shall remit or deposit any amount not required to be remitted
or deposited and not otherwise subject to withdrawal pursuant to Section 3.09
hereof, it may at any time withdraw such amount from the Custodial Account on
the following Distribution Date, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officers'
Certificate to the Trustee which describes the amounts deposited in error in the
Custodial Account. All funds deposited in the Custodial Account shall be held by
the Servicer in trust for the Certificateholders [and the Insurer] until
disbursed in accordance with this Agreement or withdrawn in accordance with
Section 3.09. In no event shall the Trustee incur liability for withdrawals from
the Custodial Account at the direction of the Servicer.
The Servicer shall invest the funds in the Custodial Account in
Eligible Investments, which shall mature not later than the second Business Day
preceding the Distribution Date following the date of such investment (except
that if such Eligible Investment is an obligation of the institution that
maintains the Custodial Account, then such Eligible Investment shall mature not
later than such Distribution Date). All such Eligible Investments shall be made
in the name of the Trustee for the benefit of the Certificateholders [[and the
Insurer]] (in its capacity as such) or its nominee. All income and gain net of
any losses realized from any such investment shall be for the benefit of the
Servicer and shall be subject to withdrawal at its direction from time to time.
The amount of any losses net of any gains not paid to the Servicer incurred in
respect of any such investments shall be remitted to the Trustee or deposited in
the Custodial Account out of the Servicer's own funds promptly following the
date that same are realized.
The Servicer shall promptly give notice to the Trustee, the Rating
Agencies, the Insurer and the Depositor of the location of the Custodial Account
and of any change thereof.
SECTION 3.08 COLLECTION OF TAXES, ASSESSMENTS AND
SIMILAR ITEMS; ESCROW ACCOUNTS.
In addition to the Custodial Account, the Servicer shall establish
and maintain one or more custodial accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments and hazard insurance
premiums or comparable items for the account of the Mortgagors. Escrow Accounts
shall be Eligible Accounts.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums or Primary Mortgage Insurance Policy premiums, condominium or PUD
association dues, or comparable items, to reimburse the Servicer pursuant to
Sections 3.10 hereof (with respect to the Primary Mortgage Insurance Policy) and
3.08 hereof (with respect to taxes and assessments) and 3.11
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hereof (with respect to hazard insurance), to refund to any Mortgagors any sums
as may be determined to be overages, to pay interest, if required, to Mortgagors
on balances in the Escrow Account or to clear and terminate the Escrow Account
at the termination of this Agreement in accordance with Section 10.01 hereof. As
part of its servicing duties, the Servicer shall, and the Sub-Servicers shall,
pursuant to any Sub-Servicing Agreement, be required to, pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
The Servicer shall, with respect to each Mortgage Loan, to the extent
any related Sub-Servicer does not do so, advance the payments referred to in the
preceding paragraph that are not timely paid by the Mortgagors; PROVIDED,
HOWEVER, that the Servicer shall be required to so advance only to the extent
that such advances, in the good faith judgment of the Servicer, will be
recoverable by the Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise of the related Mortgage Loan; and PROVIDED FURTHER, that such payments
shall be advanced when the tax, premium or other cost for which such payment is
intended is due.
SECTION 3.09 PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.
The Servicer may (and, with respect to clauses (e) and (g) below,
shall), from time to time, direct the Trustee to make, and the Trustee shall
make, to the extent required or authorized hereunder, withdrawals from the
Custodial Account for the following purposes:
(a) to pay to the Servicer as additional servicing compensation,
earnings on or investment income with respect to funds in the Custodial
Account credited to the Custodial Account;
(b) to reimburse the Servicer for advances made pursuant to
Sections 3.01, 3.10, 3.13, 5.01 and 5.02 hereof, such right of
reimbursement pursuant to this subclause (b) being limited to amounts
received in respect of the particular Mortgage Loan (including, for this
purpose, Insurance Proceeds, Liquidation Proceeds, amounts representing
proceeds of other insurance policies, if any, covering the related
Mortgaged Property, rental and other income from REO Property and proceeds
of any purchase or repurchase of the related Mortgage Loan);
(c) to reimburse the Servicer for any Nonrecoverable Advances;
(d) to reimburse the Servicer from Liquidation Proceeds for
Liquidation Expenses and, to the extent that Liquidation Proceeds after
such reimbursement are in excess of the Principal Balance of the related
Mortgage Loan together with accrued and unpaid interest thereon at a rate
equal to the sum of the Net Mortgage Rate and the Trustee Fee Rate, to pay
out of such excess the amount of any unpaid servicing compensation with
respect to the related Mortgage Loan to the Servicer, which may include
any unpaid servicing compensation to the Sub-Servicer (for disbursement in
accordance with Section 3.16 hereof);
(e) to pay to the Seller or the Servicer, as the case may be,
with respect to each Mortgage Loan or property acquired in respect thereof
that has been purchased pursuant to Sections 2.01, 2.02, 2.04 or 3.12
hereof all amounts received thereon and not
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taken into account in determining the Purchase Price of such repurchased
Mortgage Loan;
(f) to reimburse the Servicer or the Depositor for expenses
incurred by and reimbursable to the Servicer or the Depositor pursuant
to Section 7.03 hereof;
(g) to withdraw any amount deposited in the Custodial Account
pursuant to Section 3.07 and not required to be deposited therein; and
(h) to clear and terminate the Custodial Account upon termination
of this Agreement pursuant to Section 10.01 hereof.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Custodial Account pursuant to such subclauses (a), (b), (c),
(d), (e) and (f). The Servicer may apply Liquidation Proceeds and Insurance
Proceeds received with respect to a particular Mortgage Loan to reimbursements
permitted by clauses (b), (c) and (d) above in any order as the Servicer deems
appropriate.
On or prior to the second Business Day preceding each Distribution
Date after payment of items (a) through (h) above, the Servicer shall withdraw
from the Custodial Account and remit to the Trustee, in immediately available
funds, and the Trustee, upon receipt thereof, shall deposit in the Certificate
Account, an amount equal to the sum of the Available Distribution Amount, the
Trustee Fee, the Servicing Fee [and the Insurer] Premium for such Distribution
Date.
SECTION 3.10 MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES; COLLECTIONS
THEREUNDER.
The Servicer shall not take, or permit any Sub-Servicer to take, any action
that would result in loss of coverage under any applicable Primary Mortgage
Insurance Policy for any loss which, but for the actions of the Servicer or
Sub-Servicer, would have been covered thereunder. The Servicer shall use its
best reasonable efforts to cause such Sub-Servicer to keep in full force and
effect each Primary Mortgage Insurance Policy applicable to a Mortgage Loan
being serviced by it, until the principal balance of the related Mortgage Loan,
in the case of a Mortgage Loan having a Loan-to-Value Ratio at origination in
excess of 80%, is reduced to (a) 80% or less of the Appraised Value or (b) 80%
or less of its current value based on a new appraisal. The Servicer agrees to
pay to the extent the related Sub-Servicer does not do so, the premiums for each
Primary Mortgage Insurance Policy on a timely basis and shall use its best
reasonable efforts to cause itself or the Sub-Servicer to be named as loss
payee. In the event that the insurer under any Primary Mortgage Insurance Policy
shall cease to be qualified to transact a mortgage guaranty insurance business
under the laws of the state of its organization or any other state that has
jurisdiction over such insurer (or if such insurer's claims-paying ability shall
adversely affect the rating on the Class A Certificates) or such Primary
Mortgage Insurance Policy is cancelled or terminated for any reason, the
Servicer shall exercise its best reasonable efforts to obtain, or to cause the
related Sub-Servicer to obtain, from another Qualified Insurer, a replacement
policy comparable to such Primary Mortgage Insurance Policy at the expense of
the
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Mortgagor. The Servicer shall not consent to the cancellation or refusal to
renew any such Primary Mortgage Insurance Policy applicable to any Mortgage
Loan, which is in effect at the date of the initial issuance of the Certificates
and is required to be kept in force hereunder unless the replacement Primary
Mortgage Insurance Policy for such cancelled or non-renewed policy is maintained
with an insurer with a rating not lower than the insurer issuing the Primary
Mortgage Insurance Policy in effect at the date of the initial issuance of the
Certificates or whose claims-paying will not adversely affect the rating on the
Class A Certificates or unless any such cancellation or refusal, or consent
thereto, will not adversely affect the rating on the Class A Certificates. In
connection with any assumption and modification agreement entered into by the
Servicer or a Sub-Servicer pursuant to Section 3.12, the Servicer shall obtain a
replacement Primary Mortgage Insurance Policy, as provided above.
In connection with its activities as administrator and servicer of
the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor, the Trustee for the benefit of the Certificateholders [and the
Insurer], claims to the insurer under any Primary Mortgage Insurance Policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any Primary Mortgage Insurance Policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.07 hereof, any amounts collected
by the Servicer under any Primary Mortgage Insurance Policy shall be deposited
in the Custodial Account, subject to withdrawal pursuant to Section 3.09 hereof.
SECTION 3.11 MAINTENANCE OF HAZARD INSURANCE AND OTHER INSURANCE.
The Servicer shall cause to be maintained for each Mortgage Loan,
hazard insurance with extended coverage in an amount that is at least equal to
the maximum insurable value of improvements securing such Mortgage Loan or its
Principal Balance, whichever is less.
Each policy of standard hazard insurance shall contain, or have an
accompanying endorsement that contains, a standard mortgagee clause complying in
all material respects in form and substance to applicable FNMA guidelines. The
Servicer shall cause to be maintained on property acquired upon foreclosure or
deed in lieu of foreclosure of any Mortgage Loan, liability insurance and, to
the extent described below, flood insurance. Pursuant to Section 3.07 hereof,
any amounts collected by the Servicer under any such policies (other than
amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the terms of the applicable Mortgage or the Servicer's normal
servicing procedures) shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 3.09 hereof.
Any cost incurred by the Servicer or the related Sub-Servicer in
maintaining any such insurance shall not, for the purpose of calculating monthly
distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the Principal Balance of the Mortgage Loan, notwithstanding
that the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Servicer out of payments by the related Mortgagor or out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.09 hereof.
If the Mortgaged Property is located at the time of origination of the Mortgage
Loan in a federally designated special flood hazard area, the Servicer shall
cause flood insurance to be maintained. Such flood insurance shall be in an
amount equal to the lesser of (i) the unpaid Principal Balance
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of the related Mortgage Loan or (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program, if the area in which such Mortgaged Property is located is
participating in such program.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.11, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers, and
provided that the provider of such blanket policy is rated by A.M. Best Company
A:V or higher and the claims-paying ability of such provider is rated in one of
the three highest rating categories by at least one nationally recognized
statistical rating organization. If such policy contains a deductible clause,
the Servicer shall, to the extent that there shall not have been maintained on
the related Mortgaged Property a policy complying with the first sentence of
this Section 3.11 and there shall have been a loss that would have been covered
by such policy, remit to the Trustee for deposit in the Custodial Account the
amount not otherwise payable under the blanket policy because of such deductible
clause, accompanied by an Officers' Certificate describing the calculation of
such amount. In connection with its activities as administrator and servicer of
the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor, the Trustee for the benefit of the Certificateholders, claims under
any such blanket policy.
SECTION 3.12 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(a) Except as otherwise provided in this Section 3.12(a), when any property
subject to a Mortgage has been conveyed by the Mortgagor, the Servicer shall, to
the extent that it has knowledge of such conveyance, enforce any due-on-sale
clause contained in any Mortgage Note or Mortgage, to the extent permitted under
applicable law and governmental regulations, but only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any Required
Insurance Policy. In the event that the Servicer or the related Sub-Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if coverage
under any Required Insurance Policy would be adversely affected, the Servicer is
authorized, subject to Section 3.12(b), to take or enter into an assumption and
modification agreement from or with the person to whom such 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, the Mortgagor
remains liable thereon, provided that the Mortgage Loan shall continue to be
covered (if so covered before the Servicer enters such agreement) by the
applicable Required Insurance Policies. The Servicer, subject to Section
3.12(b), is also authorized with the prior approval of the insurers under any
Required Insurance Policies 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. Notwithstanding the foregoing, the Servicer shall not be
deemed to be in default under this Section 3.12(a) by reason of any transfer or
assumption which the Servicer is restricted by law from preventing, for any
reason whatsoever.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to the
extent set forth in Section 3.12(a) hereof, in any case in which a Mortgaged
Property has been
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conveyed to a Person by a Mortgagor, if an assumption is permitted under Section
3.12(a) and such Person is to enter into an assumption agreement or modification
agreement or supplement to the Mortgage Note or Mortgage held for the benefit of
the Certificateholders [and the Insurer] that requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Servicer shall
deliver or cause to be delivered to the Trustee for signature the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
The Servicer shall also deliver or cause to be delivered to the Trustee with the
foregoing documents a letter explaining the nature of such documents and the
reason or reasons why the Trustee's signature is required.
With such letter, the Servicer shall deliver to the Trustee a
certificate of a Servicing Officer certifying that: (i) a Servicing Officer has
examined and approved such documents as to form and substance, (ii) the
Trustee's execution and delivery thereof will not conflict with or violate any
terms of this Agreement or cause the unpaid balance and interest on the Mortgage
Loan to be uncollectible in whole or in part, (iii) any required consents of
insurers under any Required Insurance Policies have been obtained and (iv)
subsequent to the closing of the transaction involving the assumption or
transfer (A) the Mortgage Loan will continue to be secured by a first mortgage
lien pursuant to the terms of the Mortgage, (B) such transaction will not
adversely affect the coverage under any Required Insurance Policies, (C) the
Mortgage Loan will fully amortize over the remaining term thereof or, if the
Mortgage Loan provided that the amortization period on which the Monthly
Payments were based was a longer period, such period has not been extended, (D)
the interest rate on the Mortgage Loan will not be altered nor will the term of
the Mortgage Loan be increased as a result of such assumption or transfer and
(E) if the seller/transferor of the Mortgaged Property is to be released from
liability on the Mortgage Loan, the Servicer used the same underwriting
standards in evaluating the creditworthiness of the purchaser/transferee as were
used in making the original Mortgage Loan, and such release will not (based on
the Servicer's good faith determination) adversely affect the collectibility of
the Mortgage Loan. Upon receipt of such certificate, the Trustee for the benefit
of the Certificateholders [and the Insurer] shall execute any necessary
instruments for such assumption or substitution of liability. Upon the closing
of the transactions contemplated by such documents, the Servicer shall cause the
originals of the assumption agreement, the release (if any), or the modification
or supplement to the Mortgage Note or Mortgage to be delivered to the Trustee
for the benefit of the Certificateholders [and the Insurer] and deposited with
the Trustee Mortgage File for such Mortgage Loan. Any fee collected by the
Servicer for entering into an assumption or substitution of liability agreement
will be retained by the Servicer as additional servicing compensation.
In the event that the Servicer, in connection with any such
assumption or modification agreement or supplement to the Mortgage Note, is
unable to deliver the certificate of the Servicing Officer set forth above, the
Servicer shall purchase, or cause the related Sub-Servicer to purchase the
related Mortgage Loan in the manner, and at the Purchase Price, set forth in
Section 2.04 hereof.
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SECTION 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
The Servicer shall foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which, in the reasonable judgment of the Servicer,
no satisfactory arrangements can, in accordance with prudent lending practices,
be made for collection of delinquent payments pursuant to Section 3.01 hereof.
In connection with such foreclosure or other conversion, the Servicer shall
follow such practices and procedures as it shall deem necessary or advisable, as
shall be normal and usual in its general mortgage servicing activities and for
its own portfolio and as are in accordance with the requirements of the insurer
under any Required Insurance Policy and shall deliver to the Insurer a
liquidation report with respect to the related Mortgage Loan on the form of
report customarily prepared by the Servicer. The Servicer shall not be required
to expend its own funds in connection with any foreclosure or towards the
restoration, repair, protection or maintenance of any property unless it shall
determine in its sole discretion that such expenses will be recoverable to it as
Liquidation Expenses either through Liquidation Proceeds (respecting which it
shall have priority for purposes of withdrawals from the Custodial Account
pursuant to Section 3.09 hereof) or through Insurance Proceeds (respecting which
it shall have similar priority). The 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 from the proceeds of
liquidation of the related Mortgaged Property, as contemplated in Section 3.09
hereof.
In the event that any Mortgaged Property becomes an REO Property, the
deed or certificate of sale shall be taken in the name of the Trustee for the
benefit of the Certificateholders [and the Insurer], or its nominee, on behalf
of the Certificateholders [and the Insurer]. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders [and the Insurer], rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer, the Insurer and the
Certificateholders for the period prior to the sale of such REO Property on such
terms and conditions and for such periods as the Servicer deems to be in the
best interest of the Servicer, the Insurer and the Certificateholders.
The decision of the Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Servicer that the proceeds of
such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any Mortgaged Properties
acquired through foreclosure or other judicial proceeding on behalf of the
Certificateholders [and the Insurer], net of reimbursement to the Servicer for
expenses incurred (including any taxes) in connection with such management,
advances made by the Servicer pursuant to Sections 3.01, 3.11, 3.13 or 5.01 in
connection with the related Mortgage Loan or REO Property and Liquidation
Expenses incurred by the Servicer in connection with the related Mortgage Loan,
shall be applied to the payment of principal of and interest on the related
defaulted Mortgage Loans (with interest accruing and principal amortizing as
though such Mortgage Loans were still current) and all such income shall be
deemed, for all purposes in this Agreement, to be payments on account of
principal of and interest on the related Mortgage Notes and shall be deposited
into the Custodial Account.
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Prior to obtaining or causing the Trustee to obtain a deed as a
result of or in lieu of foreclosure, or otherwise acquiring (or causing the
Trustee to acquire) possession of or title to any Mortgaged Property, if the
Servicer determines that obtaining a deed or otherwise acquiring title or
possession of such Mortgaged Property would likely subject the Servicer, the
Trustee or the Trust Fund to substantial liability in respect of environmental
conditions concerning the Mortgaged Property, (a) the Servicer shall (i) notify
the Trustee and the Depositor of such determination and (ii) refrain from
obtaining or directing the Trustee to obtain a deed as a result of or in lieu of
foreclosure or otherwise acquiring title or possession to such Mortgaged
Property and (b) the obligations of the Servicer to make advances, including,
without limitation, Monthly Advances, in connection with the Mortgage Loan in
question shall cease as of the date that the Servicer makes such determination.
SECTION 3.14 TRUSTEE TO COOPERATE; RELEASE OF TRUSTEE MORTGAGE FILES.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, and upon notification by the Servicer in the form
of a certification (which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Custodial Account have been or will be
so deposited) of a Servicing Officer and a Request for Release of the Trustee
Mortgage File in the form of Exhibit G hereto the Trustee shall promptly release
the related Trustee Mortgage File to the Servicer, and the Trustee shall execute
and deliver to the Servicer the request for reconveyance, deed of reconveyance
or release, satisfaction or assignment of mortgage or such instrument releasing
the lien of the Mortgage, and, in each case, such other documents or instruments
as may be reasonably required in connection therewith, as directed by the
Servicer, together with the Mortgage Note with written evidence of cancellation
thereon. The provisions of the immediately preceding sentence shall not, in any
manner, limit or impair the right of the Servicer to execute and deliver, on
behalf of the Trustee, the Depositor, the Certificateholders or any of them, any
and all instruments of satisfaction, cancellation or assignment, or of partial
or full release or discharge and all other comparable instruments, with respect
to the Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Certificate Account but shall be paid by the Servicer. From time to time and as
shall be appropriate for the servicing or foreclosure of any Mortgage Loan,
including, without limitation, for such purpose, collection under any policy of
flood insurance, any fidelity bond or errors or omissions policy, or for the
purposes of effecting a partial or total release of any Mortgaged Property from
the lien of the Mortgage or the making of any corrections to the Mortgage Note
or the Mortgage or any of the other documents included in the Trustee Mortgage
File, the Trustee shall, upon request of the Servicer and the delivery to the
Trustee of a Request for Release signed by a Servicing Officer, in the form of
Exhibit G hereto, release the Trustee Mortgage File to the Servicer. If the
Servicer at any time seeks to initiate a foreclosure proceeding in respect of
any Mortgaged Property, the Servicer shall deliver to the Depositor or the
Trustee, for signature as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity, together with a certificate of a
Servicing
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Officer requesting that such pleadings or documents be executed by the Trustee.
A Servicing Officer shall certify as to the reason such documents or pleadings
are required and that the execution and delivery thereof by the Trustee will not
invalidate the insurance coverage under any Required Insurance Policy or
invalidate or otherwise affect the lien of the Mortgage except for the
termination of such lien upon completion of the foreclosure.
SECTION 3.15 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF SERVICER TO BE HELD
FOR THE DEPOSITOR AND THE TRUSTEE FOR THE BENEFIT OF THE CERTIFICATEHOLDERS.
Notwithstanding any other provisions of this Agreement, the Servicer
shall transmit to the Trustee to the extent required by this Agreement all
documents and instruments coming into the possession of the Servicer from time
to time and shall account fully to the Trustee for the benefit of the
Certificateholders [and the Insurer] for any funds received by the Servicer or
which otherwise are collected by the Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. All Servicer Mortgage Files
or Trustee Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds or Insurance
Proceeds, including but not limited to, any funds on deposit in the Custodial
Account, shall be held by the Servicer for and on behalf of the Depositor, the
Trustee for the benefit of the Certificateholders [and the Insurer] and shall be
and remain the sole and exclusive property of the Trustee, subject to the
applicable provisions of this Agreement. The Servicer also agrees that it shall
not create, incur or subject any Servicer Mortgage File or Trustee Mortgage File
or any funds that are deposited in the Custodial Account or any Servicing or
Escrow Account, or any funds that otherwise are or may become due or payable to
the Trustee for the benefit of the Certificateholders, to any claim, lien,
security interest, judgment, levy, writ of attachment or other encumbrance, or
assert by legal action or otherwise any claim or right of setoff against any
Servicer Mortgage File or Trustee Mortgage File or any funds collected on, or in
connection with, a Mortgage Loan, except, however, that the Servicer shall be
entitled to set off against and deduct from any such funds any amounts that are
properly due and payable to the Servicer under this Agreement subject to the
terms of this Agreement.
SECTION 3.16 SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain from the Custodial Account or withdraw from the Custodial
Account the amounts specified in subclause (a) of Section 3.09 hereof as payable
to it.
Additional servicing compensation in the form of prepayment
penalties, fees or premiums, assumption fees, modification fees, late payment
charges or otherwise or any excess interest charges payable by the Mortgagor by
virtue of any default or other non-compliance by the Mortgagor with the terms of
the Mortgage or any other instrument or document executed in connection
therewith or otherwise shall be retained by the Servicer to the extent not
required to be deposited in the Custodial Account pursuant to Section 3.07
hereof. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of
premiums for Primary Mortgage Insurance Policies, to the extent such premiums
are not required to be paid or have not been paid by the related Mortgagor or
the
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related Sub-Servicer, payment of any premiums for hazard insurance, as required
by Section 3.11 hereof and maintenance of the other forms of insurance coverage
required by Section 3.11 hereof) the payment of servicing compensation to any
Sub-Servicers pursuant to any Sub-Servicing Agreement and the payment of the
expenses of the Trustee to the extent provided in Section 9.05, and shall not be
entitled to reimbursement therefor except as specifically provided in Sections
3.09, 3.13 and 5.03 hereof.
SECTION 3.17 REPORTS TO THE DEPOSITOR; ACCOUNT STATEMENTS.
Within five Business Days following each Distribution Date, the
Servicer shall deliver to the Trustee, the Insurer and the Depositor a statement
setting forth the status of the Custodial Account, if any, as of the close of
business on such Distribution Date showing, for the period covered by such
statement, the aggregate of deposits in or withdrawals from the Custodial
Account, if any, for each category of deposit specified in Section 3.07 hereof
and each category of withdrawal specified in Section 3.09 hereof. The Servicer
shall forward a copy of such statement to the Rating Agencies. Within ten
Business Days following each Distribution Date, the Trustee shall deliver to the
Depositor [and the Insurer] a statement setting forth the status of the
Certificate Account as of the close of business on such Distribution Date
showing, for the period covered by such statement, the aggregate of deposits in
or withdrawals from the Certificate Account. The Trustee shall forward a copy of
such statement to the Rating Agencies.
SECTION 3.18 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer shall deliver to the Depositor, the Insurer and the
Trustee on or before January 31 of each year, commencing January 31, [200_] an
Officers' Certificate stating, as to each signer thereof, that (a) a review of
the activities of the Servicer during the year ended on the preceding September
30 and of the performance of the Servicer under this Agreement has been made
under such officer's supervision, (b) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement in all material respects 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, (c) a Servicing Officer
has conducted an examination of the activities of each Sub-Servicer during the
immediately preceding year and its performance under any Sub-Servicing
Agreement, and (d) to the best of such Servicing Officer's knowledge, based on
such examination, each Sub-Servicer has performed and fulfilled its duties,
responsibilities and obligations under such Sub-Servicing Agreement in all
material respects throughout such year, or if there has been a default in the
performance or fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof. The Servicer shall forward a copy of each such statement to the
Rating Agencies.
SECTION 3.19 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before January 31 of each year, beginning with the first
January 31 that occurs at least six months after the Cut-off Date, the Servicer,
at its expense, shall cause a firm of independent public accounts that is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Depositor, the Insurer and the Trustee for the benefit of the
Certificateholders to the effect that such firm has examined certain documents
substantially
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similar to this Agreement and records relating to the servicing of mortgage
loans serviced by the Servicer or any successor servicer that are substantially
similar to the Mortgage Loans and that, on the basis of an examination conducted
substantially in compliance with the Uniform Single Audit Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for FHLMC, such servicing
has been conducted in compliance with such agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
the Uniform Single Audit Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC requires it to report. In rendering such statement
such firm may rely, as to matters relating to direct servicing of Mortgage Loans
by Sub-Servicers, if any, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Audit Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for FHLMC (rendered within
one year of such statement) of independent public accounts with respect to the
related Sub-Servicer. The Servicer shall forward a copy of each such report to
the Rating Agencies.
SECTION 3.20 REPORTS TO TRUSTEE.
On or before the third Business Day prior to each Distribution Date,
the Servicer shall deliver to the Trustee [and the Insurer] a monthly Servicing
Report containing the information set forth in Section 4.04(a) and the Servicer
shall notify the Trustee of the Deficiency Amount, if any, with respect to such
Distribution Date. The Trustee may conclusively rely on information provided by
the Servicer and shall have no obligation to recompute, recalculate, or verify
the accuracy of such information.
SECTION 3.21 CONVERTED MORTGAGE LOANS; CERTAIN PROCEDURES AND PURCHASES.
(a) The Trustee, as Note Holder (as defined in the Mortgage Notes for the
Mortgage Loans) on behalf of the Certificateholders [and the Insurer] is hereby
authorized and hereby authorizes and directs the Servicer, on behalf of the Note
Holder, to determine fixed interest rates into which Mortgagors under
Convertible Mortgage Loans may convert the adjustable interest rates on their
Mortgage Notes in accordance with the terms set forth in such Mortgage Notes.
The Servicer agrees to make such determinations and otherwise administer the
program contemplated in the Mortgage Notes for the Convertible Mortgage Loans
until the later to occur of (i) the date on which all the Convertible Mortgage
Loans have become Converted Mortgage Loans, and (ii) the last date on which
Mortgagors have the option to convert the adjustable interest rates on their
Mortgage Notes to fixed interest rates.
(b) The Servicer may, but is not obligated to, purchase such Converting
Mortgage Loan. All amounts paid by the Servicer in connection with the purchase
of a Converting Mortgage Loan or Converted Mortgage Loan, as the case may be,
will be deposited in the Custodial Account. No party to this Agreement or any
successor to any party shall be required to purchase any Converted or Converting
Mortgage Loan.
(c) Notwithstanding that a Mortgage Loan becomes a Converting Mortgage Loan
or Converted Mortgage Loan in any month, such Converting Mortgage Loan or
Converted Mortgage Loan shall remain in the Trust Fund and all payments in
respect thereof shall remain in
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the Trust Fund unless and until such Converting Mortgage Loan or Converted
Mortgage Loan, as the case may be, is purchased by the Servicer, pursuant to
Section 3.21(b).
(d) Upon any purchase of a Converting Mortgage Loan or Converted Mortgage
Loan, as the case may be, by the Servicer pursuant to Section 3.21(b) and the
deposit in the Custodial Account of the Purchase Price, the Servicer shall give
the Trustee written notice thereof and, based thereon, the Trustee shall
release, or cause any Custodian to release, the related Mortgage File and convey
such Mortgage Loan to the purchaser whereupon such purchased Converted Mortgage
Loan shall cease to be part of the Trust Fund.
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ARTICLE IV
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.01 CERTIFICATE ACCOUNT.
The Trustee shall establish, prior to the Delivery Date, and shall
maintain, in the name of the Trustee on behalf of the Holders of interests in
the Trust Fund, the Certificate Account, which shall be an Eligible Account,
into which the Trustee upon receipt from the Servicer shall deposit all payments
remitted by the Servicer and any amounts required to be remitted by the
Depositor pursuant to the terms hereof. All distributions to be made from time
to time to Holders of interests in the Trust Fund out of funds in the
Certificate Account shall be made by or on behalf of the Trustee. The Trustee
will give notice to the Servicer, the Rating Agencies, the Insurer and the
Depositor of the location of the Certificate Account and of any change thereof,
prior to the use thereof. Funds held in the Certificate Account and delivered to
the Trustee earlier than one Business Day prior to the next Distribution Date
shall be invested by the Trustee in Eligible Investments as directed by the
Servicer or shall remain uninvested. All income and gain net of any losses
realized from any such investment shall be for the benefit of the Servicer and
shall be subject to withdrawal at the Servicer's direction from time to time.
The amount of any losses net of any gains not paid to the Servicer incurred in
respect of any such investments shall be deposited in the Certificate Account
out of the Servicer's own funds immediately as realized.
In addition, the Trustee shall withdraw from the Insurance Account
and deposit into the Certificate Account the amount necessary to make the
Insured Payment on each Distribution Date to the extent received from the
Insurer.
The Trustee shall make, to the extent required or authorized
hereunder, withdrawals from the Certificate Account for the following purposes:
(i) to withdraw any amount deposited in the Certificate Account and
not required to be deposited therein;
(ii) to reimburse the Servicer for any unreimbursed Nonrecoverable
Advance;
(iii) to make required distributions pursuant to Section 4.02; and
(iv) to pay to the Depositor any amount to which it is entitled
pursuant to Section 7.03.
SECTION 4.02 DISTRIBUTIONS.
(a) On each Distribution Date, the following amounts, in the following
order of priority, shall be distributed by REMIC I to REMIC II on account of the
REMIC I Regular Interests or withdrawn from the Certificate Account and
distributed to the holders of the Class R-I Certificates, as the case may be:
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(i) to the Holders of REMIC Regular Interests, in an amount equal to
(A) the Uncertificated Interest for such Distribution Date, plus (B)
any amounts in respect thereof remaining unpaid from previous
Distribution Dates; and
(ii) on each Distribution Date, to the Holders of REMIC I Regular
Interests, in an amount equal to the remainder of the Available
Distribution Amount for such Distribution Date after the
distributions made pursuant to clause (i) above, allocated as follows
(except as provided below):
(x) first, to the Holders of the REMIC I Regular Interests
[____], REMIC I Regular Interests [____] and REMIC I Regular
Interests [____], respectively, the Class [____] Principal
Distribution Amount, the Class [____] Principal Distribution
Amount, and the Class [____] Principal Distribution Amount from
such remainder;
(y) second, to the Holders of the REMIC I Regular Interests
[____], any remaining portion of such remainder.
(b) On each Distribution Date the Trustee shall apply amounts in the
Certificate Account plus the Insured Payment, if any, transferred from the
Insurance Account and payable to the Class A Certificateholders in accordance
with Section 4.06, to pay the following amounts in the following order of
priority:
(i) [to pay to the Insurer, the Insurer Premium];
(ii) to pay to itself on each Distribution Date an amount equal to the
Principal Balance of each Mortgage Loan immediately prior such
Distribution Date multiplied by one-twelfth of the Trustee Fee
Rate;
(iii)to pay to the Servicer, on any Distribution Date, the Servicing
Fee due on such Distribution Date, if the Servicer has remitted
prior to the related Distribution Date funds directly to the
Trustee for deposit in the Certificate Account;
(iv) [to pay to the Insurer the amount of Cumulative Insurance
Payments as of such Distribution Date];
(v) to the holders of the Class A Certificates, the Class A Interest
Distribution Amount and the Class A Cumulative Interest Shortfall
Amount for which no Insured Payment has been previously paid to
the Class A Certificateholders;
(vi) to the holders of the Class A Certificates, to the extent of the
Available Distribution Amount remaining, the Class A Principal
Distribution Amount; and
(vii)to the holders of the Class S Certificates, to the extent of the
Available Distribution Amount remaining, the Class S Interest
Distribution Amount and the Class S Cumulative Interest Shortfall
Amount; and
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(viii) to the holders of the Class R-II Certificates, the balance, if
any, of the Available Distribution Amount.
(c) Within five Business Days before the related Distribution Date, the
Servicer shall notify the Trustee of the amounts, if any, payable to the Insurer
pursuant to Sections 4.02(b)(iv).
(d) The Servicer shall be responsible for the calculations with respect to
distributions from the Certificate Account so long as the Trust Fund has not
been terminated in accordance with this Agreement. All distributions made to
Certificateholders of any Class on such Distribution Date will be made to the
Certificateholders of the respective Class of record on the immediately
preceding Record Date, except for the final distribution, which shall be made as
provided in the form of Certificate. All distributions made to the
Certificateholders shall be based upon the Percentage Interest represented by
their respective Certificates. If on any Determination Date, the Trustee
determines that there are no Mortgage Loans outstanding and no other funds or
assets in the Trust Fund other than the funds in the Certificate Account, the
Trustee shall promptly send the final distribution notice to each
Certificateholder specifying the manner in which the final distribution will be
made.
(e) Any Certificateholder shall be entitled to receive distributions
hereunder on a Distribution Date (other than as provided in Section 10.02
respecting the final distribution) by wire transfer to the account specified in
writing by the Certificateholder to the Trustee if the Initial Certificate
Principal Balance evidenced by such Holder's Certificate is at least equal to
$2,500,000 or the Percentage Interest thereof is 100%. In each case, the account
must be specified in writing at least five Business Days prior to the Record
Date for the Distribution Date on which wire transfers will commence. All other
distributions shall be made by check payable to the Certificateholder mailed by
first class mail to the address of such Certificateholder reflected in the
Certificate Register.
SECTION 4.03 ALLOCATION OF REALIZED LOSSES.
Prior to each Distribution Date, the Servicer shall determine the
total of Realized Losses, if any, incurred with respect to the Mortgage Loans
during the previous Prepayment Period. On each Distribution Date, Realized
Losses will be allocated after the distribution of principal and interest on
such Distribution Date; PROVIDED, HOWEVER, that if the Certificate Principal
Balance of any Class of Certificates would be reduced to zero as a result of
Realized Losses to be allocated on such Distribution Date if no funds were
available for distributions on the Certificates, then Realized Losses will be
allocated to such Class prior to the distribution of principal and interest. In
every case, such Realized Losses shall be allocated as follows:
(a) first, by application of clause (vi) of the definition of Class A
Principal Distribution Amount, to the Class S Interest Distribution Amount for
the related Distribution Date; second, to any Class S Cumulative Interest
Shortfall Amount; and third, to the Class A Certificates. All such allocations
to a Class of Certificates shall be on a pro rata basis in accordance with the
shortfall amount or distribution amount, as applicable, for each Certificate of
such Class.
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(b) All Realized Losses on the Mortgage Loans shall be allocated to the
REMIC I Regular Interests in accordance with the definition of REMIC I Realized
Losses.
SECTION 4.04 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.
(a) Not later than each Distribution Date, the Servicer shall prepare and
the Trustee shall cause to be forwarded by mail to each Certificateholder, the
Servicer, the Insurer, the Depositor and the Rating Agencies a statement setting
forth:
(i) the amount of such distribution representing principal of the
Mortgage Loans, separately identifying the aggregate amount of
any Principal Prepayments included therein, and the portion of
such distribution, if any, representing a Monthly Advance of
principal and the Certificate Principal Balance of the Class A
Certificates after giving effect to such distributions;
(ii) the amount of such distribution representing interest on the
Mortgage Loans and the portion of such distribution, if any,
representing a Monthly Advance of interest;
(iii)the aggregate Principal Balances of the Mortgage Loans as of the
close of business on such Distribution Date and the amount of
Principal Prepayments received during the immediately preceding
Prepayment Period;
(iv) the related amount of the Servicing Fees retained or withdrawn
from the Custodial Account or the Certificate Account;
(v) the amount of Monthly Advances paid by the Servicer;
(vi) the number and aggregate principal amounts of Mortgage Loans (A)
delinquent (1) one month, (2) two months, (3) three months or
more and (B) in foreclosure and (C) in bankruptcy;
(vii)the book value (within the meaning of 12 C.F.R. 571.13 or
comparable provision) of any REO Property;
(viii) the respective amounts, if any, of Realized Losses allocated to
the respective Classes of Certificates with respect to such
Distribution Date;
(ix) all Monthly Advances recovered during the related Due Period;
(x) the amount of any tax imposed on a "prohibited transaction" of
the Trust Fund as defined in Section 860F of the Code during the
related Due Period;
(xi) the amount of any reduction in Certificate Principal Balance,
cumulative interest shortfall amount or interest distribution
amount for any Class attributable to the application of Realized
Losses thereto on such Distribution Date;
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(xii)the amount of any Insured Payment made on such Distribution
Date, the amount of any reimbursement payment made to the Insurer
on such Distribution Date pursuant to Section 4.02(c) and the
amount of Cumulative Insurance Payments after giving effect to
any such Insured Payment or any such reimbursement payment to the
Insurer;
(xiii) the Certificate Rate on the Class A Certificates for such
Distribution Date;
(xiv)the aggregate principal balance of all Converting Mortgage Loans
and Converted Mortgage Loans, as the case may be, purchased by
the Servicer pursuant to Section 3.21, the proceeds of which are
being distributed on such Distribution Date and the aggregate
principal balance of all Converted Mortgage Loans which have not
been so purchased pursuant to Section 3.21;
(xv) the Rolling Three Month Delinquency Percentage; and
(xvi)cumulative Realized Losses since the Delivery Date and for the
three year period commencing on the Delivery Date.
(b) Upon reasonable advance notice in writing, if required by federal
regulation, the Trustee will provide to each Certificateholder that is a savings
association, bank or insurance company certain reports and access to information
and documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the Office of Thrift
Supervision or other regulatory authorities with respect to investment in the
Certificates and the Servicer shall cooperate with the Trustee in providing such
information; PROVIDED, HOWEVER, that the Trustee shall be entitled to be
reimbursed by each such Certificateholder for the Trustee's actual expenses
incurred in providing such reports and access. The Trustee will provide to any
Certificateholder upon request the outstanding Certificate Principal Balance as
of such dates and, if then known by the Trustee, the outstanding Certificate
Principal Balances after giving effect to any distribution to be made on the
next following Distribution Date.
SECTION 4.05 PREPAYMENT INTEREST SHORTFALLS AND RELIEF ACT SHORTFALLS.
Prepayment Interest Shortfalls resulting from a Principal Prepayment
of a Mortgage Loan during any Prepayment Period and Relief Act Shortfalls will
be applied first, to reduce the Class A Interest Distribution Amount payable on
the related Distribution Date as set forth in the definition of the Class A
Interest Distribution Amount and second, to reduce the Class S Interest
Distribution Amount payable on the related Distribution Date, in respect of such
Mortgage Loan.
SECTION 4.06 [THE POLICY.
(a) If the Servicer determines that the Deficiency Amount is greater than
zero with respect to any Distribution Date, the Trustee shall complete the
notice in the Form of Exhibit A to the Policy (the "Notice") and submit such
Notice in accordance with the Policy to the Insurer no later than 12:00 P.M.,
New York City time, on the third Business Day
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immediately preceding each Distribution Date, as a claim for an Insured Payment
in an amount equal to such Deficiency Amount.
(b) The Trustee shall establish and maintain the Insurance Account on
behalf of the Holders of the Class A Certificates. Upon receipt of an Insured
Payment from the Insurer on behalf of the Class A Certificateholders, the
Trustee shall deposit such Insured Payment in the Insurance Account. All amounts
on deposit in the Insurance Account shall remain uninvested. On each
Distribution Date, the Trustee shall transfer any Insured Payment then on
deposit in the Insurance Account to the Certificate Account. The Trustee shall
distribute on each Distribution Date the Deficiency Amount for such Distribution
Date from the Certificate Account, together with the distributions to be made to
the Class A Certificateholders on such Distribution Date, as distributions of
interest and principal, respectively.
(c) The Trustee shall (i) receive as attorney-in-fact of each Class A
Certificateholder any Insured Payment from the Insurer and (ii) distribute such
Insured Payment to such Class A Certificateholders as set forth in subsection
(b) above. Insured Payments disbursed by the Trustee from proceeds of the Policy
shall not be considered payment by the Trust Fund with respect to the Class A
Certificates, nor shall such disbursement of such Insured Payments discharge the
obligations of the Trust Fund with respect to the amounts thereof, [and the
Insurer] shall become owner of such amounts to the extent covered by such
Insured Payments as the deemed assignee of such Class A Certificateholders. The
Trustee hereby agrees on behalf of each Class A Certificateholder (and each
Class A Certificateholder, by its acceptance of its Class A Certificates, hereby
agrees) for the benefit of the Insurer that the Trustee shall recognize that to
the extent the Insurer pays Insured Payments, either directly or indirectly (as
by paying through the Trustee), to the Class A Certificateholders, the Insurer
will be entitled to be subrogated to the rights of the Class A
Certificateholders to the extent of such payments.]
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ARTICLE V
ADVANCES
SECTION 5.01 MONTHLY ADVANCES BY THE SERVICER.
Subject to the conditions of this Article V, the Servicer, as
required below, shall make a Monthly Advance to the Certificate Account
maintained by the Trustee, in the amount, if any, of the aggregate Monthly
Payments less Prepayment Interest Shortfalls and Relief Act Shortfalls, after
adjustment of the interest portion of each such Monthly Payment to the Mortgage
Rate less the applicable Servicing Fee Rate, on the Mortgage Loans that were due
on the Due Date but that were not received and remitted to the Certificate
Account on or prior to the Servicer Advance Date. The Servicer shall be
obligated to make any such Monthly Advance only to the extent that such advance,
in the good faith judgment of the Servicer, will be recoverable by the Servicer
from Insurance Proceeds, Liquidation Proceeds (less Liquidation Expenses), or
otherwise on the related Mortgage Loan.
On the Determination Date immediately preceding the related
Distribution Date, the Servicer shall determine whether and to what extent any
Mortgagor has failed to make any Monthly Payment due on the Due Date and whether
such deficiencies, if advanced by the Servicer, would be recoverable by the
Servicer from related Insurance Proceeds or Liquidation Proceeds (net of
Liquidation Expenses). If the Servicer shall have determined that it is not
obligated to make the entire Monthly Advance because all or a lesser portion of
such Monthly Advance would not be recoverable by the Servicer from related
Insurance Proceeds or Liquidation Proceeds (net of Liquidation Expenses), the
Servicer shall deliver to the Trustee, not less than two Business Days prior to
the related Distribution Date, for the benefit of the Certificateholders [and
the Insurer], an Officers' Certificate setting forth the reasons for such
determination.
In lieu of making all or a portion of any Monthly Advance, the
Servicer may cause to be made an appropriate entry in its records relating to
the Custodial Account that funds in such account, including but not limited to
any amounts received in respect of scheduled principal and interest on any
Mortgage due after the related Due Period, in excess of the Available
Distribution Amount (less the amount of such Monthly Advance) for the related
Distribution Date have been used by the Servicer in discharge of its obligation
to make any such Monthly Advance. Any funds so applied shall be replaced by the
Servicer by deposit, in the manner set forth above, in the Custodial Account no
later than the Servicer Advance Date to the extent that funds in the Custodial
Account on such date are less than the amounts required to be distributed on the
related Distribution Date. The Servicer shall be entitled to be reimbursed from
the Custodial Account for all Monthly Advances of its own funds made pursuant to
this Section as provided in Section 3.09.
SECTION 5.02 ADVANCES FOR ATTORNEYS' FEES.
The Servicer shall make advances from time to time for attorneys'
fees and court costs incurred, or which reasonably can be expected to be
incurred, for the foreclosure of any Mortgage Loan or for any transaction in
which the Trustee for the benefit of the
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Certificateholders [and the Insurer] is expected to receive a deed-in-lieu of
foreclosure, unless the Servicer has made a good faith determination that such
advances would not be recoverable from Insurance Proceeds or Liquidation
Proceeds relating to the Mortgage Loan. If the Servicer shall make a good faith
determination that such advances would not be so recoverable, the Servicer shall
promptly deliver to the Trustee an Officers' Certificate setting forth the
reasons for such determination. The Servicer shall be entitled to reimbursement
for any such advance as provided in Section 3.09 hereof.
SECTION 5.03 NONRECOVERABLE ADVANCES.
The determination by the Servicer that it has made a Nonrecoverable
Advance shall be evidenced by an Officers' Certificate of the Servicer promptly
delivered to the Trustee setting forth the reasons for such determination.
Following the Trustee's receipt of the Officers' Certificate, the Servicer shall
be entitled to reimbursement for such Nonrecoverable Advance as provided in
Section 3.09 hereof.
SECTION 5.04 ADVANCE PROCEDURES.
(a) If, on any Determination Date, the Servicer determines to make a
Monthly Advance in accordance with Section 5.01, it shall make such Monthly
Advance on or before noon, St. Paul time, on the second Business Day prior to
the related Distribution Date (the "Servicer Advance Date"). The Servicer shall
notify the Trustee of the aggregate amount of Monthly Advances for a
Distribution Date on or before three Business Days prior to such Distribution
Date. Any such Monthly Advance shall be included with the distribution on the
related Distribution Date pursuant to Section 4.02.
(b) In the event that the Servicer fails to make a Monthly Advance required
to be made pursuant to Section 5.01 on or before 3 p.m., [________] time, on the
Servicer Advance Date, the Trustee shall on or before 12 noon, New York time on
the next Business Day provide to the Servicer, by telecopy, written notice of
such failure and the amount of such failure and that continuance of such failure
for a period of one Business Day will be an Event of Default.
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01 THE CERTIFICATES.
The Certificates shall be in substantially the forms set forth in
Exhibits A, B and C hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement or as may in the reasonable judgment of the Trustee or the Depositor
be necessary, appropriate or convenient to comply, or facilitate compliance,
with applicable laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which any of the
Certificates may be listed, or as may, consistently herewith, be determined by
the officers executing such Certificates, as evidenced by their execution
thereof.
The definitive Certificates shall be printed, typewritten,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which any of the Certificates may be listed, all as determined by
the officers executing such Certificates, as evidenced by their execution
thereof.
The Class A Certificates will be in fully-registered form only in
minimum denominations of $100,000 Certificate Principal Balance and integral
multiples of $1,000 in excess thereof, provided that one Class A Certificate may
be issued in such other amount as is required so that the aggregate of the Class
A Certificate equals its aggregate Certificate Principal Balance. The Class S
Certificates will be issued in fully-registered form only in minimum Percentage
Interests of 20% and integral multiples thereof. The Class R-I and Class R-II
Certificates will each be issuable only as a single Certificate.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by a Responsible Officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless there appears on such Certificate a certificate of
authentication executed by the Trustee by manual signature, and such certificate
of authentication upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
SECTION 6.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain, or cause to be maintained, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as
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herein provided. Upon surrender for registration of transfer of any Certificate,
the Trustee shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates in like
aggregate interest and of the same Class.
(b) At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of authorized denominations and the same aggregate interest
in the Trust Fund and of the same Class, upon surrender of the Certificates to
be exchanged at the office or agency of the Trustee set forth in Section 9.11.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the Holder thereof or his attorney duly authorized in writing.
(c) No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
(d) All Certificates surrendered for registration of transfer and exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(e) No transfer of any Class S or Class R Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
1933 Act and effective registration or qualification under applicable state
securities laws, or is made in a transaction which does not require such
registration or qualification. In the event that a transfer is to be made
without registration or qualification, (i) the Trustee shall require, in order
to assure compliance with such laws, that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
certify to the Trustee in writing in the forms set forth in Exhibit H and
Exhibit I, respectively, the facts surrounding the transfer and (ii) the
Depositor or the Trustee shall require an opinion of counsel reasonably
satisfactory to the requesting party that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not be required to
be an expense of the Depositor or the Trustee. Neither the Depositor nor the
Trustee is obligated to register or qualify any Class S or Class R Certificate
under the 1933 Act or any other securities law or to take any action not
otherwise required under this Agreement to permit the transfer of such
Certificate or interest without registration or qualification. Any such Holder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt, or is not made in accordance with federal and state laws.
(f) No transfer of a Class S or Class R Certificate shall be made to any
employee benefit or other plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code, to a
trustee or other person acting on behalf of any such plan, or to any other
person using "plan assets" to effect such acquisition, unless the prospective
transferee of a Certificateholder desiring to transfer its Certificate provides
the Trustee with a certification as set forth in paragraph 6 of Exhibit I or an
Opinion of Counsel
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which establishes to the reasonable satisfaction of the Depositor and the
Trustee that the purchase and holding of a Class S or Class R Certificate by, on
behalf of or with "plan assets" of such plan is permissible under applicable
local law, would not constitute or result in a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code, and would not subject the
Depositor or the Trustee to any obligation or liability (including liabilities
under ERISA or Section 4975 of the Code) in addition to those undertaken in this
Agreement or any other liability. The Trustee shall require that such
prospective transferee certify to the Trustee in writing the facts establishing
that such transferee is not such a plan and is not acting on behalf of or using
"plan assets" of any such plan to effect such acquisition.
(g) Additional restrictions on transfers of the Class R Certificates to
Disqualified Organizations are set forth below:
(i) Each Person who has or who acquires any ownership interest
in a Class R 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 Class R Certificate are
expressly subject to the following provisions:
(A) Each Person holding or acquiring any ownership interest
in a Class R Certificate shall be other than a Disqualified
Organization and shall promptly notify the Trustee of any change or
impending change in its status as other than a Disqualified
Organization.
(B) In connection with any proposed transfer of any
ownership interest in a Class R Certificate to a U.S. Person, the
Trustee shall require delivery to it, and shall not register the
transfer of a Class R Certificate until its receipt of (1) an
affidavit and agreement (a "Transferee Affidavit and Agreement"
attached hereto as Exhibit J) from the proposed transferee, in form
and substance satisfactory to the Servicer, representing and
warranting, among other things, that it is not a non-U.S. Person,
that such transferee is other than a Disqualified Organization, that
it is not acquiring its ownership interest in a Class R Certificate
that is the subject of the proposed Transfer as a nominee, trustee or
agent for any Person who is not other than a Disqualified
Organization, that for so long as it retains its ownership interest
in a Class R Certificate, it will endeavor to remain other than a
Disqualified Organization, and that it has reviewed the provisions of
this Section 6.02(g) and agrees to be bound by them, and (2) a
certificate, attached hereto as Exhibit K, from the Holder wishing to
transfer a Class R Certificate, in form and substance satisfactory to
the Servicer, 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.
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(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
other than a Disqualified Organization, no transfer of an ownership
interest in a Class R Certificate to such proposed transferee shall
be effected.
(D) Each Person holding or acquiring any ownership interest
in a Class R Certificate agrees, by holding or acquiring such
ownership interest, (1) to require a Transferee Affidavit and
Agreement from the 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 K, and (2) to obtain
the express written consent of the Servicer prior to any transfer of
such ownership interest, which consent may be withheld in the
Servicer's sole discretion.
(ii) The Trustee shall register the transfer of any Class R
Certificate only if it shall have received the Transferee Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the
form attached hereto as Exhibit J and all of such other documents as shall
have been reasonably required by the Trustee as a condition to such
registration.
(iii)(A) If any Disqualified Organization shall become a Holder of a
Class R Certificate, then the last preceding Holder that was other than a
Disqualified Organization 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 Class R Certificate. If any
non-U.S. Person shall become a Holder of a Class R Certificate, then the
last preceding Holder that 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 Class R Certificate. If a transfer of a Class R Certificate
is disregarded pursuant to the provisions of Treasury Regulations Section
1.860E-1 or Section 1.860G-3, then the last preceding Holder that was other
than a Disqualified Organization 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 Class R Certificate. The
Trustee shall be under no liability to any Person for any registration of
transfer of a Class R Certificate that is in fact not permitted by this
Section 6.02(g) 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 of a Class R Certificate shall become
a Holder of a Class R Certificate in violation of the restrictions in this
Section 6.02(g) and to the extent that the retroactive restoration of the
rights of the Holder of such Class R Certificate as described in clause
(iii)(A) above shall be invalid, illegal or unenforceable, then the
Servicer shall have the right, without notice to the Holder or any prior
Holder of such Class R Certificate, to sell such Class R Certificate to a
purchaser selected by the Servicer on such terms as the Servicer may
choose. Such purported transferee shall promptly endorse and
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deliver a Class R Certificate in accordance with the instructions of the
Servicer. Such purchaser may be the Servicer itself or any affiliate of the
Servicer. The proceeds of such sale, net of the commissions (which may
include commissions payable to the Servicer or its affiliates), expenses
and taxes due, if any, shall be remitted by the Servicer to such purported
transferee. The terms and conditions of any sale under this clause (iii)(B)
shall be determined in the sole discretion of the Servicer, and the
Servicer shall not be liable to any Person having an ownership interest or
a purported ownership interest in a Class R Certificate as a result of its
exercise of such discretion.
(iv) The Servicer, on behalf of the Trustee, shall make
available, upon written request from the Trustee, all information
reasonably available to it that is necessary to compute any tax imposed
(A) as a result of the transfer of an ownership interest in a Class R
Certificate to any Person who is not other than a Disqualified
Organization, including the information regarding "excess inclusions" of
such Residual Certificate 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 other than a
Disqualified Organization. Reasonable compensation for providing such
information may be required by the Servicer from such Person.
(v) The provisions of this Section 6.02(g) set forth prior to
this Section (v) may be modified, added to or eliminated by the Servicer,
provided that there shall have been delivered to the Trustee the
following:
(A) written notification from each Rating Agency to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agency to downgrade its
then-current rating of the Certificates; and
(B) a certificate of the Servicer stating that the Servicer
has received an Opinion of Counsel, in form and substance
satisfactory to the Servicer, to the effect that such modification,
addition to or elimination of such provisions will not cause either
REMIC to cease to qualify as a REMIC and will not create a risk that
(i) the REMIC may be subject to an entity-level tax caused by the
transfer of a Class R Certificate to a Person which is not other than
a Disqualified Organization or (2) a Certificateholder or another
Person will be subject to a REMIC-related tax caused by the transfer
of applicable Class R Certificate to a Person which is not other than
a Disqualified Organization.
(vi) The following legend shall appear on each Class R
Certificate:
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO
THE Servicer AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE
UNITED
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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
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 CERTIFICATE BY ACCEPTANCE OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF
THIS PARAGRAPH.
(h) The Trustee shall have no liability to the Trust Fund arising from a
transfer of any such Certificate in reliance upon a certification, ruling or
Opinion of Counsel described in this Section 6.02; PROVIDED, HOWEVER, that the
Trustee shall not register the transfer of any Class R Certificate if it has
actual knowledge that the proposed transferee does not meet the qualifications
of a permitted Holder of a Class R Certificate as set forth in this Section
6.02.
SECTION 6.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there is delivered to the Servicer, the Insurer
and the Trustee 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 that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and interest in the Trust Fund. In connection with the issuance of any new
Certificate under this Section 6.03, the Trustee 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) connected therewith. Any replacement Certificate issued pursuant to
this Section 6.03 shall
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constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 6.04 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Trustee, and any agent of the Servicer, the Insurer
or the Trustee may treat the person in whose name any Certificate is registered
as the owner of such Certificate for the purpose of receiving distributions as
provided in this Agreement and for all other purposes whatsoever, and neither
the Servicer, the Trustee, the Insurer nor any agent of the Servicer, the
Insurer or the Trustee shall be affected by any notice to the contrary.
SECTION 6.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
(a) If three or more Certificateholders (i) request in writing from the
Trustee a list of the names and addresses of Certificateholders, (ii) state that
such Certificateholders desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Certificates and (iii)
provide a copy of the communication which such Certificateholders propose to
transmit, then the Trustee shall, within ten Business Days after the receipt of
such request, afford such Certificateholders access during normal business hours
to a current list of the Certificateholders. The expense of providing any such
information requested by a Certificateholder shall be borne by the
Certificateholders requesting such information and shall not be borne by the
Trustee. Every Certificateholder, by receiving and holding a Certificate, agrees
that the Trustee shall not be held accountable by reason of the disclosure of
any such information as to the list of the Certificateholders hereunder,
regardless of the source from which such information was derived.
(b) The Servicer, so long as it is the master servicer hereunder, shall
have unlimited access to a list of the names and addresses of the
Certificateholders which list shall be provided by the Trustee promptly upon the
request of the Servicer.
SECTION 6.06 MAINTENANCE OF OFFICE OR AGENCY.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in [St. Paul, Minnesota] where
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The Trustee initially designates the office
described in Section 9.11 as its office for such purpose. The Trustee will give
prompt written notice to the Certificateholders of any change in the location of
any such office or agency.
SECTION 6.07 BOOK-ENTRY CERTIFICATES.
Notwithstanding the foregoing, the Class A Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Depositor. The Class A
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
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Holder will receive a definitive certificate representing such Beneficial
Holder's interest in the Certificates, except as provided in Section 6.09.
Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to the Beneficial Holders pursuant to Section
6.09:
(a) the provisions of this Section 6.07 shall be in full force and effect
with respect to the Class A Certificates;
(b) the Depositor and the Trustee may deal with the Clearing Agency for all
purposes with respect to the Class A Certificates (including the making of
distributions on such Certificates) as the sole Holder of such Certificates;
(c) to the extent that the provisions of this Section 6.07 conflict with
any other provisions of this Agreement, the provisions of this Section 6.07
shall control; and
(d) the rights of the Beneficial Holders of the Class A Certificates shall
be exercised only through the Clearing Agency and the Participants and shall be
limited to those established by law and agreements between such Beneficial
Holders and the Clearing Agency and/or the Participants. Pursuant to the
Depository Agreement, unless and until Definitive Certificates are issued
pursuant to Section 6.09, the initial Clearing Agency will make book-entry
transfers among the Participants and receive and transmit distributions of
principal and interest on the related Certificates to such Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of the
Class A Certificates evidencing a specified percentage of the aggregate unpaid
principal amount of such Certificates, such direction or consent may be given by
the Clearing Agency at the direction of Beneficial Holders owning such
Certificates evidencing the requisite percentage of principal amount of such
Certificates. The Clearing Agency may take conflicting actions with respect to
the Class A Certificates to the extent that such actions are taken on behalf of
the Beneficial Holders.
SECTION 6.08 NOTICES TO CLEARING AGENCY.
Whenever notice or other communication to the Holders of Class A
Certificates is required under this Agreement, unless and until Definitive
Certificates shall have been issued to the related Certificateholders pursuant
to Section 6.09, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Class A Certificates to the
Clearing Agency which shall give such notices and communications to the related
Participants in accordance with its applicable rules, regulations and
procedures.
SECTION 6.09 DEFINITIVE CERTIFICATES.
If (a) the Depositor advises the Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
under the Depository Agreement with respect to the Certificates and the Trustee
or the Depositor is unable to locate a qualified successor, (b) the Depositor,
at its option, advises the Trustee in writing that it elects to terminate the
book-entry system with respect to the Class A Certificates through the Clearing
Agency or (c) after the occurrence of an Event of Default, Holders of Class A
Certificates evidencing not
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less than 66% of the aggregate Certificate Principal Balance of the Class A
Certificates advise the Trustee in writing that the continuation of a book-entry
system with respect to the such Certificates through the Clearing Agency is no
longer in the best interests of the Holders of such Certificates with respect to
the Class A Certificates, the Trustee shall notify all Holders of such
Certificates of the occurrence of any such event and the availability of
Definitive Certificates. Upon surrender to the Trustee of the such Certificates
by the Clearing Agency, accompanied by registration instructions from the
Clearing Agency for registration, the Trustee shall authenticate and deliver the
Definitive Certificates. Neither the Depositor 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 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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ARTICLE VII
THE DEPOSITOR AND THE SERVICER
SECTION 7.01 LIABILITIES OF THE DEPOSITOR AND THE SERVICER.
The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.
SECTION 7.02 MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE SERVICER.
The Depositor and the Servicer will each do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights and franchises (charter and statutory) and will each obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any Person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; PROVIDED, HOWEVER, that
the successor or surviving Person to the Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.
Notwithstanding anything else in this Section 7.02 or in Section 7.04
hereof to the contrary, the Servicer may assign its rights and delegate its
duties and obligations under this Agreement (except for the obligation of the
Servicer or Seller to effectuate repurchases or substitutions of Mortgage Loans
hereunder, including pursuant to Section 2.01, 2.02 or 2.04 hereof, which shall
remain with [__________] hereunder); PROVIDED, HOWEVER, that the Servicer gives
the Depositor, the Insurer and the Trustee notice of such assignment; and
PROVIDED FURTHER, that such purchaser or transferee accepting such assignment
and delegation shall be an institution that is a FNMA and FHLMC approved
seller/servicer in good standing, which has a net worth of at least
$[15,000,000], and which is willing to service the Mortgage Loans and executes
and delivers to the Depositor and the Trustee an agreement accepting such
delegation and assignment, which contains an assumption by such Person of the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement;
and PROVIDED FURTHER, that each of the Rating Agencies acknowledge that its
rating of the Certificates in effect immediately prior to such assignment and
delegation or its rating of the risk undertaken by the Insurer with respect to
the Policy will not be qualified or reduced as a result of such assignment and
delegation. In the case of any such assignment and delegation, the Servicer
shall be released from its obligations under this Agreement (except as provided
above), except that the Servicer shall remain liable for all
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liabilities and obligations incurred by it as Servicer hereunder prior to the
satisfaction of the conditions to such assignment and delegation set forth in
the preceding sentence.
SECTION 7.03 LIMITATION ON LIABILITY OF THE DEPOSITOR, THE SERVICER AND OTHERS.
Neither the Depositor, the Servicer, any Sub-Servicer nor any of the
directors, officers, employees or agents of the Depositor, the Servicer or any
Sub-Servicer shall be under any liability to the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; PROVIDED, HOWEVER, that
this provision shall not protect the Depositor or the Servicer against any
breach of representations or warranties made by it herein or protect the
Depositor or the Servicer or any such person from any liability which would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer, any Sub-Servicer and any
director, officer, employee or agent of the Depositor, the Servicer or any
Sub-Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Servicer, any Sub-Servicer and any director,
officer, employee or agent of the Depositor, the Servicer or any Sub-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
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder, provided that the foregoing indemnification by
the Trust Fund shall be limited to amounts that would otherwise be distributable
with respect to the Class S Certificates. Neither the Depositor, the Servicer
nor any Sub-Servicer shall be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to their respective duties
hereunder and which in its opinion may involve it in any expense or liability;
PROVIDED, HOWEVER, that either the Depositor, the Servicer or any Sub-Servicer
may in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto and interests of the Trustee and the Certificateholders hereunder.
SECTION 7.04 SERVICER NOT TO RESIGN.
The Servicer shall not resign from the obligations and duties imposed
upon it hereunder except upon determination that such obligations and duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Servicer under this Section 7.04 shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee [and
the Insurer]. The Servicer shall give notice of any proposed resignation to the
Trustee, the Certificateholders, the Insurer and the Rating Agencies. No such
resignation by the Servicer shall become effective until the Trustee or a
successor servicer acceptable to the Insurer shall have assumed the Servicer's
responsibilities and obligations in accordance with Section 8.02 hereof.
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SECTION 7.05 ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of FNMA or FHLMC for persons performing servicing
for mortgage loans purchased by FNMA or FHLMC. In the event that any such policy
or bond ceases to be in effect, the Servicer shall obtain a comparable
replacement policy or bond from an insurer or issuer, meeting the requirements
set forth above as of the date of such replacement.
SECTION 7.06 SERVICER MAY OWN CERTIFICATES.
The Servicer in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Servicer.
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ARTICLE VIII
DEFAULT
SECTION 8.01 EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(a) any failure by the Servicer to remit to the
Certificateholders, the Insurer or to the Trustee any payment other than a
Monthly Advance required to be made by the Servicer under the terms of
this Agreement, which failure shall continue unremedied for a period of
one Business Day after the date upon which written notice of such failure
shall have been given to the Servicer by the Trustee, the Insurer or the
Depositor or to the Servicer, the Insurer and the Trustee by the Holders
of Certificates having not less than 25% of the Voting Rights evidenced by
the Certificates; or
(b) any failure by the Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement (except as set forth in (c)
below) which failure (i) materially affects the rights of the
Certificateholders or the Insurer and (ii) shall continue unremedied for a
period of 60 days (except that such number of days shall be 15 in the case
of a failure to pay the premium for any Required Insurance Policy) after
the date on which written notice of such failure shall have been given to
the Servicer by the Trustee or the Depositor, or to the Servicer and the
Trustee by the Holders of Certificates evidencing not less than 25% of the
Voting Rights evidenced by the Certificates; or
(c) if a representation or warranty set forth in Section 2.03 or
2.04 hereof shall prove to be materially incorrect as of the time made in
any respect that materially and adversely affects interests of the
Certificateholders or the Insurer, and the circumstances or condition in
respect of which such representation or warranty was incorrect shall not
have been eliminated or cured, or the affected Mortgage Loan shall not
have been substituted for or repurchased, within 60 days after the date on
which written notice thereof shall have been given to the Servicer and
Seller by the Trustee for the benefit of the Certificateholders [and the
Insurer] or by the Depositor; or
(d) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(e) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and
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liabilities or similar proceedings of or relating to the Servicer or all or
substantially all of the property of the Servicer; or
(f) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of,
or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(g) either Rating Agency shall lower or withdraw the outstanding
rating of the Certificates because the existing or prospective financial
condition or mortgage loan servicing capability of the Servicer is
insufficient to maintain such outstanding rating; or
(h) any failure of the Servicer to make any Monthly Advance in
the manner and at the time required to be made from its own funds pursuant
to this Agreement and after receipt of notice from the Trustee pursuant to
Section 5.04, which failure continues unremedied after 5 p.m., [St. Paul,
Minnesota] time, on the Business Day immediately preceding the
Distribution Date; or
(i) a Servicer Trigger Event occurs.
If an Event of Default due to the actions or inaction of the Servicer
described in clauses (a) through (g) or (i) of this Section shall occur, then,
and in each and every such case, so long as such Event of Default shall not have
been remedied, the Trustee shall at the direction of the Insurer (unless an
Insurer Default is continuing) or, if so directed by the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates,
by notice in writing to the Servicer (with the prior written consent of the
Insurer and with a copy to the Rating Agencies), terminate all of the rights and
obligations of the Servicer under this Agreement (other than rights to
reimbursement for Monthly Advances or other advances previously made, as
provided in Section 3.09) PROVIDED, HOWEVER, that unless an Insurer Default is
continuing the successor to the Servicer appointed pursuant to Section 7.02
shall be acceptable to the Insurer and shall have accepted the duties of
Servicer effective upon the resignation of the Servicer.
If an Event of Default described in clause (h) shall occur, the
Trustee with the consent of the Insurer (which shall not be unreasonably
withheld) shall, prior to the next Distribution Date, terminate the rights and
obligations of the Servicer hereunder and succeed to the rights and obligations
of the Servicer hereunder pursuant to Section 8.02, including the obligation to
make Monthly Advances on such Distribution Date pursuant to the terms hereof.
SECTION 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer receives a notice of termination
pursuant to Section 8.01 hereof or resigns pursuant to Section 7.04 hereof,
subject to the provisions of Section 3.06 hereof, the Trustee shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and with respect to the transactions set forth or provided for herein
and shall be subject to all the responsibilities, duties and liabilities
relating
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thereto placed on the Servicer by the terms and provisions hereof, provided that
the Trustee shall not be deemed to have made any representation or warranty as
to any Mortgage Loan made by the Servicer and shall not effect any repurchases
or substitutions of any Mortgage Loan. As compensation therefor, the Trustee
shall be entitled to all funds relating to the Mortgage Loans that the Servicer
would have been entitled to charge to the related Custodial Account if the
Servicer had continued to act hereunder (except that the terminated Servicer
shall retain the right to be reimbursed for advances (including, without
limitation, Monthly Advances) theretofore made by the Servicer with respect to
which it would be entitled to be reimbursed if it had not been so terminated as
Servicer). Notwithstanding the foregoing, if the Trustee has become the
successor to the Servicer in accordance with this Section 8.02, the Insurer may,
and if the Insurer fails to the Trustee may, if it shall be unwilling to so act,
or shall, if it is unable to so act (exclusive of the obligations with respect
to Monthly Advances), appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution acceptable to the
Insurer, the appointment of which does not adversely affect the then current
rating of the Certificates, as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer, provided that such successor to the Servicer shall not be deemed
to have made any representation or warranty as to any Mortgage Loan made by the
Servicer. Pending appointment of a successor to the Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall act in
such capacity as provided herein. 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 be in excess of that
permitted the Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any other successor servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof caused by the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it.
The Servicer that has been terminated shall, at the request of the
Trustee but at the expense of such Servicer, deliver to the assuming party all
documents and records relating to each Sub-Servicing Agreement and the related
Mortgage Loans and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Sub-Servicing Agreement to the assuming party.
The Servicer shall cooperate with the Trustee and any successor
servicer in effecting the termination of the Servicer's responsibilities and
rights hereunder, including without limitation, the transfer to such successor
for administration by it of all cash amounts which shall at the time be credited
by the Servicer to the Custodial Account or thereafter received with respect to
the Mortgage Loans.
Neither the Trustee nor any other successor servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (a) the
failure of the Servicer to (i) deliver, or any delay in delivering, cash,
documents or records to it, (ii) cooperate as required by this Agreement, or
(iii) deliver the Mortgage Loan to the Trustee as required by this Agreement, or
(b) restrictions imposed by any regulatory authority having jurisdiction over
the Servicer.
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Any successor to the Servicer as servicer shall during the term of
its service as servicer maintain in force the policy or policies that the
Servicer is required to maintain pursuant to Section 7.05 hereof.
SECTION 8.03 NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination or appointment of a successor to the Servicer, the
Trustee shall give prompt written notice thereof to the Insurer, the
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Rating Agencies.
(b) Within 2 Business Days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to the Insurer and all Certificateholders and the
Rating Agencies notice of each such Event of Default hereunder known to the
Trustee, unless such Event of Default shall have been cured or waived.
SECTION 8.04 WAIVER OF EVENTS OF DEFAULT.
The Insurer or the Holders representing at least 66% of the Voting
Rights of Certificates affected by a default or Event of Default hereunder may
waive any default or Event of Default, with the written consent of the Insurer,
which consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that (a) a
default or Event of Default under clause (i) of Section 8.01 may be waived, with
the written consent of the Insurer, only by all of the Holders of Certificates
affected by such default or Event of Default (which Voting Rights of the Class A
Certificateholders may be exercised by the Insurer without the consent of such
Holders and may only be exercised by such Holders with the prior written consent
of the Insurer so long as there does not exist a failure by the Insurer to make
a required payment under the Policy) and (b) no waiver pursuant to this Section
8.04 shall affect the Holders of Certificates in the manner set forth in Section
11.01(b)(i), (ii) or (iii). Upon any such waiver of a default or Event of
Default by the Insurer or the Holders representing the requisite percentage of
Voting Rights of Certificates affected by such default or Event of Default with
the consent of the Insurer, which consent shall not be unreasonably withheld,
such default or Event of Default shall cease to exist and shall be deemed to
have been remedied for every purpose hereunder. No such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon except to the extent expressly so waived.
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ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 9.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, undertakes with
respect to the Trust Fund to perform such duties and only such duties as are
specifically set forth in this Agreement. In case an Event of Default has
occurred and remains uncured, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. Any permissive right
of the Trustee set forth in this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they conform
to the requirements of this Agreement. The Trustee shall have no duty to
recompute, recalculate or verify the accuracy of any resolution, certificate,
statement, opinion, report, document, order or other instrument so furnished to
the Trustee.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability which would be imposed by
reason of its willful misfeasance or bad faith; PROVIDED, HOWEVER, that:
(a) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be personally
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and 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 which it reasonably believed in good faith to be genuine
and to have been duly executed by the proper authorities respecting any
matters arising hereunder;
(b) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless the Trustee was negligent or acted in bad
faith or with willful misfeasance;
(c) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates evidencing not
less than 25% of the Voting Rights allocated to
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each Class of Certificates relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement; and
(d) no provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any
of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Except with respect to an Event of Default described in clause (a) of
Section 8.01, the Trustee shall not be deemed to have knowledge of any Event of
Default or event which, with notice or lapse of time, or both, would become an
Event of Default, unless a Responsible Officer of the Trustee shall have
received written notice thereof from the Servicer, the Depositor or a
Certificateholder, or a Responsible Officer of the Trustee has actual notice
thereof, and in the absence of such notice no provision hereof requiring the
taking of any action or the assumption of any duties or responsibility by the
Trustee following the occurrence of any Event of Default or event which, with
notice or lapse of time or both, would become an Event of Default, shall be
effective as to the Trustee.
The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided, however,
that the Trustee shall use its best efforts to remit to the Servicer upon
receipt of any such complaint, claim, demand, notice or other document (i) which
is delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.
SECTION 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 9.01:
(i) the Trustee may request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
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 be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such
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Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured or waived), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care
and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that 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 so to do by Holders of
Certificates evidencing not less than 25% of the Voting Rights allocated
to each Class of Certificates; PROVIDED, HOWEVER, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such expense or
liability as a condition to taking any such action; the reasonable expense
of every such investigation shall be paid by the Servicer in the event
that such investigation relates to an Event of Default by the Servicer, if
an Event of Default by the Servicer shall have occurred and is continuing,
and otherwise by the Certificateholders requesting the investigation;
(vi) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys;
(vii)the Trustee shall not be required to expend its own funds
or otherwise incur any financial liability in the performance of any of
its duties hereunder if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such liability
is not assured to it; and
(viii) the Trustee shall not be liable for any loss on any
investment of funds pursuant to this Agreement.
(b) All rights of action under this Agreement or under any of the Certificates,
enforceable by the Trustee, may be enforced by it without the possession of any
of the Certificates, or the production thereof at the trial or other proceeding
relating thereto, and any such suit, action or proceeding instituted by the
Trustee shall be brought in its name for the benefit of all the Holders of such
Certificates, subject to the provisions of this Agreement.
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SECTION 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, the Certificates or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Depositor or the Servicer of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Certificate Account by the Depositor or the Servicer.
SECTION 9.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
SECTION 9.05 TRUSTEE'S FEES AND EXPENSES.
The Trustee shall pay to itself on each Distribution Date from
amounts on deposit in the Certificate Account, an amount equal to the Trustee
Fee in accordance with Section 4.02(b). Any amount payable to the Trustee on
such Distribution Date in excess of such amount on deposit will be paid by the
Servicer from its own funds. Any payment hereunder made by the Servicer to the
Trustee, other than any amount to be paid from the Certificate Account pursuant
to this Section 9.05, shall be paid from the Servicer's own funds, without
reimbursement from the Trust Fund therefor.
The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Depositor and held harmless against any
loss, liability or expense (a) incurred in connection with any legal action
relating to this Agreement or the Certificates, or the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance of
any of the Trustee's duties hereunder or by reason of reckless disregard of the
Trustee's obligations and duties hereunder and (b) resulting from the exercise
of any power of attorney granted by the Trustee in accordance with this
Agreement. Such indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee hereunder.
SECTION 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a corporation or
association having its principal office in a state and city acceptable to the
Depositor [and the Insurer] and organized and doing business under the laws of
such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having ratings on its long-term debt
obligations at the time of such appointment in at least the third highest rating
category by both Moody's and Standard & Poor's or such lower ratings as will not
cause Moody's or Standard & Poor's to lower their then-current ratings of the
Class A Certificates, acceptable to the Insurer, having a combined capital and
surplus of at least $[50,000,000] and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.06 the combined capital and surplus
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of such corporation or association shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07 hereof.
SECTION 9.07 RESIGNATION AND REMOVAL OF TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (a) giving written notice of resignation to the Depositor [and
the Insurer] and by mailing notice of resignation by first class mail, postage
prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register, and to the Rating Agencies, not less than 60 days before
the date specified in such notice when, subject to Section 9.08, such
resignation is to take effect, and (b) acceptance by a successor trustee
acceptable to the Insurer in accordance with Section 9.08 meeting the
qualifications set forth in Section 9.06. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 hereof and shall fail to resign after
written request thereto by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation or if the
Trustee breaches any of its obligations or representations hereunder, then the
Insurer or, with the prior written consent of the Insurer, the Depositor 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 and
one copy to the successor trustee. The Trustee may also be removed at any time
by the Holders of Certificates evidencing not less than 50% of the Voting Rights
evidenced by the Certificates with the prior written consent of the Insurer.
Notice of any removal of the Trustee and acceptance of appointment by the
successor trustee shall be given to the Rating Agencies by the Servicer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 9.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.08 hereof.
SECTION 9.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 9.07 hereof
shall execute, acknowledge and deliver to the Depositor 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 the like effect as if originally named as trustee
herein. The Depositor 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.
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No successor trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 9.06 hereof and its appointment is
acceptable to the Insurer and shall not adversely affect the then current rating
of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register. If the 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 at the expense of the Depositor.
SECTION 9.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any Person resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any Person succeeding
to the business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such Person shall be eligible under the provisions of Section 9.06
hereof without the execution or filing of any paper or further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
SECTION 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the applicable Certificateholders, such title to the Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 9.10,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within fifteen days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or imposed upon
the Trustee, except for any obligation of the Trustee under this Agreement to
advance funds on behalf of the Servicer, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
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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 Servicer), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Trustee;
(b) no trustee hereunder shall be held personally liable by reason of any
act or omission of any other trustee hereunder; and
(c) the Servicer and the Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 9.11 OFFICE OF THE TRUSTEE.
The office of the Trustee for purposes of receipt of notices and demands is
[_____________________________________], Attn: Structured Finance/[__________]
200_-____.
SECTION 9.12 TAX RETURNS.
The Servicer, upon request, will furnish the Trustee with all such
information in the possession of the Servicer as may be reasonably required in
connection with the preparation by the Trustee of all tax and information
returns of the Trust Fund, and the Trustee shall sign such returns. The Servicer
shall indemnify the Trustee for all reasonable costs, including legal fees,
related to errors in such tax returns due to errors in information provided by
the Servicer.
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ARTICLE X
TERMINATION
SECTION 10.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL MORTGAGE LOANS.
The obligations and responsibilities of the Servicer, the Depositor
and the Trustee created hereby with respect to the Trust Fund created hereby
shall terminate upon the earlier of:
(a) the repurchase by the Servicer, at its election, of all
Mortgage Loans and all property acquired in respect of any Mortgage Loan
remaining in the Trust Fund, which repurchase right the Servicer may
exercise at its sole and exclusive election as of any Distribution Date
(such applicable Distribution Date being herein referred to as the
"Optional Termination Date") on or after the date on which the aggregate
Principal Balance of the Mortgage Loans at the time of the repurchase is
less than 5% of the aggregate Principal Balance of the Mortgage Loans as
of the Cut-off Date; and
(b) the later of (i) twelve months after the maturity of the
last Mortgage Loan remaining in the Trust Fund, (ii) the liquidation (or
any advance with respect thereto) of the last Mortgage Loan remaining in
the Trust Fund and the disposition of all REO Property and (iii) the
distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement.
In no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Mr. Joseph P.
Kennedy, former Ambassador of the United States to Great Britain, living on the
date of execution of this Agreement.
The Mortgage Loan Repurchase Price for any such Optional Termination
of the Trust Fund shall be equal to the aggregate Principal Balance of the
Mortgage Loans as of the date of repurchase, together with accrued and unpaid
interest thereon from the date to which such interest was paid or advanced at
the sum of the applicable Net Mortgage Rate and the Trustee Fee Rate with
respect to each Mortgage Loan through the last day of the month of such
repurchase, plus any sums on account of such Mortgage Loan that have been
advanced by the Servicer and are reimbursable to the Servicer hereunder
(including the Principal Balance of each Mortgage Loan that was secured by any
REO Property) plus any amounts due the Insurer and the Insurance Agreement;
PROVIDED, HOWEVER, that if the Servicer shall so choose, the Servicer may remit
the Mortgage Loan Repurchase Price net of advances that would otherwise be
reimbursable to the Servicer and the Servicer would have no further entitlement
to reimbursement for such advances. The Trustee shall give notice to the Insurer
and the Rating Agencies of the Servicer's election to purchase the Mortgage
Loans pursuant to this Section 10.01 and of the Optional Termination Date. No
purchase pursuant to clause (a) is permitted if it would result in a draw on the
Policy unless the Insurer consents.
SECTION 10.02 PROCEDURE UPON OPTIONAL TERMINATION.
(a) In case of any Optional Termination pursuant to Section 10.01, the
Servicer shall, at least twenty days prior to the date notice is to be mailed to
the affected
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Certificateholders notify the Trustee [and the Insurer] of such Optional
Termination Date and of the applicable repurchase price of the Mortgage Loans to
be repurchased.
(b) Any repurchase of the Mortgage Loans by the Servicer shall be made on
an Optional Termination Date by deposit of the applicable repurchase price into
the Certificate Account, as applicable, before the Distribution Date on which
such repurchase is effected. Upon receipt by the Trustee of an Officers'
Certificate of the Servicer certifying as to the deposit of such repurchase
price into the Certificate Account, the Trustee and each co-trustee and separate
trustee, if any, then acting as such under this Agreement, shall, upon request
and at the expense of the Servicer, execute and deliver all such instruments of
transfer or assignment, in each case without recourse, as shall be reasonably
requested by the Servicer, to vest title in the Servicer in the Mortgage Loans
so repurchased and shall transfer or deliver to the Servicer the repurchased
Mortgage Loans. Any distributions on the Mortgage Loans received by the Trustee
subsequent to (or with respect to any period subsequent to) the Optional
Termination Date shall be promptly remitted by it to the Servicer.
(c) Notice of the Distribution Date on which the Servicer anticipates that
the final distribution shall be made (whether upon Optional Termination or
otherwise), shall be given promptly by the Servicer to the Trustee [and the
Insurer] and by the Trustee by first class mail to Holders of the affected
Certificates. Such notice shall be mailed no earlier than the 15th day and not
later than the 10th day preceding the Optional Termination Date or date of final
distribution, as the case may be. Such notice shall specify (i) the Distribution
Date upon which final distribution on the affected Certificates will be made
upon presentation and surrender of such Certificates at the office or agency
therein designated, (ii) the amount of such final distribution and (iii) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, such distribution being made only upon presentation and surrender of
such Certificates at the office or agency maintained for such purposes (the
address of which shall be set forth in such notice).
(d) In the event that any Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining such Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain subject to
the Trust Fund.
SECTION 10.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event the Servicer exercises its purchase option pursuant to
Section 10.01, REMIC I or REMIC II, as the case may be, shall be terminated in
accordance with the following additional requirements, unless the Trustee has
received an Opinion of Counsel to the effect that the failure of REMIC I or
REMIC II, as the case may be, to comply with the requirements of this Section
will not (i) result in the imposition of taxes on a "prohibited transaction" of
the REMIC, as described in Section 860F of the Code, or (ii) cause REMIC I or
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REMIC II, as the case may be, to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(A) within 90 days prior to the final Distribution Date set
forth in the notice given by the Servicer under Section 10.02, the Holder
of the Class R Certificates shall adopt a plan of complete liquidation of
the REMIC; and
(B) at or after the time of adoption of any such plan of
complete liquidation for the REMIC at or prior to the final Distribution
Date, the Trustee shall sell all of the assets of the Trust Fund to the
Depositor for cash; PROVIDED, HOWEVER, that in the event that a calendar
quarter ends after the time of adoption of such a plan of complete
liquidation but prior to the final Distribution Date, the Trustee shall
not sell any of the assets of the Trust Fund prior to the close of that
calendar quarter.
(b) By its acceptance of a Class R Certificate, the Holder thereof hereby
agrees to adopt such a plan of complete liquidation and to take such other
action in connection therewith as may be reasonably required to liquidate and
otherwise terminate REMIC I or REMIC II.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01 AMENDMENT.
(a) This Agreement may be amended from time to time by the Depositor and
the Trustee, with the consent of the Insurer but without the consent of any of
the Certificateholders,
(i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein that may be
inconsistent with any other provisions herein,
(iii)to modify, eliminate or add to any of its provisions to such extent
as shall be necessary or desirable to maintain the qualification of
the Trust Fund as two separate REMICs at all times that any
Certificate is outstanding or to avoid or minimize the risk of the
imposition of any tax on the Trust Fund pursuant to the Code that
would be a claim against the Trust Fund, provided that the Trustee has
received an Opinion of Counsel to the effect that (A) such action is
necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax and (B) such
action will not adversely affect the status of the Trust Fund as two
separate REMICs or adversely affect in any material respect the
interests of any Certificateholder, or
(iv) to make any other provisions with respect to matters or questions
arising under this Agreement that are not materially inconsistent with
the provisions of this Agreement, provided that such action shall not
adversely affect in any material respect the interests of any
Certificateholder or cause an Adverse REMIC Event.
(b) This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Insurer and the Holders of
Certificates evidencing, in the aggregate, not less than 66-2/3% of the Voting
Rights of all the Certificates 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 Holders of the Certificates;
PROVIDED, HOWEVER, that no such amendment may (i) reduce in any manner the
amount of, delay the timing of or change the manner in which payments received
on or with respect to Mortgage Loans are required to be distributed with respect
to any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of a Class
of Certificates in a manner other than as set forth in (i) above without the
consent of the Holders of Certificates evidencing not less than 66-2/3% of the
Voting Rights of such Class, (iii) reduce the aforesaid percentages of Voting
Rights, the holders of which are required to consent to any such amendment
without the consent of 100% of the Holders of Certificates of the Class affected
thereby, (iv) change the percentage of the Principal Balance of the Mortgage
Loans specified in Section 10.01(a) relating to optional termination of the
Trust Fund or (v) modify the provisions of this Section 11.01.
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It shall not be necessary for the consent of Certificateholders under
this Section 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.
(c) Promptly after the execution of any amendment to this Agreement, the
Trustee shall furnish written notification of the substance of such amendment to
each Certificateholder and the Rating Agencies.
SECTION 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS.
(a) This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. Such recordation,
if any, shall be effected by the Servicer at its expense on direction of the
Insurer or the Trustee, but only upon direction of the Insurer or the Trustee
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders of
the Trust Fund.
(b) 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 11.03 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.04 INTENTION OF PARTIES.
(a) It is the express intent of the Depositor, the Seller and the Trustee
that the conveyance by the Seller to the Depositor pursuant to the Mortgage Loan
Purchase Agreement and the conveyance by the Depositor to the Trustee as
provided for in Section 2.01 of each of the Seller's and Depositor's right,
title and interest in and to the Mortgage Loans be, and be construed as, an
absolute sale and assignment by the Seller to the Depositor and by the Depositor
to the Trustee of the Mortgage Loans for the benefit of the Certificateholders
[and the Insurer]. Further, it is not intended that either conveyance be deemed
to be a pledge of the Mortgage Loans by the Seller to the Depositor or by the
Depositor to the Trustee to secure a debt or other obligation. However, in the
event that the Mortgage Loans are held to be property of the Seller or the
Depositor, or if for any reason the Mortgage Loan Purchase Agreement or this
Agreement is held or deemed to create a security interest in the Mortgage Loans,
then it is intended that (i) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8
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and 9 of the New York Uniform Commercial Code and the Uniform Commercial Code of
any other applicable jurisdiction; (ii) the conveyances provided for in Section
2.01 shall be deemed to be a grant by the Seller and the Depositor to the
Trustee on behalf of the Certificateholders [and the Insurer] ([and the Insurer]
directly), to secure payment in full of the Secured Obligations (as defined
below), of a security interest in all of the Seller's and the Depositor's right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to the Mortgage Loans, including the
Mortgage Notes, the Mortgages, any related insurance policies and all other
documents in the related Mortgage Files, and all accounts, contract rights,
general intangibles, chattel paper, instruments, documents, money, deposit
accounts, certificates of deposit, goods, letters of credit, advices of credit
and uncertificated securities consisting of, arising from or relating to (A) the
Mortgage Loans, including with respect to each Mortgage Loan, the Mortgage Note
and related Mortgage, and all other documents in the related Trustee Mortgage
Files, and including any Replacement Mortgage Loans; (B) pool insurance
policies, hazard insurance policies and any bankruptcy bond relating to the
foregoing, if applicable; (C) the Certificate Account; (D) the Custodial
Account; (E) all amounts payable after the Cut-off Date to the holders of the
Mortgage Loans in accordance with the terms thereof; (F) all income, payments,
proceeds and products of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation all amounts from time to time held or invested in the
Certificate Account, whether in the form of cash, instruments, securities or
other property; and (G) all cash and non-cash proceeds of any of the foregoing;
(iii) the possession by the Trustee or any other agent of the Trustee of
Mortgage Notes or such other items of property as constitute instruments, money,
documents, advices of credit, letters of credit, goods, certificated securities
or chattel paper shall be deemed to be a "possession by the secured party", or
possession by a purchaser or a person designated by him or her, for purposes of
perfecting the security interest pursuant to the Uniform Commercial Code
(including, without limitation, Sections 9-305, 8-313 or 8-321 thereof); and
(iv) 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, financial
intermediaries, securities intermediaries, bailees or agents (as applicable) of
the Trustee for the purpose of perfecting such security interest under
applicable law. "Secured Obligations" means (i) the rights of each
Certificateholder to be paid any amount owed to it under this Agreement, (ii)
the rights of the Insurer to be paid any amount owed to it under this Agreement
and (iii) all other obligations of the Seller and the Depositor under this
Agreement and the Mortgage Loan Purchase Agreement.
(b) The Seller and the Depositor, and, at the Depositor's direction, the
Servicer and the Trustee, shall, to the extent consistent with this Agreement,
take such reasonable actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans and
the other property described above, such security interest would be deemed to be
a perfected security interest of first priority as applicable. The Trustee shall
file, at its expense, all filings necessary to maintain the effectiveness of any
original filings necessary under the Uniform Commercial Code as in effect in any
jurisdiction to perfect the Trustee's security interest (and the security
interest granted to the Insurer directly) in or lien on the Mortgage Loans,
including without limitation (i) continuation statements, and (ii) such other
statements as may be occasioned by any transfer of any interest of the Servicer
or the Depositor in any Mortgage Loan.
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SECTION 11.05 NOTICES.
In addition to other notices provided under this Agreement, the
Trustee shall notify the Rating Agencies in writing: (a) of any substitution of
any Mortgage Loan; (b) of any payment or draw on any insurance policy applicable
to the Mortgage Loans; (c) of the final payment of any amounts owing to a Class
of Certificates; (d) any Event of Default under this Agreement; and (e) in the
event any Mortgage Loan is repurchased in accordance with this Agreement.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when received (i) in the case of the
Depositor, Credit Suisse First Boston Mortgage Securities Corp., 11 Madison
Avenue, New York, New York 10055, Attention: President; (ii) in the case of the
Trustee, [___________________], [_____________________], Attn: Structured
Finance or such other address as may hereafter be furnished to the Depositor in
writing by the Trustee; (iii) in the case of the Seller or Servicer,
[___________________],[___________________], Attention: General Counsel; (iv) in
the case of the Insurer, [___________________],[___________________], Attn:
Insured Portfolio Management Structured Finance; and (v) in the case of the
Rating Agencies, [Moody's Investors Service, Inc. 99 Church Street, New York,
New York 10007, Attention: Mortgage-Backed Securities Rating Group] and
[Standard & Poor's Rating Services, 25 Broadway, New York, New York 10004,
Attention: Structured Finance]. Notices to Certificateholders shall be deemed
given when mailed, first class postage prepaid.
SECTION 11.06 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof or the
Insurer.
SECTION 11.07 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
95
<PAGE>
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee and Insurer a
written notice of an Event of Default and of the continuance thereof, as
provided herein, and such default would not result in a claim under the Policy,
and unless the Holders of Certificates evidencing not less than 25% of the
Voting Rights evidenced by the Certificates shall also 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 Insurer] shall have given its written
consent, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 11.07, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.08 CERTIFICATES NONASSESSABLE AND FULLY PAID.
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 11.09 [RIGHTS OF THE INSURER.
(a) The Insurer is an express third-party beneficiary of this Agreement
unless an Insurer Default exists.
(b) On each Distribution Date the Trustee shall forward to the Insurer a
copy of the reports furnished to the Class A Certificateholders and the
Depositor on such Distribution Date.
(c) The Trustee shall provide to the Insurer copies of any report, notice,
Opinion of Counsel, Officer's Certificate, request for consent or request for
amendment to any document related hereto promptly upon the Trustee's production
or receipt thereof.
(d) Unless an Insurer Default exists, the Trustee and the Depositor shall
not agree to any amendment to this Agreement without first having obtained the
prior written consent of the Insurer, if such consent is not unreasonably
withheld.
96
<PAGE>
(e) So long as there does not exist a failure by the Insurer to make a
required payment under the Policy, the Insurer shall have the right to exercise
all rights of the Holders of the Class A Certificates under this Agreement
without any consent of such Holders, and such Holders may exercise such rights
only with the prior written consent of the Insurer, except as provided herein.]
97
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized all as of the first day of [____________, 200_].
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP., as Depositor
By:
------------------------------------
Name:
Title:
[----------------------------],
as Seller and Servicer
By:
------------------------------------
Name:
Title:
[----------------------------],
as Trustee
By:
------------------------------------
Name:
Title:
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this [___] day of [__________,200_], before me, personally
appeared [____________], known to me to be an officer of
[____________________________], the [national association] that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said national association, and acknowledged to me that such national
association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the [___] day of [__________,200_], before me, personally appeared
[__________], known to me to be a [_________________] of Credit Suisse First
Boston Mortgage Securities Corp., one of the corporations that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the [____] of [__________, 200_] before me, a Notary Public in and
for said State, personally appeared [______________] known to me to be a
[_____________] of [________________], the [________________________] that
executed the within instrument and also known to me to be the person who
executed it on behalf of said bank, and acknowledged to me that such bank
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CREDIT
SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP. OR THE TRUSTEE REFERRED TO BELOW,
OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY
ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
A-1
<PAGE>
[--------------------]
MORTGAGE-BACKED PASS-THROUGH CERTIFICATE
SERIES 200_-____, CLASS A
Evidencing an undivided interest in a Trust Fund whose assets consist of a pool
of adjustable-rate, conventional mortgage loans secured by first liens on one-
to four-family, residential real properties and certain other property held in
trust transferred by
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
CUSIP $ INITIAL AGGREGATE
CLASS A CERTIFICATE
- - - - - - - - -------------------- PRINCIPAL BALANCE
Certificate No. A- $____________ INITIAL CERTIFICATE
---- PRINCIPAL BALANCE OF
THIS CERTIFICATE
First Distribution Final Scheduled
Date: Distribution Date:
[_________, 200_]
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
beneficial interest in the Trust Fund referred to below consisting of a pool of
adjustable-rate conventional mortgage loans secured by first liens on one- to
four-family residential real properties (the "Mortgage Loans") and certain other
property held in trust transferred to the Trust Fund by Credit Suisse First
Boston Mortgage Securities Corp. (the "Depositor"), and certain related
property. The Trust Fund was created pursuant to the Pooling and Servicing
Agreement, dated as of [_________, 200_] (the "Agreement"), among the Depositor,
[________________], as trustee (the "Trustee", which term includes any successor
entity under the Agreement) and [___________________], as seller and servicer, a
summary of certain of the pertinent provisions of which is set forth herein.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
This Certificate is one of a duly authorized issue of certificates by
Credit Suisse First Boston Mortgage Securities Corp. designated as the
[_______________] Mortgage-Backed Pass-Through Certificates, Series 200_-____
(the "Certificates"), which is comprised of the following [four] Classes: Class
A, Class S, Class R-I and Class R-II. Reference is hereby made to the Agreement
for a statement of the respective rights thereunder of the Depositor and the
Trustee and the Holders of the Certificates and the terms upon which the
Certificates are authenticated and delivered. This Certificate represents an
interest in the Trust Fund, which Trust Fund consists of, among other things,
(i) the Mortgage Loans and all distributions thereon payable after the Cut-off
Date, net of certain amounts in accordance with the provisions of the Agreement,
(ii) the Certificate Account and the Custodial Account and all amounts deposited
therein pursuant to the applicable provisions of the Agreement, net of any
investment earnings thereon, (iii) the interest of the Trust Fund in any
insurance policies with respect to the Mortgage
A-2
<PAGE>
Loans, (iv) the interest of the Trust Fund in the Policy issued for the benefit
of the Holders of the Class A Certificates, (v) the rights of the Depositor
assigned to the Trustee pursuant to Sections 2.01 and 3.01 of the Agreement and
(vi) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
This Class A Certificate represents a Percentage Interest equal to
the Initial Certificate Principal Balance of this Certificate divided by the
Initial Certificate Principal Balance of the Class A Certificates, both as set
forth above.
The Trustee shall distribute from the Certificate Account, to the
extent of available funds, on the 25th day of each calendar month, or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing [_________, 200_], to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month immediately preceding the month of such
distribution (each, a "Record Date"), a principal amount equal to the product of
the Percentage Interest evidenced by this Certificate and that portion of the
Available Distribution Amount that is allocated to principal on such Class of
Certificates on such Distribution Date.
Distributions of interest will be made on each Distribution Date, to
the extent of available funds, in an amount equal to the sum of (a) one month's
interest accrued at the per annum Certificate Rate on the outstanding
Certificate Principal Balance of this Certificate as of the day immediately
prior to the related Distribution Date reduced by its pro rata portion of the
aggregate shortfalls of interest allocated to such Class of Certificates and (b)
the amount of any Class A Cumulative Interest Shortfall Amount payable on such
Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Loans and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto at the address
appearing in the Certificate Register or, if such Holder holds one or more of
this Class of Certificates with an aggregate initial Certificate Principal
Balance of at least $[2,500,000] or all of the Certificates of this Class, by
wire transfer in immediately available funds to the account of such
Certificateholder designated in writing to the Trustee at least five Business
Days prior to the applicable Record Date. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice of the pendency
of such final distribution and only upon presentation and surrender of this
Certificate at the office or agency designated in such notice.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Holders of Certificates evidencing Voting Rights aggregating not less than
66-2/3% of the Voting Rights of all the Certificates; PROVIDED, HOWEVER, that no
such amendment may (i) reduce in any manner the amount of, delay the timing of
or change the manner in which payments received on Mortgage Loans are required
to be distributed in respect of any Certificate without the consent of the
Holder of such Certificate, (ii) adversely
A-3
<PAGE>
affect in any material respect the interests of the Holders of a Class of
Certificates in a manner other than in (i) above without the consent of the
Holders of Certificates evidencing not less than 66-2/3% of the Voting Rights of
such Class and (iii) reduce the aforesaid percentages of Voting Rights, the
holders of which are required to consent to any such amendment, without the
consent of 100% of the Holders of Certificates of the Class affected thereby.
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 Agreement also permits the Depositor and the Trustee to amend
certain terms and conditions set forth in the Agreement without the consent of
Holders of the Certificates. At any time that any of the Class A Certificates
are outstanding, [___]% of all Voting Rights will be allocated to the Holders of
the Class A Certificates, in proportion to their then outstanding Certificate
Principal Balances, [___]% of all Voting Rights will be allocated to the Holders
of the Class S Certificates, [___]% of all Voting Rights will be allocated to
the Holders of the Class R-I Certificates and [___]% of all Voting Rights will
be allocated to the Holders of the Class R-II Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class and of authorized denominations, and for the same aggregate
interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Class A Certificates will be issued in fully registered form in
minimum denominations of $100,000 Certificate Principal Balance and in integral
multiples of $1,000 in excess of such amount; PROVIDED, HOWEVER, that one
Certificate of each Class may be issued in such other amount as is required so
that the aggregate of each Class of Certificates equals its respective aggregate
Certificate Principal Balance. As provided in the Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for one
or more new Certificates of the same Class and of authorized denominations
evidencing a like aggregate Certificate Principal Balance, as requested by the
Holder surrendering the same.
No service charge will be made for such registrations of transfers or
exchanges, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. The Trustee
and any agent of the Trustee may treat the person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Trustee nor
any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor and the Trustee
created by the Agreement will terminate upon the earlier of (a) the purchase by
the Servicer from the Trust Fund of all remaining Mortgage Loans and all
property acquired in respect of such Mortgage Loans, thereby effecting early
retirement of the Certificates, or (b) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in the Trust
Fund and the disposition of all property acquired upon foreclosure or deed in
lieu of
A-4
<PAGE>
foreclosure of any Mortgage Loan. As provided in the Agreement, the right to
purchase all Mortgage Loans pursuant to clause (a) above shall be conditioned
upon the unpaid Principal Balances of such Mortgage Loans, at the time of any
such repurchase, aggregating less than 5% of the aggregate Principal Balances
thereof as of the Cut-off Date.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning. If the terms hereof are inconsistent with the
Agreement, the Agreement shall control.
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 Agreement or be valid or obligatory for any
purpose.
The recitals contained herein shall be taken as statements of the
Depositor and not of the Trustee. The Trustee assumes no responsibility for the
correctness of the statements contained in this Certificate and makes no
representation as to the validity or sufficiency of the Agreement, this
Certificate, any Mortgage Loan or any related document.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
[_______________________],
solely as Trustee
and not individually
By:_______________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Agreement.
Date:
----------------------
[-----------------------],
as Trustee
By:-----------------------
Authorized Officer
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, or
assignee) the undivided interest in the Trust Fund evidenced by the within
Certificate and hereby authorize(s) the transfer of registration of such
interest to the assignee on the Certificate Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like Initial Certificate Principal Balance and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:____________________________________
_________________________ _______________________________________
Social Security or Signature by or on behalf of assignor
other Tax Identification (signature must be signed as registered)
No. of Assignee
____________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Master Servicer:
Distribution shall be made by check mailed to__________________________,
_____________________________________ or if the aggregate initial Certificate
Principal Balance of Certificates of this Class held by the Holder is at least
$[2,500,000] or the Percentage Interest within such Class is 100%, and the
Trustee shall have received appropriate wiring instructions in accordance with
the Agreement, by wire transfer in immediately available funds to
________________________________the account of , __________________________
account number _________________. This information is provided by the assignee
named above, or its agent.
A-7
<PAGE>
EXHIBIT B
FORM OF CLASS S CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT REFERRED TO HEREIN.
THE YIELD TO MATURITY ON THIS CERTIFICATE WILL BE EXTREMELY SENSITIVE TO THE
RATE AND TIMING OF PAYMENTS (INCLUDING PREPAYMENTS) ON THE MORTGAGE LOANS.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS [_______________, 200_].
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT 100% SPA (AS DESCRIBED IN THE
PROSPECTUS SUPPLEMENT), AND ASSUMING A CONSTANT PASS-THROUGH RATE EQUAL TO THE
INITIAL CERTIFICATE RATE, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN
$____ OF OID PER [$1,000] [$100,000] OF [INITIAL NOTIONAL AMOUNT], THE PRE-TAX
YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $____ PER [$1,000] [$100,000] OF [INITIAL
NOTIONAL AMOUNT], COMPUTED USING THE APPROXIMATE METHOD. NO REPRESENTATION IS
MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE STANDARD
PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE OR AS TO THE CONSTANCY OF THE
CERTIFICATE RATE.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CREDIT
SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP. OR THE TRUSTEE REFERRED TO BELOW,
OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY
ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
B-1
<PAGE>
[________________________]
MORTGAGE-BACKED PASS-THROUGH CERTIFICATE
SERIES 200_-____, CLASS S
Evidencing an undivided interest in the interest portion of a Trust Fund whose
assets consist of a pool of adjustable-rate, conventional mortgage loans secured
by first liens on one- to four-family, residential real properties and certain
other property held in trust transferred by
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
$ INITIAL AGGREGATE
NOTIONAL AMOUNT OF
CLASS S CERTIFICATES
Certificate No. S- 100% PERCENTAGE INTEREST
---- REPRESENTED BY THIS
CERTIFICATE
First Distribution Final Scheduled
Date: Distribution Date:
[__________, 200_]
THIS CERTIFIES THAT ____________________ is the registered owner of a
beneficial interest in the Trust Fund referred to below consisting of a pool of
adjustable-rate, conventional mortgage loans secured by first liens on one- to
four-family residential real properties (the "Mortgage Loans") and certain other
property held in trust transferred to the Trust Fund by Credit Suisse First
Boston Mortgage Securities Corp. (the "Depositor"), and certain related
property. The Trust Fund was created pursuant to the Pooling and Servicing
Agreement, dated as of [__________, 200_] (the "Agreement"), among the
Depositor, [___________________], as trustee (the "Trustee", which term includes
any successor entity under the Agreement) and [_________________], as seller and
servicer, a summary of certain of the pertinent provisions of which is set forth
herein. This Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
This Certificate is one of a duly authorized issue of certificates by
Credit Suisse First Boston Mortgage Securities Corp. designated as the
[_______________] Mortgage-Backed Pass-Through Certificates, Series 200_-____
(the "Certificates"), which is comprised of the following [four] Classes: Class
A, Class S, Class R-I and Class R-II. Reference is hereby made to the Agreement
for a statement of the respective rights thereunder of the Depositor and the
Trustee and the Holders of the Certificates and the terms upon which the
Certificates are authenticated and delivered. This Certificate represents an
interest in the Trust Fund, which Trust Fund consists of, among other things,
(i) the Mortgage Loans and all distributions thereon payable after the Cut-off
Date, net of certain amounts in accordance with the provisions of the Agreement,
(ii) the Certificate Account and the Custodial Account and all amounts deposited
therein pursuant to the applicable provisions of the Agreement, net of any
investment earnings
B-2
<PAGE>
thereon, (iii) the interest of the Trust Fund in any insurance policies with
respect to the Mortgage Loans, (iv) the interest of the Trust Fund in the Policy
issued for the benefit of the Holders of the Class A Certificates, (v) the
rights of the Depositor assigned to the Trustee pursuant to Sections 2.01 and
3.01 of the Agreement and (vi) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid property.
This Class S Certificate represents the right to receive a portion of
interest with respect to the Mortgage Loans on a Distribution Date. This Class S
Certificate is not entitled to any distributions with respect to principal on
the Mortgage Loans in the Trust Fund.
The Trustee shall distribute from the Certificate Account, to the
extent of available funds, on the 25th day of each calendar month, or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (the "Distribution Date"), commencing [_____________, 200_], to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month immediately preceding the month of such
distribution (each a "Record Date"), distributions of interest in an amount
equal to the Class S Interest Distribution Amount for such Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Loans and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto at the address
appearing in the Certificate Register or, if such Holder holds all of the
Certificates of this Class, by wire transfer in immediately available funds to
the account of such Certificateholder designated in writing to the Trustee at
least five Business Days prior to the applicable Record Date. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice of the pendency of such final distribution and only upon presentation and
surrender of this Certificate at the office or agency designated in such notice.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Holders of Certificates evidencing Voting Rights aggregating not less than
66-2/3% of the Voting Rights of all the Certificates; PROVIDED, HOWEVER, that no
such amendment may (i) reduce in any manner the amount of, delay the timing of
or change the manner in which payments received on Mortgage Loans are required
to be distributed in respect of any Certificate without the consent of the
Holder of such Certificate, (ii) adversely affect in any material respect the
interests of the Holders of a Class of Certificates in a manner other than in
(i) above without the consent of the Holders of Certificates evidencing not less
than 66-2/3% of the Voting Rights of such Class and (iii) reduce the aforesaid
percentages of Voting Rights, the holders of which are required to consent to
any such amendment, without the consent of 100% of the Holders of Certificates
of the Class affected thereby. 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.
B-3
<PAGE>
The Agreement also permits the Depositor and the Trustee to amend certain terms
and conditions set forth in the Agreement without the consent of Holders of the
Certificates. At any time that any of the Class A Certificates are outstanding,
[___]% of all Voting Rights will be allocated to the Holders of the Class A
certificates, in proportion to their then outstanding Certificate Principal
Balances, [__]% of all Voting Rights will be allocated to the Holders of the
Class S Certificates, [__]% of all Voting Rights will be allocated to the
Holders of the Class R-I Certificates and [__]% of all Voting Rights will be
allocated to the Holders of the Class R-II Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class and of authorized denominations, and for the same aggregate
interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Class S Certificates will be issued in fully registered form in
minimum Percentage Interests of 20% and integral multiples thereof. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates of the same Class
and of authorized Percentage Interests evidencing a like aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers or
exchanges, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. The Trustee
and any agent of the Trustee may treat the person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Trustee nor
any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor and the Trustee
created by the Agreement will terminate upon the earlier of (a) the purchase by
the Servicer from the Trust Fund of all remaining Mortgage Loans and all
property acquired in respect of such Mortgage Loans, thereby effecting early
retirement of the Certificates, or (b) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in the Trust
Fund and the disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan. As provided in the Agreement, the
right to purchase all Mortgage Loans pursuant to clause (a) above shall be
conditioned upon the unpaid Principal Balances of such Mortgage Loans, at the
time of any such repurchase, aggregating less than 5% of the aggregate Principal
Balances thereof as of the Cut-off Date.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning. If the terms hereof are inconsistent with the
Agreement, the Agreement shall control.
B-4
<PAGE>
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 Agreement or be valid or obligatory for any
purpose.
The recitals contained herein shall be taken as statements of the
Depositor and not of the Trustee. The Trustee assumes no responsibility for the
correctness of the statements contained in this Certificate and makes no
representation as to the validity or sufficiency of the Agreement, this
Certificate, any Mortgage Loan or any related document.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
[__________________________], solely as Trustee
and not individually
By: ______________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Agreement.
Date:
----------------------
[--------------------------],
as Trustee
By:------------------------
Authorized Officer
B-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, or
assignee) the undivided interest in the Trust Fund evidenced by the within
Certificate and hereby authorize(s) the transfer of registration of such
interest to the assignee on the Certificate Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like Percentage Interest and undivided interest in the Trust Fund
to the above-named assignee and to deliver such Certificate to the following
address:
Dated:______________
________________________ ________________________________
Social Security or Signature by or on behalf of
other Tax Identification assignor (signature must be
signed as registered)
No. of Assignee
_____________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Master Servicer:
Distribution shall be made by check mailed to _________________________
______________________________________________________________________________,
or if the Percentage Interest within such Class is 100%, and the Trustee shall
have received appropriate wiring instructions in accordance with the Agreement,
by wire transfer in immediately available funds to _______________________the
account of , account number _________________. This information is provided by
the assignee named above, or its agent.
B-6
<PAGE>
EXHIBIT C
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE"). THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED
STATES PERSON.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CREDIT
SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP. OR THE TRUSTEE REFERRED TO BELOW,
OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY
ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
ANY SALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS [R-I] [R-II] CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
TRUSTEE TO THE EFFECT THAT (1) SUCH TRANSFEREE AGREES TO BE BOUND BY THE TERMS
OF THE AGREEMENT AND ALL RESTRICTIONS SET FORTH ON THE FACE HEREOF, (2) 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
(3) 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.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT OR OTHER PLAN
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
C-1
<PAGE>
ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE UNLESS THE
TRANSFEREE PROVIDES AN OPINION OF COUNSEL SATISFACTORY TO THE DEPOSITOR AND THE
TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE BY OR ON BEHALF OF SUCH PLAN IS
PERMISSIBLE UNDER APPLICABLE LAW AND WILL NOT CONSTITUTE OR RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA AND SECTION 4975 OF
THE CODE.
C-2
<PAGE>
[--------------------]
MORTGAGE-BACKED PASS-THROUGH CERTIFICATE
SERIES 200_-____, CLASS [R-I] [R-II]
Evidencing an undivided interest in a Trust Fund whose assets consist of a pool
of adjustable-rate, conventional mortgage loans secured by first liens on one-
to four-family, residential real properties and certain other property held in
trust transferred by
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Certificate No.[R-I- ] [R-II-__] 100% PERCENTAGE INTEREST
REPRESENTED BY THIS
CERTIFICATE
First Distribution Date: Final Scheduled
[_________, 200_] Distribution Date:
THIS CERTIFIES THAT ____________________________ is the registered owner of
a beneficial interest in the Trust Fund referred to below consisting of a pool
of adjustable-rate conventional mortgage loans secured by first liens on one- to
four-family residential real properties (the "Mortgage Loans") and certain other
property held in trust transferred to the Trust Fund by Credit Suisse First
Boston Mortgage Securities Corp. (the "Depositor"), and certain related
property. The Trust Fund was created pursuant to the Pooling and Servicing
Agreement, dated as of [_________, 200_] (the "Agreement"), among the Depositor,
[________________________], as trustee (the "Trustee", which term includes any
successor entity under the Agreement) and [_________________], as seller and
servicer, a summary of certain of the pertinent provisions of which is set forth
herein. This Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
This Certificate is one of a duly authorized issue of certificates by
Credit Suisse First Boston Mortgage Securities Corp. designated as the
[_______________] Mortgage-Backed Pass-Through Certificates, Series 200_-____
(the "Certificates"), which is comprised of the following four Classes: Class A,
Class S, Class R-I and Class R-II. Reference is hereby made to the Agreement for
a statement of the respective rights thereunder of the Depositor and the Trustee
and the Holders of the Certificates and the terms upon which the Certificates
are authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Loans and all distributions thereon payable after the Cut-off Date, net of
certain amounts in accordance with the provisions of the Agreement, (ii) the
Certificate Account and the Custodial Account and all amounts deposited therein
pursuant to the applicable provisions of the Agreement, net of any investment
earnings thereon, (iii) the interest of the Trust Fund in any insurance policies
with respect to the Mortgage Loans, (iv) the interest of the Trust Fund in the
Policy issued for the benefit of the Holders of the
C-3
<PAGE>
Class A Certificates, (v) the rights of the Depositor assigned to the Trustee
pursuant to Sections 2.01 and 3.01 of the Agreement and (vi) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property.
This Class [R-I] [R-II] Certificate is not entitled to any
distributions with respect to principal or interest on the Mortgage Loans in the
Trust Fund.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Loans and payments made to Certificateholders.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Holders of Certificates evidencing Voting Rights aggregating not less than
66-2/3% of the Voting Rights of all the Certificates; PROVIDED, HOWEVER, that no
such amendment may (i) reduce in any manner the amount of, delay the timing of
or change the manner in which payments received on Mortgage Loans are required
to be distributed in respect of any Certificate without the consent of the
Holder of such Certificate, (ii) adversely affect in any material respect the
interests of the Holders of a Class of Certificates in a manner other than in
(i) above without the consent of the Holders of Certificates evidencing not less
than 66-2/3% of the Voting Rights of such Class or (iii) reduce the aforesaid
percentages of Voting Rights, the holders of which are required to consent to
any such amendment, without the consent of 100% of the Holders of Certificates
of the Class affected thereby. 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 Agreement also permits the Depositor
and the Trustee to amend certain terms and conditions set forth in the Agreement
without the consent of Holders of the Certificates. At any time that any of the
Class A Certificates are outstanding, [___]% of all Voting Rights will be
allocated among the Holders of the Class A, in proportion to their then
outstanding Certificate Principal Balances, [__]% of all Voting Rights will be
allocated to the Holders of the Class S Certificates, [___]% of all Voting
Rights will be allocated to the Holders of the Class R-I Certificates and [___]%
of all Voting Rights will be allocated to the Holders of the Class R-II
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class and of authorized denominations, and for the same aggregate
interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Class [R-I] [R-II] Certificates will be issued in fully
registered form in minimum Percentage Interests of 20% and integral multiples
thereof. As provided in the Agreement and subject to certain limitations therein
set forth, this Certificate is exchangeable for
C-4
<PAGE>
one or more new Certificates of the same Class and of authorized Percentage
Interests evidencing a like aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for such registrations of transfers or
exchanges, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. The Trustee
and any agent of the Trustee may treat the person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Trustee nor
any such agent thereof shall be affected by notice to the contrary.
Pursuant to the Agreement, the Depositor will make two separate
elections to treat each of REMIC I and REMIC II as a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes. The Class R-I
Certificates will be the "residual interest" in REMIC I, the Class R-II
Certificates will be the "residual interest" in REMIC II, and all other Classes
of Certificates will constitute the "regular interests" in REMIC II.
The obligations and responsibilities of the Depositor and the Trustee
created by the Agreement will terminate upon the earlier of (a) the purchase by
the Servicer from the Trust Fund of all remaining Mortgage Loans and all
property acquired in respect of such Mortgage Loans, thereby effecting early
retirement of the Certificates, or (b) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in the Trust
Fund and the disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan. As provided in the Agreement, the
right to purchase all Mortgage Loans pursuant to clause (a) above shall be
conditioned upon the unpaid Principal Balances of such Mortgage Loans, at the
time of any such repurchase, aggregating less than 5% of the aggregate Principal
Balances thereof as of the Cut-off Date.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning. If the terms hereof are inconsistent with the
Agreement, the Agreement shall control.
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 Agreement or be valid or obligatory for any
purpose.
The recitals contained herein shall be taken as statements of the
Depositor and not of the Trustee. The Trustee assumes no responsibility for the
correctness of the statements contained in this Certificate and makes no
representation as to the validity or sufficiency of the Agreement, this
Certificate, any Mortgage Loan or any related document.
C-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
[____________________________], solely as
Trustee and not individually
By:___________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Agreement.
Date:
----------------------
[--------------------------],
as Trustee
By:------------------------
Authorized Officer
C-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
(Please print or typewrite name and address, including postal zip code, or
assignee) the undivided interest in the Trust Fund evidenced by the within
Certificate and hereby authorize(s) the transfer of registration of such
interest to the assignee on the Certificate Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like Percentage Interest and undivided interest in the Trust Fund
to the above-named assignee and to deliver such Certificate to the following
address: _______________________________________________________________________
________________________________________________________________________________
Dated:
------------------------
- - - - - - - - ------------------------------- ----------------------------
Social Security or Signature by or on behalf of
other Tax Identification assignor
(signature must be signed as
registered)
No. of Assignee ____________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the Master
Servicer:
Distribution shall be made by check mailed to __________________________,
or if the Percentage Interest within such Class is 100%, and the Trustee shall
have received appropriate wiring instructions in accordance with the Agreement,
by wire transfer in immediately available funds to___________________________
the account of , account number ____________________. This information is
provided by the assignee named above, or its agent.
C-7
<PAGE>
EXHIBIT D
SCHEDULE OF MORTGAGE LOANS
D-1
<PAGE>
EXHIBIT E
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[_________________, 200_]
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue, 5th Floor
New York, New York 10010
Re: Pooling and Servicing Agreement ("Pooling and Servicing
Agreement") relating to [__________________] Mortgage-Backed Pass-Through
Certificates, Series 200_-___
Ladies and Gentlemen:
In accordance with and subject to the provisions of Section 2.02 of
the Pooling and Servicing Agreement, the undersigned, as Trustee, hereby
certifies that, except for the exceptions noted on the schedule attached hereto,
it has (a) received an original Mortgage Note with respect to each Mortgage Loan
listed on the Mortgage Loan Schedule and (b) received an original Mortgage (or a
certified copy thereof) with respect to each Mortgage Loan listed on the
Mortgage Loan Schedule in accordance with Section 2.01 of the Pooling and
Servicing Agreement. The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
mentioned above. The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
delivered in accordance with Section 2.01 of the Pooling and Servicing Agreement
or any of the Mortgage Loans identified in the Mortgage Loan Schedule, or (ii)
the collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
The Trustee acknowledges receipt of notice that the Depositor has
granted to the Trustee for the benefit of the Certificateholders a security
interest in all of the Depositor's right, title and interest in and to the
Mortgage Loans.
Capitalized terms used herein without definition shall have the
meaning assigned to them in the Pooling and Servicing Agreement.
[___________________________],
as Trustee
By:___________________________
Authorized Representative
E-1
<PAGE>
EXHIBIT F
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue, 5th Floor
New York, New York 10010
Re: Pooling and Servicing Agreement ("Pooling and Servicing
Agreement") relating to [___________________] Mortgage-Backed Pass-Through
Certificates, Series 200_-___
Ladies and Gentlemen:
In accordance with and subject to the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement the undersigned, as Trustee,
hereby certifies that, except for the exceptions noted on the schedule attached
hereto, as to each Mortgage Loan listed in the Mortgage Loan Schedule it has
reviewed the Mortgage File and has determined that (based solely on its review
of each such documents on its face) (i) all documents described in clauses
(i)-(v) of Section 2.01 of the Pooling and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, defaced, torn or otherwise physically altered and such
documents relate to such Mortgage Loan and (iii) each Mortgage Note has been
endorsed and each assignment of Mortgage has been delivered as provided in
Section 2.01 of the Pooling and Servicing Agreement. The Trustee has made no
independent examination of any documents required to be delivered in accordance
with Section 2.01 of the Pooling and Servicing Agreement beyond the review
specifically required therein. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents required to be delivered in accordance with Section 2.01 of the
Pooling and Servicing Agreement or any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectibility, insurability, effectiveness
or suitability of any such Mortgage Loan.
F-1
<PAGE>
Capitalized terms used herein without definition have the meanings
ascribed to them in the Pooling and Servicing Agreement.
[____________________________],
as Trustee
By:____________________________
Authorized Representative
F-2
<PAGE>
EXHIBIT G
FORM OF REQUEST FOR RELEASE
[date]
To:
In connection with the administration of the Mortgage Loans held by
you as Trustee under the Pooling and Servicing Agreement dated as of
[__________, 200_], between Credit Suisse First Boston Mortgage Securities
Corp., as Depositor, and you, as Trustee (the "Pooling and Servicing
Agreement"), the undersigned hereby requests a release of the Mortgage File held
by you as Trustee with respect to the following described Mortgage Loan for the
reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
Reason for requesting file:
____ 1. Mortgage Loan paid in full.
(The Servicer hereby certifies that all amounts received in
connection with the Mortgage Loan have been or will be credited
to the Certificate Account pursuant to the Pooling and Servicing
Agreement.)
____ 2. Mortgage Loan repurchased.
(The Servicer hereby certifies that the Purchase Price has been
credited to the Certificate Account pursuant to the Pooling and
Servicing Agreement.)
____ 3. The Mortgage Loan is being foreclosed.
____ 4. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Pooling and Servicing
Agreement and will be returned, except if the Mortgage Loan has been paid in
full or repurchased (in which case the Mortgage File will be retained by us
permanently) when no longer required by us for such purpose.
Capitalized terms used herein shall have the meanings ascribed to them in
the Pooling and Servicing Agreement.
G-1
<PAGE>
[SERVICER]
By:_______________________________
Name:
Title:
G-2
<PAGE>
EXHIBIT H
FORM OF INVESTOR REPRESENTATION LETTER
[date]
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue, 5th Floor
New York, New York 10010
[---------------------]
[---------------------]
[---------------------]
Re: [__________________] Mortgage-Backed Pass-Through
Certificates, Series 200_-___
Ladies and Gentlemen:
[_] (the "Purchaser") intends to purchase from [_] (the "Seller") the
[_________________] Mortgage-Backed Pass-Through Certificates, Series 200_-____
[Class S] [Class R-I] [Class R-II] (together, the "Certificates"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of [__________, 200_] among Credit Suisse First Boston
Mortgage Securities Corp., as Depositor (the "Company"), [__________________],
as seller and servicer, and [____________________], as trustee (the "Trustee").
All terms used herein and not otherwise defined shall have the meanings set
forth in the Pooling and Servicing Agreement. The Purchaser hereby certifies,
represents and warrants to, and covenants with, the Company and the Trustee
that:
1. The Purchaser understands that (a) the Certificates have not been
and will not be registered or qualified under the Securities Act of 1933, as
amended (the "Act") or any state securities law, (b) the Company is not required
to so register or qualify the Certificates, (c) the Certificates may be resold
only if registered and qualified pursuant to the provisions of the Act or any
state securities law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates and (e) the Certificates
will bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own account
for investment only and not with a view to or for sale in connection with any
distribution thereof in any manner that would violate the Act or any applicable
state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and, in particular, in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) able to bear the economic risks of such an
investment and (c) an "accredited investor" within the meaning of Rule 501(a)
promulgated pursuant to the Act.
H-1
<PAGE>
4. The Purchaser has been furnished with, and has had an opportunity
to review (a) a copy of the Pooling and Servicing Agreement and (b) such other
information concerning the Certificates, the Mortgage Loans and the Company as
has been requested by the Purchaser from the Company or the Seller and is
relevant to the Purchaser's decision to purchase the Certificates. The Purchaser
has had any questions arising from such review answered by the Company or the
Seller to the satisfaction of the Purchaser.
5. The Purchaser has not and will not nor has it authorized or will
it authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other similar
security to any person in any manner, (b) solicit any offer to buy or to accept
a pledge, disposition of other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner or (e) take any other action, that (as to any of (a) through (e) above)
would constitute a distribution of any Certificate under the Act, that would
render the disposition of any Certificate a violation of Section 5 of the Act or
any state securities law, or that would require registration or qualification
pursuant thereto. The Purchaser will not sell or otherwise transfer any of the
Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
6. The Purchaser
(a) is not an employee benefit 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 Certificate with "plan assets" of
any Plan; or
(b) is an insurance company, the source of funds to be used by it to
purchase the 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 Section III of PTCE 95-60.
Very truly yours,
[Purchaser]
By:
Name:__________________
Title:
H-2
<PAGE>
EXHIBIT I
FORM OF TRANSFEROR REPRESENTATION LETTER
[date]
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue, 5th Floor
New York, New York 10010
[---------------------]
[---------------------]
[---------------------]
Re: [_________________________] Mortgage-Backed Pass-Through
Certificates, Series 200_-___
Ladies and Gentlemen:
In connection with the sale by [_] (the "Seller") to [_] (the "Purchaser")
the [__________________] Mortgage-Backed Pass-Through Certificates, Series
200_-____ [Class S] [Class R-I] [Class R-II] (together, the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of [__________, 200_] among Credit Suisse First
Boston Mortgage Securities Corp., as Depositor (the "Company"),
[___________________], as seller and servicer, and [__________________], as
trustee (the "Trustee"), the Seller hereby certifies, represents and warrants
to, and covenants with, the Company and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act, in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.
I-1
<PAGE>
Very truly yours,
[Seller]
By:______________________
Name:
Title:
I-2
<PAGE>
EXHIBIT J
FORM OF INVESTOR TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] or [Name of Owner] (record or beneficial
owner (the "Owner") of the Class [R-I] [R-II] Certificates (the "Class R
Certificates")), 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"), (ii) will endeavor to
remain other than a disqualified organization for so long as it retains its
ownership interest in the Class R Certificates, and (iii) is acquiring the Class
R 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. A "Permitted Transferee" is any person other
than a "disqualified organization". (For this purpose, a "disqualified
organization" means the United States, any state or political subdivision
thereof, 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, 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 Class R Certificates to disqualified organizations under the Code;
(ii) that such tax would be on the transferor, or, if such transfer is through
an agent (which person includes a broker, nominee or middleman) for a
non-Permitted Transferee, on the agent; (iii) that the person otherwise 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 a Permitted
Transferee and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Class R Certificates
may be "noneconomic residual interests" 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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4. That the Owner is aware of the tax imposed on a "pass-through entity"
holding Class R Certificates if at any time during the taxable year of the
pass-through entity a non-Permitted Transferee 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 any Class R Certificates unless the transferee, or the transferee's 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 Certificates and the provisions of Section 6.02 of the Pooling and
Servicing Agreement under which the Class R Certificates were issued. 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 Certificates will only be owned, directly
or indirectly, by an Owner that is a Permitted Transferee.
8. That the Owner's Taxpayer Identification Number is ______________ .
9. That 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 includable 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.
10. That no purpose of the Owner relating to the purchase of the Class R
Certificate by the Owner is or will be to impede the assessment or collection of
tax.
11. 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.
12. 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.
13. That no purpose of the Owner relating to any sale of the Class R
Certificate by the Owner will be to impede the assessment or collection of tax.
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14. The Owner hereby agrees to cooperate with the Trustee 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 Trust Fund.
15. The Owner hereby agrees that it will not take any action that could
endanger the REMIC status of the Trust Fund or result in the imposition of tax
on the Trust Fund unless counsel for, or acceptable to, the Trustee 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.
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.
[NAME OF OWNER]
By:_______________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
____________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer],
known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Owner, and acknowledged to me
that he executed the same as his free act and deed and the free act and deed of
the Owner.
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Subscribed and sworn before me this ____ day of _________________.
______________________________
NOTARY PUBLIC
COUNTY OF______________________
STATE OF ______________________
My Commission expires the ____ day of _________ , 20__.
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EXHIBIT K
FORM OF TRANSFER CERTIFICATE
[date]
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue, 5th Floor
New York, New York 10010
[---------------------]
[---------------------]
[---------------------]
Re: [_________________________] Mortgage-Backed Pass-Through
Certificates, Series 200_-___, Class [R-I]
[R-II] (the "CERTIFICATES")
Ladies and Gentlemen:
This letter is delivered to you in connection with the sale by
_____________________ (the "Seller") to _________________ (the "Purchaser") of a
____% Percentage Interest in the above referenced Certificates, pursuant to
Section 6.02 of the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of [___________, 200_] among Credit Suisse First Boston
Mortgage Securities Corp. as depositor (the "Depositor"),
[_______________________], as trustee (the "Trustee") and [________________], as
seller and servicer. All terms used herein and not otherwise defined shall have
the meanings set forth in the Pooling and Servicing Agreement. The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and the
Trustee that:
1. No purpose of the Seller relating to 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 any tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing 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 Certificate.
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
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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
Certificate constitutes 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 Certificate as they become due.
Very truly yours,
[SELLER]
By:________________________________
Name:
Title:
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<PAGE>
EXHIBIT L
CERTIFICATE GUARANTY INSURANCE POLICY
Exhibit 4.2
This Agreement (the "Sale and Purchase Agreement"), dated as of
[___________], 200_, by and between CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP., a Delaware corporation (the "Depositor"), and
[_________________________], a Delaware [___________] (the "Seller").
W I T N E S S E T H:
WHEREAS, Exhibit A attached hereto and made a part hereof lists certain
residential mortgage loans (the "Mortgage Loans") owned by the Seller that the
Seller desires to sell to the Depositor and that the Depositor desires to
purchase;
WHEREAS, it is the intention of the Seller and the Depositor that
simultaneously with the Seller's conveyance of the Mortgage Loans to the
Depositor on the Closing Date, the Depositor shall deposit the Mortgage Loans in
trust pursuant to a Pooling and Servicing Agreement to be dated as of
[______________, 200_] (the "Pooling and Servicing Agreement"), to be entered
into by and among the Depositor, as depositor, the Seller, as seller and
servicer (the Seller or the "Servicer") and [_________________], as trustee (the
"Trustee");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article:
"Agreement" means this Sale and Purchase Agreement, as amended or
supplemented in accordance with the provisions hereof.
"Closing Date" shall have the meaning ascribed thereto in Section 2.01(c).
"Commission" means the United States Securities and Exchange Commission.
"Cut-Off Date" [___________ 1, 200_].
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"List of Mortgage Loans" shall have the meaning ascribed thereto in Section
2.01(b).
"Mortgage Loan Information" shall have the meaning ascribed thereto in
Section 4.14(a)(i).
<PAGE>
"Prospectus" means the Prospectus, dated [__________, 200_], relating to
the offering by the Depositor from time to time of its Mortgage-Backed
Pass-Through Certificates (Issuable in Series) in the form in which it was or
will be filed with the Securities Exchange Commission pursuant to Rule 424(b)
under the Securities Act with respect to the offer and sale of the Offered
Certificates.
"Prospectus Supplement" means the Prospectus Supplement, dated [__________,
200_], relating to the offering of the Certificates in the form in which it was
or will be filed with the Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Offered Certificates.
"Registration Statement" means that certain registration statement on Form
S-3, as amended (Registration No. 333-______) relating to the offering by the
Depositor from time to time of its Mortgage-Backed Pass-Through Certificates
(Issuable in Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means [_____________], in its capacity as Seller of the
Mortgage Loans under this Agreement and any successor thereto, whether through
merger, consolidation, purchase and assumption thereof or by purchase or
acquisition all or substantially all of its assets or otherwise.
Capitalized terms used herein that are not otherwise defined shall have the
respective meanings ascribed thereto in the Pooling and Servicing Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase. (a) Subject to the terms and
conditions of this Agreement, the Seller agrees to sell, and the Depositor
agrees to purchase on the Closing Date, the Mortgage Loans.
(b) Subject to Section 2.07, the Depositor and the Seller have agreed upon
which of the Seller's loans are to be purchased by the Depositor on the Closing
Date pursuant to this Agreement, and the Seller has prepared a schedule (the
"List of Mortgage Loans") setting forth all of the Mortgage Loans to be
purchased under this Agreement, which schedule is attached hereto as Exhibit A.
(c) The closing for the purchase and sale of the Mortgage Loans shall take
place at the offices of [______________], at 10:00 a.m., New York time, on
[____________, 200_] or such other place and time as the parties shall agree
(such time being herein referred to as the "Closing Date").
Section 2.02. Purchase Price. On the Closing Date, as full consideration
for the Seller's sale of the Mortgage Loans to the Depositor, the Depositor will
deliver to the Seller (i) an amount in cash equal to $[___________], all payable
by wire transfer of same day funds [and
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(ii) the Class R-I Certificates and the Class R-II Certificates to be issued
pursuant to the Pooling and Servicing Agreement].
Section 2.03. Conveyance of Mortgage Loans; Possession of Mortgage Files.
On the Closing Date, the Seller shall sell, transfer, assign, set over and
convey to the Depositor, without recourse but subject to the terms of this
Agreement, all right, title and interest in and to the Mortgage Loans and the
other assets relating thereto. Upon payment of the purchase price for such
Mortgage Loans as provided in Section 2.02 of this Agreement, the Seller shall
have hereby, and shall be deemed to have, sold, transferred, assigned, set over
and conveyed such Mortgage Loans and the other related assets. Upon the sale of
such Mortgage Loans, the ownership of each related Note, each related Mortgage
and the contents of the related Loan File shall immediately vest in the
Depositor and the ownership of all related records and documents with respect to
each Mortgage Loan prepared by or which come into the possession of the Seller
shall immediately vest in the Depositor. The contents of any Loan File in the
possession of the Seller at any time after such sale, and any scheduled payments
of principal and interest on the Mortgage Loans due after the Cut-Off Date and
received by the Seller, shall be held in trust by the Seller for the benefit of
the Depositor as the owner thereof, and shall be promptly delivered by the
Seller to or upon the order of the Depositor.
Pursuant to the Pooling and Servicing Agreement, the Depositor shall, on
the Closing Date, assign all of its right, title and interest in and to the
Purchased Loans and the other Purchased Assets and the Seller's right to
exercise the remedies created by Section 4 of the Loan Sale Agreement to the
Trustee for the benefit of the Holders of the Certificates.
Section 2.04. Delivery of Mortgage Loan Documents. On or prior to the
Closing Date, the Seller shall deliver to the Trustee (as assignee of the
Depositor pursuant to the Pooling and Servicing Agreement) the Loan File
Documents, as described in the related Pooling and Servicing Agreement.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee (as assignee of the Depositor pursuant to the Pooling
and Servicing Agreement) as required by this Section 2.04 are and shall be held
by the Seller in trust for the benefit of the Trustee on behalf of the related
Holders of the Certificates. In the event that any such original document is
required pursuant to the terms of this Section 2.04 to be a part of a Loan File,
such document shall be delivered promptly to the Trustee (as assignee of the
Depositor pursuant to the Pooling and Servicing Agreement).
From and after the sale of the Mortgage Loans to the Depositor pursuant
hereto, to the extent that the Seller retains legal title of record to any
Mortgage Loans prior to the vesting of legal title in the Trustee (as assignee
of the Depositor pursuant to the Pooling and Servicing Agreement), such title
shall be retained in trust for the Depositor as the owner of the Mortgage Loans
and the Trustee, as the Depositor's assignee.
Section 2.05. Transfer of Mortgage Loans; Assignment of Agreement. The
Depositor has the right to assign its interest under this Agreement to the
Trustee as may be required to effect the purposes of the Pooling and Servicing
Agreement, without further notice to, or consent of, the Seller, and the Trustee
shall succeed to such of the rights and obligations of
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<PAGE>
the Depositor hereunder as shall be so assigned. The Depositor shall, pursuant
to the Pooling and Servicing Agreement, assign all of its right, title and
interest in and to the Mortgage Loans and the related assets to the Trustee for
the benefit of the Holders of the Certificates.
Section 2.06. Books and Records. The sale of each Mortgage Loan shall be
reflected on the Seller's balance sheet and other financial statements as a sale
of assets by the Seller for accounting purposes and for tax purposes. The Seller
shall be responsible for maintaining, and shall maintain, a complete set of
books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Trustee for the benefit of
the Holders of the Certificates.
Section 2.07. Cost of Delivery of Documents. The costs relating to the
delivery of the documents specified in this Article Two in connection with the
Mortgage Loans shall be borne by the Seller.
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<PAGE>
ARTICLE THREE
COVENANTS
The Seller covenants with the Depositor as follows:
(a) The Seller shall cooperate with the Depositor and the firm of
independent certified public accountants retained with respect to the issuance
of the Certificates in making available all information and taking all steps
reasonably necessary to permit the accountants' letters required hereunder to be
delivered within the times set for delivery herein.
(b) The Seller hereby agrees to do all acts, transactions, and things and
to execute and deliver all agreements, documents, instruments, and papers by and
on behalf of the Seller as the Depositor or its counsel may reasonably request
in order to consummate the transfer of the Mortgage Loans to the Depositor and
the subsequent transfer thereof to the Trustee, and the rating, issuance and
sale of the Certificates.
(c) The Seller hereby agrees to arrange separately to pay to the Trustee
all of the Trustee's fees and expenses in connection with the transactions
contemplated by the Pooling and Servicing Agreement subject to existing
agreements to which the Seller assented at an earlier date. For the avoidance of
doubt, the parties hereto acknowledge that it is the intention of the parties
that the Depositor shall not pay any of the Trustee's fees and expenses in
connection with the transactions contemplated by the Pooling and Servicing
Agreement.
ARTICLE FOUR
MISCELLANEOUS
Section 4.01. Conditions of Depositor's Obligations. The obligations of the
Depositor to purchase the Mortgage Loans will be subject to the satisfaction on
the Closing Date of the following conditions. Upon payment of the purchase price
for the Mortgage Loans, such conditions shall be deemed satisfied or waived.
(a) Each of the obligations of the Seller required to be performed by it on
or prior to the Closing Date pursuant to the terms of this Agreement and the
Pooling and Servicing Agreement shall have been duly performed and complied with
in all material respects and all of the representations and warranties of the
Seller under this Agreement and the Pooling and Servicing Agreement shall be
true and correct in all material respects as of the Closing Date and no event
shall have occurred which, with notice or the passage of time, would constitute
a default under this Agreement or the Pooling and Servicing Agreement, and the
Depositor shall have received a certificate to the effect of the foregoing
signed by an authorized officer of the Seller.
(b) The Depositor shall have received a letter dated the date of this
Agreement, in form and substance reasonably acceptable to the Depositor and its
counsel, prepared by [__________________], independent certified public
accountants, regarding the
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<PAGE>
numerical information contained in the Prospectus Supplement under the captions
"Certain Yield and Prepayment Considerations" and "The Mortgage Loan Pools."
(c) The Mortgage Loans will be reasonably acceptable to the Depositor, in
its sole discretion.
(d) The Depositor shall have received the following additional closing
documents, in form and substance satisfactory to the Depositor and its counsel:
(i) the List of Mortgage Loans;
(ii) the Pooling and Servicing Agreement, dated as of [___________, 200_],
and the Underwriting Agreement, dated as of [_____________, 200_] (the
"Underwriting Agreement"), between the Depositor and Credit Suisse First Boston
Corporation and all documents required thereunder, duly executed and delivered
by each of the parties thereto other than the Depositor;
(iii)an officer's certificate of an officer of the Seller, dated as of the
Closing Date, in the form of Exhibit B hereto, and attached thereto resolutions
of the board of directors and a copy of the charter and by-laws;
(iv) an officer's certificate of an officer of the Seller that the
representations and warranties of the Seller and Servicer herein and in the
Pooling and Servicing Agreement are true and correct as of the date of this
Agreement;
(v) a copy of the Seller's charter and all amendments, revisions, and
supplements thereof, certified by an officer of such entity;
(vi) an opinion of the counsel for the Seller as to various corporate
matters substantially in the form attached hereto as Exhibit C (it being agreed
that the opinion shall expressly provide that the Trustee shall be entitled to
rely on the opinion);
(vii)letters from the Rating Agencies that they have assigned ratings to
the Certificates as described in the Prospectus Supplement;
(viii) an opinion of counsel for the Trustee in form and substance
acceptable to the Depositor, its counsel, and each Rating Agency (it being
agreed that the opinion shall expressly provide that the Seller shall be
entitled to rely on the opinion); and
(ix) an opinion or opinions of counsel for the Servicer, in form and
substance acceptable to the Depositor, its counsel, and each Rating Agency.
(e) All documents contemplated by this Agreement and the Pooling and
Servicing Agreement shall be satisfactory in form and substance to the Depositor
and its counsel.
(f) The Seller shall have furnished the Depositor with such other
certificates of its officers or others and such other documents or opinions as
the Depositor or its counsel may reasonably request.
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Section 4.02. Conditions of Seller's Obligations. The obligations of the
Seller under this Agreement shall be subject to the satisfaction, on the Closing
Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be performed
by it at or prior to the Closing Date pursuant to the terms of this Agreement
and the Pooling and Servicing Agreement shall have been duly performed and
complied with and all of the representations and warranties of the Depositor
contained in this Agreement and the Pooling and Servicing Agreement shall be
true and correct as of the Closing Date and the Seller shall have received a
certificate to that effect signed by an authorized officer of the Depositor.
(b) The Seller shall have received the Pooling and Servicing
Agreement, and all documents required thereunder, in each case executed by
the Depositor as applicable.
Section 4.03. Termination of Depositor's Obligations. The Depositor may
terminate its obligations hereunder by notice to the Seller at any time before
delivery of and payment of the purchase price for the Mortgage Loans if: (i) any
of the conditions described in Section 4.01 are not satisfied when and as
provided therein; (ii) there shall have been the entry of a decree or order by a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or the Servicer, or for the winding up
or liquidation of the affairs of the Seller or the Servicer; (iii) there shall
have been the consent by the Seller or the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Seller or the Servicer or relating to substantially all of the property of
the Seller or the Servicer; or (iv) the Underwriter terminates its obligations
under the Underwriting Agreement (except as a result of a failure solely due to
a matter within the reasonable control of the Depositor). The termination of the
Depositor's obligations hereunder shall not terminate the Depositor's rights
hereunder or its right to exercise any remedy available to it at law or in
equity.
Section 4.04. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
facsimile and confirmed by a similar mailed writing, if to the Depositor,
addressed to the Depositor at Eleven Madison Avenue, New York, New York 10010,
or to such other address as the Depositor may designate in writing to the
Seller, and if to the Seller, addressed to the Seller at
[_____________________], Attention: [___________________], or to such other
address as the Seller may designate in writing to the Depositor.
Section 4.05. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such
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<PAGE>
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction as to
any Mortgage Loan shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by applicable law, the parties
hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
Section 4.06. Agreement of Seller. The Seller agrees to execute and deliver
such instruments and take such actions as the Depositor may, from time to time,
reasonably request in order to effectuate the purpose and to carry out the terms
of this Agreement.
Section 4.07. Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.
Section 4.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 4.09. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement; provided, however, that the Depositor may assign its rights hereunder
to the Trustee on behalf of the Trust without the consent of the Seller.
Section 4.10. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York (without
regard to conflicts of laws principles), and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 4.11. Confirmation of Intent. It is the express intent of the
parties hereto that the conveyance of the Mortgage Loans by the Seller to the
Depositor as contemplated by this Agreement be, and be treated for all purposes
as, a sale by the Seller to the Depositor of the Mortgage Loans. It is, further,
not the intention of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Seller to the Depositor to secure a debt or other
obligation of the Seller. However, in the event that, notwithstanding the intent
of the parties, the Mortgage Loans are held to continue to be property of the
Seller then: (a) this Agreement shall also be deemed to be a security agreement
within the meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the
transfer of the Mortgage Loans provided for herein shall be deemed to be a grant
by the Seller to the Depositor of a security interest in all of the Seller's
right, title and interest in and to the Mortgage Loans and all amounts payable
on the Mortgage Loans in accordance with the terms thereof and all proceeds of
the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property; (c) the possession by the
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Depositor of Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the Uniform Commercial Code; 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, financial intermediaries,
bailees or agents (as applicable) of the Depositor for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Depositor pursuant to any provision hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Depositor
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
Section 4.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 4.13. Costs. In connection with the transactions contemplated under
this Agreement and the Pooling and Servicing Agreement, the Seller shall
promptly pay (or shall promptly reimburse the Depositor to the extent that the
Depositor shall have paid or otherwise incurred): (a) the fees and disbursements
of the Depositor's counsel up to $[____], plus disbursements up to $[_____]; (b)
the fees of each Rating Agency as separately agreed; (c) any of the fees of the
Trustee as separately agreed and the reasonable fees and disbursements of the
Trustee's counsel up to $[_____]; (d) reasonable expenses incurred in connection
with printing the Prospectus, the Prospectus Supplement, any amendment or
supplement thereto, any preliminary prospectus and the Certificates; (e) fees
and expenses relating to the filing of documents with the Commission relating to
the Offered Certificates (including without limitation periodic reports under
the Exchange Act); and (f) the shelf registration amortization fee (which fee
shall equal [1/33rd of 1%] of the amount of the Offered Certificates) paid in
connection with the issuance of Certificates. For the avoidance of doubt, the
parties hereto acknowledge that it is the intention of the parties that the
Depositor shall not pay any of the Trustee's fees and expenses in connection
with the transactions contemplated by the Pooling and Servicing Agreement. All
other costs and expenses in connection with the transactions contemplated
hereunder shall be borne by the party incurring such expenses.
Section 4.14. Indemnification. (a) (i) The Seller agrees to indemnify and
hold harmless the Depositor, each of its directors, each of its officers who
have signed the Registration Statement, and each of its directors and each
person or entity who controls the Depositor or any such person, within the
meaning of Section 15 of the Securities Act, against any and all losses, claims,
damages or liabilities, joint and several, to which the Depositor or any such
person or entity may become subject, under the Securities Act or otherwise, and
will reimburse the Depositor and each such controlling person for any legal or
other expenses incurred by the Depositor or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
9
<PAGE>
statement or alleged untrue statement of any material fact contained in the
Prospectus Supplement under the headings ["Risk Factors--Risks Associated with
the Mortgage Loans" and "The Mortgage Loan Pools"; the "Seller"; the Servicer]
(such information, the "Mortgage Loan Information") or any amendment or
supplement to the Prospectus Supplement relating to the Mortgage Loan
Information, the Seller or the Servicer, or the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements in the Prospectus Supplement or any amendment or supplement
to the Prospectus Supplement approved in writing by the Seller, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Seller will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Prospectus Supplement or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Seller by the
Underwriter or the Depositor specifically for use therein. This indemnity
agreement will be in addition to any liability which the Seller may otherwise
have.
(ii) The Seller agrees to indemnify and to hold the Depositor harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Depositor may sustain in any way related to the failure of the Seller to perform
its duties in compliance with the terms of this Agreement. The Seller shall
immediately notify the Depositor if a claim is made by a third party with
respect to this Agreement, and the Seller shall assume the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Depositor in respect of such claim. Pursuant to the
Pooling and Servicing Agreement, the Trustee shall reimburse the Seller in
accordance with the Pooling and Servicing Agreement for all amounts advanced by
the Seller pursuant to the preceding sentence except when the claim relates
directly to the failure of the Seller to perform its duties in compliance with
the terms of this Agreement.
(b) The Depositor agrees to indemnify and hold harmless the Seller, each of
its directors and each person or entity who controls the Seller or any such
person, within the meaning of Section 15 of the Securities Act, against any and
all losses, claims, damages or liabilities, joint and several, to which the
Seller or any such person or entity may become subject, under the Securities Act
or otherwise, and will reimburse the Seller and any such director or controlling
person for any legal or other expenses incurred by such party or any such
director or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus, the Prospectus
Supplement or the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, but
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission is other than a statement or omission relating to
the information set forth in subsection (a)(i) of this Section 4.14. This
indemnity agreement will be in addition to any liability which the Depositor may
otherwise have.
10
<PAGE>
(c) The Seller shall in addition indemnify and hold harmless the Depositor
for any losses, claims, damages, or liabilities to which it becomes subject in
connection with the use in connection with the offering for resale of the
Offered Certificates of any materials which would constitute "computational
materials", "collateral term sheets" or "structural term sheets" (collectively,
"Computational Materials") under the Commission's "no-action letter" definitions
of such terms as of the date hereof, except to the extent that any such losses,
claims, damages or liabilities result from the negligence of the Depositor in
the preparation of such Computational Materials. The Depositor shall indemnify
and hold harmless the Seller for any losses, claims, damages or liabilities
which result from the negligence of the Depositor in the preparation of such
Computational Materials, provided that in no event shall the Depositor be liable
to the Seller under this paragraph (c) in an amount in excess of the Depositor's
resale profit on its sale of the Offered Certificates or the underwriter's fee,
whichever is greater.
(d) Promptly after receipt by an indemnified party under this Section 4.14
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 4.14, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 4.14 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to the indemnifying party and would raise
a potential conflict, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. The indemnifying party shall not be liable for the expenses of more
than one separate counsel.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.14 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.14 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof); provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered (i) the relative benefits received by the Seller on the one hand,
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<PAGE>
and the Depositor on the other, from the offering of the Certificates or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, the
relative benefits described in clause (i) as well as the relative faults of the
Seller and the Depositor, taking into account the Seller's and the Depositor's
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Seller and the Depositor agree that it would not be equitable
if the amount of such contribution were determined by pro rata or per capita
allocation. For purposes of this Section 4.14, each director of the Depositor,
each officer of the Depositor who signed the Registration Statement, and each
person, if any, who controls the Depositor within the meaning of Section 15 of
the Securities Act, shall have the same rights to contribution as the Depositor,
and each director of Seller, and each person, if any, who controls the Seller
within the meaning of Section 15 of the Securities Act, shall have the same
rights to contribution as the Seller.
Section 4.15. Miscellaneous. (i) This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof, (ii) this
Agreement may be amended from time to time by the Seller and the Depositor by
written agreement, without notice to or consent of the related Holders to cure
any ambiguity, to correct or supplement any provisions herein, to comply with
any changes in the Code, or to make any other provisions with respect to matters
or questions arising under this Agreement which shall not be inconsistent with
the provisions of this Agreement; provided, however, that such action shall not,
as evidenced by an Officer's Certificate, at the expense of the party requesting
the change, delivered to the Trustee, adversely affect in any material respect
the interests of any Holder; and provided further, that no such amendment shall
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, or change the rights or
obligations of any other party hereto without the consent of such party, (iii)
this Agreement may be amended from time to time by the Seller and the Depositor
with the consent of the Required Certificateholders 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 Holders;
provided, however, that no such amendment shall be made unless the Trustee
receives an Officer's Certificate, that such change will not reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, and (iv) it shall not be necessary
for the consent of any Holder under this Section to approve the particular form
of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof.
[Signatures Commence on Following Page]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
by their respective officers thereunto duly authorized as of the date first
above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.
By:________________________________
Name:
Title:
[_____________________________]
By:________________________________
Name:
Title:
13
<PAGE>
EXHIBIT A
LIST OF MORTGAGE LOANS
[See Schedule 1 to the
Loan Sale Agreement]
14
<PAGE>
EXHIBIT B
OFFICER'S CERTIFICATE OF
THE SELLER
15
<PAGE>
EXHIBIT C
OPINION OF COUNSEL TO
THE SELLER
16
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS....................................................... 1
Section 1.01. Definitions........................................ 1
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS................... 2
Section 2.01. Agreement to Purchase.............................. 2
Section 2.02. Purchase Price..................................... 3
Section 2.03. Conveyance of Mortgage Loans; Possession of
Mortgage Files................................... 3
Section 2.04. Delivery of Mortgage Loan Documents................ 3
Section 2.05. Transfer of Mortgage Loans; Assignment of
Agreement........................................ 4
Section 2.06. Books and Records.................................. 4
Section 2.07. Cost of Delivery of Documents...................... 4
ARTICLE THREE
COVENANTS......................................................... 5
ARTICLE FOUR
MISCELLANEOUS..................................................... 5
Section 4.01. Conditions of Depositor's Obligations.............. 5
Section 4.02. Conditions of Seller's Obligations................. 7
Section 4.03. Termination of Depositor's Obligations............. 7
Section 4.04. Notices............................................ 8
Section 4.05. Severability of Provisions......................... 8
Section 4.06. Agreement of Seller................................ 8
Section 4.07. Survival........................................... 8
Section 4.08. Effect of Headings and Table of Contents........... 8
17
<PAGE>
Section 4.09. Successors and Assigns............................. 8
Section 4.10. Governing Law...................................... 9
Section 4.11. Confirmation of Intent............................. 9
Section 4.12. Execution in Counterparts.......................... 9
Section 4.13. Costs.............................................. 9
Section 4.14. Indemnification....................................10
Section 4.15. Miscellaneous......................................13
Exhibits
- - - - - - - - --------
Exhibit A - List of Mortgage Loans
Exhibit B - Officer's Certificate of the Seller
Exhibit C - Opinion of Counsel to the Seller
Exhibit 4.3
===================================================================
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.,
Depositor
and
------------------------------,
Trustee
-----------------------------------------------
FORM OF TRUST AGREEMENT
Dated as of ____________, 200_
-----------------------------------------------
Trust Certificates
Series 200_-__
===================================================================
<PAGE>
TRUST AGREEMENT, dated as of __________, 200_, by and among Credit Suisse
First Boston Mortgage Securities Corp., as depositor (the "Depositor") and
_______________________, a ___________ banking corporation, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Underlying Certificates being conveyed by
it to the Trustee for inclusion in the Trust Fund and has duly authorized the
execution and delivery of this Agreement to provide for the sale and conveyance
to the Trustee of the Underlying Certificates and the issuance of Trust
Certificates, Series 200_-__ (the "Certificates" or "Trust Certificates"),
representing in the aggregate the entire beneficial ownership of the Underlying
Certificates and other assets included in the Trust Fund, which Trust
Certificates are issuable as provided in this Agreement. All covenants and
agreements made by the Depositor and the Trustee herein are for the benefit of
the Holders of the Certificates. The Depositor is entering into this Agreement,
and the Trustee is accepting the trust created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Agreement a valid declaration of trust by
the Depositor in accordance with its terms have been done.
In consideration of the premises and the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accrued Certificate Interest: With respect to each Payment Date, as to any
Regular Certificate, one month's interest accrued at the Pass-Through Rate on
the Certificate Principal Balance thereof immediately prior to such Payment Date
minus the amount of principal on the Underlying Certificates, if any, which was
not previously distributed in accordance with Section 3.02(a). Accrued
Certificate Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Affiliate: An "affiliate" of, or person "affiliated" with, a specific
person, is a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified.
Aggregate Series Balance: For any class of certificates is equal to the
aggregate outstanding principal balances of all classes of certificates of the
series of which such class is a part.
<PAGE>
Aggregate Underlying Certificate Balance: With respect to any
Underlying Certificate, as of any Distribution Date (following all distributions
to be made with respect to the Underlying Certificate on such Distribution
Date), and as of any date of determination thereafter until the next succeeding
Distribution Date, the aggregate outstanding principal balance of the class of
Underlying Certificates to which such Underlying Certificate relates, as set
forth in the Distribution Date Statement sent to the Trustee as the
Certificateholder of part or all of the class of certificates to which such
Underlying Certificate relates, relating to such Distribution Date, which is to
be determined in accordance with the terms of the related Underlying Agreement.
Agreement: This Trust Agreement and all amendments hereof and supplements
hereto.
Anticipated Termination Date: Any Payment Date on which the Trustee
anticipates that the Trust Fund will be terminated pursuant to Section 6.01.
Available Funds: As of any date of determination, the aggregate amount on
deposit in the Trust Certificate Account as of such date of determination, net
of any portion thereof which represents amounts payable pursuant to clauses (i),
(iii) and (iv) of Section 3.04.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which banking institutions in the State of [_______] or the State of [New
York] and such other state or states in which the Trust Certificate Account or
any account relating to the Underlying Certificates, are required or authorized
by law or executive order to be closed.
Certificate or Trust Certificate: Any Offered Certificate or Class R
Certificate.
Certificate Owner: With respect to a Book-Entry Certificate, the Person who
is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent, if any, and otherwise on the books of a Depository Participant, if any,
and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to the Certificates other than
the Class R Certificate, on any date of determination, an amount equal to (i)
the Initial Certificate Principal Balance of such Certificate as specified on
the face thereof, minus (ii) the aggregate of all amounts previously distributed
with respect to such Certificate and applied to reduce the Certificate Principal
Balance thereof pursuant to Section 3.05; provided that the Certificate
Principal Balance of each Certificate of the Class of Regular Certificates
outstanding with the lowest payment priority shall be subject to further
reduction as set forth in Section 3.05(b). The Class R Certificate has no
Certificate Principal Balance.
Certificate Registrar and Certificate Register: The meanings provided in
Section 4.02.
Certificateholder or Holder: The person in whose name a Trust Certificate
is registered in the Certificate Register, except that, solely for the purpose
of giving any consent or
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<PAGE>
exercising any Voting Rights pursuant to this Agreement, any Trust Certificate
registered in the name of the Depositor or any Affiliate shall be deemed not to
be an Outstanding Certificate or taken into account when calculating the Voting
Rights of any Certificateholder.
All references herein to "Holder" or "Certificateholder" shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee shall be required to recognize as a
"Holder" or "Certificateholder" only the Person in whose name a Certificate is
registered in the Certificate Register.
Class: Collectively, all of the Trust Certificates bearing the same
designation.
Class A Certificate: Any of the Class A Certificates executed and delivered
by the Trustee substantially in the form annexed hereto as Exhibit A evidencing
an interest [designated as a "regular interest"] in the Trust Fund [for purposes
of the REMIC Provisions].
Class B Certificate: Any one of the Class B Certificates executed and
delivered by the Trustee substantially in the form annexed hereto as Exhibit C,
evidencing an interest [designated as a "regular interest"] in the Trust Fund
[for purposes of the REMIC Provisions].
Class M Certificate: Any one of the Class M1, Class M2 and Class M3
Certificates executed and delivered hereunder by the Trustee substantially in
the form annexed hereto as Exhibit B, evidencing an interest [designated as a
"regular interest"] in the Trust Fund [for purposes of the REMIC Provisions].
Class R Certificate: Any Class R Certificate executed and delivered
hereunder by the Trustee substantially in the form annexed hereto as Exhibit D,
evidencing an interest [designated as a "regular interest"] in the Trust Fund
[for purposes of the REMIC Provisions].
Closing Date: _________, 200_.
Code: The Internal Revenue Code of 1986.
Corporate Trust Office: The principal corporate trust office of the Trustee
in the State of ___________ 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
________________________________.
Cut-off Date: ________, 200_.
Definitive Certificate: Any definitive, fully registered Certificate.
Depositor: Credit Suisse First Boston Mortgage Securities Corp. or its
successor in interest.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all
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<PAGE>
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Distribution Date: With respect to any Underlying Certificate,
"Distribution Date" shall mean the date specified in the related Underlying
Agreement on which distributions on the Underlying Certificates are to be made.
Distribution Date Statement: With respect to any Underlying Certificate and
any Distribution Date, the monthly remittance report forwarded to the holder
thereof with respect to such Distribution Date pursuant to the related
Underlying Agreement.
Eligible Account: An account that is any of the following: (i) maintained
with a depository institution the debt obligations of which have been rated by
the Rating Agency in its highest rating category, (ii) an account or accounts
the deposits in which such accounts are fully insured to the limits established
by the FDIC, provided that any such deposits not so insured shall, to the extent
acceptable to the Rating Agency, as evidenced in writing, be otherwise
maintained such that (as evidenced by an Opinion of Counsel delivered to the
Trustee and the Rating Agency) the registered Holders of Certificates have a
claim with respect to the funds in such account or a perfected first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, (iii) an account or accounts of a depository institution acceptable
to the Rating Agency (as evidenced in writing by the Rating Agency that use of
any such account as the Trust Certificate Account will not have an adverse
effect on the then-current ratings assigned to the Classes of the Certificates
then rated by such Rating Agency), or (iv) a trust account or accounts
maintained with the trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity.
FDIC: The Federal Deposit Insurance Corporation or any successor.
FHLMC: The Federal Home Loan Mortgage Corporation or any successor.
FNMA: The Federal National Mortgage Association or any successor.
Independent: When used with respect to any specified Person, such a Person
who (i) is in fact independent of the Depositor, (ii) does not have any direct
financial interest in the Depositor or in an Affiliate, and (iii) is not
connected with the Depositor as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
Initial Certificate Principal Balance: With respect to any Class of Trust
Certificates, the initial Certificate Principal Balance thereof, as follows:
4
<PAGE>
Class A Certificates $_________________
[Class M1 Certificates $_________________
Class M2 Certificates $_________________
Class M3 Certificates $_________________
Class B Certificates $_________________
Class R Certificates $0]
Mortgage Loans: With respect to any Underlying Certificate and any Related
Certificates, the mortgage loans in which such Underlying Certificate and
Related Certificates evidence a beneficial ownership interest.
Non-United States Person: Any Person other than a United States Person.
Notice of Final Distribution: With respect to any Underlying Certificate,
the notice to be provided pursuant to the related Underlying Agreement to the
effect that final distribution on such Underlying Certificate shall be made only
upon presentation and surrender thereof.
Notice of Termination: Any of the notices given by the Trustee pursuant to
Section 6.01(b).
Offered Certificate: Any of the [Class A, Class M1, Class M2, Class M3 and
Class B] Certificates.
Officer's Certificate: A certificate signed by the Chairman of the Board,
the President or a Vice President or Assistant Vice President and by the
Treasurer, the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Trustee, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel (not at the expense of the
Trustee), who may be counsel for the Depositor; except that any opinion of
counsel relating to (i) the qualification of any account required to be
maintained pursuant to this Agreement as an Eligible Account or (ii) the
qualification of the Trust Fund as a REMIC or compliance with the REMIC
Provisions, must be an opinion of Independent counsel.
Outstanding Certificates: With respect to any of the Trust Certificates, as
of the date of determination, all Trust Certificates theretofore executed and
delivered under this Agreement except:
(i) Trust Certificates theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; and
5
<PAGE>
(ii) Trust Certificates in exchange for which or in lieu of which other
Trust Certificates have been executed and delivered pursuant to this Agreement
unless proof satisfactory to the Trustee is presented that any such Trust
Certificates are held by a holder in due course.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
Pass-Through Rate: With respect to any Class of Certificates and any
Payment Date, means the [___________________].
Payment Date: The date which is the later of (a) the second Business Day
following the latest of the related Distribution Dates on the Underlying
Certificates, and (b) the date on which both the distribution with respect to
each Underlying Certificate and the related Distribution Date Statements and
Underlying Re-REMIC Distribution Date Statements, as applicable, have been
received by the Trustee, but no later than five Business Days following the date
set forth in clause (a); PROVIDED, HOWEVER, that the initial Payment Date will
be _________, 200_.
Percentage Interest: With respect to a Class A, Class M or Class B
Certificate, the undivided percentage ownership interest in the related Class
evidenced by such Certificate, which percentage ownership interest shall be
equal to the initial Certificate Principal Balance thereof divided by the
aggregate initial Certificate Principal Balance of all of the Certificates of
the same Class. With respect to a Class R Certificate, the undivided percentage
ownership interest in such Class, as stated on the face of such Certificate.
Permitted Investments: One or more of the following:
(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 specified in clause (i) maturing
not more than one month from the date of acquisition thereof, provided that the
unsecured obligations of the party agreeing to repurchase such obligations are
at the time rated by the Rating Agency in its highest short-term rating
available;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original maturity of
not more than 90 days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days or a remaining maturity of
more than 30 days) of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof or of any
domestic branch of a foreign depository institution or trust company; provided
that the debt obligations of such depository institution or trust company at the
date of acquisition thereof have been rated by the Rating Agency in its highest
short-term rating available;
6
<PAGE>
(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United States or any
state thereof which on the date of acquisition has been rated by the Rating
Agency in its highest short-term rating available; provided that such commercial
paper shall have a remaining maturity of not more than 30 days;
(v) a money market fund or qualified investment fund rated by the Rating
Agency in its highest rating available; and
(vi) other obligations or securities that are acceptable to the Rating
Agency as a Permitted Investment hereunder and will not result in a reduction in
the then-current rating of the Classes of Certificates that have been rated, as
evidenced in writing;
provided, however, (A) such obligation or security is held for a temporary
period pursuant to Treasury Regulations Section 1.860G-2(g)(1) and (B) that no
instrument shall be a Permitted Investment if it represents, either (1) the
right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments
derived from obligations underlying such instrument and the principal payments
with respect to such instrument provide a yield to maturity greater than [120%]
of the yield to maturity at par of such underlying obligations. References
herein to the highest rating available on unsecured long-term debt shall mean
[____] or higher in the case of [_____] and in the case of any other Rating
Agency shall mean such ratings without any plus or minus, and references herein
to the highest rating available on unsecured commercial paper and short-term
debt obligations shall mean [____] by [_____] in the case of [_____].
Permitted Transferee: Any Transferee of a Class R Certificate other than
(i) the United States, any state or any political subdivision thereof, any
possession of the United States, or any agency or instrumentality of any of the
foregoing (other than an instrumentality which is a corporation if all of its
activities are subject to tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by any such
governmental unit), (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 Section 521 of the Code)
which is exempt from tax 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 Section 1381 of the Code and (v) an electing large
partnership under Section 775 of the Code and any other Person so designated by
the Trustee based upon an Opinion of Counsel that the holding of an Ownership
Interest in a Class R Certificate by such Person may cause the Trust Fund or any
Person having an Ownership Interest in any Class of Certificates, other than
such Person, to incur a liability for any tax imposed under the Code that would
not otherwise be imposed but for the Transfer of an Ownership Interest in a
Class R Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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Prepayment Assumption: The percentage of the standard prepayment assumption
set forth below with respect to the Mortgage Loans related to each of the
Underlying Certificates. The standard prepayment assumption assumes a constant
rate of prepayment of mortgage loans of [__]% per annum of the then outstanding
principal balance of such mortgage loans in the first month of the life of the
mortgage loans, increasing by an additional [__]% per annum in each succeeding
month until the thirtieth month, and a constant [__]% per annum rate of
prepayment thereafter for the life of the mortgage loans.
________ Series ____-__ Class __ ____%
________ Series ____-__ Class __ ____%
________ Series ____-__ Class __ ____%
Principal Distribution Amount: With respect to any Payment Date and any
Class of Certificates means the product of the applicable Principal Distribution
Percentage for such Class of Trust Certificates times the Underlying Certificate
Principal Distribution Amount for such Payment Date.
Principal Payment: With respect to any Payment Date and any Class of
Certificates means the payment received, if any, with respect to its Principal
Distribution Amount.
Rating Agency: [_____] and [_____]. If either agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor, notice of which
designation shall be given to the Trustee.
Realized Losses: With respect to any Underlying Certificate, the amount of
a "Realized Loss," or, with respect to the Underlying [Re-REMIC] Certificates,
the aggregate of the "Pooled Certificate Excess Bankruptcy Losses", "Pooled
Certificate Excess Fraud Losses" and "Pooled Certificate Excess Special Hazard
Losses", in each case as such terms are defined in the related Underlying
Agreement, which is applied to reduce the principal balance of such Underlying
Certificate.
Record Date: With respect to any Payment Date, other than the first Payment
Date, the last Business Day of the month preceding the month in which the
earliest related Distribution Date on the Underlying Certificates occurs, and
with respect to the first Payment Date, the Closing Date.
Regular Certificates: [The Class A, Class B and Class M Certificates.]
Related Certificates: With respect to the Underlying Certificates, any
other mortgage pass-through certificates issued pursuant to the related
Underlying Agreement.
Related Senior Certificates: With respect to the Underlying Certificates,
any class of certificates of the related series with a higher payment priority.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
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REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at Sections 860A through 860G
of the Code, and related provisions, and regulations and rulings promulgated
thereunder, as the foregoing may be in effect from time to time.
Responsible Officer: When used with respect to the Trustee, any
officer of the [_____________ Division] of the Trustee, including any Vice
President, any Assistant Vice President, any Assistant Secretary, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers to whom, with respect to a
particular matter, such matter is referred.
Rule 144A: Rule 144A under the Securities Act of 1933, as in effect from
time to time.
Single Certificate: A Certificate of any Class evidencing a [$1,000]
denomination for Certificates of such class as set forth in Section 3.06.
Startup Day: The day designated as such pursuant to Section 2.03(b).
Tax Returns: The federal income tax return on Internal Revenue Service Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including
Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC
Taxable Income or Net Loss Allocation, or any successor forms, to be filed on
behalf of the Trust Fund due to its classification as a REMIC under the REMIC
Provisions, together with any and all other information, reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provisions of federal, state or local tax laws.
Termination Date: The Payment Date on which the Trust Fund is terminated
pursuant to Section 6.01.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation or
other form of assignment of any Ownership Interest in a Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership Interest
in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
Trust Certificate Account: The trust account or accounts, which shall at
all times be Eligible Accounts, created and maintained by the Trustee pursuant
to Section 3.03. Funds deposited in the Trust Certificate Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in
Article III hereof.
Trustee: __________________, a _____________ banking corporation or its
successor in interest, or any successor trustee appointed as herein provided.
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Trustee Fee: With respect to any Payment Date, the fee payable monthly to
the Trustee in respect of its compensation hereunder that accrues at an annual
rate equal to [___]% on the aggregate Certificate Principal Balance of the
Certificates of all Classes as in effect immediately prior to the next preceding
Distribution Date.
Trustee Fee Agreement: The fee agreement between the Depositor and the
Trustee relating to certain fees and expenses payable to the Trustee in
connection with this Agreement.
Trust Fund: The corpus of the trust created by and to be administered under
this Agreement consisting of: (i) the Underlying Certificates described in the
Underlying Certificate Schedule, (ii) all distributions thereon after but not
including the Distribution Date occurring in _________, 200_, and (iii) the
Trust Certificate Account and such assets that are deposited therein from time
to time, together with any and all income, proceeds and payments with respect
thereto.
Underlying Agreement: With respect to each Underlying Certificate, the
pooling and servicing agreement, trust agreement or indenture pursuant to which
such Underlying Certificate was issued, as described in Exhibit E.
Underlying Certificate: Any one of the mortgage pass-through certificates
transferred to the Trustee by the Depositor pursuant to Section 2.01, as from
time to time are held as a part of the Trust Fund and as are more fully
described in the Underlying Certificate Schedule attached hereto as Exhibit E.
Underlying Certificate Distribution Date: With respect to any Payment Date
and Underlying Certificate, the Distribution Date occurring next preceding such
Payment Date.
Underlying Certificateholder: The registered owner of an Underlying
Certificate.
Underlying Certificate Rate: With respect to any Underlying Certificate and
any Distribution Date, the rate per annum at which interest payable with respect
to such Underlying Certificate on such Distribution Date accrued.
Underlying Certificate Schedule: The schedule attached as Exhibit E hereto
identifying the Underlying Certificates.
[Underlying Re-REMIC Certificates: The ______________________ Trust
_________, Series ______ Class __, and ___________________ Trust __________,
Series ______ Class __, as listed in Exhibit E hereto.]
United States 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 or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includable 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.
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Voting Rights: The portion of the voting rights of all of the Certificates
which is allocated to any Certificate. For so long as the related Classes of
Certificates remain outstanding, [99]% of all of the Voting Rights shall be
allocated among Holders of the Regular Certificates, in proportion to the
outstanding Certificate Principal Balances of their respective Outstanding
Certificates and the aggregate outstanding Certificate Principal Balance of the
Regular Certificates which are Outstanding Certificates; and the Holder of the
Class R Certificate shall be entitled to [1]% of all of the Voting Rights,
allocated among the Certificates of such Class in accordance with their
respective Percentage Interests.
ARTICLE II
CONVEYANCE OF THE UNDERLYING CERTIFICATES;
ORIGINAL ISSUANCE OF TRUST CERTIFICATES
Section 2.01. Conveyance of the Underlying Certificates.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set-over and otherwise convey to the
Trustee, in trust, for the use and benefit of the Certificateholders, without
recourse, all the right, title and interest of the Depositor in and to the
Underlying Certificates and all other assets constituting the Trust Fund. Such
assignment includes, without limitation, all amounts payable to and all rights
of the Underlying Certificateholders pursuant to the related Underlying
Agreement.
In connection with such transfer and assignment, on the Closing Date the
Depositor will deliver to, and deposit with, the Trustee each of the Underlying
Certificates, together with the following documents or instruments:
(i) a duly issued and authenticated certificate or certificates for
each class of the Underlying Certificates, evidencing the entire interest
in such class, with appropriate endorsements and other documentation
sufficient under the related Underlying Agreement to transfer each such
certificate to "______________, as trustee under the Trust Agreement, dated
as of _________, 200_, relating to Credit Suisse First Boston Mortgage
Securities Corp., Trust Certificates, Series 200_-__";
(ii) a copy of each related Underlying Agreement; and
(iii) copies of each of the most recent Distribution Date Statements
and [Underlying Re-REMIC Distribution Date] Statements delivered to the
Underlying Certificateholders.
In addition, subsequent to the Closing Date, the Depositor shall deliver
to, and deposit with, the Trustee all distributions, Distribution Date
Statements, and Underlying Re-REMIC Distribution Date Statements, if applicable,
relating to distributions on the Underlying Certificates due after the Cut-off
Date and received by the Depositor. Any such distributions shall be made by wire
on the same day on which such distributions are received by the Depositor or, if
such distribution is received by the Depositor after noon New York time, on the
next Business Day.
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The Trustee hereby acknowledges the receipt by it of the Underlying
Certificates and the other documents and instruments referenced above, and
declares that it holds and will hold such Underlying Certificates, such other
documents and instruments and that it holds and will hold all other assets and
documents included in the Trust Fund, in trust for the exclusive use and benefit
of all present and future Certificateholders.
The transfer of the Underlying Certificates and all other assets
constituting the Trust Fund is absolute and is intended by the parties hereto as
a sale. Except as provided in Sections 2.02, 3.02(b) and 6.01 hereof, the
Trustee shall not assign, sell, dispose of or transfer any interest in the
Underlying Certificates or any other asset constituting the Trust Fund or permit
the Underlying Certificates or any other asset constituting the Trust Fund to be
subjected to any lien, claim or encumbrance arising by, through or under the
Trustee or any person claiming by, through or under the Trustee.
(b) It is the express intent of the parties hereto that the conveyance of
the Trust Fund to the Trustee, for the benefit of the Certificateholders, by the
Depositor 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 Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event that, notwithstanding the intent of the parties, the Trust Fund is held to
be the property of the Depositor, or if for any other reason this Agreement is
held or deemed to create a security interest in the Trust Fund, then:
(i) this Agreement shall be deemed to be a security agreement; and
(ii) the conveyance provided for in Section 2.01 shall be deemed to be
a grant by the Depositor to the Trustee, for the benefit of the
Certificateholders, of a security interest in all of the Depositor'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 uncertificated securities consisting of,
arising from or relating to any of the property described in
clauses (1) and (2) below: (1) the Underlying Certificates;
and (2) the Trust Certificate Account, including all
property therein and all income from the investment of funds
therein (including any accrued discount realized on
liquidation of any investment purchased at a discount);
(ii) All accounts, contract rights, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices
of credit, uncertificated securities, 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
clause (A) above (including any accrued discount realized on
liquidation of any investment purchased at a discount); and
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(iii)All cash and non-cash proceeds of the collateral described
in clauses (A) and (B) above.
(c) The possession by the Trustee of the Underlying Certificates 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 or a person
designated by him or her, for purposes of perfecting the security interest
pursuant to the Uniform Commercial Code (including, without limitation, Sections
9-305, 8-313 or 8-321 thereof) as in force in the relevant jurisdiction.
(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,
financial intermediaries, bailees or agents (as applicable) of the Trustee for
the purpose of perfecting such security interest under applicable law.
(e) The Depositor and, at the Depositor's direction, the Trustee, shall, to
the extent consistent with this Agreement, take such reasonable actions as may
be necessary to ensure that, if this Agreement were deemed to create a security
interest in the Trust Fund or the other property described above, 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. The Depositor shall file all filings necessary to perfect such
security interest of first priority and shall maintain the effectiveness of any
original filings necessary under the Uniform Commercial Code as in effect in any
jurisdiction to perfect the Trustee's security interest in or lien on the Trust
Fund and such other property, including without limitation (i) continuation
statements, and (ii) such other statements as may be occasioned by any transfer
of any interest of the Depositor in the Trust Fund or such other property. 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.
Section 2.02. Issuance of Trust Certificates.
The Trustee acknowledges the transfer, delivery and assignment to it of the
Underlying Certificates, together with the assignment to it of all other assets
included in the Trust Fund, and declares that it holds and will hold the
Underlying Certificates and all other assets included in the Trust Fund in trust
for the benefit of all present and future Certificateholders. Concurrently with
such transfer and delivery, the Trustee has duly executed, authenticated and
delivered, to or upon the order of the Depositor, the Trust Certificates in
authorized denominations, and registered in such names as the Depositor has
requested.
Section 2.03. [Miscellaneous REMIC Provisions.
(a) The Depositor hereby designates the Certificates (other than the Class
R Certificate) as the "regular interests" and the Class R Certificate as the
sole class of "residual interest" in the Trust Fund for purposes of Sections
860G(a)(1) and 860G(a)(2) of the Code, respectively. The Trustee shall not
permit the creation of any "interests" (within the meaning of
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Section 860G of the Code) in the REMIC, other than the regular interests and the
interests represented by the Class R Certificates, respectively.
(b) The Closing Date will be the "Startup Day" of the Trust Fund within the
meaning of Section 860G(a)(9) of the Code.
(c) The Class R Certificateholder is hereby designated as the "tax matters
person" with respect to the Trust Fund in the manner provided under Treasury
Regulations Section 1.860F-4(d) and Temporary Treasury Regulations Section
301.6231(a)(7)-1T. The Trustee shall serve as attorney-in-fact and agent for any
Person that is the tax matters person of the REMIC. The Holder of the Class R
Certificate, by purchasing or accepting such Certificate, (A) shall be deemed to
consent to the appointment of the Trustee as attorney-in-fact and agent for any
Person that is the tax matters person of the REMIC and (B) agrees to execute any
documents required to give effect to (A) above.
(d) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations, the "latest possible maturity date" by which the Certificate
Principal Balance of each Class of Certificates representing a regular interest
in the REMIC would be reduced to zero is ________ 20__, which is the
Distribution Date immediately following the latest scheduled maturity of any
Mortgage Loan.]
ARTICLE III
ADMINISTRATION OF THE UNDERLYING CERTIFICATES;
PAYMENTS AND REPORTS TO CERTIFICATEHOLDERS
Section 3.01. Administration of the Trust Fund and the Underlying
Certificates.
(a) [The parties intend that the Trust Fund formed hereunder shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
qualify the Trust Fund as a "real estate mortgage investment conduit" as defined
in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee covenants and agrees that it shall act as agent (and the
Trustee is hereby appointed to act as agent) on behalf of the Trust Fund and
that in such capacity it shall: (i) prepare and file, or cause to be prepared
and filed, in a timely manner, annual U.S. Real Estate Mortgage Investment
Conduit Income Tax Returns (Form 1066) and any other Tax Returns required to be
filed by the Trust Fund, using a calendar year as the taxable year for the Trust
Fund or as otherwise may be required by the REMIC Provisions; (ii) in the first
such tax return, make an election, on behalf of the Trust Fund, to be treated as
a REMIC, such election to be made on Form 1066 or other appropriate tax or
information return (including Form 8811) or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued; (iii) prepare and forward, or cause to be prepared and
delivered to the Trustee for forwarding and the Trustee shall forward to the
Certificateholders all information reports as and when required to be provided
to them in accordance with the REMIC Provisions or other federal income tax laws
and regulations (for purposes of federal income tax information reporting to the
Internal Revenue Service and to Certificateholders, the Prepayment Assumption
shall be used as required); (iv) conduct the
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affairs of the Trust Fund at all times that any Certificates are outstanding so
as to maintain the status of the Trust Fund as a REMIC under the REMIC
Provisions; (v) not knowingly or intentionally take any action (including,
without limitation, permitting any modification with respect to any Underlying
Certificate), or omit to take any action, that would cause the termination of
the REMIC status of the Trust Fund; (vi) execute any such returns or reports to
be filed on behalf of the Trust Fund; (vii) in a timely manner pay the amount of
any and all federal, state and local taxes imposed on the Trust Fund or its
assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the Code, if, when and
as the same shall be due and payable and (B) any tax on contributions to a REMIC
after the Closing Date imposed by Section 860G(d) of the Code (and the Trustee
may in its absolute discretion determine when any such tax is due and payable
and whether to pay such tax, to pay and contest such tax or to withhold payment
of such tax, if permitted by law, pending the outcome of any such proceedings);
(viii) provide to the Certificateholders such data reasonably necessary for
their original issue discount computations and market discount computations with
respect to the Certificates for federal income tax purposes based on pricing
information provided by the Depositor to the Trustee (and upon notice thereof,
the Trustee shall promptly correct any errors in such data); and (ix) as and
when necessary and appropriate, represent the Trust Fund in any administrative
or judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
the Trust Fund, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any tax item of the Trust
Fund, and otherwise act on behalf of the Trust Fund in relation to any tax
matter involving the Trust Fund or controversy involving the Trust Fund. 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 Trustee
shall be entitled to be reimbursed therefor out of amounts attributable to the
Underlying Certificates on deposit in the Trust Certificate Account as provided
by Section 3.04 and, on the Payment Date(s) following such reimbursement, the
aggregate of such expenses and costs as well as all taxes paid by the Trustee
pursuant to clause (vii) above (to the extent that such taxes are not imposed
due to a negligent failure by the Trustee to perform any obligation specifically
undertaken by the Trustee pursuant to this Agreement) shall be allocated in
reduction of the Accrued Certificate Interest on each Class entitled thereto in
the same manner as if such expenses and costs constituted a Prepayment Interest
Shortfall. The Trustee shall sign all Tax Returns relating to the Trust Fund.
(b) Within 30 days after the Closing Date, the Trustee shall prepare and
file with the Internal Revenue Service Form 8811, "Information Return for Real
Estate Mortgage Investment Conduits (REMICs) and Issuers of Collateralized Debt
Obligations" for the Trust Fund.
(c) If at any time the Trustee, as an Underlying Certificateholder, is
requested in such capacity to take any action or to give any consent, approval
or waiver, including without limitation in connection with an amendment of the
related Underlying Agreement or if an Event of Default as defined in the related
Underlying Agreement occurs under the related Underlying Agreement, the Trustee,
in its capacity as an Underlying Certificateholder, may take such action in
connection with the enforcement of any rights and remedies available to it in
such capacity with respect thereto but only in accordance with the written
directions of Holders of Certificates entitled to at least 51% of the Voting
Rights. The Trustee shall promptly notify all of the Certificateholders of any
such request.
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(d) Following the Startup Day, the Trustee shall not accept any
contributions of assets to the REMIC unless the Trustee has received an Opinion
of Counsel (at the expense of the party seeking to make such contribution) to
the effect that the inclusion of such assets in the REMIC will not cause the
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject the REMIC to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances.]
Section 3.02. Collection of Monies.
(a) [In the event the Trustee does not receive any Distribution Date
Statement in connection with its receipt of any distribution on an Underlying
Certificate on any Distribution Date, and, in the case of the Underlying
Re-REMIC Certificates, the Underlying Re-REMIC Distribution Date Statements with
respect to the Underlying Certificates, the Trustee shall use its best efforts
to contact the related trustee to obtain such Distribution Date Statement and
Underlying Re-REMIC Distribution Date Statements as soon as possible and will
confirm that the amount of principal and interest distributions received on such
Distribution Date equals the distribution amount shown on the related
Distribution Date Statement. If such amounts differ, the Trustee will use its
best efforts to contact the trustee for the Underlying Certificates to attempt
to reconcile such difference. If such distribution and the related Distribution
Date Statement and any Underlying Re-REMIC Distribution Date Statements shall
not have been received by the Trustee by the close of business one Business Day
following the day on which such distribution was to be received by the Trustee
or the Trustee shall gain actual knowledge of any Event of Default under and as
defined in the related Underlying Agreement, the Trustee shall promptly notify
the Depositor and the Certificateholders and such parties shall proceed in
accordance with the terms and conditions of Section 3.01(c). Any distribution
received, or with respect to which the Distribution Date Statement or any
Underlying Re-REMIC Distribution Date Statements are received, subsequent to a
Payment Date shall be deposited in the Trust Certificate Account and distributed
on the next succeeding Payment Date.
(b) Except as otherwise provided in Section 6.01, upon its receipt of a
Notice of Final Distribution, the Trustee shall present and surrender the
Underlying Certificate to which such notice applies, for final payment thereon
in accordance with the terms and conditions of the related Underlying Agreement
and such Notice of Final Distribution. The Trustee shall promptly deposit in the
Trust Certificate Account the final distribution received upon presentation and
surrender of any Underlying Certificate.]
Section 3.03. Establishment of Trust Certificate Account; Deposits in Trust
Certificate Account.
(a) The Trustee, for the benefit of the Certificateholders, shall establish
and maintain one or more accounts (collectively, the "Trust Certificate
Account"), each of which shall be an Eligible Account, entitled
"________________, in trust for the registered holders of Credit Suisse First
Boston Mortgage Securities Corp., Trust Certificates, Series 200_-__," held in
trust by the Trustee for the benefit of the Certificateholders. The Trustee
shall cause the following payments and collections in respect of the Underlying
Certificates to be deposited directly into the Trust Certificate Account:
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(i) all distributions due and received on the Underlying Certificates
subsequent to the Cut-off Date;
(ii) any amounts received in connection with the sale of the Underlying
Certificates pursuant to Section 6.01 in accordance with a plan of
complete liquidation of the Trust Fund; and
(iii)any other amounts specifically required to be deposited in the Trust
Certificate Account hereunder.
The foregoing requirements for deposit in the Trust Certificate Account
shall be exclusive.
(b) Funds in a Trust Certificate Account may be invested by the Trustee in
Permitted Investments in accordance with the provisions set forth in Section
3.08. The Trustee shall give notice to the Depositor of the location of each
Trust Certificate Account upon establishment thereof and prior to any change
thereof.
Section 3.04. Permitted Withdrawals From the Trust Certificate Account.
The Trustee may from time to time withdraw funds from the Trust Certificate
Account for the following purposes:
(i) to pay to the Trustee on each Payment Date, as compensation for its
services hereunder, the Trustee Fee, any Trustee Fee due on a prior
Payment Date remaining unpaid, permitted expenses of the Trustee as
set forth in the Trustee Fee Agreement and any investment income on
amounts in the Trust Certificate Account;
(ii) to make distributions in the amounts and in the manner provided for in
Section 3.05;
(iii)to reimburse the Depositor or the Trustee for expenses incurred by
and reimbursable to the Depositor or the Trustee pursuant to Section
3.01(a) or 7.03 or as otherwise permitted under this Agreement; and
(iv) to clear and terminate the Trust Certificate Account upon the
termination of this Agreement.
Section 3.05. Distributions.
(a) [CASH FLOW PROVISIONS TO BE INSERTED AS APPROPRIATE]
(b) Except as otherwise provided in Section 6.01, whenever the Trustee, as
of [five] Business Days prior to any Record Date, has received notice that the
final distribution with respect to any Class of Certificates will be made on the
related Payment Date, the Trustee shall, no later than such related Record Date,
mail to each Holder on such date of such Class of Certificates a notice to the
effect that:
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(i) the Trustee has received notice that the final distribution with
respect to such Class of Certificates will be made on such Payment
Date but only upon presentation and surrender of such Certificates at
the office of the Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and after such
final Payment Date.
(c) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar or the Depositor shall have any responsibility therefor
except as otherwise provided by this Agreement or applicable law.
Section 3.06. Statements to Certificateholders.
On each Payment Date to the extent the Trustee has received the related
Distribution Date Statement for the Underlying Certificates on the Underlying
Certificate Distribution Date, the Trustee shall prepare and forward by mail a
statement as to the distributions on the Underlying Certificates made on such
Distribution Date and, in the case of the Underlying Re-REMIC Certificates, the
Underlying Re-REMIC Distribution Date Statements with respect to the Underlying
Certificates, if received, and a statement to each Certificateholder and to the
Depositor stating:
(i) the Available Funds for such Payment Date;
(ii) with respect to such Payment Date, the aggregate amount of Accrued
Certificate Interest and the aggregate Principal Distribution Amount
and the amounts of principal and interest distributed to the
Certificateholders of each Class of Certificates on such Payment Date
pursuant to Section 3.05;
(iii)the aggregate amount of distributions on the Class R Certificate on
such Payment Date pursuant to Section 3.05, if any;
(iv) the Certificate Principal Balance of each Class of Regular
Certificates after giving effect to distributions of principal of such
Certificates on such Payment Date;
(v) the Underlying Certificate Balance for each Underlying Certificate as
of the Distribution Date immediately preceding such Payment Date,
after giving effect to the distribution of principal made thereon on
such Distribution Date and the amount of any Realized Losses with
respect to
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each Underlying Certificate applied to reduce the Underlying
Certificate Balance thereof on such Distribution Date;
(vi) the amount of any reductions in the Certificate Principal Balance of
each Class of Regular Certificates or the Accrued Certificate Interest
distributable thereon; and
(vii)the amount of Accrued Certificates Interest on any Payment Date which
was not distributed on such Payment Date.
In the case of the information furnished pursuant to clauses (i)-(iii)
above, the amounts shall also be expressed as a dollar amount per Single
Certificate of the applicable Class.
In addition, the Trustee promptly will furnish to Certificateholders copies
of any notices, statements, reports or other communications including, without
limitation, the Distribution Date Statements and the Underlying Re-REMIC
Distribution Date Statements for each Distribution Date, received by the Trustee
as the Underlying Certificateholder.
On or before __________ of each calendar year, beginning with calendar year
200_, the Trustee shall prepare and deliver by first class mail to each Person
who at any time during the previous calendar year was a Certificateholder of
record a statement containing the information required to be contained in the
regular monthly report to Certificateholders, as set forth in clause (ii) above
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code and regulations thereunder as from time to time are in force.
Upon the written request of any Certificateholder, the Trustee, as soon as
reasonably practicable, shall provide the Certificateholder with such
information as has been provided by the Depositor to the Trustee, for purposes
of satisfying applicable information reporting requirements under Rule 144A.
Section 3.07. Access to Certain Documentation and Information.
The Trustee shall provide to the Certificateholders access to Certificates
and all reports, documents and records maintained by the Trustee in respect of
its duties hereunder, such access being afforded without charge but only upon
reasonable written request no less than two Business Days prior to such access
and during normal business hours at offices designated by the Trustee.
Section 3.08. Permitted Investments.
The Trustee may direct any institution maintaining the Trust Certificate
Account to invest the funds in such Trust Certificate Account in Permitted
Investments, which shall mature not later than the Business Day immediately
preceding the next Payment Date (except that any investment in the institution
with which the Trust Certificate Account is maintained may mature on such
Payment Date). All such Permitted Investments shall be made in the name of the
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Trustee, in trust for the Holders of the Certificates, or its nominee. All
income and gain received from any such investment shall be deposited in the
appropriate Trust Certificate Account and may only be withdrawn and applied for
the purposes set forth in Section 3.04.
Section 3.09. Sale of Defective Assets.
Upon the discovery by the Depositor or the Trustee that any of the
Underlying Certificates are not REMIC regular interests or that any other asset
of the REMIC is not a permitted asset, the party discovering such fact shall
give prompt written notice to the other party. The Trustee shall sell such
Underlying Certificate (or other asset, as the case may be) upon the terms and
at the direction of the Depositor within 90 days of such discovery and any tax
resulting therefrom not borne by the Trustee pursuant to Article V hereof shall
be payable out of the Trust Fund ratably among all of the Classes to which the
prohibited transaction relates.
Section 3.10. Modification of Underlying Certificates.
Notwithstanding any contrary provision herein, the Trustee will not permit
the modification of any Underlying Certificate without an Opinion of Counsel
which shall not be an expense of the Trustee that such modification would not
(i) endanger the status of the REMIC as a REMIC or (ii) result in the imposition
of a tax upon the REMIC (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code).
ARTICLE IV
THE TRUST CERTIFICATES
Section 4.01. The Certificates.
The Certificates shall be substantially in the respective forms set forth
in Exhibits A, B, C and D hereto. The Class A, Class B and Class M Certificates
are issuable in minimum initial Certificate Principal Balances as of the Closing
Date of $[25,000] plus integral multiples of $[1,000] in excess thereof;
provided, however, that one Class B Certificate may be issued in an initial
denomination equal to an integral multiple of $[25,000], plus the excess, if
any, of the Initial Certificate Principal Balance of such Class over the largest
integral multiple of $[1,000] less than such Initial Certificate Principal
Balance. The Class R Certificate will be issuable in fully registered form as a
single Certificate evidencing a 100% Percentage Interest. The Certificates
shall, on original issue, be executed by the Trustee, not in its individual
capacity but solely as Trustee, and delivered by the Trustee to the Certificate
Registrar for authentication and delivery to or upon the order of the Depositor
upon receipt by the Trustee of the Underlying Certificates and any other
documents which are required by this Agreement or which the Trustee may
reasonably request.
The Certificates shall be executed by manual signature on behalf of the
Trustee in its capacity as trustee hereunder by an authorized officer.
Certificates bearing the manual signatures of individuals who were at any time
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
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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 Certificate Registrar 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.
The Class A, Class B and Class M Certificates shall initially be issued as
one or more Certificates registered in the name of the Depository or its nominee
and, except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Holders of the Book-Entry Certificates shall hold their respective
Ownership Interests in and to each of the Book-Entry Certificates through the
book-entry facilities of the Depository and, except as provided below, shall not
be entitled to Definitive Certificates in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall transfer the Ownership
Interests only in the Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
The Trustee and the Depositor may for all purposes (including the making of
payments due on the respective Classes of Book-Entry Certificates) deal with the
Depository as the authorized representative of the Certificate Owners with
respect to the respective Classes of Book-Entry Certificates for the purposes of
exercising the rights of Certificateholders hereunder. The rights of Certificate
Owners with respect to the respective Classes of Book-Entry Certificates shall
be limited to those established by law and agreements between such Certificate
Owners and the Depository Participants and brokerage firms representing such
Certificate Owners. Multiple requests and directions from, and votes of, the
Depository as Holder of any Class of Book-Entry Certificates with respect to any
particular matter shall not be deemed inconsistent if they are made with respect
to different Certificate Owners. The Trustee may establish a reasonable record
date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the Depository
is no longer willing or able to properly discharge its responsibilities as
Depository and (B) the Depositor is unable to locate a qualified successor or
(ii) the Depositor at its option advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration of transfer, the Trustee shall issue the
Definitive Certificates. Neither the Depositor, nor the Trustee, nor any
Affiliate of either thereof shall be liable for any actions taken by the
Depository or its nominee, including, without limitation, 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 all
references herein to obligations imposed upon or to be performed by the
Depositor in connection
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with the issuance of the Definitive Certificates pursuant to this Section shall
be deemed to be imposed upon and performed by the Trustee, and the Trustee shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
Section 4.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or agencies to
be appointed by the Trustee in accordance with the provisions of this Section
4.02 a Certificate Register in which, subject to such reasonable regulations as
it may prescribe, the Trustee shall provide for the registration of Certificates
and of transfers and exchanges of Certificates as herein provided. The Trustee
is initially appointed Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided.
Upon satisfaction of the conditions set forth below, the Trustee shall execute
and the Certificate Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and aggregate Percentage Interest. In addition, the Trustee shall notify
the Depositor of each transfer or exchange of the Certificates.
(b) At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of a like Class and aggregate
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 Certificate Registrar shall authenticate and
deliver the Certificates of such Class which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(c) Except as provided in Section 4.02(d), no transfer, sale, pledge or
other disposition of a Certificate shall be made unless such transfer, sale,
pledge or other disposition (1) is exempt from the registration requirements of
the Securities Act of 1933 (the "1933 Act"), as amended, and any applicable
state securities laws or is registered or qualified in accordance with the 1933
Act and such laws and (2) is made in accordance with Rule 3a-7(a)(2) under the
Investment Company Act of 1940. In the event that a Transfer of a Certificate is
to be made under this Section 4.02(c), (i) the Trustee or the Depositor shall
require a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee and the Depositor that such Transfer may be made
pursuant to an exemption from the 1933 Act made pursuant to the 1933 Act and
such laws, which Opinion of Counsel shall not be an expense of the Trustee or
the Depositor, and (ii) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit F hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit G hereto, acceptable to and in form and
substance satisfactory to the Depositor and the Trustee certifying to the
Trustee and the Depositor the facts surrounding such Transfer, which investment
letter shall not be an expense of the Trustee or the Depositor. The Holder of a
Certificate desiring to effect such transfer, sale, pledge or other disposition
shall, and does hereby agree to, indemnify the Trustee, the Depositor and the
Certificate Registrar against any liability that may result if the transfer,
sale, pledge or other disposition is not so exempt or is not made in accordance
with such federal and state laws.
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(d) Transfers of Certificates may also be made in accordance with this
Section 4.02(d) if the prospective transferee of a Certificate provides the
Trustee and the Depositor with an investment letter substantially in the form of
Exhibit H attached hereto, which investment letter shall not be an expense of
the Trustee or the Depositor, 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 1933 Act provided by Rule 144A. Such transfers shall be
deemed to have complied with the requirements of Section 4.02(c) hereof;
provided, however, that no Transfer of any of the Certificates may be made
pursuant to this Section 4.02(d) by the Depositor. The Holder of a Certificate
desiring to effect such Transfer does hereby agree to indemnify the Trustee, the
Depositor and the Certificate Registrar against any liability that may result if
the Transfer is not made in accordance with this Agreement.
(e) Notwithstanding Sections 4.02(c), (d) and (f), an Opinion of Counsel or
certification will not be required with respect to the transfer of any Class A,
Class B or Class M Certificate to a Depository, or for any subsequent transfer
of any interest in such a Certificate for so long as such Certificate is a
Book-Entry Certificate. Any Transferee of a Book-Entry Certificate will be
deemed to have represented by virtue of its purchase or holding of such
Certificate (or interest therein) that (A) either (a) it is not, and is not
purchasing on behalf of, any Plan or using the "plan assets" of any Plan to
effect such purchase and the holding of any Certificate or (b) such Transferee
is an insurance company acquiring such Certificates solely with assets of its
general account in a transaction satisfying the conditions to the applicability
of exemptive relief under Sections I and III of U.S. Department of Labor
Prohibited Transaction Class Exemption 95-60 and (B) such Transferee is a
"qualified institutional buyer" as defined under Rule 144A, acting for its own
account or the accounts of other "qualified institutional buyers", and is aware
that the proposed transferor intends to rely on the exemption from registration
requirements under the 1933 Act provided by Rule 144A. Any purported Certificate
Owner whose acquisition or holding of any Book-Entry Certificate (or interest
therein) was effected in violation of the restrictions in this Section 4.02(e)
shall indemnify and hold harmless the Depositor, the Trustee and the Trust Fund
from and against any and all liabilities, claims, costs or expenses incurred by
such parties as a result of such acquisition or holding.
(f) In the case of any Certificate presented for registration by the
Trustee, the Trustee shall not register the purchase or transfer unless the
prospective purchaser or transferee provides the Trustee and the Depositor with
a representation in the form set forth in Exhibit F or Exhibit H that (i) it is
not, and is not purchasing on behalf of, any Plan or using the "plan assets" of
any Plan to effect such purchase and the holding of any Certificate; or (ii) in
the case of a Regular Certificate, it has delivered an Opinion of Counsel which
shall be acceptable to and in form and substance satisfactory to the Trustee and
the Depositor, to the effect that the purchase or holding of such Certificate is
permissible under applicable law, will not constitute or result in a non-exempt
prohibited transaction under Section 406 or 407 of ERISA or Section 4975 of the
Code, and will not subject the Trustee or the Depositor to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those explicitly undertaken in this Agreement, which
Opinion of Counsel shall not be an expense of the Trustee or the Depositor; or
(iii) in the case of a Regular Certificate, it is an insurance company, it is
acquiring the Certificates solely with assets of its general account, and such
general account
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satisfies the conditions to the applicability of exemptive relief available
under Sections I and III of U.S. Department of Labor Prohibited Transaction
Class Exemption 95-60.
(g) [(i) No transfer of the Class R Certificate may be made except to
"qualified institutional buyers" who have complied with the requirements of
Section 4.02(d) hereof or to the Depositor or an Affiliate of the Depositor. In
addition, each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions. The rights of
each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall be a United States Person and 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 Class R Certificate to a United States Person, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Class R Certificate until its receipt of, (I) an affidavit and
agreement (a "Transfer Affidavit and Agreement" attached hereto as
Exhibit I-1) from the proposed Transferee, representing and
warranting, among other things, that it is a United States Person,
that such Transferee is a Permitted Transferee, that it is not
acquiring its Ownership Interest in the Class R 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 Class R Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed
the provisions of this Section 4.02(g) and agrees to be bound by them
and (II) a Certificate, attached hereto as Exhibit I-2, from the
Holder wishing to transfer the Class R Certificate, representing and
warranting, among other things, that no purpose of the proposed
Transfer is to impede the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer 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 Class R
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Class R Certificate and (y) not
to transfer its Ownership Interest unless it provides a certificate to
the Trustee in the form attached hereto as Exhibit I-2.
(E) Each Person holding or acquiring an Ownership Interest in a Class R
Certificate, by purchasing an Ownership Interest in such Certificate,
agrees to give the Trustee written notice that it is a "pass-through
interest holder" within the meaning of Temporary Treasury Regulations
1.67-3T(a)(2)(A) immediately upon acquiring an
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Ownership Interest in a Class R Certificate, if it is, or is holding
an Ownership Interest in a Class R Certificate on behalf of, a
"pass-through interest holder."
(ii) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement, a Certificate of the Holder requesting such transfer in the
form attached hereto as Exhibit I-2 and all of such other documents as
shall have been reasonably required by the Trustee as a condition to
such registration. Transfers of the Class R Certificate to Non-United
States Persons and Persons other than Permitted Transferees are
prohibited.
(iii) The Trustee shall be under no liability to any Person for
any registration of Transfer of a Class R Certificate that is in fact
not permitted by this Section 4.02(g) 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.
(iv) The Trustee shall make available all information necessary
to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest to any Person who is not a Permitted Transferee,
including the information regarding "excess inclusions" of such Class
R Certificate required to be provided to the Internal Revenue Service
and certain Persons as described in Treasury Regulation Sections
1.860D-1(b)(5) and 1.860E-2(a)(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
Trustee.
(v) The provisions of this Section 4.02(g) set forth prior to
this Section (v) may be modified, added or eliminated, provided that
there shall have been delivered to the Trustee:
(A) written notification from the Rating Agency to the effect
that the modification, addition or elimination of such provisions will
not cause such Rating Agency to downgrade its then-current ratings of
the Certificates; and
(B) an Opinion of Counsel, which shall not be an expense of the
Trustee, to the effect that such modification, addition or absence of
such provisions will not cause the Trust Fund to cease to qualify as a
REMIC and will not (subject to Section 5.01(b) hereof) cause (x) the
Trust Fund to be subject to an entity-level tax caused by the Transfer
of any Class R Certificate to a Person that is not a Permitted
Transferee or (y) a Certificateholder or another Person to be subject
to a REMIC-related tax caused by the Transfer of a Class R Certificate
to a Non-United States Person or a Person that is not a Permitted
Transferee.]
(h) No service charge shall be made for any transfer or exchange of
Certificates of any Class, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
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(i) All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 4.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Depositor, the Trustee, the Certificate Registrar and any agent of the
Depositor, the Trustee or the Certificate Registrar 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 3.05 and for all
other purposes whatsoever, and neither the Depositor, the Trustee, the
Certificate Registrar nor any agent of the Depositor, the Trustee or the
Certificate Registrar shall be affected by notice to the contrary except as
provided in Section 4.02(g).
ARTICLE V
THE TRUSTEE
Section 5.01. Duties of Trustee.
(a) The Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement.
(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
conform to the requirements of this Agreement and the related Underlying
Agreement. The Trustee shall notify the Certificateholders of any such documents
which do not materially conform to the requirements of this Agreement in the
event that the Trustee, after so requesting, does not receive satisfactorily
corrected documents or a satisfactory explanation regarding any such
nonconformities.
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The Trustee shall forward or cause to be forwarded in a timely fashion the
notices, reports and statements required to be forwarded by the Trustee pursuant
to Sections 3.02, 3.06 and 6.01. [The Trustee covenants and agrees that it shall
take such actions and shall cause the REMIC created hereunder to take such
actions as are reasonably within the Trustee's control and the scope of its
duties more specifically set forth herein as shall be necessary or desirable to
maintain the status thereof as a REMIC under the REMIC Provisions. In performing
its duties more specifically set forth herein, the Trustee shall not knowingly
or intentionally take any action, cause the Trust Fund to take any action or
fail to take (or fail to cause to be taken) any action reasonably within its
control that, under the REMIC Provisions, if taken or not taken, as the case may
be, could (i) endanger the status of the REMIC as a REMIC or (ii) result in the
imposition of a tax upon the REMIC (including but not limited to the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) unless the
Trustee has received an Opinion of Counsel (at the expense of the party seeking
to take such action or, if such party fails to pay such expense, and the Trustee
determines that taking such action is in the best interest of the Trust Fund and
the Certificateholders, at the expense of the Trust Fund, but in no event at the
expense of the Trustee) to the effect that the contemplated action will not,
with respect to the REMIC created hereunder, endanger such status or, unless the
Trustee, the Depositor or both, as applicable, determines in its or their sole
discretion to indemnify the Trust Fund against the imposition of such a tax,
result in the imposition of such a tax. Wherever in this Agreement a
contemplated action may not be taken because the timing of such action might
result in the imposition of a tax on the Trust Fund, or may only be taken
pursuant to an Opinion of Counsel that such action would not impose a tax on the
Trust Fund, such action may nonetheless be taken provided that the indemnity
given in the preceding sentence with respect to any taxes that might be imposed
on the Trust Fund has been given and that all other preconditions to the taking
of such action have been satisfied. At all times as may be required by the Code,
the Trustee will to the extent within its control and the scope of its duties
more specifically set forth herein, maintain substantially all of the assets of
the REMIC as "qualified mortgages" as defined in Section 860G(a)(3) of the Code
and "permitted investments" as defined in Section 860G(a)(5) of the Code.]
(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) The duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
by the Depositor to the Trustee and which on their face, do not contradict
the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
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(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Certificateholders of any Class holding
Certificates which evidence, as to such Class, Percentage Interests
aggregating not less than 25% as to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
(iv) The Trustee shall not be charged with knowledge of any default
under an Underlying Agreement unless a Responsible Officer of the Trustee
assigned to and working in the Corporate Trust Office obtains actual
knowledge of such failure or event or the Trustee receives written notice
of such failure or event at its Corporate Trust Office from the Depositor
or any Certificateholder; and
(v) Except to the extent provided in Section 5.02, no provision in
this Agreement shall require the Trustee to expend or risk its own funds or
otherwise incur any personal financial liability in the performance of any
of its duties as Trustee hereunder, or in the exercise of any of its rights
or powers, if the Trustee shall have reasonable grounds for believing that
repayment of funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 5.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 5.01:
(i) The Trustee may request and may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
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 be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) 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,
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request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests aggregating not less
than 50%; provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to
it by the terms of this Agreement, the Trustee may require reasonable
indemnity against such expense or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be paid
by the Certificateholder requesting the investigation; and
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.
(b) Following the issuance of the Certificates, the Trustee shall not
accept any contribution of assets to the Trust Fund unless it shall have
obtained or been furnished with an Opinion of Counsel from the party seeking to
contribute assets and at such party's expense to the effect that such
contribution will not (i) cause the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding or (subject to Section 5.01(b)
hereof) (ii) cause the Trust Fund to be subject to any tax as a result of such
contribution (including the imposition of any tax on "prohibited transactions"
of the Trust Fund imposed under Section 860F(a) of the Code).
Section 5.03. Trustee Not Liable for Certificates or Underlying
Certificates.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Underlying Certificates) shall be taken as the statements of the Depositor 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 (except that the Certificates shall be duly and validly executed by
it as Trustee and authenticated by it as Certificate Registrar) or of the
Underlying Certificates of any related document. Except as otherwise provided
herein, the Trustee shall not be accountable for the use or application by the
Depositor of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor in respect of the
Underlying Certificates deposited in or withdrawn from the Trust Certificate
Account by the Depositor.
Section 5.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee.
Section 5.05. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association having its principal office in a state and city
acceptable to the Depositor and organized and doing business under the laws of
such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or state
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authority. If such corporation or national banking association publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation 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, the Trustee shall
resign immediately in the manner and with the effect specified in Section 5.06.
Section 5.06. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor. Upon receiving
such notice of resignation, the Depositor 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 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.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 5.05 and shall fail to resign after written
request therefor by the Depositor, 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 Depositor
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 and one copy to the successor trustee.
(c) The Holders of Regular Certificates entitled to at least 51% of the
Voting Rights 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 Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 5.07.
Section 5.07. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 5.06 shall
execute, acknowledge and deliver to the Depositor 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 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
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Underlying Certificates and
related documents and statements held by it hereunder, and the
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Depositor 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.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 5.05.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 5.08. Merger or Consolidation of Trustee.
Any corporation or national banking association into which the Trustee may
be merged or converted or with which it may be consolidated or any corporation
or national banking association resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
national banking association succeeding to all or substantially all of the
corporation trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation or national banking association shall be
eligible under the provisions of Section 5.05, 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. The Trustee shall mail notice
of any such merger or consolidation to the Certificateholders at their address
as shown in the Certificate Register.
Section 5.09. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
5.09, such powers, duties, obligations, rights and trusts as the Depositor and
the Trustee may consider necessary or desirable. If the Depositor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 5.05 hereunder and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 5.07 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 5.09 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
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trustee or co-trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed, the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to the Trust Fund or 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.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article V. 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.
(d) Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 5.10. Appointment of Office or Agency.
The Trustee will maintain an office or agency in the City of _________
where Certificates may be surrendered for registration of transfer or exchange,
or presented for final distribution, and where the office of the Certificate
Registrar is located. The Trustee initially designates such office to be at
________________ which is located at _____________________________________,
Attention: ________________________.
Section 5.11. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee shall
comply with all federal withholding requirements with respect to payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. Without limiting the
foregoing, the Trustee 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 871(c)(3)(C) with respect to the Trust
Fund. The consent of Certificateholders shall not be required for any such
withholding. 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.
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ARTICLE VI
TERMINATION
Section 6.01. Termination.
(a) Subject to Section 6.02, the respective obligations and
responsibilities of the Depositor and the Trustee created hereby with respect to
the Certificates (other than the obligation to make certain payments and to send
certain notices to Certificateholders as hereinafter set forth) shall terminate
immediately upon the occurrence of the last action required to be taken by the
Trustee on the Termination Date pursuant to this Article VI following receipt of
the final distribution to be made on the last remaining Underlying Certificate
in the Trust Fund upon presentation and surrender of such Underlying Certificate
in accordance with the terms and conditions of the related Underlying Agreement;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of twenty-one years from the death of the last survivor of
the descendants of Joseph P. Kennedy, the late ambassador of the United States
to the United Kingdom, living on the date hereof.
(b) Notice of any termination of the Trust Fund pursuant to this Section
6.01 shall be mailed by the Trustee to affected Certificateholders at their
addresses shown in the Certificate Register as soon as practicable after the
Trustee shall have received a Notice of Termination but in any event, not more
than thirty days, and not less than ten days, prior to the Anticipated
Termination Date. The notice mailed by the Trustee to affected
Certificateholders shall:
(i) specify the Anticipated Termination Date on which the final
distribution is anticipated to be made to Holders of Certificates of
the Classes specified therein;
(ii) specify the amount of any such final distribution, if known; and
(iii)state that the final distribution to Certificateholders will be made
only upon presentation and surrender of Certificates at the office of
the Trustee therein specified.
If the Trust Fund is not terminated on the Anticipated Termination Date for
any reason, the Trustee shall promptly mail notice thereof to each affected
Certificateholder.
(c) Upon presentation and surrender of the Certificates by the
Certificateholders on the Termination Date, the Trustee shall distribute to the
Certificateholders the amounts otherwise distributable on such Payment Date
pursuant to Section 3.05(a). Any funds not distributed on the Termination Date
because of the failure of any Certificateholders to tender their Certificates
shall be set aside and held in trust for the account of the appropriate
non-tendering Certificateholders, whereupon the Trust Fund shall terminate. If
any Certificates as to which notice of the Termination Date has been given
pursuant to this Section 6.01 shall not have been surrendered for cancellation
within six months after the time specified in such notice, the Trustee shall
mail a second notice to the remaining Certificateholders, at their last
addresses shown in the Certificate Register, to surrender their Certificates for
cancellation in order to receive, from such funds held, the final distribution
with respect thereto. If within one year after the
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second notice any Certificate shall not have been surrendered for cancellation,
the Trustee shall so notify the Depositor who shall upon receipt of such notice,
directly or through an agent, take reasonable steps to contact the remaining
Certificateholders concerning surrender of their Certificates. The costs and
expenses of maintaining such funds and of contacting Certificateholders shall be
paid out of the assets which remain held. If within two years after the second
notice any Certificates shall not have been surrendered for cancellation, the
Trustee shall pay to the Depositor all amounts distributable to the Holders
thereof and the Depositor shall thereafter hold such amounts for the benefit of
such Holders. No interest shall accrue or be payable to any Certificateholder on
any amount held as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 6.01.
Section 6.02. Additional Termination Requirements.
(a) Within 90 days prior to the Anticipated Termination Date, the Trustee
shall adopt and the Trustee shall sign a plan of complete liquidation of the
Trust Fund meeting the requirements of Section 860F(a)(4)(A) of the Code
pursuant to which the Trustee shall sell or otherwise dispose of all the
remaining assets of the Trust Fund, unless the Trustee has received an Opinion
of Counsel to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 6.02(a) will not (i) result in the imposition of
taxes on "prohibited transactions" of the Trust Fund as described in Section
860F of the Code, or (subject to Section 5.01(b) hereof) (ii) cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
(b) Each Holder of a Certificate hereby irrevocably approves and appoints
the Trustee as its attorney-in-fact for the purposes of, adoption of the plan of
complete liquidation and obtaining the signature of the Trustee in accordance
with the terms and conditions of this Agreement.
ARTICLE VII
THE DEPOSITOR
Section 7.01. Liability of the Depositor.
The Depositor shall be liable in accordance herewith only to the extent of
the respective obligations specifically imposed upon and undertaken by the
Depositor herein.
Section 7.02. Merger, Consolidation or Conversion of the Depositor.
Subject to the following paragraph, the Depositor will keep in full effect
its existence, rights and franchises as a corporation or association under the
laws of the jurisdiction of its incorporation, and each will obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and the Certificates and to perform its
respective duties under this Agreement.
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The Depositor may be merged or consolidated with or into any Person, or
transfer all or substantially all of its assets to any Person, in which case any
Person resulting from any merger or consolidation to which the Depositor shall
be a party, or any Person succeeding to the business of the Depositor shall be
the successor of the Depositor 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 7.03. Limitation on Liability of the Depositor and Others.
(a) Neither the Depositor nor any of the directors, officers, employees or
agents of the Depositor shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor or any
such person against any breach of warranties or representations made herein, or
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 obligations or duties hereunder. The Depositor
and any director, officer, employee or agent of the Depositor may rely in good
faith on any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder. The Depositor
and any director, officer, employee or agent of the Depositor shall be
indemnified and held harmless by the Trust Fund 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 incurred by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations or duties hereunder.
The Depositor shall not be under any obligation to appear in, prosecute or
defend any legal action unless such action is related to its respective duties
under this Agreement and which in its opinion does not involve it in any expense
or liability; provided, however, that the Depositor may in its discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, and provided that
such action has been consented to by the Holders of Certificates entitled to at
least 51% of the Voting Rights, 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 Depositor shall be entitled to be reimbursed therefor
from the Trust Certificate Account as provided in Section 3.04.
(b) Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee or any such
person against any breach of warranties or representations made herein, or
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 obligations or duties hereunder. The Trustee and
any director, officer, employee or agent of the Trustee may rely in good faith
on any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder. The Trustee
and any director, officer, employee or agent of the Trustee will be indemnified
and held harmless by the Trust Fund against any loss, liability or expense
incurred in connection with any claim or legal action
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or any pending or threatened claim or legal action relating to this Agreement or
the Trust Certificates or any claim or legal actionor any pending or threatened
claim or legal action relating to the performance of the Trustee's duties under
the Agreement, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of the Trustee's
duties under this Agreement or as a result of a breach, or by reason of reckless
disregard, of the Trustee's obligations and duties under this Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment.
(a) This Agreement may be amended from time to time by the Depositor and
the Trustee, without the consent of any of the Certificateholders:
(i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein or therein, which may
be inconsistent with any other provisions herein or therein or to
correct any error,
(iii)to modify, eliminate or add to any of its provisions to such extent
as shall be necessary or desirable to maintain the qualification of
the Trust Fund as a REMIC at all times that any Certificate is
outstanding or to avoid or minimize the risk of the imposition of any
tax on the Trust Fund pursuant to the Code that would be a claim
against the Trust Fund, provided that the Trustee has received an
Opinion of Counsel to the effect that (A) such action is necessary or
desirable to maintain such qualification or to avoid or minimize the
risk of the imposition of any such tax and (B) such action will not
adversely affect in any material respect the interests of any
Certificateholder,
(iv) to change the timing and/or nature of deposits into the Trust
Certificate Account, provided that (A) such change shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder and (B) such change
shall not adversely affect the then-current rating of the
Certificates, as evidenced by a letter from the Rating Agency then
rating the Certificates to such effect,
(v) to modify, eliminate or add to the provisions of Section 4.02(g) or
any other provision hereof restricting transfer of the Class R
Certificate by virtue of their being the REMIC "residual interest",
provided that (A) such change shall not adversely affect the then
current ratings of the Certificates, as evidenced by a letter from the
Rating Agency to such effect, and (B) such change shall not, as
evidenced by an Opinion of Counsel, cause either the Trust Fund or any
of the Certificateholders (other than the transferor) to be subject to
a tax caused by a transfer to a Non-United States Person or a Person
that is not a Permitted Transferee, or
(vi) to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be materially
inconsistent with the provisions of
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this Agreement, provided that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests
of any Certificateholder.
(b) This Agreement may also be amended from time to time by the Depositor
and the Trustee with the consent of the Holders of Certificates evidencing in
the aggregate not less than 66% of the Percentage Interests of each Class of
Certificates affected thereby 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 Holders of Certificates of such
Class; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of, payments
which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, or
(ii) reduce the aforesaid percentage of Certificates of any Class the
Holders of which are required to consent to any such amendment, in any
such case without the consent of the Holders of all Certificates of
such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel to the effect that such amendment or the exercise
of any power granted to the Depositor or the Trustee in accordance with such
amendment will not (subject to Section 5.01(b) hereof) result in the imposition
of a tax on the Trust Fund or cause the Trust Fund to fail to qualify as a REMIC
at any time that any Certificate is outstanding.
(d) Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 8.01 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 8.02. Counterparts.
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 8.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
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(b) No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue 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 notice of a default by the Depositor or the
Trustee in the performance of any obligation hereunder, and of the continuance
thereof, as hereinbefore provided, and unless also the Holders of Certificates
entitled to at least 33% of the Voting Rights 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. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 8.04. Governing Law.
This Agreement and the Certificates shall be construed in accordance with
the laws of the State of __________ and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
Section 8.05. Notices.
All demands and notices hereunder shall be in writing and shall be deemed
to have been duly given if personally delivered at or mailed by registered mail,
postage prepaid (except for notices to the Trustee which shall be deemed to have
been duly given only when received), to (a) in the case of the Depositor, 11
Madison Avenue, New York, New York 10010, Attention: Principal Transactions
Group, or such other address as may hereafter be furnished to the Trustee in
writing by the Depositor, (b) in the case of the Trustee, _____________________,
____________________, ____________________, Attention: ____________________ or
such other address as may hereafter be furnished to the Depositor in writing by
the Trustee, with a copy to ________________, ________________, _______________,
Attention: ___________, and (c) in the case of [Rating Agency],
__________________, ______________, Attention: ______________ or such other
address as may hereafter be furnished to the Depositor and the Trustee in
writing by [Rating Agency]. 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.
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Section 8.06. Notices to the Rating Agency.
The Depositor or the Trustee, as applicable, shall notify the Rating
Agency at such time as it is otherwise required pursuant to this Agreement to
give notice of the occurrence of any of the events described in clauses (a),
(b), (d), (e) or (f) below or provide a copy to the Rating Agency at such time
as otherwise required to be delivered pursuant to this Agreement of any of the
statements described in clauses (c) below:
(a) a material change or amendment to this Agreement,
(b) the termination or appointment of a successor Trustee or a change in
the majority ownership of the Trustee,
(c) the statement required to be delivered to the Holders of each Class of
Certificates pursuant to Section 3.06,
(d) a change in the location of the Trust Certificate Account,
(e) the occurrence of the Final Distribution Date, and
(f) the repurchase of any Underlying Certificate.
Section 8.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 8.08. Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Certificateholders.
Section 8.09. Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
39
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their names
to be signed hereto by their respective officers thereunto duly authorized and
their respective seals, if required, duly attested, to be hereunto affixed, all
as of the day and year first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.
By:________________________________
Name:
Title:
___________________________________
as Trustee
By:________________________________
Name:
Title:
40
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE TRUST AGREEMENT REFERRED
TO HEREIN. THIS CERTIFICATE MAY BE SOLD TO "QUALIFIED INSTITUTIONAL BUYERS"
PURSUANT TO RULE 144A UNDER THE ACT AND, IN CERTAIN LIMITED CIRCUMSTANCES
DESCRIBED IN THE TRUST AGREEMENT, TO A LIMITED NUMBER OF ACCREDITED INVESTORS.
THIS CERTIFICATE IS ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER TO EMPLOYEE
BENEFIT PLANS AND OTHER ARRANGEMENTS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986.
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986. THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _________, 200_. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT THE PREPAYMENT ASSUMPTION, THIS CERTIFICATE
HAS BEEN ISSUED WITH NO MORE THAN $____ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING THE APPROXIMATE METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF [CEDE & CO.] OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO [CEDE & CO.]
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, [CEDE & CO.], HAS AN
INTEREST HEREIN.
A-1
<PAGE>
Certificate No. CUSIP:
Class A Weighted Average Pass-Through Rate
____________________________ _____________________________________
Date of Trust Agreement Aggregate Initial Certificate
_________, 200_ Principal Balance of Class A
Certificates: $____________
Initial Payment Date: _________, Initial Certificate Principal
200_ Balance of this Certificate:
$_____________
TRUST CERTIFICATE,
Series 200_-__
evidencing a percentage interest in any distributions allocable to the
Class A Certificates with respect to the Trust Fund consisting of the
Underlying Certificates formed and sold by Credit Suisse First Boston
Mortgage Securities Corp.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Credit Suisse First Boston
Mortgage Securities Corp., the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the Underlying Certificates are
guaranteed or insured by any governmental agency or instrumentality or by Credit
Suisse First Boston Mortgage Securities Corp. or the Trustee or any of their
affiliates.
This certifies that [Cede & Co.] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Balance of this Certificate by the aggregate initial
Certificate Principal Balance of all Class A Certificates, both as specified
above) in certain distributions with respect to a Trust Fund consisting
primarily of a pool of the Underlying Certificates, formed and sold by Credit
Suisse First Boston Mortgage Securities Corp. (hereinafter called the
"Depositor", which term includes any successor entity under the Agreement
referred to below). The Trust Fund was created pursuant to a Trust Agreement
dated as specified above (the "Agreement") among the Depositor and
__________________, 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
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
date (the "Payment Date") which is the later of (a) the second Business Day
following the latest related Distribution Date on the Underlying Certificates
and (b) the date on which both the distribution with respect to each related
Underlying Certificate and the related Distribution Date Statement have been
received by the Trustee, but no later than five Business Days following the
A-2
<PAGE>
date set forth in clause (a) (provided that the initial Payment Date shall be
_________, 200_), 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
preceding the month of the latest related Distribution Date for the related
Underlying Certificates or, under certain circumstances, the preceding month
(the "Record Date"), from the Available Funds in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to Holders of Certificates of this Class of Certificates on
such Payment Date.
Distributions on this Certificate will be made by the Trustee in
immediately available funds (by wire transfer or otherwise) for the account of
the Person entitled thereto except as otherwise provided in the Agreement if
such Person shall have so notified the Trustee, or by 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 of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The initial
aggregate Certificate Principal Balance of the Class A Certificates is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent of
the distributions allocable to principal and as further set forth in the Trust
Agreement.
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 Act and
any applicable state securities laws. In the event that such a transfer is to be
made without such registration or qualification, (i) if this Certificate is a
Definitive Certificate, the Depositor and the Trustee shall require the
transferee to execute an investment letter in substantially the form attached as
either Exhibit F or Exhibit H to the Trust Agreement, which investment letter
shall not be an expense of the Depositor or the Trustee and (ii) in the event
that such a transfer is not made pursuant to Rule 144A under the Act, the
Depositor shall require an Opinion of Counsel satisfactory to the Depositor that
such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee.
Neither the Depositor nor the Trustee will register the Certificate under the
Act, qualify this Certificate under any state securities law or provide
registration rights to any purchaser. Any such holder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor 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.
In connection with any transfer of a Definitive Certificate, the Trustee
will require (i) a representation, in the form set forth in Exhibit F or Exhibit
H, stating that the transferee is not, and is not purchasing on behalf of, or
with "plan assets" of an employee benefit plan or other arrangement subject to
the fiduciary responsibility provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or is an insurance company whose
purchase satisfies certain conditions set forth in the Agreement, or (ii) an
opinion of counsel acceptable to and in form and substance satisfactory to the
Trustee and the Depositor with respect to the permissibility of such transfer
under ERISA and stating, among other things, that the transferee's acquisition
of this Certificate will not constitute or result in a non-exempt
A-3
<PAGE>
"prohibited transaction" within the meaning of ERISA or Section 4975 of the
Internal Revenue Code of 1986.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Trust Certificates of the Series specified
hereon (herein collectively called the "Certificates"). The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Underlying Certificates, all as more specifically set forth herein and in the
Agreement.
As provided in the Agreement, withdrawals from the Trust Certificate
Account created for the benefit of Certificateholders may be made by the Trustee
from time to time for purposes other than distributions to Certificateholders,
such purposes including without limitation reimbursement to the Depositor and
the Trustee of advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Holders of Certificates evidencing in the aggregate not less than 66% of the
Percentage Interests of each Class of Certificates affected thereby. 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 the Certificate. The
Agreement also permits the amendment thereof in certain circumstances without
the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed 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 and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-4
<PAGE>
The Depositor, the Trustee and the Certificate Registrar and any agent of
the Depositor, 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 Depositor, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of __________.
The obligations created by the Agreement in respect of the Certificates and
the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following receipt of the
final distribution to be made on the last remaining Underlying Certificate in
the Trust Fund upon presentation and surrender of such Underlying Certificate in
accordance with the terms and conditions of the related Underlying Agreement.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
________________________, as Trustee
By:______________________________
Authorized Signatory
This is one of the Trust Certificates referred to in the within-mentioned
Agreement.
___________________________,
as Certificate Registrar
By:_________________________________
Authorized Signatory
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto__________________________________________________________
________________________________________________________________________________
_______________________________________________________ (Please print or
typewrite name and address including postal zip code of assignee) the beneficial
interest evidenced by the within Trust Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
Dated:
___________________________________________
Signature by or on behalf of assignor
___________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________________________________________________ for
the account of _________________________________________ account number
_____________________________________________, or, if mailed by check, to
_______________________________. Applicable statements should be mailed to
________________________________________________________________________.
This information is provided by ____________________________________,
the assignee named above, or _________________________________, as its agent.
A-7
<PAGE>
EXHIBIT B
FORM OF CLASS M CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS [M1]
[M2] CERTIFICATES AS DESCRIBED IN THE TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE TRUST AGREEMENT REFERRED
TO HEREIN. THIS CERTIFICATE MAY BE SOLD TO "QUALIFIED INSTITUTIONAL BUYERS"
PURSUANT TO RULE 144A UNDER THE ACT AND, IN CERTAIN LIMITED CIRCUMSTANCES
DESCRIBED IN THE TRUST AGREEMENT, TO A LIMITED NUMBER OF ACCREDITED INVESTORS.
THIS CERTIFICATE IS ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER TO EMPLOYEE
BENEFIT PLANS AND OTHER ARRANGEMENTS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986.
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986. THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _________, 200_. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT THE PREPAYMENT ASSUMPTION, THIS CERTIFICATE
HAS BEEN ISSUED WITH NO MORE THAN $____ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING THE APPROXIMATE METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF [CEDE & CO.] OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO [CEDE & CO.]
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
B-1
<PAGE>
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.
B-2
<PAGE>
Certificate No. CUSIP:
Class M_ Weighted Average Pass-Through Rate
_________________________________ _________________________________________
Date of Trust Agreement Aggregate Initial Certificate
_________, 200_ Principal Balance of Class M_
Certificates: $_______________
Initial Payment Date: _________, Initial Certificate Principal
200_ Balance of this Certificate:$______________
TRUST CERTIFICATE,
Series 200_-__
evidencing a percentage interest in any distributions allocable to the
Class M_ Certificates with respect to the Trust Fund consisting of the
Underlying Certificates formed and sold by Credit Suisse First Boston
Mortgage Securities Corp.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Credit Suisse First Boston
Mortgage Securities Corp., the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the Underlying Certificates are
guaranteed or insured by any governmental agency or instrumentality or by Credit
Suisse First Boston Mortgage Securities Corp. or the Trustee or any of their
affiliates.
This certifies that [Cede & Co.] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Balance of this Certificate by the aggregate initial
Certificate Principal Balance of all Class M_ Certificates, both as specified
above) in certain distributions with respect to a Trust Fund consisting
primarily of a pool of the Underlying Certificates, formed and sold by Credit
Suisse First Boston Mortgage Securities Corp. (hereinafter called the
"Depositor", which term includes any successor entity under the Agreement
referred to below). The Trust Fund was created pursuant to a Trust Agreement
dated as specified above (the "Agreement") among the Depositor and
______________________, 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
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
date (the "Payment Date") which is the later of (a) the second Business Day
following the latest related Distribution Date on the Underlying Certificates
and (b) the date on which both the distribution with respect to each related
Underlying Certificate and the related Distribution Date Statement have been
received by the Trustee, but no later than five Business Days following the
B-3
<PAGE>
date set forth in clause (a) (provided that the initial Payment Date shall be
_________, 200_), 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
preceding the month of the latest related Distribution Date for the related
Underlying Certificates or, under certain circumstances, the preceding month
(the "Record Date"), from the Available Funds in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to Holders of Certificates of this Class of Certificates on
such Payment Date.
Distributions on this Certificate will be made by the Trustee in
immediately available funds (by wire transfer or otherwise) for the account of
the Person entitled thereto except as otherwise provided in the Agreement if
such Person shall have so notified the Trustee, or by 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 of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The initial
aggregate Certificate Principal Balance of the Class M_ Certificates is set
forth above. The Certificate Principal Balance hereof will be reduced to the
extent of the distributions allocable to principal and as further set forth in
the Trust Agreement.
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 Act and
any applicable state securities laws. In the event that such a transfer is to be
made without such registration or qualification, (i) if this Certificate is a
Definitive Certificate, the Depositor and the Trustee shall require the
transferee to execute an investment letter in substantially the form attached as
either Exhibit F or Exhibit H to the Trust Agreement, which investment letter
shall not be an expense of the Depositor or the Trustee and (ii) in the event
that such a transfer is not made pursuant to Rule 144A under the Act, the
Depositor shall require an Opinion of Counsel satisfactory to the Depositor that
such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee.
Neither the Depositor nor the Trustee will register the Certificate under the
Act, qualify this Certificate under any state securities law or provide
registration rights to any purchaser. Any such holder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor 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.
In connection with any transfer of a Definitive Certificate, the Trustee
will require (i) a representation, in the form set forth in Exhibit F or Exhibit
H, stating that the transferee is not, and is not purchasing on behalf of, or
with "plan assets" of an employee benefit plan or other arrangement subject to
the fiduciary responsibility provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or is an insurance company whose
purchase satisfies certain conditions set forth in the Agreement, or (ii) an
opinion of counsel acceptable to and in form and substance satisfactory to the
Trustee and the Depositor with respect to the permissibility of such transfer
under ERISA and stating, among other things, that the transferee's acquisition
of this Certificate will not constitute or result in a non-exempt
B-4
<PAGE>
"prohibited transaction" within the meaning of ERISA or Section 4975 of the
Internal Revenue Code of 1986.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Trust Certificates of the Series specified
hereon (herein collectively called the "Certificates"). The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Underlying Certificates, all as more specifically set forth herein and in the
Agreement.
As provided in the Agreement, withdrawals from the Trust Certificate
Account created for the benefit of Certificateholders may be made by the Trustee
from time to time for purposes other than distributions to Certificateholders,
such purposes including without limitation reimbursement to the Depositor and
the Trustee of advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Holders of Certificates evidencing in the aggregate not less than 66% of the
Percentage Interests of each Class of Certificates affected thereby. 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 the Certificate. The
Agreement also permits the amendment thereof in certain circumstances without
the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed 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 and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
B-5
<PAGE>
The Depositor, the Trustee and the Certificate Registrar and any agent of
the Depositor, 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 Depositor, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of _________.
The obligations created by the Agreement in respect of the Certificates and
the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following receipt of the
final distribution to be made on the last remaining Underlying Certificate in
the Trust Fund upon presentation and surrender of such Underlying Certificate in
accordance with the terms and conditions of the related Underlying Agreement.
B-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
______________________, as Trustee
By:___________________________________
Authorized Signatory
This is one of the Trust Certificates referred to in the within-mentioned
Agreement.
___________________________,
as Certificate Registrar
By:_________________________________
Authorized Signatory
B-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________________________
_______________________________________________________________________________
_____________________________ (Please print or typewrite name and address
including postal zip code of assignee) the beneficial interest evidenced by the
within Trust Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
Dated:
_______________________________________
Signature by or on behalf of assignor
_______________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ___________________________________________________ for the
account of __________________________________ account number __________________,
or, if mailed by check, to ___________________. Applicable statements should be
mailed to ________________________________________.
This information is provided by ________________________________________,
the assignee named above, or ________________________________________ , as its
agent.
B-8
<PAGE>
EXHIBIT C
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS M1,
CLASS M2 AND CLASS M3 CERTIFICATES AS DESCRIBED IN THE TRUST AGREEMENT REFERRED
TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE TRUST AGREEMENT REFERRED
TO HEREIN. THIS CERTIFICATE MAY BE SOLD TO "QUALIFIED INSTITUTIONAL BUYERS"
PURSUANT TO RULE 144A UNDER THE ACT AND, IN CERTAIN LIMITED CIRCUMSTANCES
DESCRIBED IN THE TRUST AGREEMENT, TO A LIMITED NUMBER OF INSTITUTIONAL
ACCREDITED INVESTORS. THIS CERTIFICATE IS ALSO SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER TO EMPLOYEE BENEFIT PLANS AND OTHER ARRANGEMENTS SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986.
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986. THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _________, 200_. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT THE PREPAYMENT ASSUMPTION, THIS CERTIFICATE
HAS BEEN ISSUED WITH NO MORE THAN $____ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING THE APPROXIMATE METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF [CEDE & CO.] OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO [CEDE & CO.]
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
C-1
<PAGE>
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.
C-2
<PAGE>
Certificate No. CUSIP:
Class B Weighted Average Pass-Through Rate
_____________________________ _________________________________________
Date of Trust Agreement Aggregate Initial Certificate
_________, 200_ Principal Balance of Class B
Certificates: $__________
Initial Payment Date: _________, Initial Certificate Principal
200_ Balance of this Certificate:$___________
TRUST CERTIFICATE,
Series 200_-__
evidencing a percentage interest in any distributions allocable to the
Class B Certificates with respect to the Trust Fund consisting of the
Underlying Certificates formed and sold by Credit Suisse First Boston
Mortgage Securities Corp.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Credit Suisse First Boston
Mortgage Securities Corp., the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the Underlying Certificates are
guaranteed or insured by any governmental agency or instrumentality or by Credit
Suisse First Boston Mortgage Securities Corp. or the Trustee or any of their
affiliates.
This certifies that [Cede & Co.] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Balance of this Certificate by the aggregate initial
Certificate Principal Balance of all Class B Certificates, both as specified
above) in certain distributions with respect to a Trust Fund consisting
primarily of a pool of the Underlying Certificates, formed and sold by Credit
Suisse First Boston Mortgage Securities Corp. (hereinafter called the
"Depositor", which term includes any successor entity under the Agreement
referred to below). The Trust Fund was created pursuant to a Trust Agreement
dated as specified above (the "Agreement") among the Depositor and
_____________________, 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
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
date (the "Payment Date") which is the later of (a) the second Business Day
following the latest related Distribution Date on the Underlying Certificates
and (b) the date on which both the distribution with respect to each related
Underlying Certificate and the related Distribution Date Statement have been
received by the Trustee, but no later than five Business Days following the
C-3
<PAGE>
date set forth in clause (a) (provided that the initial Payment Date shall be
_________, 200_), 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
preceding the month of the latest related Distribution Date for the related
Underlying Certificates or, under certain circumstances, the preceding month
(the "Record Date"), from the Available Funds in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to Holders of Certificates of this Class of Certificates on
such Payment Date.
Distributions on this Certificate will be made by the Trustee in
immediately available funds (by wire transfer or otherwise) for the account of
the Person entitled thereto except as otherwise provided in the Agreement if
such Person shall have so notified the Trustee, or by 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 of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The initial
aggregate Certificate Principal Balance of the Class B Certificates is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent of
the distributions allocable to principal and as further set forth in the Trust
Agreement.
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 Act and
any applicable state securities laws. In the event that such a transfer is to be
made without such registration or qualification, (i) if this Certificate is a
Definitive Certificate, the Depositor and the Trustee shall require the
transferee to execute an investment letter in substantially the form attached as
either Exhibit F or Exhibit H to the Trust Agreement, which investment letter
shall not be an expense of the Depositor or the Trustee and (ii) in the event
that such a transfer is not made pursuant to Rule 144A under the Act, the
Depositor shall require an Opinion of Counsel satisfactory to the Depositor that
such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee.
Neither the Depositor nor the Trustee will register the Certificate under the
Act, qualify this Certificate under any state securities law or provide
registration rights to any purchaser. Any such holder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor 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.
In connection with any transfer of a Definitive Certificate, the Trustee
will require (i) a representation, in the form set forth in Exhibit F or Exhibit
H, stating that the transferee is not, and is not purchasing on behalf of, or
with "plan assets" of an employee benefit plan or other arrangement subject to
the fiduciary responsibility provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or is an insurance company whose
purchase satisfies certain conditions set forth in the Agreement, or (ii) an
opinion of counsel acceptable to and in form and substance satisfactory to the
Trustee and the Depositor with respect to the permissibility of such transfer
under ERISA and stating, among other things, that the transferee's acquisition
of this Certificate will not constitute or result in a non-exempt
C-4
<PAGE>
"prohibited transaction" within the meaning of ERISA or Section 4975 of the
Internal Revenue Code of 1986.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Trust Certificates of the Series specified
hereon (herein collectively called the "Certificates"). The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Underlying Certificates, all as more specifically set forth herein and in the
Agreement.
As provided in the Agreement, withdrawals from the Trust Certificate
Account created for the benefit of Certificateholders may be made by the Trustee
from time to time for purposes other than distributions to Certificateholders,
such purposes including without limitation reimbursement to the Depositor and
the Trustee of advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Holders of Certificates evidencing in the aggregate not less than 66% of the
Percentage Interests of each Class of Certificates affected thereby. 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 the Certificate. The
Agreement also permits the amendment thereof in certain circumstances without
the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed 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 and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
C-5
<PAGE>
The Depositor, the Trustee and the Certificate Registrar and any agent of
the Depositor, 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 Depositor, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of __________.
The obligations created by the Agreement in respect of the Certificates and
the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following receipt of the
final distribution to be made on the last remaining Underlying Certificate in
the Trust Fund upon presentation and surrender of such Underlying Certificate in
accordance with the terms and conditions of the related Underlying Agreement.
C-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
________________________, as Trustee
By:__________________________________
Authorized Signatory
This is one of the Trust Certificates referred to in the within-mentioned
Agreement.
_______________________________,
as Certificate Registrar
By:___________________________________
Authorized Signatory
C-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto__________________________________________________
________________________________________________________________________________
_____________________________________ (Please print or typewrite name and
address including postal zip code of assignee) the beneficial interest evidenced
by the within Trust Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
Dated:
_________________________________________
Signature by or on behalf of assignor
_________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to __________________________________ for the account of _______
____________________ account number , or, if mailed by check, to _________
__________________________________________. Applicable statements should be
mailed to ____________________________________________.
This information is provided by ____________________________________,
the assignee named above, or __________________________________, as its agent.
C-8
<PAGE>
EXHIBIT D
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON OR A
DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE AGREEMENT REFERRED TO
HEREIN. THIS CERTIFICATE MAY BE SOLD TO "QUALIFIED INSTITUTIONAL BUYERS"
PURSUANT TO RULE 144A UNDER THE ACT. THIS CERTIFICATE IS ALSO SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER TO EMPLOYEE BENEFIT PLANS AND OTHER ARRANGEMENTS
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE UNITED STATES, ANY STATE
OR ANY POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF THE UNITED STATES, OR
ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN
INSTRUMENTALITY WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO
TAX AND, EXCEPT FOR THE FEDERAL HOME LOAN MORTGAGE CORPORATION, A MAJORITY OF
ITS BOARD OF DIRECTORS IS NOT SELECTED BY ANY SUCH GOVERNMENTAL UNIT), (B) A
FOREIGN GOVERNMENT, INTERNATIONAL ORGANIZATION OR ANY AGENCY OR INSTRUMENTALITY
OF EITHER OF THE FOREGOING, (C) AN ORGANIZATION (EXCEPT CERTAIN FARMERS'
COOPERATIVES DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM TAX
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), (D)
RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN SECTION 1381 OF THE CODE
AND (E) AN ELECTING LARGE PARTNERSHIP UNDER SECTION 775 OF THE CODE (ANY SUCH
PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C), (D), or (E) BEING
HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (F) AN AGENT OF A
DISQUALIFIED ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION
D-1
<PAGE>
OF TAX, AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS.
D-2
<PAGE>
Class R Certificate No. R-1
Date of Trust Agreement: 100% Percentage Interest
_________, 200_
TRUST CERTIFICATE,
Series 200_-__
evidencing a 100% undivided interest in any distributions allocable to the
Class R Certificate with respect to the Trust Fund consisting of a pool of
Underlying Certificates formed and sold by Credit Suisse First Boston
Mortgage Securities Corp.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Credit Suisse First Boston
Mortgage Securities Corp. or the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the Underlying Certificates are
guaranteed or insured by any governmental agency or instrumentality or by Credit
Suisse First Boston Mortgage Securities Corp., the Trustee or any of their
affiliates.
This certifies that CREDIT SUISSE FIRST BOSTON CORPORATION is the
registered owner of a 100% undivided interest in certain distributions with
respect to the Trust Fund consisting primarily of a pool of Underlying
Certificates, formed and sold by Credit Suisse First Boston Mortgage Securities
Corp. (hereinafter called the "Depositor", which term includes any successor
entity under the Agreement referred to below). The Trust Fund was created
pursuant to a Trust Agreement dated as specified above (the "Agreement") among
the Depositor and __________________, 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 Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the
date (the "Payment Date") which is the later of (a) the second Business Day
following the latest related Distribution Date on the Underlying Certificates
and (b) the date on which both the distribution with respect to each related
Underlying Certificate and the related Distribution Date Statement have been
received by the Trustee, but no later than five Business Days following the date
set forth in clause (a) (provided that the initial Payment Date shall be
________, 200_), 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
preceding the month of the latest related Distribution Date for the related
Underlying Certificates or, under certain circumstances, the preceding month
(the "Record Date"), from the Available Funds in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to Holders of Certificates of this Class of Certificates on
such Payment Date.
D-3
<PAGE>
Distributions on this Certificate will be made by the Trustee in
immediately available funds (by wire transfer or otherwise) for the account of
the Person entitled thereto except as otherwise provided in the Agreement if
such Person shall have so notified the Trustee, or by 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 of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York.
No transfer of this Certificate will be made unless such transfer is exempt
from the registration requirements of the Act pursuant to Rule 144A and any
applicable state securities laws. In the event that such a transfer is to be
made, the Depositor and the Trustee shall require the transferee to execute
investment letters in substantially the forms attached as Exhibits H and I-1 to
the Trust Agreement, which investment letters shall not be an expense of the
Depositor or the Trustee, stating, among other things, that the transferee is
not, and is not purchasing on behalf of, or with "plan assets" of an employee
benefit plan or other arrangement subject to the fiduciary responsibility
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Neither the Depositor nor the Trustee will register the Certificate
under the Act, qualify this Certificate under any state securities law or
provide registration rights to any purchaser. Any such holder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor 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.
Each Holder of this Class R Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Class R Certificate
must be a Permitted Transferee and a United States Person, (ii) no Ownership
Interest in this Class R Certificate may be transferred without the express
written consent of the Depositor, which consent may be conditioned on the
delivery to the Depositor of, among other things, an opinion of counsel and
(iii) any attempted or purported transfer of any Ownership Interest in this
Class R Certificate in violation of such restrictions will be absolutely null
and void and will vest no rights in the purported transferee.
This Certificate is one of a duly authorized issue of Certificates issued
in several Classes designated as Trust Certificates of the Series specified
hereon (herein collectively called the "Certificates"). The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Underlying Certificates, all as more specifically set forth herein and in the
Agreement.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Underlying Certificates, all as more specifically set
forth herein and in the Agreement.
As provided in the Agreement, withdrawals from the Trust Certificate
Account created for the benefit of Certificateholders may be made by the Trustee
from time to time for purposes other than distributions to Certificateholders,
such purposes including without
D-4
<PAGE>
limitation reimbursement to the Depositor and the Trustee of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Holders of Certificates evidencing in the aggregate not less than 66% of the
Percentage Interests of each Class of Certificates affected thereby. 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 the Certificate. The
Agreement also permits the amendment thereof in certain circumstances without
the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed 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 and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Trustee and the Certificate Registrar and any agent of
the Depositor, 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 Depositor, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with the
laws of the State of _________.
The obligations created by the Agreement in respect of the Certificates and
the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following receipt of the
final distribution to be made on the last remaining Underlying Certificate
D-5
<PAGE>
in the Trust Fund upon presentation and surrender of such Underlying Certificate
in accordance with the terms and conditions of the related Underlying Agreement.
D-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
_______________________, as Trustee
By:_________________________________
Authorized Signatory
This is one of the Trust Certificates referred to in the within-mentioned
Agreement.
________________________________,
as Certificate Registrar
By:________________________________
Authorized Signatory
D-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _________________________________________________
________________________________________________________________________________
_______________________________________________________ (Please print or
typewrite name and address including postal zip code of assignee) the beneficial
interest evidenced by the within Trust Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of assignor
__________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________ for the account
of _______________________________________________ account number
___________________________, or, if mailed by check, to
_____________________________. Applicable statements should be mailed to
__________________________________.
This information is provided by _________________________________,
the assignee named above, or _________________________________________, as
its agent.
D-8
<PAGE>
EXHIBIT E
UNDERLYING CERTIFICATE AND
UNDERLYING AGREEMENT SCHEDULE
$________ aggregate principal amount of ______________________________
Certificates, Series ______ Class ___ were issued pursuant to the Pooling and
Servicing Agreement, dated as of _______ 1, ____, among
_____________________________________________________.
$________ aggregate principal amount of ________________________________
Certificates, Series ______ Class ___ were issued pursuant to the Pooling and
Servicing Agreement, dated as of _______ 1, ____, among
_____________________________________________________.
$_________ aggregate principal amount of _______________________________
Certificates, Series ______ Class ___ were issued pursuant to the Pooling and
Servicing Agreement, dated as of _______ 1, ____, among
____________________________________________________.
E-1
<PAGE>
EXHIBIT F
FORM OF INVESTOR REPRESENTATION LETTER
_____________, 20__
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
[Trustee]
Attention: Corporate Trust Administration
Re: Credit Suisse First Boston Mortgage
Securities Corp., Trust Certificates, Series
200_-__, Class
Dear Sirs:
____________________________________________ (the "Purchaser") has today
purchased in a private resale from ___________________________________________
(the "Seller") [$______ initial principal amount of] [a __% Percentage Interest
in] Trust Certificates, Series 200_-__, Class __ (the "Certificates"), issued
pursuant to the Trust Agreement (the "Trust Agreement"), dated as of _________,
200_ among Credit Suisse First Boston Mortgage Securities Corp, as depositor
(the "Depositor") and ______________________, as trustee (the "Trustee"). The
undersigned hereby certifies and agrees on behalf of the Purchaser:
1. The Purchaser is an institutional investor and is acquiring the
Certificates either (a) for its own account or for accounts for which it
exercises sole investment discretion and not with a view to or for sale in
connection with any distribution thereof, subject nevertheless to any
requirement of law that the disposition of the Purchaser's property shall at all
times be and remain within its control, or (b) for resale to institutional
investors in accordance with the provisions of the Trust Agreement.
2. The Purchaser has received and reviewed (a) a copy of the Private
Placement Memorandum relating to the Certificates and (b) such other information
concerning the Certificates and the Depositor as has been requested by the
Purchaser and is relevant to the Purchaser's decision to purchase the
Certificates.
3. The Purchaser has such expertise, knowledge and sophistication in
financial and business matters generally, and in financial and business matters
related to securities similar to the Certificates in particular, as to be
capable of evaluating the merits and risks of an investment in the Certificates
and it (or any account referred to above) is able to bear the economic risks of
such an investment.
4. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Certificates by
the Purchaser.
F-1
<PAGE>
5. The Purchaser understands that (a) the Certificates have not been and
will not be registered under the Securities Act of 1933, as amended (the "1933
Act"), (b) the Depositor is not required to so register the Certificates, (c)
the Certificates may be resold only if registered pursuant to the provisions of
the 1933 Act, or if an exemption from such registration is available, (d) the
Trust Agreement contains restrictions regarding the transfer of the
Certificates, (e) the Certificates will bear a legend to the foregoing effect
and (f) a stop order may be placed in the certificate register relating to the
Certificates against the transfer of any Certificate subject to compliance with
the 1933 Act, the rules and regulations thereunder and state securities laws.
6. If the Purchaser sells any of the Certificates, the Purchaser will
comply with any applicable requirements set forth in Section 4.02 of the Trust
Agreement.
7. The Purchaser (i) is not an employee benefit or other plan subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the Internal Revenue Code of 1986, as amended (the "Code"), nor a Person (as
such term is defined in the Trust Agreement) acting, directly or indirectly, on
behalf of any such plan, or using "plan assets" of any such plan to effect its
purchase of the Certificate; or (ii) has delivered an opinion of its counsel,
addressed and satisfactory to the Trustee and the Depositor, to the effect that
the purchase and holding of a Certificate by or on behalf of, or with "plan
assets" of, any such plan would be permissible under applicable law, would not
constitute or result in a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code, and would not subject the Depositor or the
Trustee to any obligation or liability (including liabilities under ERISA or
Section 4975 of the Code) in addition to those explicitly undertaken in the
Trust Agreement; or (iii) is an insurance company, is acquiring the Certificate
solely with assets of its general account, and such general account satisfies
the conditions to the applicability of the exemptive relief available under
Sections I or III of U.S. Department of Labor Prohibited Transaction Class
Exemption 95-60.
8. The Purchaser will not nor has it authorized or will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that (as to any of (a) through (e) above)
would constitute a distribution of any Certificate under the 1933 Act, that
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law, or that would require registration or
qualification pursuant thereto.
9. The Purchaser will not sell or otherwise transfer any of the
Certificates, except in compliance with the provisions of the Trust Agreement.
The Purchaser understands that the Certificates were issued in a transaction
relying on Rule 3a-7 under the Investment Company Act of 1940, as amended, and
that the Certificates may be sold and resold only to persons specified in Rule
3a-7(a)(2)(i) or Rule 3a-7(a)(2)(ii), as applicable.
In the case of any Class B Certificate:
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<PAGE>
For purposes of Rule 3a-7(a)(2)(i) the Purchaser satisfies the criteria in
the category marked below.
__ Any bank as defined in Section 3(a)(2) of the Act or any savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; any broker
dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934; any insurance company as defined in Section 2(13) of the Act; any
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act;
any 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; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section
3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000, or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors.
__ Any private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940.
__ Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000.
__ Any trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii).
__ Any entity in which all of the equity owners come with the previous four
paragraphs.
Very truly yours,
By:__________________________________
Name:________________________________
Title:_______________________________
F-3
<PAGE>
EXHIBIT G
FORM OF TRANSFEROR REPRESENTATION LETTER
_______________, 20__
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
[Trustee]
Attention: Corporate Trust Administration
Re: Credit Suisse First Boston Mortgage
Securities Corp., Trust Certificates, Series
200_-__, Class
Dear Sirs:
In connection with the sale by ___________ (the "Seller") to (the
"Purchaser") of $_______ initial principal amount of Trust Certificates, Series
200_-__, Class __ (the "Certificates"), issued pursuant to the Trust Agreement
(the "Trust Agreement") dated as of _________, 200_ among Credit Suisse First
Boston Mortgage Securities Corp., as depositor (the "Depositor") and
____________________, as trustee (the "Trustee"), the Seller hereby certifies,
represents and warrants to, and covenants with, the Depositor and the Trustee
that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Trust Agreement. The Seller
understands that the Certificates were issued in a transaction relying on Rule
3a-7 under the Investment Company Act of 1940, as amended, and that the
Certificates may be sold and resold only to persons specified in Rule
3a-7(a)(2)(i) or Rule 3a-7(a)(2)(ii), as applicable.
G-1
<PAGE>
Very truly yours,
_________________________________
(Seller)
By:______________________________
Name:
Title:
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<PAGE>
EXHIBIT H
[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, 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 and
the Trustee pursuant to Section 4.02 of the Trust 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 been furnished with all information regarding the Rule
144A Securities that it has requested from the Seller, the Trustee or the
Depositor and has received and reviewed a copy of the Private Placement
Memorandum with respect to the Certificates.
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 the
Rule 144A Securities, any interest in the Rule 144A Securities
H-1
<PAGE>
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 completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. 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.
3. The Buyer (i) is not an employee benefit or other plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Internal Revenue Code of 1986, as amended (the "Code"), nor a Person (as such
term is defined in the Trust Agreement) acting, directly or indirectly, on
behalf of any such plan, or using "plan assets" of any such plan to effect its
purchase of the Certificate; or (ii) except in the case of a Class R
Certificate, has delivered an opinion of its counsel, addressed and satisfactory
to the Trustee and the Depositor, to the effect that the purchase and holding of
a Certificate by or on behalf of, or with "plan assets" of, any such plan would
be permissible under applicable law, would not constitute or result in a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code, and would not subject the Depositor or the Trustee to any obligation
or liability (including liabilities under ERISA or Section 4975 of the Code) in
addition to those explicitly undertaken in the Trust Agreement; or (iii) except
in the case of a Class R Certificate, is an insurance company, is acquiring the
Certificate solely with assets of its general account, and such general account
satisfies the conditions to the applicability of the exemptive relief available
under Sections I or III of U.S. Department of Labor Prohibited Transaction Class
Exemption 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.
H-2
<PAGE>
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:________________________________
H-3
<PAGE>
ANNEX 1 TO EXHIBIT H
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than 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, 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 $______________________/ 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.
__ 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.
H-4
<PAGE>
__ State or Local Plan. The Buyer is a plan established and maintained by a
State, its political subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit of its employees.
__ ERISA Plan. The Buyer is an employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974.
__ Investment 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 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.
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<PAGE>
____ ____ 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:
Title:
Date:__________________________________
H-6
<PAGE>
ANNEX 2 TO EXHIBIT H
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 (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.
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<PAGE>
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:
IF AN ADVISER:
____________________________________
Print Name of Buyer
Date:_______________________________
H-8
<PAGE>
EXHIBIT I-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or beneficial
owner (the "Owner") of the Credit Suisse First Boston Mortgage Securities Corp.,
Trust Certificate, Series 200_-__, Class R (the "Class R Certificate")), 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"), (ii) will endeavor to
remain other than a disqualified organization for so long as it retains its
ownership interest in the Class R Certificate and (iii) is acquiring the Class R
Certificate for its own account or for the account of another Owner from which
it has received an affidavit in substantially the same form as this affidavit
and agreement. (For this purpose, a "disqualified organization" means an
electing large partnership under section 775 of the Code, 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, 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 Certificate to disqualified organizations under the
Code, that applies to all transfers of the Class R Certificate after March 31,
1988; (ii) that such tax would be on the transferor (or, with respect to
electing large partnerships, on such partnership), or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person (other than
transfers with respect to electing large partnerships) otherwise 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 Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income of such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
I-1-1
<PAGE>
4. That the Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificate if either the pass-through entity is an electing
large partnership under Section 775 of the Code of 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 a Class R Certificate unless the transferee, or the transferee's 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 Certificate and the provisions of Section 4.02(g) of the Trust
Agreement under which the Class R Certificate was issued. The Owner expressly
agrees to be bound by and to comply with such restrictions and provisions.
7. The Owner warrants and represents that it is [a qualified institutional
buyer as that term is defined in Rule 144A under the Securities Act of 1933, as
amended] [a person involved in the organization of the issuer of the Class R
Certificate, or an affiliate, as defined in Rule 405 under the Securities Act of
1933, as amended, of such person].
8. 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 Certificate will only be owned, directly
or indirectly, by an Owner that is not a disqualified organization.
9. The Owner's Taxpayer Identification Number is _________________.
10. This affidavit and agreement relates only to the Class R Certificate
held by the Owner and not to any other holder of the Class R Certificate. The
Owner understands that the liabilities described herein relate only to the Class
R Certificate.
11. That no purpose of the Owner relating to the purchase of the Class R
Certificate by the Owner is or will be to impede the assessment or collection of
any tax.
12. 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. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class R Certificate
that the Owner intends to pay taxes associated with holding such Class R
Certificate as they become due, fully understanding that it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificate.
13. That the Owner has no present knowledge or expectation that it will
become insolvent or subject to a bankruptcy proceeding for so long as the Class
R Certificate remains outstanding.
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<PAGE>
14. 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 includable in gross (or
otherwise a domestic partnership pursuant to Treasury Regulations) income for
United States federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States.
I-1-3
<PAGE>
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 __________, 20__.
[NAME OF OWNER]
By:________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
_____________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] of the Owner, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this __ day of ______________________, 20__.
_____________________________
NOTARY PUBLIC
COUNTY OF____________________
STATE OF ____________________
My Commission expires the ______ day of
____________, 20__.
I-1-4
<PAGE>
EXHIBIT I-2
Form of Transferor Certificate
_____________, 20__
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
[Trustee]
Attention: Corporate Trust Administration
Re: Credit Suisse First Boston Mortgage Securities
Corp., Trust Certificates, Series 200_-__,
Class
Dear Sirs:
This letter is delivered to you in connection with the transfer by (the
"Seller") to (the "Purchaser") of a ____% Percentage Interest in Trust
Certificates, Series 200_-___, Class R (the "Certificates"), pursuant to Section
4.02 of the Trust Agreement (the "Trust Agreement"), dated as of _________, 200_
among Credit Suisse First Boston Mortgage Securities Corp., as depositor (the
"Depositor") and _____________________, as trustee (the "Trustee"). All terms
used herein and not otherwise defined shall have the meanings set forth in the
Trust Agreement. The Seller hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to transfer of the Certificate by the
Seller to the Purchaser is or will be to impede the assessment or collection of
any tax.
2. The Seller understands that the Purchaser has delivered to the Trustee a
transfer affidavit and agreement in the form attached to the Trust Agreement as
Exhibit I-1. 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
both a United States Person and a Permitted Transferee.
4. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Seller has determined that the Purchaser has historically
paid its debts as they become due and has found no significant evidence to
indicate the Purchaser will not continue to pay its debts as they become due in
the future. The Seller understands that the transfer of the Class R Certificate
may not be respected for United States income tax purposes (and the Seller may
continue to be liable for United States income taxes associated therewith)
unless the Seller has conducted such an investigation.
I-2-1
<PAGE>
Very truly yours,
_____________________________
(Seller)
By:__________________________
Name:
Title:
I-2-2
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...................................................1
Section 1.01. Defined Terms...................................1
ARTICLE II CONVEYANCE OF THE UNDERLYING CERTIFICATES;
ORIGINAL ISSUANCE OF TRUST CERTIFICATES......................14
Section 2.01. Conveyance of the Underlying Certificates......14
Section 2.02. Issuance of Trust Certificates.................16
Section 2.03. Miscellaneous REMIC Provisions.................16
ARTICLE III ADMINISTRATION OF THE UNDERLYING CERTIFICATES;
PAYMENTS AND REPORTS TO CERTIFICATEHOLDERS...................17
Section 3.01. Administration of the Trust Fund and the
Underlying Certificates........................17
Section 3.02. Collection of Monies...........................19
Section 3.03. Establishment of Trust Certificate Account;
Deposits in Trust Certificate Account..........19
Section 3.04. Permitted Withdrawals From the Trust
Certificate Account............................20
Section 3.05. Distributions..................................20
Section 3.06. Statements to Certificateholders...............23
Section 3.07. Access to Certain Documentation and
Information....................................24
Section 3.08. Permitted Investments..........................24
Section 3.09. Sale of Defective Assets.......................25
Section 3.10. Modification of Underlying Certificates........25
ARTICLE IV THE TRUST CERTIFICATES.......................................25
Section 4.01. The Certificates...............................25
Section 4.02. Registration of Transfer and Exchange of
Certificates...................................27
Section 4.03. Mutilated, Destroyed, Lost or Stolen
Certificates...................................31
Section 4.04. Persons Deemed Owners..........................31
ARTICLE V THE TRUSTEE..................................................31
Section 5.01. Duties of Trustee..............................31
Section 5.02. Certain Matters Affecting the Trustee..........33
Section 5.03. Trustee Not Liable for Certificates or
Underlying Certificates........................34
Section 5.04. Trustee May Own Certificates...................34
Section 5.05. Eligibility Requirements for Trustee...........34
Section 5.06. Resignation and Removal of the Trustee.........35
i
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 5.07. Successor Trustee..............................35
Section 5.08. Merger or Consolidation of Trustee.............36
Section 5.09. Appointment of Co-Trustee or Separate
Trustee........................................36
Section 5.10. Appointment of Office or Agency................37
Section 5.11. Compliance with Withholding Requirements.......37
ARTICLE VI TERMINATION..................................................38
Section 6.01. Termination....................................38
Section 6.02. Additional Termination Requirements............39
ARTICLE VII THE DEPOSITOR................................................39
Section 7.01. Liability of the Depositor.....................39
Section 7.02. Merger, Consolidation or Conversion of
the Depositor..................................39
Section 7.03. Limitation on Liability of the Depositor
and Others.....................................40
ARTICLE VIII MISCELLANEOUS PROVISIONS.....................................41
Section 8.01. Amendment......................................41
Section 8.02. Counterparts...................................42
Section 8.03. Limitation on Rights of Certificateholders.....42
Section 8.04. Governing Law..................................43
Section 8.05. Notices........................................43
Section 8.06. Notices to the Rating Agency...................44
Section 8.07. Severability of Provisions.....................44
Section 8.08. Successors and Assigns.........................44
Section 8.09. Article and Section Headings...................44
Exhibit A Form of Class A Certificate
Exhibit B Form of Class M Certificate
Exhibit C Form of Class B Certificate
Exhibit D Form of Class R Certificate
Exhibit E Underlying Certificate and Underlying
Agreement Schedule
Exhibit F Form of Investor Representation Letter
Exhibit G Form of Transferor Representation Letter
Exhibit H Form of Rule 144A Investment Representation
Exhibit I-1 Form of Transfer Affidavit and Agreement
Exhibit I-2 Form of Transferor Certificate
ii
Exhibit 5.1
[ORRICK, HERRINGTON & SUTCLIFFE LLP]
May 23, 2000
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-3,
to be filed by Credit Suisse First Boston Mortgage Securities Corp., a Delaware
corporation (the "Registrant"), with the Securities and Exchange Commission on
May 23, 2000 (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended (the "Act"), of
Conduit Mortgage and Manufactured Housing Contract Pass-Through Certificates
(the "Certificates"). The Certificates are issuable in series (each, a "Series")
under either a separate Pooling and Servicing Agreement, among the Registrant,
as depositor, the servicer named in the prospectus supplement and the trustee
named in the prospectus supplement (each such agreement, a "Pooling and
Servicing Agreement") or a separate Trust Agreement, between the Registrant, as
depositor and the trustee named in the prospectus supplement (each such
agreement, a "Trust Agreement"). The Certificates of each Series are to be sold
as set forth in the Registration Statement, any amendment thereto, and the
prospectus and prospectus supplement relating to such Series.
We have examined such instruments, documents and records as we deemed
relevant and necessary as a basis of our opinion hereinafter expressed. In such
examination, we have assumed the following: (a) the authenticity of original
documents and the genuineness of all signatures; (b) the conformity to the
originals of all documents submitted to us as copies; and (c) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
Based on such examination, we are of the opinion that when the
Certificates of such Series have been duly executed, authenticated and delivered
in accordance with the Pooling and Servicing Agreement or Trust Agreement
relating to such Series and sold, the Certificates will be legally issued, fully
paid, binding obligations of the trust created by the Pooling and Servicing
Agreement or Trust Agreement, as applicable, and the holders of the Certificates
will be entitled to the benefits of the Pooling and Servicing Agreement or the
Trust Agreement, as applicable, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium, or other laws relating to or affecting the rights of
creditors generally and general principles of equity, including without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance or injunctive
relief, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and the prospectus contained therein. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
Exhibit 8.1
[ORRICK, HERRINGTON & SUTCLIFFE LLP]
May 23, 2000
Credit Suisse First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, NY 10010
Ladies and Gentlemen:
We have advised Credit Suisse First Boston Mortgage Securities Corp. (the
"Registrant") with respect to federal income tax aspects of the issuance by the
Registrant of its Conduit Mortgage and Manufactured Housing Contract
Certificates (the "Certificates"), issuable in series (each, a "Series"). In
connection therewith we have prepared the description of federal income tax
consequences to holders of the Certificates that appears under the heading
"Material Federal Income Tax Consequences" in the prospectus (the "Prospectus")
forming a part of the Registration Statement on Form S-3 (the "Registration
Statement") filed on May 23, 2000 with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"). In
our opinion, such discussion is a discussion of the material federal income tax
consequences of purchasing, holding and disposing of the Certificates (and also
includes a discussion of certain minor and incidental consequences as well). In
our opinion, to the extent the description of the material federal income tax
consequences of purchasing, holding and disposing of the Certificates is a
discussion of law or legal conclusions, such description is true and correct in
all material respects. To the extent that such discussion explicitly states our
opinion, we hereby confirm and adopt such opinion herein. In our opinion: (1)
with respect to each Series of REMIC certificates (issued as described in the
Prospectus), the related mortgage pool (or portion thereof) will be classified
as one or more "real estate mortgage investment conduits" ("REMICs") and not an
association taxable as a corporation (or publicly traded partnership treated as
a corporation) and each class of Certificates will represent a "regular" or
"residual" interest in a REMIC, (2) with respect to each Series of FASIT
certificates (issued as described in the Prospectus), the related pool (or
portion thereof) will be classified as one or more "financial asset
securitization trusts" ("FASITs") and not an association taxable as a
corporation (or publicly traded partnership treated as a corporation) and each
class of Certificates will represent a "regular" interest in a FASIT, and (3)
with respect to each other Series of Certificates (issued as described in the
Prospectus), the related trust fund will be a grantor trust for federal income
tax purposes and not an association taxable as a corporation (or publicly traded
partnership treated as a corporation) and each holder will be treated as holding
an equity interest in such grantor trust.
You should be aware that the discussion under "Material Federal Income Tax
Consequences" in the Prospectus is intended as an explanatory discussion of the
consequences of holding the Certificates generally and does not purport to
furnish information in the level of detail or with the investor's specific tax
circumstances that would be provided by an investor's
<PAGE>
own tax advisor. Accordingly, the Prospectus indicates that it is recommended
that each prospective investor consult with its own tax advisor regarding the
application of United States federal income tax law, as well as any state,
local, foreign or other tax laws, to their particular situations.
You should be aware that this opinion applies to the Certificates as
described in the Registration Statement. The Prospectus indicates that with
respect to each Series of Certificates, Registrant's then current counsel will
be identified in the related prospectus supplement and, if such counsel is other
than Orrick, Herrington & Sutcliffe LLP, will confirm (modify or supplement) the
aforementioned opinions.
In reaching the conclusions set forth herein, we have reviewed, relied
upon, and assumed full compliance with the Pooling and Servicing Agreement or
Trust Agreement and such other documents that we have deemed necessary or
appropriate as a basis for the opinion contained herein. With your permission,
we have further assumed the following: (a) the authenticity of original
documents and the genuineness of all signatures; (b) the conformity to the
originals of all documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations and warranties made in
conferences or contained in the records, documents, instruments and certificates
we have reviewed; (d) the due authorization, execution, and delivery on behalf
of the respective parties thereto of documents referred to herein and the legal,
valid and binding effect thereof on such parties; and (e) the absence of any
agreements or understandings among any other parties not contemplated by the
aforementioned transaction documents. As to any facts material to this opinion
which we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of the
Registrant and others.
We express no opinion as to the law of any jurisdiction other than the
federal income tax laws of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and the Prospectus contained therein, as supplemented by
the prospectus supplement relating to a Series of Certificates. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, (including
this opinion) as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
______________________________________
ORRICK, HERRINGTON & SUTCLIFFE LLP
Exhibit 23.1
Included as part of Exhibit 5.1 and Exhibit 8.1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Patrick D. Coleman, William Pitofsky, Greg
Petroski and Kari Roberts or any of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and his or her name, place and stead, in any and
all capacities, to sign any and all amendments (including post- effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said attorneys-in-fact and
agents, and each of them, with or without the others, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Patrick D. Coleman Director and President May 23, 2000
- - - - - - - - --------------------------- (Principal Executive
PATRICK D. COLEMAN Officer)
/s/ Scott J. Ulm Director and Chairman May 23, 2000
- - - - - - - - -------------------------- of the Board
SCOTT J. ULM
/s/ William Pitofsky Director May 23, 2000
- - - - - - - - --------------------------- and Vice President
WILLIAM PITOFSKY
/s/ Carlos Onis Director May 23, 2000
- - - - - - - - ---------------------------
CARLOS ONIS
/s/ Zev Kindler Treasurer May 23, 2000
- - - - - - - - ---------------------------- (Principal Financial Officer)
ZEV KINDLER
/s/ Thomas Zingalli Vice President May 23, 2000
- - - - - - - - --------------------------- and Controller
THOMAS ZINGALLI (Principal Accounting Officer)
Exhibit 24.2
ASSISTANT SECRETARY'S CERTIFICATE
I, Rhonda Matty, Assistant Secretary of Credit Suisse First Boston
Mortgage Securities Corp., hereby certify that the copy of the resolutions
attached hereto is a true, correct and complete copy of resolutions adopted by
the Board of Directors of Credit Suisse First Boston Mortgage Securities Corp.
by unanimous written consent in lieu of a meeting on May 8, 2000. Such
resolutions have not been amended or modified and are now in full force and
effect in the form attached.
IN WITNESS WHEREOF, I have hereunto set my hand on as of this 16th
day of May, 2000.
/s/ Rhonda Matty
--------------------------
Assistant Secretary
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
UNANIMOUS WRITTEN CONSENT OF DIRECTORS
IN LIEU OF MEETING OF BOARD OF DIRECTORS
May 8, 2000
The undersigned, being all the Directors of Credit Suisse First Boston
Mortgage Securities Corp., a Delaware corporation (the "Company"), do hereby
onsent in writing that the following resolutions shall have the same force and
effect as if adopted at a Meeting of the Board of Directors of the Company:
RESOLVED, that the form of Registration Statement on Form S-3, as set
forth as Exhibit A attached hereto, together with all exhibits thereto (the
"Registration Statement"), to be filed with the Securities and Exchange
Commission (the "Commission") for the purpose of registering under the
Securities Act of 1933, as amended, up to $1,500,000,000 aggregate principal
amount of conduit mortgage and manufactured housing contract pass-through
certificates (the "Certificates"), which will be offered in one or more series
(each, a "Series"), representing fractional undivided interests in trusts (the
"Trusts") to be created by the Company be, and it hereby is, approved; and it is
FURTHER RESOLVED, that the directors and appropriate officers of the
Company be, and each of them hereby is, authorized and empowered to execute on
their own behalf, or in the name and on behalf of the Company, or both, as the
case may be, the Registration Statement, and any and all amendments (including
post-effective amendments) to the Registration Statement, including amendments
to the prospectus (the "Prospectus") and the addition or amendment of exhibits
or other documents relating thereto or required by law or regulation in
connection therewith, in such form as such directors and officers may deem
necessary, appropriate or desirable in order to effect the registration of the
Certificates; and that the appropriate officers of the Company be, and each of
them hereby is, authorized and empowered to procure all other necessary
signatures to the Registration Statement and to cause the Registration Statement
and such amendment or amendments, so executed, to be filed with the Commission;
and it is
FURTHER RESOLVED, that prior to the effective date of the
Registration Statement or any post-effective amendment thereto, the appropriate
officers of the Company are directed to use their best efforts to furnish each
director and each officer signing the Registration Statement or such
post-effective amendment with a copy of the Registration Statement, or such
post-effective amendment, and if, prior to the effective date of the
Registration Statement or such post-effective amendment, material changes
therein or material additions thereto are proposed to be made, the appropriate
officers of the Company are directed to use their best efforts to furnish each
director, and each officer signing the Registration Statement or such
post-effective amendment, with a copy of the Registration Statement and each
amendment thereto or such post-effective amendment as filed with the Commission,
or a description of such changes or additions, or a combination thereof, in as
complete and final form as practicable and in sufficient time to
<PAGE>
permit each director and each such officer so desiring to object to any part of
the Registration Statement or such post-effective amendment before it becomes
effective; and it is
FURTHER RESOLVED, that each officer or director who is required or
entitled to execute the Registration Statement (whether in the name and on
behalf of the Company, or as an officer or director of the Company, or both) be,
and each of them hereby is, authorized and empowered to execute a power of
attorney appointing William Pitofsky, Patrick D. Coleman, Greg Petroski and Kari
Roberts, as attorneys-in-fact, with full power of substitution severally, (a) to
execute (individually and in each capacity in which such officer or director is
required or entitled to execute the Registration Statement, including in the
name of and on behalf of the Company) the Registration Statement and all
amendments (including post-effective amendments) to the Registration Statement
and documents in connection therewith, which amendments may make such changes in
the Registration Statement as the attorney-in-fact acting in the premises deems
appropriate, and (b) to cause the Registration Statement and any such amendment
or amendments to the Registration Statement, so executed, to be filed with the
Commission, each of said attorneys to have power to act with or without the
others, and to have full power and authority to do and perform in the name and
on behalf of each of said officers and directors who shall have executed such a
power of attorney, every act whatsoever which such attorneys or any of them may
deem necessary, appropriate or desirable to be done in connection therewith as
fully and to all intents and purposes as such officers or directors might or
could do in person; and it is
FURTHER RESOLVED, that Thomas Zingalli, Vice President, Controller
and Principal Accounting Officer of the Company, be and he hereby is, appointed
the agent of the Company for service in connection with the Registration
Statement; and it is
FURTHER RESOLVED, that the Chairman, President, Principal Accounting
Officer and Controller, Treasurer, any Vice President, Director of Taxes and any
other officer specifically authorized by the Board of Directors in writing of
the Company (the "Authorized Officers"), the Secretary or any Assistant
Secretary of the Company be, and each of them with full authority to act without
the others, hereby is, authorized and directed in the name and on behalf of the
Company to take any and all action that he or she may deem necessary or
advisable in order to obtain a permit, register or qualify the Certificates for
issuance and sale or to request an exemption from registration of the
Certificates, to register or obtain a license for the Company as a dealer or
broker under the securities laws of such of the states of the United States of
America or other jurisdictions, including Canada, as such officer may deem
advisable, and in connection with such registration, permits, licenses,
qualifications and exemptions to execute, acknowledge, verify, file and publish
all such applications, reports, issuer's covenants, resolutions, irrevocable
consents to service of process, powers of attorney and other papers, agreements,
documents and instruments as may be deemed by such officer to be useful or
advisable to be filed, and that the Board of Directors hereby adopts the form of
any and all resolutions required by any such state authority in connection with
any such applications, reports, issuer's covenants, irrevocable consents to
service of process, powers of attorney and other papers, agreements, documents
and instruments if (i) in the opinion of the officer of the Company so acting
the adoption of such resolutions is necessary or advisable and (ii) the
Secretary or any Assistant Secretary of the Company evidences such adoption by
filing with this Unanimous Written Consent copies of such resolutions, which
shall thereupon be deemed to be
2
<PAGE>
adopted by the Board of Directors and incorporated in this Unanimous Written
Consent as part of this resolution with the same force and effect as if included
herein, and that the Authorized Officers, the Secretary or any Assistant
Secretary of the Company take any and all further action that they may deem
necessary or advisable in order to maintain such registration in effect for as
long as they may deem to be in the best interests of the Company; and it is
FURTHER RESOLVED, that it is in the best interests of the Company
that the Certificates be qualified or registered for sale in various states,
that the Authorized Officers, the Secretary or any Assistant Secretary of the
Company and its counsel are authorized to determine the states in which
appropriate action shall be taken to qualify or register for sale all or such
part of the Certificates as said Authorized Officers, the Secretary or any
Assistant Secretary may deem advisable, that said Authorized Officers, Secretary
or any Assistant Secretary are hereby authorized to perform on behalf of the
Company any and all such acts as they may deem necessary or advisable in order
to comply with the applicable laws of any such states, and in connection
therewith to execute and file all requisite papers and documents, including, but
not limited to, applications, reports, surety bonds, irrevocable consents and
appointments of attorneys for service of process, and the execution by such
Authorized Officers, Secretary or any Assistant Secretary of any such paper or
document or the performance by them of any act in connection with the foregoing
matters shall conclusively establish their authority therefor from the Company
and the approval and ratification by the Company of the papers and documents to
be executed and the action so taken; and it is
FURTHER RESOLVED, that the Company, as depositor or settlor, is
authorized and empowered to enter into various Trust Agreements (each, a "Trust
Agreement") with such bank, trust company or other financial institution as the
directors or Authorized Officers shall deem necessary or appropriate, as
trustee, pursuant to which certain trusts will be created, in the form included
in the Registration Statement, together with such changes, modifications,
insertions and additions as the proper officers of the Company deem necessary,
appropriate or desirable and to sell the beneficial interests of such trusts;
and it is
FURTHER RESOLVED, that the Company, as depositor or settlor, is
authorized and empowered to enter into various Pooling and Servicing Agreements
(each, a "Pooling and Servicing Agreement") with such bank, trust company or
other financial institution, as trustee, and such servicer, as the directors or
Authorized Officers shall deem necessary or appropriate, with respect to the
Certificates, in the form included in the Registration Statement, together with
such changes, modifications, insertions and additions as the directors or
Authorized Officers of the Company shall deem necessary, appropriate or
desirable; and it is
FURTHER RESOLVED, that the Company is authorized and empowered to
enter into various Underwriting Agreements (each, an "Underwriting Agreement")
with Credit Suisse First Boston Corporation, as underwriter, or an underwriting
syndicate represented by Credit Suisse First Boston Corporation, as
underwriters, with regard to the Certificates, or such other purchasers as may
be approved by an Authorized Officer, in the form included in the Registration
Statement, together with such changes, modifications, insertions and additions
as the directors or Authorized Officers of the Company shall deem necessary,
appropriate or desirable; and it is
3
<PAGE>
FURTHER RESOLVED, that the Company is authorized and empowered to
enter into various Sale and Purchase Agreements or similar agreements (each, a
"Purchase Agreement") with a seller of mortgage loans, manufactured housing
conditional sales contracts or other assets to be included in a trust fund with
respect to a Series as the directors or Authorized Officers shall deem necessary
or appropriate with respect to the Certificates, in the form included in the
Registration Statement, together with such changes, modifications, insertions
and additions as the directors or Authorized Officers of the Company shall deem
necessary, appropriate or desirable; and it is
FURTHER RESOLVED, that the Authorized Officers of the Company, in the
name and on behalf of the Company be, and each of them hereby is, authorized and
empowered to execute and deliver a Trust Agreement, a Pooling and Servicing
Agreement, a Purchase Agreement and an Underwriting Agreement with regard to any
Series of Certificates, with such changes therein as may be approved by the
Authorized Officers executing the same, and to take such action and to execute
such further instruments and documents as any of the aforesaid officers of the
Company may deem to be necessary, appropriate or desirable in order to
consummate the transactions contemplated by a Trust Agreement, a Pooling and
Servicing Agreement, a Purchase Agreement and an Underwriting Agreement, such
other instruments and documents being in such form and containing such terms and
conditions as the Authorized Officers of the Company executing the same shall
approve; and it is
FURTHER RESOLVED, that the preparation of a prospectus supplement
(the "Prospectus Supplement") relating to the Certificates of a Series, in the
form included in the Registration Statement or in such other form as an
Authorized Officer of the Company shall deem necessary, appropriate or
desirable, and the use of such Prospectus Supplement and the Prospectus in
connection with the sale of the Certificates offered thereby, is hereby
approved; and it is
FURTHER RESOLVED, that the Authorized Officers of this Company, on
behalf of any Trust be, and they hereby are, authorized and directed to cause
the Certificates to be issued, sold and delivered to the underwriter or
underwriters, or to such other purchasers as may be approved by an Authorized
Officer, as the case may be, and to cause the Certificates to be rated by
Standard & Poor's Ratings Group, Moody's Investors Service, Inc., Fitch IBCA,
Inc. or another nationally recognized rating agency; and it is
FURTHER RESOLVED, that execution of any agreement, instrument or
document by an Authorized Officer of the Company pursuant to these resolutions
shall constitute conclusive evidence of the approval of, and of that Authorized
Officer's authority to execute, such agreement, instrument or document; and it
is
FURTHER RESOLVED, that the retention of the law firm of Orrick,
Herrington & Sutcliffe LLP as counsel to the Company in connection with the
proposed public offerings be and it hereby is, approved; and it is
FURTHER RESOLVED, that the Authorized Officers of the Company, and
its counsel be, and each of them hereby is, authorized with full authority to
act without the other to
4
<PAGE>
appear on behalf of the Company or the Trusts before the Commission in
connection with any matter relating to the Registration Statement and to any
amendments thereto.
IN WITNESS WHEREOF, the undersigned Directors have executed this Unanimous
Written Consent this 8th day of May, 2000.
/s/ Carlos Onis /s/ Scott J. Ulm
---------------- -------------------
Carlos Onis Scott J. Ulm
/s/ William Pitofsky /s/ Patrick D. Coleman
--------------------- -------------------------
William Pitofsky Patrick D. Coleman
