SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
April 30, 1998
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under the Trust
Agreement, dated as of April 1, 1998, providing for the issuance of
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-5)
Structured Asset Securities Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 3233-47499 74-2440850
State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (212) 526-5594
No Change
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
A. The Registrant registered issuances of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Act"), by a Registration Statement on Form S-3 (Registration File No.
333-47499) (the "Registration Statement"). Pursuant to the Registration
Statement, the Registrant issued $214,399,000 in aggregate principal amount of
Class A, Class B-1, Class B-2 and Class B-3 Certificates of its Structured
Asset Securities Corporation Mortgage Pass-Through Certificates, Series 1998-5
on April 30, 1998. This Current Report on Form 8-K is being filed to satisfy
an undertaking, contained in the definitive Prospectus dated March 18, 1998,
as supplemented by the Prospectus Supplement dated April 27, 1998 (the
"Prospectus Supplement"), to file a copy of the Trust Agreement (as defined
below) executed in connection with the issuance of the Certificates, a form of
which was filed as an exhibit to the Registration Statement.
The Certificates were issued pursuant to a Trust Agreement (the "Trust
Agreement"), attached hereto as Exhibit 4.1, dated as of April 1, 1998,
between Structured Asset Securities Corporation, as depositor (the
"Depositor") and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"). The "Certificates" consist of the following classes: Class A,
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and Class R.
The Certificates evidence all the beneficial ownership interest in a trust
fund (the "Trust Fund") that consists primarily of a pool of adjustable rate,
fully amortizing, conventional, first lien residential mortgage loans (the
"Mortgage Loans") with an aggregate outstanding principal balance of
$216,566,808.48 as of April 1, 1998, together with certain other assets.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Trust Agreement.
Item 7. Financial Statements; Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated April 27, 1998, between Structured Asset
Securities Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of April 1, 1998, between
Structured Asset Securities Corporation, as Depositor, and
Norwest Bank Minnesota, National Association, as Trustee.
9.1 Mortgage Loan Sale and Assignment Agreement, dated as of
April 1, 1998, between Lehman Capital, A Division of Lehman
Brothers Holdings Inc., as Seller, and Structured Asset
Securities Corporation, as Purchaser.
9.2 Amended and Restated Mortgage Loan Sale, Warranties and
Servicing Agreement, dated as of April 1, 1998, between Lehman
Capital, A Division of Lehman Brothers Holdings Inc., and
Boston Safe Deposit and Trust Company, as Servicer.
9.3 Amended and Restated Mortgage Loan Sale, Warranties and
Servicing Agreement, dated as of April 1, 1998, between Lehman
Capital, A Division of Lehman Brothers Holdings Inc., and
Boston Safe Deposit and Trust Company, as Servicer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Stanley Labanowski
________________________
Name: Stanley Labanowski
Title: Authorized Signatory
Dated: May 14, 1998
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Terms Agreement, dated April 27, 1998,
between Structured Asset Securities
Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of April 1, 1998,
between Structured Asset Securities
Corporation, as Depositor and Norwest Bank
Minnesota, National Association, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement,
dated as of April 1, 1998, between Lehman
Capital, A Division of Lehman Brothers
Holdings Inc., as Seller, and Structured
Asset Securities Corporation, as Purchaser.
99.2 Amended and Restated Mortgage Loan Sale,
Warranties and Servicing Agreement, dated as
of April 1, 1998, between Lehman Capital, A
Division of Lehman Brothers Holdings Inc.,
and Boston Safe Deposit and Trust Company, as
servicer.
99.3 Amended and Restated Mortgage Loan Sale,
Warranties and Servicing Agreement, dated as
of April 1, 1998, between Lehman Capital, A
Division of Lehman Brothers Holdings Inc.,
and Boston Safe Deposit and Trust Company, as
servicer.
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-5
TERMS AGREEMENT
Dated: April 30, 1998
To: Structured Asset Securities Corporation, as Depositor under the
Trust Agreement dated as of April 1, 1998 (the "Trust Agreement").
Re: Underwriting Agreement Standard Terms dated as of April 16, 1996
(the "Standard Terms," and together
with this Terms Agreement, the "Agreement").
Series Designation: Series 1998-5.
Terms of the Series 1998-5 Certificates: Structured Asset Securities
Corporation, Series 1998-5 Mortgage Pass-Through Certificates, Class A, Class
B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and Class R (the
"Certificates") will evidence, in the aggregate, the entire beneficial
ownership interest in a trust fund (the "Trust Fund"). The primary assets of
the Trust Fund consist of a pool of adjustable rate, conventional, first lien
residential mortgage loans (the "Mortgage Loans"). Only the Class A
Certificates and the Class B-1, Class B-2 and Class B-3 Certificates (together
with the Class A Certificates, the "Offered Certificates") are being sold
pursuant to the terms hereof.
Registration Statement: File Number 333-47499.
Certificate Ratings: It is a condition of Closing that at the Closing Date the
Class A Certificates that they be rated "AAA" by each of Fitch IBCA, Inc.
("Fitch") and Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P"); that the Class B-1 Certificates be rated
"AA" by each of Fitch and S&P; that the Class B-2 Certificates be rated "A" by
each of Fitch and S&P; and that the Class B-3 Certificates be rated "BBB" by
each of Fitch and S&P.
Terms of Sale of Offered Certificates: The Depositor agrees to sell to Lehman
Brothers Inc. (the "Underwriter") and the Underwriter agrees to purchase from
the Depositor, the Offered Certificates in the principal amounts and prices
set forth on Schedule 1 annexed hereto. The purchase price for the Offered
Certificates shall be the Purchase Price Percentage set forth in Schedule 1
plus accrued interest at the initial interest rate per annum from and
including the Cut-off Date up to, but not including, the Closing Date.
The Underwriter will offer the Offered Certificates to the public from time to
time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale.
Cut-off Date: April 1, 1998.
Closing Date: 10:00 A.M., New York time, on or about April 30, 1998. On the
Closing Date, the Depositor will deliver the Offered Certificates to the
Underwriter against payment therefor for the account of the Underwriter.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Depositor and the Underwriter in accordance with its terms.
LEHMAN BROTHERS INC.
By: /s/ Joseph J. Kelly
_____________________
Name: Joseph J. Kelly
Title: Vice President
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Stanley Labanowski
________________________
Name: Stanley Labanowski
Title: Authorized Signatory
Schedule 1
Initial
Certificate Certificate Purchase
Principal Interest Price
Class Amount(1) Rate Percentage
Class A $209,528,000.00 (2) 101.53125%
Class B-1 2,165,000.00 (4) 101.00000%
Class B-2 1,624,000.00 (5) 100.00000%
Class B-3 1,082,000.00 (5) 95.00000%
- -----------------------
(1) Approximate.
(2) Interest will accrue on each Class of Certificates at the applicable
per annum rate described in the Prospectus Supplement.
EXECUTION
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of April 1, 1998
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-5
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01. Definitions........................................................... 2
1.02. Calculations Respecting Mortgage Loans................................ 24
1.03. Calculations Respecting Accrued Interest.............................. 24
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans.. 24
2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund........................................ 26
2.03. Representations and Warranties of the Depositor....................... 26
2.04. Discovery of Breach................................................... 28
2.05. Repurchase, Purchase or Substitution of Mortgage Loans................ 29
2.06. Converted Mortgage Loans.............................................. 30
2.07. Grant Clause.......................................................... 30
ARTICLE III
THE CERTIFICATES
3.01. The Certificates...................................................... 30
3.02. Registration.......................................................... 31
3.03. Transfer and Exchange of Certificates................................. 31
3.04. Cancellation of Certificates.......................................... 34
3.05. Replacement of Certificates........................................... 34
3.06. Persons Deemed Owners................................................. 35
3.07. Temporary Certificates................................................ 35
3.08. Appointment of Paying Agent........................................... 35
3.09. Book-Entry Certificates............................................... 36
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
4.01. [Omitted]............................................................. 37
4.02. [Omitted]............................................................. 37
4.03. Reports to Certificateholders......................................... 37
4.04. Certificate Account................................................... 40
4.05. Determination of LIBOR................................................ 41
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
5.01. Distributions Generally............................................... 42
5.02. Distributions from the Certificate Account............................ 43
5.03. Allocation of Losses.................................................. 46
5.04. Trustee Advances...................................................... 46
5.05. Distributions of Principal on Redemption Certificates................. 46
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
6.01. Duties of Trustee..................................................... 51
6.02. Certain Matters Affecting the Trustee................................. 53
6.03. Trustee Not Liable for Certificates................................... 54
6.04. Trustee May Own Certificates.......................................... 54
6.05. Eligibility Requirements for Trustee.................................. 54
6.06. Resignation and Removal of Trustee.................................... 55
6.07. Successor Trustee..................................................... 55
6.08. Merger or Consolidation of Trustee.................................... 56
6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.............. 56
6.10. Authenticating Agents................................................. 58
6.11. Indemnification of Trustee............................................ 58
6.12. Fees and Expenses of Trustee.......................................... 60
6.13. Collection of Monies.................................................. 60
6.14. Trustee To Act; Appointment of Successor.............................. 60
6.15. Additional Remedies of Trustee Upon Event of Default.................. 62
6.16. Waiver of Defaults.................................................... 62
6.17. Notification to Holders............................................... 62
6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default............................................. 63
6.19. Action Upon Certain Failures of the Servicer and Upon
Event of Default.................................................... 63
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
7.01. Termination of Trust Fund Upon Repurchase or Liquidation
of All Mortgage Loans............................................... 63
7.02. Procedure Upon Termination of Trust Fund.............................. 64
7.03. Additional Trust Fund Termination Requirements........................ 65
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
8.01. Limitation on Rights of Holders....................................... 66
8.02. Access to List of Holders............................................. 66
8.03. Acts of Holders of Certificates....................................... 67
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
9.01. Trustee To Retain Possession of Certain Documents..................... 68
9.02. Preparation of Tax Returns and Other Reports.......................... 68
9.03. Release of Mortgage Files............................................. 69
ARTICLE X
REMIC ADMINISTRATION
10.01. REMIC Administration................................................. 70
10.02. Prohibited Transactions and Activities............................... 71
10.03. Indemnification with Respect to Certain Taxes and
Loss of REMIC Status............................................... 72
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Binding Nature of Agreement; Assignment.............................. 72
11.02. Entire Agreement..................................................... 73
11.03. Amendment............................................................ 73
11.04. Voting Rights........................................................ 74
11.05. Provision of Information............................................. 74
11.06. Governing Law........................................................ 74
11.07. Notices.............................................................. 75
11.08. Severability of Provisions........................................... 75
11.09. Indulgences; No Waivers.............................................. 75
11.10. Headings Not To Affect Interpretation................................ 75
11.11. Benefits of Agreement................................................ 75
11.12. Special Notices to the Rating Agencies............................... 76
11.13. Counterparts......................................................... 76
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Trustee Final Certification
Exhibit B-2 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Residual Certificate Transfer Affidavit (Transferor)
Exhibit E-1 Amended and Restated Sale, Warranties and Servicing Agreement
Exhibit E-2 Amended and Restated Sale, Warranties and Servicing Agreement
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
Exhibit K Custodial Agreement
Schedule A Mortgage Loan Schedule
Schedule B Principal Amount Schedules
This TRUST AGREEMENT, dated as of April 1, 1998 (the "Agreement"), is
by and between STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation,
as depositor (the "Depositor"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc., and at the Closing Date is the owner
of the Mortgage Loans and the other property being conveyed by it to the Trustee
for inclusion in the Trust Fund. On the Closing Date, the Depositor will acquire
the Certificates from the Trust Fund, as consideration for its transfer to the
Trust Fund of the Mortgage Loans and the other property constituting the Trust
Fund. The Depositor has duly authorized the execution and delivery of this
Agreement to provide for the conveyance to the Trustee of the Mortgage Loans and
the other property constituting the Trust Fund. All covenants and agreements
made by the Depositor and the Trustee herein with respect to the Mortgage Loans
and the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates. The Depositor is entering into
this Agreement, and the Trustee is accepting the Trust Fund created hereby, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Certificate Principal Amount and
minimum denomination for each Class of Certificates comprising the interests in
the Trust Fund created hereunder.
<TABLE>
<CAPTION>
Class Certificate Interest Initial Certificate Minimum
<S> <C> <C> <C>
Class A (1) $209,528,000.00 $100,000
Class B-1 (1) 2,165,000.00 100,000
Class B-2 (1) 1,624,000.00 100,000
Class B-3 (1) 1,082,000.00 100,000
Class B-4 (1) 974,000.00 250,000
Class B-5 (1) 649,000.00 250,000
Class B-6 (1) 544,808.48 250,000
Class R (2) (2) (3)
</TABLE>
- ----------------------
(1) The Certificate Interest Rate with respect to any Distribution Date for
each Class of Certificates is a per annum variable rate equal to the
Weighted Average Rate for such Distribution Date.
(2) The Class R Certificate will be issued without a Certificate Principal
Amount and will not bear interest. (3) The Class R Certificate will be
issued as a single Certificate evidencing the entire Percentage
Interest in such Class.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $216,566,808.48.
In consideration of the mutual agreements herein contained, the Depositor
and the Trustee hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: As defined in the applicable Sale and
Servicing Agreement.
Accountant: A person engaged in the practice of accounting who (except when
this Agreement provides that an Accountant must be Independent) may be employed
by or affiliated with the Depositor or an Affiliate of the Depositor.
Accretion Directed Certificate: None.
Accrual Certificate: None.
Accrual Component: None.
Accrual Period: With respect to any Distribution Date and any Class of
Certificates other than the Class R Certificate, the one-month period beginning
immediately following the end of the preceding Accrual Period (or from the
Cut-off Date, in the case of the first Accrual Period) and ending on the last
day of the calendar month immediately preceding the month in which such
Distribution Date occurs.
Additional Collateral: As defined in the applicable Sale and Servicing
Agreement.
Advance: An advance of the aggregate of payments of principal and interest
(net of the Servicing Fee) on one or more Mortgage Loans that were due on the
Due Date in the related Collection Period and not received as of the close of
business on the related Determination Date, required to be made by the Servicer
pursuant to the applicable Sale and Servicing Agreement (or by the Trustee
hereunder).
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Loan Balance: The aggregate of the Scheduled Principal Balances
for all Mortgage Loans at the date of determination.
Aggregate Notional Amount: With respect to any Class of Notional
Certificates, the applicable aggregate notional amount set forth or described in
the Preliminary Statement hereto.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements hereto.
Applied Loss Amount: With respect to any Distribution Date, the amount, if
any, by which (x) the aggregate Certificate Principal Amount after giving effect
to distributions on such date, but before giving effect to any application of
the Applied Loss Amount on such date, exceeds (y) the Aggregate Loan Balance as
of the close of the related Collection Period.
Appraised Value: With respect to any Mortgage Loan, the amount set forth in
an appraisal made in connection with the origination of such Mortgage Loan as
the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate on
behalf of the Depositor.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee to
the effect that any proposed transfer will not (i) cause the assets of the Trust
Fund to be regarded as plan assets for purposes of the Plan Asset Regulations or
(ii) give rise to any fiduciary duty on the part of the Depositor or the
Trustee.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificates: Beneficial interests in Certificates designated as
"Book-Entry Certificates" in this Agreement, ownership and transfers of which
shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer permitted and
Definitive Certificates are to be issued to Certificate Owners, such Book-Entry
Certificates shall no longer be "Book-Entry Certificates." As of the Closing
Date, the following Classes of Certificates constitute Book-Entry Certificates:
the Class A, Class B-1, Class B-2 and Class B-3 Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which banking institutions in New York, New York or, if other than New York,
the city in which the Corporate Trust Office of the Trustee is located, or the
State of Massachusetts, are authorized or obligated by law or executive order to
be closed.
Carryforward Interest: With respect to any Distribution Date and each Class
of Certificates (other than the Class R Certificate), the amount, if any, by
which (x) the sum of (A) Current Interest for such Class for the immediately
preceding Distribution Date and (B) any unpaid Carryforward Interest for such
Class from previous Distribution Dates exceeds (y) the amount distributed in
respect of interest on such Class on such immediately preceding Distribution
Date.
Certificate: Any one of the certificates signed and countersigned by the
Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in accordance
with the provisions of Section 4.04.
Certificate Interest Rate: With respect to each Class of Certificates, the
applicable per annum rate set forth or described in the Preliminary Statement
hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the Person who
is the owner of such Book-Entry Certificate, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate other than a
Notional Certificate, at the time of determination, the maximum specified dollar
amount of principal to which the Holder thereof is then entitled hereunder, such
amount being equal to the initial principal amount set forth on the face of such
Certificate, less the amount of all principal distributions previously made with
respect to such Certificate and all Applied Loss Amounts previously allocated to
such Certificate.
Certificate Register and Certificate Registrar: The register maintained and
the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
Class: All Certificates bearing the same class designation.
Class A Principal Distribution Amount: With respect to any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event has
occurred with respect to such Distribution Date, the Principal Distribution
Amount and (b) on or after the Stepdown Date and as long as a Trigger Event has
not occurred with respect to such Distribution Date, the amount, if any, by
which (x) the Class Certificate Principal Amount of the Class A Certificates
immediately prior to such Distribution Date exceeds (y) the product of (i)
93.50% and (ii) the Aggregate Loan Balance as of the last day of the related
Collection Period.
Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amount of the Class A
Certificates after giving effect to distributions on such Distribution Date and
(ii) the Class Certificate Principal Amount of the Class B-1 Certificates
immediately prior to such Distribution Date exceeds (y) the product of (i)
95.50% and (ii) the Aggregate Loan Balance as of the last day of the related
Collection Period.
Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A and
Class B-1 Certificates after giving effect to distributions on such Distribution
Date and (ii) the Class Certificate Principal Amount of the Class B-2
Certificates immediately prior to such Distribution Date exceeds (y) the product
of (i) 97.00% and (ii) the Aggregate Loan Balance as of the last day of the
related Collection Period.
Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A, Class
B-1 and Class B-2 Certificates after giving effect to distributions on such
Distribution Date and (ii) the Class Certificate Principal Amount of the Class
B-3 Certificates immediately prior to such Distribution Date exceeds (y) the
product of (i) 98.00% and (ii) the Aggregate Loan Balance as of the last day of
the related Collection Period.
Class B-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A, Class
B-1, Class B-2 and Class B-3 Certificates after giving effect to distributions
on such Distribution Date and (ii) the Class Certificate Principal Amount of the
Class B-4 Certificates immediately prior to such Distribution Date exceeds (y)
the product of (i) 98.90% and (ii) the Aggregate Loan Balance as of the last day
of the related Collection Period.
Class B-5 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A, Class
B-1, Class B-2, Class B-3 and Class B-4 Certificates after giving effect to
distributions on such Distribution Date and (ii) the Class Certificate Principal
Amount of the Class B-5 Certificates immediately prior to such Distribution Date
exceeds (y) the of (i) 99.50% and (ii) the Aggregate Loan Balance as of the last
day of the related Collection Period.
Class B-6 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A, Class
B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates after giving
effect to distributions on such Distribution Date and (ii) the Class Certificate
Principal Amount of the Class B-6 Certificates immediately prior to such
Distribution Date exceeds (y) the Aggregate Loan Balance as of the last day of
the related Collection Period.
Class Certificate Principal Amount: With respect to each Class of
Certificates other than the Class R Certificate and any Class of Notional
Certificates, the aggregate of the Certificate Principal Amounts of all
Certificates of such Class at the date of determination.
Clearing Agency: An organization registered as a "clearing agency" pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended. As of the
Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: April 30, 1998.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Account: Not applicable.
Collection Period: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.
Compensating Interest Payment: With respect to any Distribution Date, the
amount paid by the Servicer in respect of Prepayment Interest Shortfalls
pursuant to Section 4.04(viii) of the applicable Sale and Servicing Agreement.
Component: None.
Component Certificate: None.
Component Interest Rate: None.
Component Principal Amount: As of any Distribution Date and with respect to
any Component, other than any Notional Component, the initial Component
Principal Amount thereof as set forth in the definition of Component (plus any
Deferred Interest allocated thereto on previous Distribution Dates and plus, in
the case of any Accrual Component, any related Accrual Amount for each previous
Distribution Date), less the sum of (x) all amounts distributed in reduction
thereof on previous Distribution Dates pursuant to Section 5.02 and (y) the
amount of all Realized Losses previously allocated thereto pursuant to Section
5.03.
Conventional Loan: A Mortgage Loan that is not insured by the United States
Federal Housing Administration or guaranteed by the United States Veterans
Administration.
Converted Mortgage Loan: Any Convertible Mortgage Loan with respect to
which the related Mortgagor has exercised its option to convert the Mortgage
Rate thereof from an adjustable to a fixed rate.
Convertible Mortgage Loan: Any Mortgage Loan pursuant to which the related
Mortgagor may elect to convert the Mortgage Rate thereof from an adjustable rate
to a fixed rate of interest.
Cooperative Corporation: The entity that holds title (fee or an acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Loan Documents: As specified in items 9 and 10 of Exhibit C-1
to the applicable Sale and Servicing Agreement.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal corporate trust office of the Trustee
at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust
Services (SASCO 1998-5).
Corresponding Class: None.
Corresponding Component: None.
Current Interest: With respect to each Class of Class A, Class B-1, Class
B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates and any
Distribution Date, the aggregate amount of interest accrued during the related
Accrual Period at the applicable Certificate Interest Rate on the Class
Certificate Principal Amount of such Class immediately prior to such
Distribution Date.
Custodial Account: An account or accounts maintained by the Servicer
pursuant to the applicable Sale and Servicing Agreement, into which it will
deposit collections and recoveries with respect to the Mortgage Loans.
Custodial Agreement: The custodial agreement between the Trustee and the
Custodian, dated as of April 1, 1998, attached hereto as Exhibit K.
Custodian: U.S. Bank Trust National Association, in its capacity as
custodian under the Custodial Agreement, or any successor in interest.
Cut-off Date: April 1, 1998.
Cut-off Date Aggregate Loan Balance: With respect to the Mortgage Loans in
the Trust Fund on the Closing Date, the Aggregate Loan Balance as of the Cut-off
Date.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Deceased Holder: With respect to a Holder of a Redemption Certificate, as
defined in Section 5.05(b).
Deferred Interest: With respect to any Distribution Date, the aggregate
Mortgage Loan Negative Amortization, if any, for the related Collection Period.
Definitive Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the Trust
Fund pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.
Depositor: Structured Asset Securities Corporation, a Delaware corporation
having its principal place of business in New York, or its successors in
interest.
Determination Date: With respect to each Distribution Date, the 13th day of
the month in which such Distribution Date occurs, or, if such 13th day is not a
Business Day, the immediately preceding Business Day.
Discount Mortgage Loan: None.
Disqualified Organization: Either (i) the United States, (ii) any state or
political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt 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, (vii) any organization described in section 1381(a)(2)(C) of the
Code, or (viii) any other entity designated as a Disqualified Organization by
relevant legislation amending the REMIC Provisions and in effect at or proposed
to be effective as of the time of the determination. In addition, a corporation
will not be treated as an instrumentality of the United States or of any state
or political subdivision thereof if all of its activities are subject to tax
and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.
Distribution Date: The 25th day of each month or, if such day is not a
Business Day, the next succeeding Business Day, commencing in May 1998.
Due Date: With respect to any Mortgage Loan, the date on which a Scheduled
Payment is due under the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period commencing on
the second day of the month immediately preceding the month in which such
Distribution Date occurs and ending on the first day of the 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 acceptable to
the Rating Agencies or (ii) an account or accounts the deposits in which are
insured by the FDIC to the limits established by such corporation, provided that
any such deposits not so insured shall be maintained in an account at a
depository institution or trust company whose commercial paper or other short
term debt obligations (or, in the case of a depository institution or trust
company which is the principal subsidiary of a holding company, the commercial
paper or other short term debt or deposit obligations of such holding company or
depository institution, as the case may be) have been rated by each Rating
Agency in its highest short-term rating category, or (iii) a segregated trust
account or accounts (which shall be a "special deposit account") maintained with
the Trustee or any other federal or state chartered depository institution or
trust company, acting in its fiduciary capacity, in a manner acceptable to the
Trustee and the Rating Agencies. Eligible Accounts may bear interest.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America
or any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the United
States of America ("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository institution
or trust company (including U.S. subsidiaries of foreign depositories and
the Trustee or any agent of the Trustee, acting in its respective
commercial capacity) incorporated or organized under the laws of the United
States of America or any state thereof and subject to supervision and
examination by federal or state banking authorities, so long as at the time
of investment or the contractual commitment providing for such investment
the commercial paper or other short-term debt obligations of such
depository institution or trust company (or, in the case of a depository
institution or trust company which is the principal subsidiary of a holding
company, the commercial paper or other short-term debt or deposit
obligations of such holding company or deposit institution, as the case may
be) have been rated by each Rating Agency in its highest short-term rating
category or one of its two highest long-term rating categories;
(iii) repurchase agreements collateralized by Direct Obligations or
securities guaranteed by GNMA, FNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed
obligation rated by each Rating Agency in its highest short-term rating
category;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any state thereof which have a credit rating from each Rating Agency, at
the time of investment or the contractual commitment providing for such
investment, at least equal to one of the two highest long-term credit
rating categories of each Rating Agency; provided, however, that securities
issued by any particular corporation will not be Eligible Investments to
the extent that investment therein will cause the then outstanding
principal amount of securities issued by such corporation and held as part
of the Trust Fund to exceed 20% of the sum of the Aggregate Loan Balance
and the aggregate principal amount of all Eligible Investments in the
Certificate Account; provided, further, that such securities will not be
Eligible Investments if they are published as being under review with
negative implications from either Rating Agency;
(v) commercial paper (including both noninterest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof)
rated by each Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership interests
in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations
are backed by the full faith and credit of the United States of America)
held by a custodian in safekeeping on behalf of the holders of such
receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or investment,
(A) rated in the highest rating category by each Rating Agency or (B) that
would not adversely affect the then current rating by either Rating Agency
of any of the Certificates;
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
ERISA-Restricted Certificate: Any Subordinate Certificate.
Event of Default: An event described in Section 9.01 of the applicable Sale
and Servicing Agreement, which pursuant to such agreement is a default by the
Servicer and entitles the Trustee to terminate such Servicer.
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 Scheduled Distribution Date: December 25, 2027.
Financial Intermediary: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
Fitch: Fitch IBCA, Inc., or any successor in interest.
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.
GNMA: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Servicer, the
Trustee or any Affiliate thereof shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent has been obtained, except that, in determining whether the Trustee shall
be protected in relying upon any such consent, only Certificates which a
Responsible Officer of the Trustee knows to be so owned shall be disregarded.
The Trustee may request and conclusively rely on certifications by the Depositor
or the Servicer in determining whether any Certificates are registered to an
Affiliate of the Depositor or the Servicer.
HUD: The United States Department of Housing and Urban Development, or any
successor thereto.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
Individual Redemption Certificate: A Redemption Certificate with a $1,000
Certificate Principal Amount.
Initial LIBOR Rate: None.
Insurance Policy: Any Primary Mortgage Insurance Policy and any standard
hazard insurance policy, flood insurance policy, earthquake insurance policy or
title insurance policy relating to the Mortgage Loans or the Mortgaged
Properties, to be in effect as of the Closing Date or thereafter during the term
of this Agreement.
Insurance Proceeds: Amounts paid by the insurer under any Insurance Policy,
other than amounts to be applied to restoration or repair of the related
Mortgaged Property or required to be paid over to the Mortgagor pursuant to law
or the related Mortgage Note.
Interest Distribution Amount: Not applicable.
Interest Remittance Amount: With respect to any Distribution Date, the sum
of (i) all interest collected (other than Payaheads) or advanced in respect of
Scheduled Payments on the Mortgage Loans during the related Collection Period
(less (x) the Servicing Fee and (y) unreimbursed Advances and other amounts due
to the Servicer or the Trustee, to the extent allocable to interest), (ii) any
Compensating Interest Payment made by the Servicer with respect to the related
Prepayment Period, (iii) the portion of any Substitution Amount paid during the
related Prepayment Period allocable to interest and (iv) all Net Liquidation
Proceeds, Insurance Proceeds and other recoveries collected during the related
Prepayment Period, to the extent allocable to interest, as reduced in each case
by unreimbursed Advances and other amounts due the Servicer or the Trustee, to
the extent allocable to interest.
Intervening Assignments: The original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Maturity Date: December 25, 2029.
Lehman Capital: Lehman Capital, A Division of Lehman Brothers Holdings
Inc., or any successor in interest.
LIBOR: The per annum rate determined pursuant to Section 4.05 on the basis
of London interbank offered rate quotations for one-month Eurodollar deposits,
as such quotations may appear on the display designated as page "LIUS01M" on the
Bloomberg Financial Markets Commodities News (or such other page as may replace
such page on that service for the purpose of displaying London interbank offered
quotations of major banks).
LIBOR Certificate: None.
LIBOR Determination Date: The second London Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Servicer has determined that all amounts that it expects to recover on behalf of
the Trust Fund from or on account of such Mortgage Loan have been recovered.
Liquidation Proceeds: As defined in the applicable Sale and Servicing
Agreement.
Living Holder: Any Holder of a Redemption Certificate other than a Deceased
Holder.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the ratio of the
principal balance of such Mortgage Loan at origination, or such other date as is
specified, to the Original Value thereof.
London Business Day: Any day on which banks are open for dealing in foreign
currency and exchange in London, England and New York City.
Maintenance: With respect to any Cooperative Unit, the rent or fee paid by
the Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Material Defect: As defined in the applicable Sale and Servicing Agreement.
Moody's: Moody's Investors Service, Inc., or any successor in interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage File: The mortgage documents listed in Exhibit B to the applicable
Sale and Servicing Agreement pertaining to a particular Mortgage Loan required
to be delivered to the Trustee pursuant to this Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 or Section 2.05,
including without limitation, each Mortgage Loan listed on the Mortgage Loan
Schedule, as amended from time to time.
Mortgage Loan Negative Amortization: None.
Mortgage Loan Sale and Assignment Agreement: The agreement for the sale of
the Mortgage Loans by Lehman Capital to the Depositor and the assignment to the
Depositor of the rights of Lehman Capital under each Sale and Servicing
Agreement, between Lehman Capital, as seller and assignor, and the Depositor, as
purchaser and assignee.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
shall identify each Mortgage Loan, as such schedule may be amended from time to
time to reflect the addition of Mortgage Loans to, or the deletion of Mortgage
Loans from, the Trust Fund.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan.
Mortgaged Property: Either of (x) the fee simple interest in real property,
together with improvements thereto including any exterior improvements to be
completed within 120 days of disbursement of the related Mortgage Loan proceeds,
or (y) in the case of a Cooperative Loan, the related Cooperative Shares and
Proprietary Lease, securing the indebtedness of the Mortgagor under the related
Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan, the
related Liquidation Proceeds net of unreimbursed expenses incurred in connection
with liquidation or foreclosure, unpaid Servicing Fees and unreimbursed
Advances, if any, received and retained in connection with the liquidation of
such Mortgage Loan.
Net Mortgage Rate: With respect to any Mortgage Loan, the Mortgage Rate
thereof reduced by the Servicing Fee Rate.
Net Prepayment Interest Shortfall: With respect to any Distribution Date,
the excess, if any, of any Prepayment Interest Shortfalls for such date over the
aggregate of all Compensating Interest Payments made by the Servicer in respect
of such shortfalls.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Aggregate
Notional Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: None.
Notional Component: None.
Notional Component Amount: None.
Offering Document: Either of the Prospectus or the private placement
memorandum dated April 27, 1998 relating to the Class B-4, Class B-5, Class B-6
and Class R Certificates.
Officer's Certificate: A certificate signed by the Chairman of the Board,
any Vice Chairman, the President, any Vice President or any Assistant Vice
President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable in
form and substance to the Trustee, and who may be in-house or outside counsel to
the Depositor or the Servicer but which must be Independent outside counsel with
respect to any such opinion of counsel concerning the transfer of any Residual
Certificate or concerning certain matters with respect to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the taxation,
or the federal income tax status, of each REMIC.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor at
the time the related Mortgage Loan was originated.
PAC Amount: As to any Distribution Date and any Class of PAC Certificates
and any PAC Component, the amount designated as such for such Distribution Date
and such Class or Component as set forth in the Principal Amount Schedules.
PAC Certificate: None.
PAC Component: None.
Payahead: With respect to any Mortgage Loan and any Due Date therefor, any
Scheduled Payment received by the Servicer during any Collection Period in
addition to the Scheduled Payment due on such Due Date, intended by the related
Mortgagor to be applied on a subsequent Due Date.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than the Class R Certificate, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal Amount
(or, in the case of a Notional Certificate, the initial Notional Amount) thereof
divided by the initial Class Certificate Principal Amount (or, in the case of a
Notional Certificate, the initial Aggregate Notional Amount) of all Certificates
of the same Class. With respect to the Class R Certificate, the Percentage
Interest evidenced thereby shall be 100%.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Placement Agent: Lehman Brothers Inc.
Plan Asset Regulations: The Department of Labor regulations set forth in 29
C.F.R. 2510.3-101.
Pool Delinquency Rate: With respect to any Collection Period, the fraction,
expressed as a percentage, the numerator of which is the aggregate outstanding
principal balance of all Mortgage Loans 60 or more days delinquent (including
all foreclosures and REO Properties) as of the close of business on the last day
of such Collection Period, and the denominator of which is the Aggregate Loan
Balance as of the close of business on the last day of such Collection Period.
Premium Mortgage Loan: None.
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the difference between (i) one full
month's interest at the applicable Mortgage Rate (giving effect to any
applicable Relief Act Reduction), as reduced by the Servicing Fee Rate, on the
Scheduled Principal Balance of such Mortgage Loan immediately prior to such
prepayment and (ii) the amount of interest actually received with respect to
such Mortgage Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to any Distribution Date, the calendar
month preceding the month in which such Distribution Date occurs.
Primary Mortgage Insurance Policy: Mortgage guaranty insurance, if any, on
an individual Mortgage Loan, as evidenced by a policy or certificate.
Principal Amount Schedules: Any principal amount schedules attached hereto,
if applicable, as Schedule B, setting forth the PAC Amounts of any PAC
Certificates and PAC Components, the TAC Amounts of any TAC Certificates and TAC
Components, and the Scheduled Amounts of any Scheduled Certificates and
Scheduled Components.
Principal Distribution Amount: With respect to any Distribution Date, the
sum of (i) all principal collected (other than Payaheads) or advanced in respect
of Scheduled Payments on the Mortgage Loans during the related Collection Period
(less amounts due to the Servicer to the extent allocable to principal), (ii)
the outstanding principal balance of each Mortgage Loan that was purchased from
the Trust Fund during the related Prepayment Period, (iii) the portion of any
Substitution Amount paid during the related Prepayment Period allocable to
principal, and (iv) all Net Liquidation Proceeds, Insurance Proceeds and other
recoveries collected during the related Prepayment Period, to the extent
allocable to principal, as reduced in each case by unreimbursed Advances and
other amounts due to the Servicer, to the extent allocable to principal.
Principal Only Certificate: None.
Principal Prepayment: Any Mortgagor payment of principal or other recovery
of principal on a Mortgage Loan (other than a Payahead) that is recognized as
having been received or recovered in advance of its scheduled Due Date and
applied to reduce the principal balance of the Mortgage Loan in accordance with
the terms of the Mortgage Note or Accepted Servicing Practices.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated April 27, 1998, together with
the accompanying prospectus dated March 18, 1998, relating to the Class A, Class
B-1, Class B-2 and Class B-3 Certificates.
Purchase Price: With respect to the repurchase of a Mortgage Loan pursuant
to Article II of this Agreement, an amount equal to the sum of (a) 100% of the
unpaid principal balance of such Mortgage Loan and (b) accrued interest thereon
at the Mortgage Rate, from the date as to which interest was last paid to (but
not including) the Due Date immediately preceding the related Distribution Date.
The Servicer (and the Trustee, if applicable) shall be reimbursed from the
Purchase Price for any Advances made with respect to any Mortgage Loan or
related Mortgage Property that are reimbursable to the Servicer under the
applicable Sale and Servicing Agreement (or to the Trustee hereunder).
Qualified GIC: A guaranteed investment contract or surety bond providing
for the investment of funds in the Collection Account or the Certificate Account
and insuring a minimum, fixed or floating rate of return on investments of such
funds, which contract or surety bond shall:
(b) be an obligation of an insurance company or other corporation whose
long-term debt is rated by each Rating Agency in one of its two highest rating
categories or, if such insurance company has no long-term debt, whose claims
paying ability is rated by each Rating Agency in one of its two highest rating
categories, and whose short-term debt is rated by each Rating Agency in its
highest rating category;
(c) provide that the Trustee may exercise all of the rights under such
contract or surety bond without the necessity of taking any action by any other
Person;
(d) provide that if at any time the then current credit standing of the
obligor under such guaranteed investment contract is such that continued
investment pursuant to such contract of funds would result in a downgrading of
any rating of the Certificates, the Trustee shall terminate such contract
without penalty and be entitled to the return of all funds previously invested
thereunder, together with accrued interest thereon at the interest rate provided
under such contract to the date of delivery of such funds to the Trustee;
(e) provide that the Trustee's interest therein shall be transferable to
any successor trustee hereunder: and
(f) provide that the funds reinvested thereunder and accrued interest
thereon be returnable to the Collection Account or the Certificate Account, as
the case may be, not later than the Business Day prior to any Distribution Date.
Qualified Insurer: An insurance company duly qualified as such under the
laws of the states in which the related Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability is
rated by each Rating Agency in its highest rating category or whose selection as
an insurer will not adversely affect the rating of the Certificates.
Qualifying Substitute Mortgage Loan: A "Qualified Substitute Mortgage Loan"
as defined in the applicable Sale and Servicing Agreement. Whenever a Qualifying
Substitute Mortgage Loan is substituted for a Deleted Mortgage Loan pursuant to
this Agreement, the party effecting such substitution shall certify such
qualification in writing to the Trustee.
Rating Agency: Each of Fitch and S&P; provided, that with respect to the
Class B-4 and Class B-5 Certificates, S&P will be the sole Rating Agency.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
equal to (i) the unpaid principal balance of such Mortgage Loan as of the date
of liquidation, minus (ii) Liquidation Proceeds received, to the extent
allocable to principal, net of amounts that are reimbursable therefrom to the
Servicer with respect to such Mortgage Loan (other than Advances of principal),
including expenses of liquidation. In determining whether a Realized Loss is a
Realized Loss of principal, Liquidation Proceeds shall be allocated, first, to
payment of expenses related to such Liquidated Mortgage Loan, then to accrued
unpaid interest and finally to reduce the principal balance of the Mortgage
Loan.
Recognition Agreement: With respect to any Cooperative Loan, an agreement
between the related Cooperative Corporation and the originator of such Mortgage
Loan to establish the rights of such originator in the related Cooperative
Property.
Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month immediately preceding the month in which
such Distribution Date occurs.
Redemption Certificate: None.
Reference Banks: As defined in Section 4.05.
Relief Act Reduction: With respect to any Mortgage Loan as to which there
has been a reduction in the amount of interest collectible thereon as a result
of application of the Solders' and Sailors' Civil Relief Act of 1940, as
amended, any amount by which interest collectible on such Mortgage Loan for the
Due Date in the related Collection Period is less than interest accrued thereon
for the applicable one-month period at the Mortgage Rate without giving effect
to such reduction.
REMIC: Each pool of assets in the Trust Fund designated as a REMIC pursuant
to Section 10.01(a) hereof.
REMIC Provisions: The provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
86OG of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The day in each month on which the Servicer is required to
remit payments to the account maintained by the Trustee, which shall be the 18th
day of each month (or the immediately following Business Day, if such 18th day
is not a Business Day).
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Reserve Interest Rate: As defined in Section 4.05.
Residual Certificate: Any Class R Certificate.
Responsible Officer: When used with respect to the Trustee, any Vice
President, Assistant Vice President, the Secretary, any assistant secretary, the
Treasurer, or any assistant treasurer, working in its corporate trust
department, or any other officer of the Trustee to whom a matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Class B-4, Class B-5, Class B-6 or Class R
Certificate.
Rolling Three Month Delinquency Rate: With respect to any Distribution
Date, the fraction, expressed as a percentage, equal to the average of the Pool
Delinquency Rates for each of the three (or one and two, in the case of the
first and second Distribution Dates) immediately preceding Collection Periods.
Rounding Account: None.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor in interest.
Sale and Servicing Agreement: Each of the Amended and Restated Sale,
Warranties and Servicing Agreements between The Boston Company and Lehman
Capital, each dated as of April 1, 1998, attached hereto as Exhibit E-1 and
Exhibit E-2. For purposes of this Agreement, with respect to each Mortgage Loan
the "applicable Sale and Servicing Agreement" shall be the Sale and Servicing
Agreement pursuant to which such Mortgage Loan is serviced by the Servicer.
Scheduled Amount: As to any Distribution Date and any Class of Scheduled
Certificates and any Scheduled Component, the amount designated as such for such
Distribution Date and such Class or Component as set forth in the Principal
Amount Schedules.
Scheduled Certificate: None.
Scheduled Component: None.
Scheduled Payment: Each scheduled payment of principal and interest (or of
interest only, if applicable) to be paid by the Mortgagor on a Mortgage Loan,
and, in the case of an REO Property, an amount equivalent to the Scheduled
Payment that would have been due on the related Mortgage Loan if such Mortgage
Loan had remained in existence.
Scheduled Principal Balance: With respect to (i) any Mortgage Loan as of
any Distribution Date, the principal balance of such Mortgage Loan at the close
of business on the Cut-off Date, after giving effect to principal payments due
on or before the Cut-off Date, whether or not received, less an amount equal to
principal payments due after the Cut-off Date and on or before the Due Date in
the related Collection Period, whether or not received from the Mortgagor or
advanced by the Servicer, and all amounts allocable to unscheduled principal
payments (including Principal Prepayments, Liquidation Proceeds, Insurance
Proceeds and condemnation proceeds, in each case to the extent identified and
applied prior to or during the related Prepayment Period) and (ii) any REO
Property as of any Distribution Date, the Scheduled Principal Balance of the
related Mortgage Loan on the Due Date immediately preceding the date of
acquisition of such REO Property by or on behalf of the Trustee (reduced by any
amount applied as a reduction of principal on the Mortgage Loan).
Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note that defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Senior Certificate: Any Class A Certificate.
Senior Enhancement Percentage: With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the sum of the
aggregate Certificate Principal Amount of the Subordinate Certificates after
giving effect to distributions on such Distribution Date, and the denominator of
which is the Aggregate Loan Balance as of the last day of the related Collection
Period.
Servicer: The Boston Company, as servicer under each Sale and Servicing
Agreement, or any successor in interest.
Servicing Advance: As defined in the applicable Sale and Servicing
Agreement.
Servicing Fee: As defined in the applicable Sale and Servicing Agreement.
Servicing Fee Rate: 0.250% 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 by the Servicer to the Trustee, as such
list may be amended from time to time.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Stepdown Date: The later to occur of (x) the Distribution Date in May 2001
and (y) the first Distribution Date on which the Senior Enhancement Percentage
(calculated for this purpose after giving effect to payments or other recoveries
in respect of the Mortgage Loans during the related Collection Period but before
giving effect to distributions on the Certificates on such Distribution Date) is
greater than or equal to 6.50%.
Subordinate Certificate: Any Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 or Class B-6 Certificate.
Substitution Amount: The applicable amount described in clause (i) of the
definition of Qualified Substitute Mortgage Loan in the applicable Sale and
Servicing Agreement.
TAC Amount: As to any Distribution Date and any Class of TAC Certificates
and any TAC Component, the amount designated as such for such Distribution Date
and such Class or Component as set forth in the Principal Amount Schedules.
TAC Certificate: None.
TAC Component: None.
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions.
Termination Price: As defined in Section 7.01 hereof.
The Boston Company: Boston Safe Deposit and Trust Company, or any successor
in interest.
Title Insurance Policy: A title insurance policy maintained with respect to
a Mortgage Loan.
Total Distribution Amount: With respect to any Distribution Date, the sum
of the Interest Remittance Amount for such date and the Principal Distribution
Amount for such date.
Trigger Event: A Trigger Event will have occurred with respect to any
Distribution Date if the Rolling Three Month Delinquency Rate as of the last day
of the immediately preceding Collection Period equals or exceeds 50% of the
Senior Enhancement Percentage for such Distribution Date.
Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of the Mortgage Loans, the assignment of the Depositor's rights under
the Mortgage Loan Sale and Assignment Agreement, such amounts as shall from time
to time be held in the Certificate Account, the Insurance Policies, any REO
Property and the other items referred to in, and conveyed to the Trustee under,
Section 2.01(a).
Trustee: Norwest Bank Minnesota, National Association, or any successor in
interest, or if any successor trustee or any co-trustee shall be appointed as
herein provided, then such successor trustee and such co-trustee, as the case
may be.
Trustee Fee: None.
Trustee Fee Rate: None.
Voting Interests: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions of
this Agreement. Voting Interests shall be allocated among the Classes of
Certificates (and among the Certificates within each such Class) in proportion
to their Class Certificate Principal Amounts (or Certificate Principal Amounts).
Weighted Average Rate: With respect to any Distribution Date, the per annum
variable rate equal to the weighted average of the Net Mortgage Rates of the
Mortgage Loans as of the first day of the calendar month immediately preceding
such Distribution Date.
Section 1.02. Calculations Respecting Mortgage Loans. Calculations required
to be made pursuant to this Agreement with respect to any Mortgage Loan in the
Trust Fund shall be made based upon current information as to the terms of the
Mortgage Loans and reports of payments received from the Mortgagor on such
Mortgage Loans and payments to be made to the Trustee as supplied to the Trustee
by the Servicer. The Trustee shall not be required to recompute, verify or
recalculate the information supplied to it by the Servicer.
Section 1.03. Calculations Respecting Accrued Interest. Accrued interest,
if any, on any Certificate shall be calculated based upon a 360-day year
consisting of twelve 30-day months.
ARTICLE II.
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans. (a) Concurrently with the execution and delivery of this
Agreement, the Depositor does hereby transfer, assign, set over, deposit with
and otherwise convey to the Trustee, without recourse, in trust, all the right,
title and interest of the Depositor in and to the Mortgage Loans. Such
conveyance includes, without limitation, the right to all distributions of
principal and interest received on or with respect to the Mortgage Loans on and
after the Cut-off Date (other than payments of principal and interest due on or
before such date), and all such payments due after such date but received prior
to such date and intended by the related Mortgagors to be applied after such
date, together with all of the Depositor's right, title and interest in and to
the Certificate Account and all amounts from time to time credited to and the
proceeds of the Certificate Account, any REO Property and the proceeds thereof,
the Depositor's rights under any Insurance Policies related to the Mortgage
Loans, the Depositor's security interest in any collateral pledged to secure the
Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral, and any proceeds of the foregoing, to have and to hold, in trust;
and the Trustee declares that, subject to the review provided for in Section
2.02, it has received and shall hold the Trust Fund, as trustee, in trust, for
the benefit and use of the Holders of the Certificates and for the purposes and
subject to the terms and conditions set forth in this Agreement, and,
concurrently with such receipt, has caused to be executed, authenticated and
delivered to or upon the order of the Depositor, in exchange for the Trust Fund,
Certificates in the authorized denominations evidencing the entire ownership of
the Trust Fund.
Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby assign to the Trustee all of its rights and interest under
the Mortgage Loan Sale and Assignment Agreement, which include all of the
Depositor's rights and interests under each Sale and Servicing Agreement (but
which do not include the rights of Lehman Capital under Section 11.12 thereof),
and delegates its obligations under the Mortgage Loan Sale and Assignment
Agreement, which include the obligations of Lehman Capital under each Sale and
Servicing Agreement, (which rights and interests have been assigned and which
obligations have been delegated to the Depositor by Lehman Capital pursuant to
the Mortgage Loan Sale and Assignment Agreement) to the Trustee. The Trustee
hereby accepts such assignment and delegation, and shall be entitled to exercise
all such rights of the Depositor under the Mortgage Loan Sale and Assignment
Agreement and each Sale and Servicing Agreement as if, for such purpose, it were
the Depositor.
(b) In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, or cause to be delivered to and deposited
with, the Custodian, acting on behalf of the Trustee, the documents or
instruments with respect to each Mortgage Loan (each a "Mortgage File") so
transferred and assigned as are specified in the applicable Sale and Servicing
Agreement.
The parties hereto acknowledge and agree that the form of endorsement
attached hereto as Exhibit B-2 is intended to effect the transfer to the
Trustee, for the benefit of the Certificateholders, of the Mortgage Notes and
the Mortgages.
(c) Assignments of Mortgage shall be recorded; provided, however, that such
Assignments need not be recorded if, in the Opinion of Counsel (which must be
Independent counsel) acceptable to the Trustee and the Rating Agencies,
recording in such states is not required to protect the Trustee's interest in
the related Mortgage Loans. Subject to the preceding sentence, as soon as
practicable after the Closing Date, the Trustee shall cause the Custodian, at
the expense of the Depositor, to cause to be properly recorded in each public
recording office where the Mortgages are recorded each Assignment of Mortgage.
(d) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering
the above-referenced documents, herewith delivers or causes to be delivered to
the Trustee an Officer's Certificate which shall include a statement to the
effect that all amounts received in connection with such prepayment that are
required to be deposited in the Custodial Account maintained by the Servicer
pursuant to the applicable Sale and Servicing Agreement have been so deposited.
Section 2.02. Acceptance of Trust Fund by Trustee: Review of Documentation
for Trust Fund. (a) The Trustee, by execution and delivery hereof, acknowledges
receipt (by it or by the Custodian) of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to any defects or
exception noted in the Initial Certification (as defined below) and further
subject to the review thereof by the Custodian in its capacity as designee of
the Purchaser under each Sale and Servicing Agreement and to the Trustee's
review thereof as specified herein. The Custodian executed and delivered as of
April 30, 1998, an initial certification (the "Initial Certification")
certifying as to its receipt of the documents required to be delivered pursuant
to the applicable Sale and Servicing Agreement and identifying any defects in
such documents, and delivered such certification to the Depositor and to The
Boston Company. Pursuant to Section 2.03 of each Sale and Servicing Agreement,
The Boston Company is obligated to cure any Material Defect (as defined in the
applicable Sale and Servicing Agreement) identified in such Initial
Certification, or to repurchase the related Mortgage Loan or substitute another
mortgage loan therefor, within 60 days of receipt of such Initial Certification.
(b) Prior to the first anniversary of the Closing Date, the Trustee shall
deliver (or cause its custodian to deliver) to the Depositor a Final
Certification substantially in the form annexed hereto as Exhibit B-1 evidencing
the completeness of the Mortgage Files in its possession or control.
(c) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.
Section 2.03. Representations and Warranties of the Depositor. (a) The
Depositor hereby represents and warrants to the Trustee, as of the Closing Date
or such other date as is specified, that:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry on
its business as presently conducted, to enter into and perform its
obligations under this Agreement, and to create the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Depositor; neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on the Depositor or its
properties or the certificate of incorporation or bylaws of the Depositor;
(iii) the execution, delivery and performance by the Depositor of this
Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
state, federal or other governmental authority or agency, except such as
has been obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the
Trustee, constitutes a valid and binding obligation of the Depositor
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and insolvency
laws and other similar laws affecting the enforcement of the rights of
creditors generally and (B) general principles of equity regardless of
whether such enforcement is considered in a proceeding in equity or at law;
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened or likely to be asserted against or
affecting the Depositor, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the transactions
contemplated by this Agreement or (B) with respect to any other matter
which in the judgment of the Depositor will be determined adversely to the
Depositor and will if determined adversely to the Depositor materially and
adversely affect it or its business, assets, operations or condition,
financial or otherwise, or adversely affect its ability to perform its
obligations under this Agreement; and
(vi) immediately prior to the transfer and assignment of the Mortgage
Loans to the Trustee, the Depositor was the sole owner of record and holder
of each Mortgage Loan, and the Depositor had good and marketable title
thereto, and had full right to transfer and sell each Mortgage Loan to the
Trustee free and clear, subject only to (1) liens of current real property
taxes and assessments not yet due and payable and, if the related Mortgaged
Property is a condominium unit, any lien for common charges permitted by
statute, (2) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording of
such Mortgage acceptable to mortgage lending institutions in the area in
which the related Mortgaged Property is located and specifically referred
to in the lender's Title Insurance Policy or attorney's opinion of title
and abstract of title delivered to the originator of such Mortgage Loan,
and (3) such other matters to which like properties are commonly subject
which do not, individually or in the aggregate, materially interfere with
the benefits of the security intended to be provided by the Mortgage, of
any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest, and had 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 this Agreement.
(b) The representations and warranties of The Boston Company with respect
to the related Mortgage Loans in the applicable Sale and Servicing Agreement,
which have been assigned to the Trustee hereunder, were made as of the date
specified in the applicable Sale and Servicing Agreement. To the extent that any
fact, condition or event with respect to a Mortgage Loan constitutes a breach of
both (i) a representation or warranty of The Boston Company under the applicable
Sale and Servicing Agreement and (ii) a representation or warranty of Lehman
Capital under the Mortgage Loan Sale and Assignment Agreement, the only right or
remedy of the Trustee or of any Certificateholder shall be the Trustee's right
to enforce the obligations of The Boston Company under any applicable
representation or warranty made by it. The Trustee acknowledges that the
representations and warranties of Lehman Capital in Section 1.04(b) of the
Mortgage Loan Sale and Assignment Agreement are applicable only to facts or
conditions that arise or events that occur subsequent to the date as of which
the representation and warranties with respect to the related Mortgage Loans in
the Sale and Servicing Agreements were made, and which do not constitute a
breach of any representation or warranty made by The Boston Company in Section
3.02 of the applicable Sale and Servicing Agreement. The Trustee acknowledges
that Lehman Capital shall have no obligation or liability with respect to any
breach of a representation or warranty made by it with respect to the Mortgage
Loans if the fact, condition or event constituting such breach also constitutes
a breach of a representation or warranty made by The Boston Company in Section
3.02 of the applicable Sale and Servicing Agreement, without regard to whether
The Boston Company fulfills its contractual obligations in respect of such
representation or warranty. The Trustee further acknowledges that the Depositor
shall have no obligation or liability with respect to any breach of any
representation or warranty with respect to the Mortgage Loans (except as set
forth in Section 2.03(a)(vi)) under any circumstances.
Section 2.04. Discovery of Breach. It is understood and agreed that the
representations and warranties set forth in Section 2.03 and the representations
and warranties of The Boston Company and Lehman Capital assigned to the Trustee
hereunder survive delivery of the Mortgage Files and the Assignment of Mortgage
of each Mortgage Loan to the Trustee and shall continue throughout the term of
this Agreement. Upon discovery by either the Depositor or the Trustee of a
breach of any of the representations and warranties set forth in Section 2.03
that adversely and materially affects the value of the related Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
party. Within 90 days of the discovery of such a breach with respect to the
representations and warranties given to the Trustee by the Depositor or given by
Lehman Capital and assigned to the Trustee, the Depositor or Lehman Capital, as
applicable, shall either (a) cure such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect thereof from
the Trustee at the Purchase Price or (c) within the two year period following
the Closing Date, substitute a Qualifying Substitute Mortgage Loan for the
affected Mortgage Loan. In the event of discovery of a breach of any
representation and warranty of The Boston Company assigned to the Trustee, the
Trustee shall enforce its rights under the applicable Sale and Servicing
Agreement for the benefit of Certificateholders.
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans. (a)
With respect to any Mortgage Loan repurchased by the Depositor pursuant to this
Article II, by The Boston Company pursuant to either Sale and Servicing
Agreement or by Lehman Capital pursuant to the Mortgage Loan Sale and Assignment
Agreement, the principal portion of the funds received by the Trustee in respect
of such repurchase of a Mortgage Loan will be considered a Principal Prepayment
and shall be deposited in the Certificate Account. The Trustee, upon receipt of
the full amount of the applicable purchase price for a Deleted Mortgage Loan, or
upon receipt of the Mortgage File for a Qualifying Substitute Mortgage Loan
substituted for a Deleted Mortgage Loan (and any applicable Substitution
Amount), shall release or cause to be released and reassign to the Depositor,
The Boston Company or Lehman Capital, as applicable, the related Mortgage File
for the Deleted Mortgage Loan and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, representation or
warranty, as shall be necessary to vest in such party or its designee or
assignee title to any Deleted Mortgage Loan released pursuant hereto, free and
clear of all security interests, liens and other encumbrances created by this
Agreement, which instruments shall be prepared by the Trustee (or its custodian)
at the Depositor's expense, and the Trustee shall have no further responsibility
with respect to the Mortgage File relating to such Deleted Mortgage Loan.
(b) With respect to each Qualifying Substitute Mortgage Loan to be
delivered to the Trustee (or its custodian) pursuant to the terms of this
Article II in exchange for a Deleted Mortgage Loan: (i) the Depositor, The
Boston Company or Lehman Capital, as applicable, must deliver to the Trustee (or
its custodian) the Mortgage File for the Qualifying Substitute Mortgage Loan
containing the documents set forth in Section 2.01(b) along with a written
certification certifying as to the delivery of such Mortgage File and containing
the granting language set forth in Section 2.01(a); and (ii) the Depositor, The
Boston Company or Lehman Capital, as applicable, will be deemed to have made
with respect to such Qualified Substitute Mortgage Loan each of the
representations and warranties made by it with respect to the related Deleted
Mortgage Loan. As soon as practicable after the delivery of any Qualifying
Substitute Mortgage Loan hereunder, the Trustee shall cause the Assignment of
Mortgage with respect to such Qualifying Substitute Mortgage Loan to be recorded
if required pursuant to the first sentence of Section 2.01(c).
(c) Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Qualifying Substitute Mortgage
Loan for a Deleted Mortgage Loan shall be made unless the Trustee has received
an Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC Provisions.
Section 2.06. Converted Mortgage Loans. The Trustee acknowledges that,
pursuant to the applicable Sale and Servicing Agreement, the Servicer is
obligated to purchase any Converted Mortgage Loan from the Trust Fund or
substitute another mortgage loan therefor. In the event that the Servicer
defaults on its obligation to purchase any Converted Mortgage Loan from the
Trust Fund (or to substitute another mortgage loan), the Trustee will attempt to
sell such Converted Mortgage Loan, but only at a price at which the Trust Fund
would receive a net amount at least equal to the Repurchase Price specified in
the applicable Sale and Servicing Agreement. Until sold at such price, each
Converted Mortgage Loan will remain in the Trust Fund with the applicable fixed
Mortgage Rate.
Section 2.07. Grant Clause. It is intended that the conveyance of the
Depositor's right, title and interest in and to property constituting the Trust
Fund pursuant to this Agreement shall constitute, and shall be construed as, a
sale of such property and not grant of a security interest to secure a loan.
However, if such conveyance is deemed to be in respect of a loan, it is intended
that: (1) the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement; (2) the Depositor hereby grants to the
Trustee for the benefit of the Holders of the Certificates a first priority
security interest in all of the Depositor's right, title and interest in, to and
under, whether now owned or hereafter acquired, the Trust Fund and all proceeds
of any and all property constituting the Trust Fund to secure payment of the
Certificates; and (3) this Agreement shall constitute a security agreement under
applicable law. If such conveyance is deemed to be in respect of a loan and the
Trust created by this Agreement terminates prior to the satisfaction of the
claims of any Person holding any Certificate, the security interest created
hereby shall continue in full force and effect and the Trustee shall be deemed
to be the collateral agent for the benefit of such Person, and all proceeds
shall be distributed as herein provided.
ARTICLE III.
THE CERTIFICATES
Section 3.01. The Certificates. (a) The Certificates shall be issuable in
registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount or Notional Amount, as
applicable, or in the Percentage Interests, specified herein. Each Class of
Book-Entry Certificates will be issued in the minimum denominations in
Certificate Principal Amount specified in the Preliminary Statement hereto and
in integral multiples of $1 in excess thereof. Each Class of Non-Book Entry
Certificates other than the Residual Certificate will be issued in definitive,
fully registered form in the minimum denominations in Certificate Principal
Amount specified in the Preliminary Statement hereto and in integral multiples
of $1,000 in excess thereof. Each Residual Certificate will be issued as a
single Certificate and maintained in definitive, fully registered form in a
minimum denomination equal to 100% of the Percentage Interest of such Class. The
Certificates may be issued in the form of typewritten certificates. One
Certificate of each Class of Certificates other than the Residual Certificate
may be issued in any denomination in excess of the minimum denomination.
(b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee upon the order of the Depositor
upon receipt by the Trustee of the Mortgage Files described in Section 2.01. 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 an
authorized officer of the Trustee or the Authenticating Agent, if any, by manual
signature, and such certification 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. At any time and from time to time after the execution
and delivery of this Agreement, the Depositor may deliver Certificates executed
by the Depositor to the Trustee or the Authenticating Agent for authentication
and the Trustee or the Authenticating Agent shall authenticate and deliver such
Certificates as in this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and hereby
accepts its appointment as, Certificate Registrar in respect of the Certificates
and shall maintain books for the registration and for the transfer of
Certificates (the "Certificate Register"). The Trustee may appoint a bank or
trust company to act as Certificate Registrar. A registration book shall be
maintained for the Certificates collectively. The Certificate Registrar may
resign or be discharged or removed and a new successor may be appointed in
accordance with the procedures and requirements set forth in Sections 6.06 and
6.07 hereof with respect to the resignation, discharge or removal of the Trustee
and the appointment of a successor Trustee. The Certificate Registrar may
appoint, by a written instrument delivered to the Holders, any bank or trust
company to act as co-registrar under such conditions as the Certificate
Registrar may prescribe; provided, however, that the Certificate Registrar shall
not be relieved of any of its duties or responsibilities hereunder by reason of
such appointment.
Section 3.03. Transfer and Exchange of Certificates. (a) A Certificate
(other than Book-Entry Certificates which shall be subject to Section 3.09
hereof) may be transferred by the Holder thereof only upon presentation and
surrender of such Certificate at the office of the Certificate Registrar duly
endorsed or accompanied by an assignment duly executed by such Holder or his
duly authorized attorney in such form as shall be satisfactory to the
Certificate Registrar. Upon the transfer of any Certificate in accordance with
the preceding sentence, the Trustee shall execute, and the Trustee or any
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any registration of transfer of Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number of
new Certificates of the same Class, in authorized denominations, representing in
the aggregate the same Certificate Principal Amount as the Certificate
surrendered, upon surrender of the Certificate to be exchanged at the office of
the Certificate Registrar duly endorsed or accompanied by a written instrument
of transfer duly executed by such Holder or his duly authorized attorney in such
form as is satisfactory to the Certificate Registrar. Certificates delivered
upon any such exchange will evidence the same obligations, and will be entitled
to the same rights and privileges, as the Certificates surrendered. No service
charge shall be made to a Certificateholder for any exchange of Certificates,
but the Certificate Registrar may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
exchange of Certificates. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, and the Trustee or the Authenticating Agent
shall authenticate, date and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the Depositor or
the Placement Agent, an affiliate (as defined in Rule 144(a)(1) under the
1933 Act) of the Depositor or the Placement Agent or (y) being made to a
"qualified institutional buyer" as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act") by a transferor who has
provided the Trustee with a certificate in the form of Exhibit F hereto;
and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made to an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the Act
by a transferor who furnishes to the Trustee a letter of the transferee
substantially in the form of Exhibit G hereto.
(d) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Trustee has
received (A) a certificate substantially in the form of Exhibit H hereto from
such transferee or (B) an Opinion of Counsel satisfactory to the Trustee and the
Depositor to the effect that the purchase and holding of such a Certificate will
not constitute or result in the assets of the Trust Fund being deemed to be
"plan assets" subject to the prohibited transactions provisions of ERISA or
Section 4975 of the Code and will not subject the Trustee or the Depositor to
any obligation in addition to those undertaken in the Agreement; provided,
however, that the Trustee will not require such certificate or opinion in the
event that, as a result of a change of law or otherwise, counsel satisfactory to
the Trustee has rendered an opinion to the effect that the purchase and holding
of an ERISA-Restricted Certificate by a Plan or a Person that is purchasing or
holding such a Certificate with the assets of a Plan will not constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code. The
preparation and delivery of the certificate and opinions referred to above shall
not be an expense of the Trust Fund, the Trustee or the Depositor.
Notwithstanding the foregoing, no opinion or certificate shall be required for
the initial issuance of the ERISA-Restricted Certificates.
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of Certificate. (f)
Notwithstanding anything to the contrary contained herein, no Residual
Certificate may be owned, pledged or transferred, directly or indirectly, by or
to a Disqualified Organization.
Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit D-1 representing and warranting, among other things, that such
transferee is neither a Disqualified Organization nor an agent or nominee acting
on behalf of a Disqualified Organization (any such transferee, a "Permitted
Transferee"), and the proposed transferor shall deliver to the Trustee an
affidavit in substantially the form attached hereto as Exhibit D-2. In addition,
the Trustee may (but shall have no obligation to) require, prior to and as a
condition of any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, addressed to the Depositor and the Trustee satisfactory in
form and substance to the Depositor, that such proposed transferee or, if the
proposed transferee is an agent or nominee, the proposed beneficial owner, is
not a Disqualified Organization. Notwithstanding the registration in the
Certificate Register of any transfer, sale, or other disposition of a Residual
Certificate to a Disqualified Organization or an agent or nominee acting on
behalf of a Disqualified Organization, such registration shall be deemed to be
of no legal force or effect whatsoever and such Disqualified Organization (or
such agent or nominee) shall not be deemed to be a Certificateholder for any
purpose hereunder, including, but not limited to, the receipt of distributions
on such Residual Certificate. The Trustee shall not be under any liability to
any person for any registration or transfer of a Residual Certificate to a
Disqualified Organization or for the maturity of any payments due on such
Residual Certificate to the Holder thereof or for taking any other action with
respect to such Holder under the provisions of the Agreement, so long as the
transfer was effected in accordance with this Section 3.03(f), unless the
Trustee shall have actual knowledge at the time of such transfer or the time of
such payment or other action that the transferee is a Disqualified Organization
(or an agent or nominee thereof). The Trustee shall be entitled to recover from
any Holder of a Residual Certificate that was a Disqualified Organization (or an
agent or nominee thereof) at the time it became a Holder or any subsequent time
it became a Disqualified Organization all payments made on such Residual
Certificate at and after either such times (and all costs and expenses,
including but not limited to attorneys' fees, incurred in connection therewith).
Any payment (not including any such costs and expenses) so recovered by the
Trustee shall be paid and delivered to the last preceding Holder of such
Residual Certificate.
If any purported transferee shall become a registered Holder of a Residual
Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Residual Certificate was not in fact permitted by this Section 3.03(f), the
last preceding Permitted Transferee shall be restored to all rights as Holder
thereof retroactive to the date of such registration of transfer of such
Residual Certificate. The Trustee shall be under no liability to any Person for
any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 3.03(f), for making any payment due on such
Certificate to the registered Holder thereof or for taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered upon receipt of the affidavit described in the preceding
paragraph of this Section 3.03(f).
(g) Each Holder of a Residual Certificate, by such Holder's acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this section.
Section 3.04. Cancellation of Certificates. Any Certificate surrendered for
registration of transfer or exchange shall be cancelled and retained in
accordance with normal retention policies with respect to cancelled certificates
maintained by the Trustee or the Certificate Registrar.
Section 3.05. Replacement of Certificates. If (i) any Certificate is
mutilated and is surrendered to the Trustee or any Authenticating Agent or (ii)
the Trustee or any Authenticating Agent receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and there is delivered to the
Trustee or the Authenticating Agent such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Depositor and any Authenticating Agent that such destroyed, lost or
stolen Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Certificate Principal
Amount. Upon the issuance of any new Certificate under this Section 3.05, the
Trustee and Authenticating Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
or the Authenticating Agent) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of Section
3.09 with respect to Book-Entry Certificates, the Depositor, the Trustee, the
Certificate Registrar and any agent of any of them may treat the Person in whose
name any Certificate is registered upon the books of the Certificate Registrar
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Sections 5.01 and 5.02 and for all other purposes whatsoever, and
neither the Depositor, the Trustee, the Certificate Registrar nor any agent of
any of them shall be affected by notice to the contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in exchange
therefor a like aggregate Certificate Principal Amount of definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Certificates of the same Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a Paying
Agent (which may be the Trustee) for the purpose of making distributions to
Certificateholders hereunder. The Trustee shall cause such Paying Agent to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in an Eligible Account in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
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 The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Depositor, the Paying Agent, the Registrar and the Trustee
may deal with the Clearing Agency for all purposes (including the making of
distributions on the Book-Entry Certificates) as the authorized
representatives of the Certificate Owners and the Clearing Agency shall be
responsible for crediting the amount of such distributions to the accounts
of such Persons entitled thereto, in accordance with the Clearing Agency's
normal procedures;
(iii) to the extent that the provisions of this Section 3.09 conflict
with any other provisions of this Agreement, the provisions of this Section
3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Unless and until Definitive Certificates are issued pursuant to Section
3.09(c), the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit distributions of
principal of and interest on the Book-Entry Certificates to such Clearing
Agency Participants.
(v) the Trustee shall not be required to monitor, determine or inquire
as to compliance with any transfer restrictions with respect to the
Book-Entry Certificates, and the Trustee shall have no liability for
transfers of Book-Entry Certificates made through the book-entry facilities
of the Clearing Agency, made in violation of applicable transfer
restriction.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Certificate Principal
Amount of a Class of Book-Entry Certificates identified as such to the Trustee
by an Officer's Certificate from the Clearing Agency advise the Trustee and the
Clearing Agency through the Clearing Agency Participants in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Certificate Owners of a Class of Book-Entry
Certificates, the Trustee shall notify or cause the Certificate Registrar to
notify the Clearing Agency to effect notification to all Certificate Owners,
through the Clearing Agency, 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
Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Trustee shall issue 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 the Definitive Certificates as Certificateholders
hereunder.
ARTICLE IV.
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Omitted].
Section 4.02. [Omitted].
Section 4.03. Reports to Certificateholders. (a) On each Distribution Date,
the Trustee shall deliver or cause to be delivered by first class mail to each
Certificateholder a written report setting forth the following information,
which information the Trustee will determine on the basis of, with respect to
the Mortgage Loans, data which the Servicer will provide to the Trustee or its
designee prior to the Remittance Date:
(i) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates (and in
respect of any Component), to the extent applicable, allocable to principal
on the Mortgage Loans, including Liquidation Proceeds and Insurance
Proceeds, stating separately the amount attributable to scheduled principal
payments and unscheduled payments in the nature of principal;
(ii) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates (other than
any Class of Principal Only Certificates) allocable to interest;
(iii) the amount, if any, of any distribution to the Holder of each
Class of Residual Certificates;
(iv) the aggregate amount of any Advances made by or on behalf of the
Servicer (or the Trustee) included in the amounts actually distributed to
the Certificateholders;
(v) the Aggregate Loan Balance of the Mortgage Loans as of the close
of business on the last day of the related Collection Period, after giving
effect to payments allocated to principal reported under clause (i) above;
(vi) the Class Certificate Principal Amount (or Aggregate Notional
Amount) of each Class of Certificates, to the extent applicable, as of such
Distribution Date after giving effect to payments allocated to principal
reported under clause (i) above (and to the addition of any Accrual Amount
in the case of any Class of Accrual Certificates), separately identifying
any reduction of any of the foregoing Certificate Principal Amounts due to
Realized Losses:
(vii) any Realized Losses realized with respect to the Mortgage Loans
(x) in the applicable Prepayment Period and (y) in the aggregate since the
Cut-off Date;
(viii) the amount of the Servicing Fees paid during the Due Period to
which such distribution relates;
(ix) the number and aggregate Scheduled Principal Balance of Mortgage
Loans, as reported to the Trustee by the Servicer, (a) remaining
outstanding (b) delinquent one month, (c) delinquent two months, (d)
delinquent three or more months, and (e) as to which foreclosure
proceedings have been commenced as of the close of business on the last
Business Day of the calendar month immediately preceding the month in which
such Distribution Date occurs;
(x) (x) the deemed principal balance of each REO Property as of the
close of business on the last Business Day of the calendar month
immediately preceding the month in which such Distribution Date occurs;
(xi) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the principal balance of such Mortgage
Loan and the number of such Mortgage Loans as of the close of business on
the Distribution Date in such preceding month;
(xii) with respect to substitution of Mortgage Loans in the preceding
calendar month, the Scheduled Principal Balance of each Deleted Mortgage
Loan, and of each Qualifying Substitute Mortgage Loan;
(xiii) the aggregate outstanding Carryforward Interest and Net
Prepayment Interest Shortfalls, if any, for each Class of Certificates,
after giving effect to the distribution made on such Distribution Date;
(xiv) the Certificate Interest Rate applicable to such Distribution
Date with respect to each Class of Certificates;
(xv) if applicable, the amount of any shortfall (i.e., the difference
between the aggregate amounts of principal and interest which
Certificateholders would have received if there were sufficient available
amounts in the Certificate Account and the amounts actually distributed);
and
(xvi) any other "loan-level" information for any Mortgage Loans that
are delinquent three or more months and any REO Property held by the Trust
that is reported by the Servicer to the Trustee.
In the case of information furnished pursuant to subclauses (i), (ii) and
(viii) above, the amounts shall be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.
In preparing or furnishing the foregoing information, the Trustee shall be
entitled to rely conclusively on the accuracy of the information or data
regarding the Mortgage Loans and the related REO Property that has been provided
to it by the Servicer, and the Trustee shall not be obligated to verify,
recompute, reconcile or recalculate any such information or data.
On each Distribution Date, the Trustee shall also deliver or cause to be
delivered by first class mail to the Depositor a copy of the above-described
written report, to the following address: Mortgage Finance Group, Lehman
Brothers Inc., Three World Financial Center, 200 Vesey Street, New York, New
York, 10285, Attention: Stanley Labanowski, or to such other address as the
Depositor may designate.
(b) Upon the reasonable advance written request of any Certificateholder
that is a savings and loan, bank or insurance company, the Trustee shall, to the
extent that such information has been provided to the Trustee by the Servicer,
provide, or cause to be provided, to such Certificateholder such reports and
access to information and documentation regarding the Mortgage Loans as such
Certificateholder may reasonably deem necessary to comply with applicable
regulations of the Office of Thrift Supervision or its successor or other
regulatory authorities with respect to investment in the Certificates; provided,
however, that the Trustee shall be entitled to be reimbursed by such
Certificateholder for such Trustee's actual expenses incurred in providing such
reports and access.
(c) Within 90 days, or such shorter period as may be required by statute or
regulation, after the end of each calendar year, the Trustee shall send to each
Person who at any time during the calendar year was a Certificateholder of
record, and make available to Certificate Owners (identified as such by the
Clearing Agency) in accordance with applicable regulations, a report summarizing
the items provided to Certificateholders pursuant to Section 4.03(a) on an
annual basis as may be required to enable such Holders to prepare their federal
income tax returns. Such information shall include the amount of original issue
discount accrued on each Class of Certificates and information regarding the
expenses of the Trust Fund.
(d) Not later than two days following each Distribution Date, the Trustee
shall deliver to the Persons designated by the Depositor, in the format provided
by the Servicer, "loan level" information with respect to the Mortgage Loans as
of the related Determination Date, to the extent that such information has been
provided in electronic format to the Trustee by the Servicer.
Section 4.04. Certificate Account. (a) The Trustee shall establish and
maintain in its name, as trustee, a special deposit trust account (the
"Certificate Account"), to be held in trust for the benefit of the
Certificateholders until disbursed pursuant to the terms of this Agreement. The
Certificate Account shall be an Eligible Account. If the existing Certificate
Account ceases to be an Eligible Account, the Trustee shall establish a new
Certificate Account that is an Eligible Account within 20 Business Days and
transfer all funds on deposit in such existing Certificate Account into such new
Certificate Account. The Certificate Account shall relate solely to the
Certificates issued hereunder and funds in the Certificate Account shall be held
separate and apart from and shall not be commingled with any other monies
including, without limitation, other monies of the Trustee held under this
Agreement.
(b) The Trustee shall cause to be deposited into the Certificate Account on
the day on which, or, if such day is not a Business Day, the Business Day
immediately following the day on which, any monies are remitted by the Servicer
to the Trustee, all such amounts. The Trustee shall make withdrawals from the
Certificate Account only for the following purposes:
(i) to withdraw amounts deposited in the Certificate Account in error;
(ii) to pay itself any investment income earned with respect to funds
in the Certificate Account invested in Eligible Investments as set forth in
subsection (c) below, and to make payment to itself and others pursuant to
any provision of this Agreement;
(iii) to make distributions to the Certificateholders pursuant to
Article V; and
(iv) to clear and terminate the Certificate Account pursuant to
Section 7.02.
(c) The Trustee may invest, or cause to be invested, funds held in the
Certificate Account, which funds, if invested, must be invested in Eligible
Investments (which may be obligations of the Trustee). All such investments must
mature no later than the next Distribution Date, and shall not be sold or
disposed of prior to their maturity. All such Eligible Investments will be made
in the name of the Trustee (in its capacity as such) or its nominee. All income
and gain realized from any such investment shall be compensation for the Trustee
and shall be subject to its withdrawal on order from time to time. The amount of
any losses incurred in respect of any such investments shall be paid by the
Trustee for deposit in the Certificate Account out of its own funds, without any
right of reimbursement therefor, immediately as realized.
Section 4.05. Determination of LIBOR. (a) If the outstanding Certificates
include any LIBOR Certificates, then on each LIBOR Determination Date the
Trustee shall determine LIBOR on the basis of the offered LIBOR quotations of
the Reference Banks as of 11:00 a.m. London time on such LIBOR Determination
Date as follows:
(i) If on any LIBOR Determination Date two or more of the Reference
Banks provide such offered quotations, LIBOR for the next Accrual Period
will be the arithmetic mean of such offered quotations (rounding such
arithmetic mean if necessary to the nearest five decimal places);
(ii) If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Accrual Period will be whichever is the higher of (x) LIBOR as determined
on the previous LIBOR Determination Date or (y) the Reserve Interest Rate.
The "Reserve Interest Rate" will be either (A) the rate per annum which the
Trustee determines to be the arithmetic mean (rounding such arithmetic mean
if necessary to the nearest five decimal places) of the one-month
Eurodollar lending rates that New York City banks selected by the Trustee
are quoting, on the relevant LIBOR Determination Date, to the principal
London offices of at least two leading banks in the London interbank market
or (B) in the event that the Trustee can determine no such arithmetic mean,
the lowest one-month Eurodollar lending rate that the New York City banks
selected by the Trustee are quoting on such LIBOR Determination Date to
leading European banks; and
(iii) If on any LIBOR Determination Date the Trustee is required but
is unable to determine the Reserve Interest Rate in the manner provided in
paragraph (ii) above, LIBOR for the next Accrual Period will be LIBOR as
determined on the previous LIBOR Determination Date, or, in the case of the
first LIBOR Determination Date, the Initial LIBOR Rate.
(b) The establishment of LIBOR by the Trustee and the Trustee's subsequent
calculation of the Certificate Interest Rate or Rates applicable to the LIBOR
Certificates for the relevant Accrual Period, in the absence of manifest error,
will be final and binding. In all cases, the Trustee may conclusively rely on
quotations of LIBOR for the Reference Banks as such quotations appear on the
display designated "LIUS01M" on the Bloomberg Financial Markets Commodities
News.
(c) As used herein, "Reference Banks" shall mean four leading banks engaged
in transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London, England, (ii) whose
quotations appear on the "Bloomberg Screen LIUS01M Index Page" (as described in
the definition of LIBOR) on the applicable LIBOR Determination Date and (iii)
which have been designated as such by the Trustee and are able and willing to
provide such quotations to the Trustee on each LIBOR Determination Date. The
Reference Banks initially shall be: Barclay's plc, Bank of Tokyo, National
Westminster Bank and Trust Company and Bankers Trust Company. If any of the
initial Reference Banks should be removed from the Bloomberg Screen LIUS01M
Index Page or in any other way fail to meet the qualifications of a Reference
Bank, the Trustee shall use its best efforts to designate alternate Reference
Banks.
ARTICLE V.
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
respecting the final distribution on the Certificates, on each Distribution Date
the Trustee or the Paying Agent shall make distributions in accordance with this
Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date by any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, by wire transfer in
immediately available funds to an account specified in the request and at the
expense of such Certificateholder; provided, however, that the final
distribution in respect of any Certificate shall be made only upon presentation
and surrender of such Certificate at the Corporate Trust Office. Wire transfers
will be made at the expense of the Holder requesting such wire transfer by
deducting a wire transfer fee from the related distribution. Notwithstanding
such final payment of principal of any of the Certificates, the Residual
Certificates will remain outstanding until the termination of each REMIC and the
payment in full of all other amounts due with respect to the Residual
Certificates and at such time such final payment in retirement of any Residual
Certificates will be made only upon presentation and surrender of such
Certificate at the Corporate Trust Office of the Trustee or at the office of the
New York Presenting Agent. If any payment required to be made on the
Certificates is to be made on a day that is not a Business Day, then such
payment will be made on the next succeeding Business Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Class Certificate Principal Amounts (or initial
Notional Amounts).
Section 5.02. Distributions from the Certificate Account. (a) On each
Distribution Date the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Total Distribution Amount and
shall distribute such amount to the Holders of record of each Class of
Certificates as specified in this Section.
(b) On each Distribution Date, the Trustee shall distribute the Interest
Remittance Amount for such date in the following order of priority:
(i) to the Class A Certificates Current Interest for such Class and
such Distribution Date and any Carryforward Interest for such Class and
such date;
(ii) to the Class B-1 Certificates, Current Interest for such Class
and such Distribution Date and any Carryforward Interest for such Class and
such date;
(iii) to the Class B-2 Certificates, Current Interest for such Class
and such Distribution Date and any Carryforward Interest for such Class and
such date;
(iv) to the Class B-3 Certificates, Current Interest for such Class
and such Distribution Date and any Carryforward Interest for such Class and
such date;
(v) to the Class B-4 Certificates, Current Interest for such Class and
such Distribution Date and any Carryforward Interest for such Class and
such date;
(vi) to the Class B-5 Certificates, Current Interest for such Class
and such Distribution Date and any Carryforward Interest for such Class and
such date; and
(vii) to the Class B-6 Certificates, Current Interest for such Class
and such Distribution Date and any Carryforward Interest for such Class and
such date.
(c) On each Distribution Date, the Trustee shall distribute the Principal
Distribution Amount for such date as follows:
(i) On each Distribution Date (x) prior to the Stepdown Date or (y)
with respect to which a Trigger Event has occurred, the Trustee shall
distribute the Principal Distribution Amount for such date in the following
order of priority:
A. to the Class A Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero;
B. to the Class B-1 Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero;
C. to the Class B-2 Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero;
D. to the Class B-3 Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero;
E. to the Class B-4 Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero;
F. to the Class B-5 Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero; and
G. to the Class B-6 Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero.
(ii) On each Distribution Date (x) on or after the Stepdown Date and
(y) with respect to which a Trigger Event has not occurred, the Trustee
shall distribute the Principal Distribution Amount for such date in the
following order of priority:
A. to the Class A Certificates, an amount equal to the lesser of
(A) the Principal Distribution Amount for such Distribution Date and
(B) the Class A Principal Distribution Amount for such date, until the
Class Certificate Principal Amount of such Class has been reduced to
zero;
B. to the Class B-1 Certificates, an amount equal to the lesser
of (A) the excess of (I) the Principal Distribution Amount for such
Distribution Date over (II) the amount distributed to the Class A
Certificates on such date pursuant to clause (1) above and (B) the
Class B-1 Principal Distribution Amount for such date, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
C. to the Class B-2 Certificates, an amount equal to the lesser
of (A) the excess of (I) the Principal Distribution Amount for such
Distribution Date over (II) the amount distributed to the Class A and
Class B-1 Certificates on such date pursuant to clauses (1) and (2)
above and (B) the Class B-2 Principal Distribution Amount for such
date, until the Class Certificate Principal Amount of such Class has
been reduced to zero;
D. to the Class B-3 Certificates, an amount equal to the lesser
of (A) the excess of (1) the Principal Distribution Amount for such
Distribution Date over (II) the amount distributed to the Class A,
Class B-1 and Class B-2 Certificates on such date pursuant to clauses
(1) through (3) above and (B) the Class B-3 Principal Distribution
Amount for such date, until the Class Certificate Principal Amount of
such Class has been reduced to zero; and
E. to the Class B-4 Certificates, an amount equal to the lesser
of (A) the excess of (1) the Principal Distribution Amount for such
Distribution Date over (II) the amount distributed to the Class A,
Class B-1, Class B-2 and Class B-3 Certificates on such date pursuant
to clauses (1) through (4) above and (B) the Class B-4 Principal
Distribution Amount for such date, until the Class Certificate
Principal Amount of such Class has been reduced to zero; and
F. to the Class B-5 Certificates, an amount equal to the lesser
of (A) the excess of (1) the Principal Distribution Amount for such
Distribution Date over (II) the amount distributed to the Class A,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates on such
date pursuant to clauses (1) through (5) above and (B) the Class B-5
Principal Distribution Amount for such date, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
and
G. to the Class B-6 Certificates, an amount equal to the lesser
of (A) the excess of (1) the Principal Distribution Amount for such
Distribution Date over (II) the amount distributed to the Class A,
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates
on such date pursuant to clauses (1) through (6) above and (B) the
Class B-6 Principal Distribution Amount for such date, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
and
Notwithstanding the foregoing, on any Distribution Date on which the Class
Certificate Principal Amount of each Class of Certificates having a higher
priority of distribution has been reduced to zero, any remaining Principal
Distribution Amount will be distributed to the remaining Classes of Class
A, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates, in the order of priority set forth above, until the Class
Certificate Principal Amount of each such Class has been reduced to zero.
(d) On each Distribution Date, the Trustee shall distribute to the Holder
of the Class R Certificate any remaining Total Distribution Amount for such
Distribution Date after application of all amounts described in paragraphs (b)
and (c) of this Section 5.02. Any distributions pursuant to this paragraph (d)
shall not reduce the Class Certificate Principal Amount of the Class R
Certificate.
Section 5.03. Allocation of Losses. On each Distribution Date, the Class
Certificate Principal Amount of each Class of Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6 Certificates will be reduced by the amount of
any Applied Loss Amount for such date, in the following order of priority:
(i) to the Class B-6 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero;
(ii) to the Class B-5 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero;
(iii) to the Class B-4 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero;
(iv) to the Class B-3 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero;
(v) to the Class B-2 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero; and
(vi) to the Class B-1 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero.
Section 5.04. Trustee Advances. In the event that the Servicer fails for
any reason to make an Advance required to be made by it pursuant to the
applicable Sale and Servicing Agreement on or before the Remittance Date, the
Trustee shall, on or before the related Distribution Date, deposit in the
Certificate Account an amount equal to the excess of (a) Advances required to be
made by the Servicer that would have been deposited in such Certificate Account
over (b) the amount of any Advance made by the Servicer with respect to such
Distribution Date; provided, however, that the Trustee shall be required to make
such Advance only if it is not prohibited by law from doing so and it has
determined that such Advance would be recoverable from amounts to be received
with respect to such Mortgage Loan, including Liquidation Proceeds, Insurance
Proceeds, or otherwise. The Trustee shall be entitled to be reimbursed from the
Certificate Account for Advances made by it pursuant to this Section 5.04 as if
it were the Servicer.
Section 5.05. Distributions of Principal on Redemption Certificates. (a)
Except as provided in subclauses (d) and (f) below, on each Distribution Date on
which distributions in reduction of the Class Certificate Principal Amount of a
Class of Redemption Certificates are made, such distributions will be made in
the following order of priority:
(i) any request by the personal representative of a Deceased Holder or
by a surviving tenant by the entirety, by a surviving joint tenant or by a
surviving tenant in common or other Person empowered to act on behalf of
such Deceased Holder upon his or her death, in an amount up to but not
exceeding $100,000 per request; and
(ii) any request by a Living Holder, in an amount up to but not
exceeding $10,000 per request.
Thereafter, distributions will be made as provided in clauses (i) and (ii)
above up to a second $100,000 and $10,000 per request, respectively. This
sequence of priorities will be repeated for each request for principal
distributions made by the Certificate Owners of a Class of Redemption
Certificates until all such requests have been honored.
Requests for distributions in reduction of the Certificate Principal
Amounts of Redemption Certificates presented on behalf of Deceased Holders in
accordance with the provisions of clause (i) above will be accepted in the order
of their receipt by the Clearing Agency. Requests for distributions in reduction
of the Certificate Principal Amounts of Redemption Certificates presented in
accordance with the provisions of clause (ii) above will be accepted in the
order of priority established by the random lot procedures of the Clearing
Agency after all requests with respect to such Class presented in accordance
with clause (i) have been honored. All requests for distributions in reduction
of the Class Certificate Principal Amount of a Class of Redemption Certificates
with respect to any Distribution Date shall be made in accordance with Section
4.03(c) below and must be received by the Clearing Agency and forwarded to, and
received by, the Trustee no later than the close of business on the related
Record Date. Requests for distributions that are received by the Clearing Agency
and forwarded to the Trustee after the related Record Date and requests, in
either case, for distributions timely received but not accepted with respect to
any Distribution Date, will be treated as requests for distributions in
reduction of the Class Certificate Principal Amount of the applicable Class of
Redemption Certificates on the next succeeding Distribution Date, and each
succeeding Distribution Date thereafter, until each such request is accepted or
is withdrawn as provided in Section 5.05(c). Such requests as are not so
withdrawn shall retain their order of priority without the need for any further
action on the part of the appropriate Certificate Owner of the related
Redemption Certificate, all in accordance with the procedures of the Clearing
Agency and the Trustee. Upon the transfer of beneficial ownership of any
Redemption Certificate, any distribution request previously submitted with
respect to such Certificate will be deemed to have been withdrawn only upon the
receipt by the Trustee of notification of such withdrawal using a form required
by the Clearing Agency.
Distributions in reduction of the Certificate Principal Amounts of
Redemption Certificates will be applied, in the aggregate, to such Certificates
in an amount equal to the portion of the Principal Distribution Amount
distributable to the Redemption Certificates pursuant to Section 5.02(c), plus
any amounts available for distribution from the applicable Rounding Account
pursuant to Section 5.05(e), provided that the aggregate distribution in
reduction of the Class Certificate Principal Amount of any Class of Redemption
Certificates on any Distribution Date is made in an integral multiple of $1,000.
(b) A "Deceased Holder" is a Certificate Owner of a Redemption Certificate
who was living at the time such interest was acquired and whose authorized
personal representative, surviving tenant by the entirety, surviving joint
tenant or surviving tenant in common or other Person empowered to act on behalf
of such Certificate Owner upon his or her death, causes to be furnished to the
Trustee a certified copy of the death certificate of such Certificate Owner and
any additional evidence of death required by and satisfactory to the Trustee and
any tax waivers requested by the Trustee. Redemption Certificates beneficially
owned by tenants by the entirety, joint tenants or tenants in common will be
considered to be beneficially owned by a single owner. The death of a tenant by
the entirety, joint tenant or tenant in common will be deemed to be the death of
the Certificate Owner, and any Redemption Certificates so beneficially owned
will be eligible for priority with respect to distributions in reduction of the
Class Certificate Principal Amount of such Class of Redemption Certificates,
subject to the limitations stated above. Redemption Certificates beneficially
owned by a trust will be considered to be beneficially owned by each beneficiary
of the trust to the extent of such beneficiary's beneficial interest therein,
but in no event will a trust's beneficiaries collectively be deemed to be
Certificate Owners of a number of Individual Redemption Certificates greater
than the number of Individual Redemption Certificates of which such trust is the
beneficial owner. The death of a beneficiary of a trust will be deemed to be the
death of a Certificate Owner of the Redemption Certificates beneficially owned
by the trust to the extent of such beneficiary's beneficial interest in such
trust. The death of an individual who was a tenant by the entirety, joint tenant
or tenant in common in a tenancy that is the beneficiary of a trust will be
deemed to be the death of the beneficiary of the trust. The death of a person
who, during his or her lifetime, was entitled to substantially all of the
beneficial ownership interests in Redemption Certificates will be deemed to be
the death of the Certificate Owner of such Redemption Certificates regardless of
the registration of ownership of such Redemption Certificates, if such
beneficial interest can be established to the satisfaction of the Trustee. Such
beneficial interest will be deemed to exist in typical cases of street name or
nominee ownership, ownership by a trustee, ownership under the Uniform Gifts to
Minors Act and community property or other joint ownership arrangements between
a husband and wife. Beneficial interests shall include the power to sell,
transfer or otherwise dispose of a Redemption Certificate and the right to
receive the proceeds therefrom, as well as interest and distributions in
reduction of the Certificate Principal Amounts of the Redemption Certificates
payable with respect thereto. The Trustee shall not be under any duty to
determine independently the occurrence of the death of any deceased Certificate
Owner. The Trustee may rely entirely upon documentation delivered to it pursuant
to Section 5.05(a) in establishing the eligibility of any Certificate Owner to
receive the priority accorded Deceased Holders in Section 5.05(a).
(c) Requests for distributions in reduction of the Certificate Principal
Amount of a Redemption Certificate must be made by delivering a written request
therefor to the Clearing Agency Participant or Financial Intermediary that
maintains the account evidencing the Certificate Owner's interest in such
Redemption Certificate. Such Clearing Agency Participant or Financial
Intermediary should in turn make the request of the Clearing Agency (or, in the
case of an Financial Intermediary, such Financial Intermediary should notify the
related Clearing Agency Participant of such request, which Clearing Agency
Participant should make the request of the Clearing Agency) on a form required
by the Clearing Agency and provided to the Clearing Agency Participant. Upon
receipt of such request, the Clearing Agency will date and time stamp such
request and forward such request to the Trustee. The Clearing Agency may
establish such procedures as it deems fair and equitable to establish the order
of receipt of requests for such distributions received by it on the same day.
The Trustee shall not be liable for any delay in delivery of requests for
distributions or withdrawals of such requests by the Clearing Agency, a Clearing
Agency Participant or any Financial Intermediary.
In the event that any requests for distributions in reduction of the
Certificate Principal Amount of Redemption Certificates are rejected by the
Trustee for failure to comply with the requirements of this Section 5.05, the
Trustee shall return such requests to the appropriate Clearing Agency
Participant with a copy to the Clearing Agency with an explanation as to the
reason for such rejection.
The Trustee shall maintain a list of those Clearing Agency Participants
representing the Certificate Owners of Redemption Certificates that have
submitted requests for distributions in reduction of the Certificate Principal
Amount of such Redemption Certificates, together with the order of receipt and
the amounts of such requests. The Trustee shall notify the Clearing Agency and
the appropriate Clearing Agency Participants as to which requests should be
honored on each Distribution Date. Requests shall be honored by the Clearing
Agency in accordance with the procedures, and subject to the priorities and
limitations, described in this Section 5.05. The exact procedures to be followed
by the Trustee and the Clearing Agency for purposes of determining such
priorities and limitations shall be those established from time to time by the
Trustee or the Clearing Agency, as the case may be. The decisions of the Trustee
and the Clearing Agency concerning such matters shall be final and binding on
all affected Persons.
Payments in reduction of the Certificate Principal Amounts of Redemption
Certificates shall be made on the applicable Distribution Date and the
Certificate Balances as to which such payments are made shall cease to bear
interest after the last day of the month preceding the month in which such
Distribution Date occurs.
Any Certificate Owner of a Redemption Certificate that has requested a
distribution may withdraw its request by so notifying in writing the Clearing
Agency Participant or Financial Intermediary that maintains such Certificate
Owner's account. In the event that such account is maintained by a Financial
Intermediary, such Financial Intermediary should notify the related Clearing
Agency Participant which in turn should forward the withdrawal of such request,
on a form required by the Clearing Agency, to the Trustee. If such notice of
withdrawal of a request for distribution has not been received by the Clearing
Agency and forwarded to the Trustee on or before the Record Date for the next
Distribution Date, the previously made request for distribution will be
irrevocable with respect to the making of distributions in reduction of the
Certificate Principal Amount of such Redemption Certificate on such Distribution
Date.
(d) To the extent, if any, that amounts available for distribution in
reduction of the Class Certificate Principal Amount of any Class of Redemption
Certificates on a Distribution Date exceed the dollar amount of requests for
distributions with respect to such Class that have been received by the related
Record Date, as provided in Section 5.05(c) above, distributions in reduction of
the Class Certificate Principal Amount of such Class of Redemption Certificates
will be made by mandatory distributions in reduction thereof. The Trustee shall
notify the Clearing Agency of the aggregate amount of the mandatory distribution
in reduction of the Class Certificate Principal Amount of such Class of
Redemption Certificates to be made on the next Distribution Date. The Clearing
Agency shall then allocate such aggregate amount among its Clearing Agency
Participants on a random lot basis. Each Clearing Agency Participant and, in
turn, each Financial Intermediary, will then select, in accordance with its own
procedures, Individual Redemption Certificates from among those held in its
accounts to receive mandatory distributions in reduction of the Class
Certificate Principal Amount of such Class of Redemption Certificates, such that
the total amount so selected is equal to the aggregate amount of such mandatory
distributions allocated to such Clearing Agency Participant by the Clearing
Agency and to such Financial Intermediary by its related Clearing Agency
Participant, as the case may be. Clearing Agency Participants and Financial
Intermediaries that hold Redemption Certificates selected for mandatory
distributions in reduction of the Class Certificate Principal Amount thereof
should provide notice of such mandatory distributions to the affected
Certificate Owners.
(e) On the Closing Date, a Rounding Account shall be established with the
Trustee for each Class of Redemption Certificates, and Lehman Brothers Inc.
shall cause to be initially deposited the sum of $999.99 in each Rounding
Account. On each Distribution Date on which a distribution is made in reduction
of the Class Certificate Principal Amount of a Class of Redemption Certificates,
funds on deposit in the applicable Rounding Account shall be, to the extent
needed, withdrawn by the Trustee and applied to round upward to an integral
multiple of $1,000 the aggregate distribution in reduction of the Class
Certificate Principal Amount to be made on such Redemption Certificates.
Rounding of such distribution on such Redemption Certificates shall be
accomplished, on the first such Distribution Date, by withdrawing from the
applicable Rounding Account the amount of funds, if any, needed to round the
amount otherwise available for such distribution in reduction of the Class
Certificate Principal Amount of such Class of Redemption Certificates upward to
the next integral multiple of $1,000. On each succeeding Distribution Date on
which distributions in reduction of the Class Certificate Principal Amount of
such Class of Redemption Certificates are to be made, the aggregate amount of
such distributions allocable to such Class of Redemption Certificates shall be
applied first to repay any funds withdrawn from the applicable Rounding Account
and not previously repaid, and then the remainder of such allocable amount, if
any, shall be similarly rounded upward and applied as distributions in reduction
of the Class Certificate Principal Amount of such Class of Redemption
Certificates; this process shall continue on succeeding Distribution Dates until
the Class Certificate Principal Amount of such Class of Redemption Certificates
has been reduced to zero. Each Rounding Account shall be an "outside reserve
fund" under the REMIC Provisions that is beneficially owned for all federal
income tax purposes by Lehman Brothers Inc. Lehman Brothers Inc. will report all
income, gain, deduction or loss with respect thereto. The Trustee shall
distribute interest earnings, if any, on amounts held in any Rounding Account as
such interest is earned pursuant to written instructions from Lehman Brothers
Inc. to the Trustee.
Notwithstanding anything herein to the contrary, on the Distribution Date
on which distributions in reduction of the Class Certificate Principal Amount of
any Class of Redemption Certificates will reduce the Class Certificate Principal
Amount thereof to zero or in the event that distributions in reduction of the
Class Certificate Principal Amount of such Class of Redemption Certificates are
made in accordance with the provisions set forth in Section 5.05(f), an amount
equal to the difference between $999.99 and the sum then held in the applicable
Rounding Account shall be paid from the Principal Distribution Amount for such
Distribution Date to such Rounding Account. Any funds then on deposit in such
Rounding Account shall be distributed to Lehman Brothers Inc.
(f) Notwithstanding any provisions herein to the contrary, on each
Distribution Date following the first Distribution Date on or after the Credit
Support Depletion Date, all distributions in reduction of the Class Certificate
Principal Amount of any Class of Redemption Certificates will be made among the
Holders of such Class of Certificates, pro rata, based on their Certificate
Principal Amounts, and will not be made in integral multiples of $1,000 or
pursuant to requested distributions or mandatory distributions by random lot.
(g) In the event that Definitive Certificates representing any Class of
Redemption Certificates are issued pursuant to Section 3.09(c), all requests for
distributions or withdrawals of such requests relating to such Class must be
submitted to the Trustee, and the Trustee shall perform the functions described
in Section 5.05(a) through (c) using its own procedures, which procedures shall,
to the extent practicable, be consistent with the procedures described in
Section 5.05(a) through (c).
ARTICLE VI.
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee. (a) The Trustee, except during the
continuance of an Event of Default, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. Any permissive
right of the Trustee provided for in this Agreement shall not be construed as a
duty of the Trustee. If an Event of Default has occurred and has not otherwise
been cured or waived, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs unless the Trustee is acting as
Servicer, in which case it shall use the same degree of care and skill as the
Servicer under the applicable Sale and Servicing 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 are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, to the Trustee pursuant to this Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful misconduct.
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 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 as provided in
Section 6.19 hereof;
(ii) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Default (other than resulting from a
failure by the Servicer (i) to remit funds (or to make Advances) or (ii) to
furnish information to the Trustee when required to do so by the applicable
Sale and Servicing Agreement) unless a Responsible Officer of the Trustee
has actual knowledge thereof or unless written notice of any event which is
in fact such a default is received by the Trustee at the Corporate Trust
Office, and such notice references the Holders of the Certificates and this
Agreement;
(iii) 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; and
(iv) The Trustee shall not be responsible for any act or omission of
the Servicer. In particular, the Trustee shall not be liable for any
servicing errors or interruptions resulting from any failure of the
Servicer to maintain computer and other information systems that are
year-2000 compliant.
(d) 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 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.
(e) 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.
Section 6.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 6.01:
(i) The Trustee may request, and may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any advice of its
counsel or 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 advice or Opinion of
Counsel; (iii) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement; (iv) Unless an Event of Default shall have
occurred and be continuing, 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 (provided the
same appears regular on its face), unless requested in writing to do so by
Holders of at least a majority in Class Certificate Principal Amount (or
Percentage Interest) of 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 or payment of such estimated expenses as a condition to
proceeding. The reasonable expense thereof shall be paid by the Holders
requesting such investigation; and (v) 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, which agents or attorneys shall have
any or all of the rights, powers, duties and obligations of the Trustee
conferred on them by such appointment provided that the Trustee shall
continue to be responsible for its duties and obligations hereunder.
Section 6. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (other than the
certificate of authentication on the Certificates) or of any Mortgage Loan,
or related document save that the Trustee represents that, assuming due
execution and delivery by the other parties hereto, this Agreement has been
duly authorized, executed and delivered by it and constitutes its valid and
binding obligation, enforceable against it in accordance with its terms
except that such enforceability may be subject to (A) applicable bankruptcy
and insolvency laws and other similar laws affecting the enforcement of the
rights of creditors generally, and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding in
equity or at law. The Trustee shall not be accountable for the use or
application by the Depositor of funds paid to the Depositor in
consideration of the assignment of the Mortgage Loans to the Trust Fund by
the Depositor or for the use or application of any funds deposited into the
Certificate Account or any other fund or account maintained with respect to
the Certificates.
Section 6.03. Trustee Not Liable for Certificates. The Trustee and any
Affiliate or agent of the Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates and may transact banking and trust
with the other parties hereto with the same rights it would have if it were not
Trustee or such agent.
Section 6.04. Trustee May Own Certificates. The Trustee hereunder shall at
all times be (i) an institution insured by the FDIC and (ii) a corporation or
national banking association, organized and doing business under the laws of any
State or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by federal or state
authority. 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 or national
banking 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 provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.06.
Section 6.05. Eligibility Requirements for Trustee. (a) The Trustee may at
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor. Upon receiving such notice of
resignation, the Depositor will promptly appoint a successor trustee by written
instrument, one copy of which instrument shall be delivered to the resigning
Trustee, and one copy to the successor trustee. If no successor trustee shall
have been so appointed and shall have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.05 and shall fail to resign after written
request therefor by the Depositor, (ii) 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, (iii) a tax is imposed or
threatened with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund held by the Trustee is located, or (iv) the continued use of the
Trustee would result in a downgrading of the rating by the Rating Agencies of
any Class of Certificates with a rating, then the Depositor shall remove the
Trustee and appoint a successor trustee by written instrument, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(c) The Holders of more than 50% of the Class Certificate Principal Amount
(or Percentage Interest) of each Class of Certificates may at any time upon 30
days' written notice to the Trustee and to the Depositor remove the Trustee by
such written instrument, signed by such Holders or their attorney-in-fact duly
authorized, one copy of which instrument shall be delivered to the Depositor and
one copy to the Trustee so removed; the Depositor shall thereupon use its best
efforts to appoint a mutually acceptable successor trustee in accordance with
this Section.
(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 6.07.
Section 6.07. Successor Trustee. (a) Any successor trustee appointed as
provided in Section 6.06 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, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and documents and statements related to each Mortgage
Files held by it hereunder, and shall duly assign, transfer, deliver and pay
over to the successor trustee the entire Trust Fund, together with all necessary
instruments of transfer and assignment or other documents properly executed
necessary to effect such transfer and such of the record or copies thereof
maintained by the predecessor trustee in the administration hereof as may be
requested by the successor trustee and shall thereupon be discharged from all
duties and responsibilities under this Agreement. In addition, the predecessor
trustee shall execute and deliver such other instruments and do such other
things as may reasonably be required to more fully and certainly vest and
confirm 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 appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
(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 and to the Rating Agencies. The expenses of such mailing
shall be borne by the Depositor.
Section 6.08. Merger or Consolidation of Trustee. Any Person into which the
Trustee may be merged 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 Persons succeeding to the business of the Trustee,
shall be the successor to the Trustee 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 that such Person shall
be eligible under the provisions of Section 6.05.
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian. (a)
Notwithstanding any other provisions hereof, at any time, the Trustee, the
Depositor or the Certificateholders evidencing more than 50% of the Class
Certificate Principal Amount (or Percentage Interest) of each Class of
Certificates shall each have the power from time to time to appoint one or more
Persons to act either as co-trustees jointly with the Trustee, or as separate
trustees, or as custodians, for the purpose of holding title to, foreclosing or
otherwise taking action with respect to any Mortgage Loan outside the state
where the Trustee has its principal place of business where such separate
trustee or co-trustee is necessary or advisable under the laws of any state in
which a property securing a Mortgage Loan is located or for the purpose of
otherwise conforming to any legal requirement, restriction or condition in any
state in which a property securing a Mortgage Loan is located or in any state in
which any portion of the Trust Fund is located. The separate Trustees,
co-trustees, or custodians so appointed shall be trustees or custodians for the
benefit of all the Certificateholders and shall have such powers, rights and
remedies as shall be specified in the instrument of appointment; provided,
however, that no such appointment shall, or shall be deemed to, constitute the
appointee an agent of the Trustee. The obligation of the Trustee to make
Advances pursuant to Section 5.04 and 6.14 hereof shall not be affected or
assigned by the appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee, co-trustee, or
custodian 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,
co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally liable by
reason of any act or omission of any other trustee or custodian hereunder;
and
(iv) the Trustee or the Certificateholders evidencing more than 50% of
the Aggregate Voting Interests of the Certificates may at any time accept
the resignation of or remove any separate trustee, co-trustee or custodian,
so appointed by it or them, if such resignation or removal does not violate
the other terms of this Agreement.
(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, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. 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, co-trustee or custodian 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, co-trustee or custodian 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.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.
(g) The Trustee shall pay the reasonable compensation of the co-trustees to
the extent, and in accordance with the standards, specified in Section 6.12
hereof (which compensation shall not reduce any compensation payable to the
Trustee under such Section).
Section 6.10. Authenticating Agents. (a) The Trustee may appoint one or
more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. Any Authenticating Agent shall be
entitled to reasonable compensation for its services and, if paid by the
Trustee, it shall be a reimbursable expense pursuant to Section 6.12.
Section 6.11. Indemnification of Trustee. The Trustee and its directors,
officers, employees and agents shall be entitled to indemnification from the
Trust Fund, to the extent that indemnification is not provided by the Servicer
pursuant to either Sale and Servicing Agreement, for any loss, liability or
expense incurred in connection with any legal proceeding and incurred without
negligence or willful misconduct on their part, arising out of, or in connection
with, (a) the acceptance or administration of the trusts created hereunder,
including the costs and expenses of defending themselves against any claim in
connection with the exercise or performance of any of their powers or duties
hereunder or under the Mortgage Loan Sale and Assignment Agreement, either of
the Sale and Servicing Agreements or the Custodial Agreement, and (b) the
selection by the Depositor of the Custodian, the failure of the Custodian to
perform in its obligations under the Custodial Agreement or the willful
misconduct of the Custodian thereunder, provided that:
(i) to the extent that the indemnification provisions of either Sale
and Servicing Agreement indemnify the Trustee, as assignee of the
"Purchaser" thereunder, for such loss, liability or expense, the Trustee
has first made reasonable efforts to enforce any applicable provisions in
such Sale and Servicing Agreement for indemnification or reimbursement of
the Trustee (as "Purchaser") by the Servicer (it being understood and
agreed that "reasonable efforts" shall, without limitation, (A) not require
that the Trustee have brought suit against the Servicer to enforce such
indemnification provisions before making a claim against the assets of the
Trust Fund and (B) have been satisfied if the Trustee shall have made
demand on the Servicer for such indemnification, but the Servicer is unable
to satisfy such demand due to its insolvency);
(ii) with respect to any such claim, the Trustee shall have given the
Depositor and the Holders written notice thereof promptly after the Trustee
shall have knowledge thereof;
(iii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Depositor in preparing such
defense; and
(iv) notwithstanding anything to the contrary in this Section 6.11,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
Section 6.12. Fees and Expenses of Trustee. The Trustee shall be entitled
to receive, and is authorized to pay to itself the amount of income or gain
earned from the investment of funds in the Certificate Account. The Trustee
shall be entitled to reimbursement of reasonable disbursements and expenses made
or incurred by the Trustee in accordance with the provisions of this Agreement,
the Mortgage Loan Sale and Assignment Agreement, either Sale and Servicing
Agreement or the Custodial Agreement, but not for (i) any such expense,
disbursement or advance as may arise from the Trustee's negligence or willful
misconduct or (ii) any amount expressly required under this Agreement to be paid
by the Trustee from its own funds.
Section 6.13. Collection of Monies. Except as otherwise expressly provided
in this Agreement, the Trustee may demand payment or delivery of, and shall
receive and collect, all money and other property payable to or receivable by
the Trustee pursuant to this Agreement. The Trustee shall hold all such money
and property received by it as part of the Trust Fund and shall distribute it as
provided in this Agreement. If the Trustee shall not have timely received
amounts to be remitted with respect to the Mortgage Loans from the Servicer, the
Trustee shall request the Servicer to make such distribution as promptly as
practicable or legally permitted. If the Trustee shall subsequently receive any
such amount, it may withdraw such request.
Section 6.14. Trustee To Act; Appointment of Successor. (a) If an Event of
Default under either Sale and Servicing Agreement shall occur, then, in each and
every case, subject to applicable law, so long as any such Event of Default
shall not have been remedied within any period of time prescribed by such Sale
and Servicing Agreement, the Trustee by notice in writing to the Servicer may,
and shall, if so directed by Certificateholders evidencing more than 50% of the
Class Certificate Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby, terminate all of the rights and obligations of
the Servicer under both Sale and Servicing Agreements and in and to the Mortgage
Loans and the proceeds thereof. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer, and only in its
capacity as Servicer under each Sale and Servicing Agreement, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee pursuant to and under the terms of each Sale and Servicing Agreement;
and the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the defaulting Servicer as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents or otherwise.
If any Event of Default shall occur, the Trustee shall promptly notify the
Rating Agencies of the nature and extent of such Event of Default. The Trustee
shall immediately give written notice to the Servicer upon such Servicer's
failure to remit funds on the Remittance Date.
(b) On and after the time the Servicer receives a notice of termination
from the Trustee pursuant to Section 6.14(a) or the Trustee receives the
resignation of the Servicer evidenced by an Opinion of Counsel pursuant to the
applicable provisions of the Sale and Servicing Agreements, the Trustee, unless
another servicer shall have been appointed, shall be the successor in all
respects to the Servicer in its capacity as such under this Agreement and the
transactions set forth or provided for herein and shall have all the rights and
powers and be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on the Servicer under each Sale
and Servicing Agreement, including the obligation to make Advances; provided,
however, that any failure to perform such duties or responsibilities caused by
the Servicer's failure to provide information required by the applicable Sale
and Servicing Agreement shall not be considered a default by the Trustee
hereunder. In addition, the Trustee shall have no responsibility for any act or
omission of the Servicer prior to the issuance of any notice of termination. In
the Trustee's capacity as such successor, the Trustee shall have the same
limitations on liability herein granted to the Servicer. As compensation
therefor, the Trustee shall be entitled to receive all compensation payable to
the Servicer under each Sale and Servicing Agreement, including the applicable
portion of the related Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be unwilling to
continue to so act, or shall, if it is unable to so act, appoint, or petition a
court of competent jurisdiction to appoint, any single established housing and
home finance institution servicer, master servicer, servicer or mortgage
servicing institution having a net worth of not less than $15,000,000 and
meeting such other standards for a successor servicer as are set forth in the
Sale and Servicing Agreements, as the successor to such Servicer under both Sale
and Servicing Agreements in the assumption of all of the responsibilities,
duties or liabilities of a servicer, like the Servicer. Any entity designated by
the Trustee as a successor Servicer may be an Affiliate of the Trustee;
provided, however, that, unless such Affiliate meets the net worth requirements
and other standards set forth herein for a successor servicer, the Trustee, in
its individual capacity shall agree, at the time of such designation, to be and
remain liable to the Trust Fund for such Affiliate's actions and omissions in
performing its duties hereunder. 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 to the Servicer. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate any
such succession and may make other arrangements with respect to the servicing to
be conducted hereunder which are not inconsistent herewith. 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, notifying Mortgagors of the assignment of the servicing
functions and providing the Trustee and successor servicer, as applicable, all
documents and records in electronic or other form reasonably requested by it to
enable it to assume the Servicer's functions hereunder and the transfer to the
Trustee or such successor servicer, as applicable, all amounts which shall at
the time be or should have been deposited by the Servicer in the Certificate
Account and any other account or fund maintained with respect to the
Certificates or thereafter be 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 (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, (ii) to cooperate as required by the applicable Sale and Servicing
Agreement, (iii) to deliver the Mortgage Loan data to the Trustee as required by
the applicable Sale and Servicing Agreement or (iv) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer.
Section 6.15. Additional Remedies of Trustee Upon Event of Default. During
the continuance of any Event of Default, so long as such Event of Default shall
not have been remedied, the Trustee, in addition to the rights specified in
Section 6.14, shall have the right, in its own name and as trustee of an express
trust, to take all actions now or hereafter existing at law, in equity or by
statute to enforce its rights and remedies and to protect the interests, and
enforce the rights and remedies, of the Certificateholders (including the
institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
Section 6.16. Waiver of Defaults. 35% or more of the Aggregate Voting
Interests of Certificateholders may waive any default or Event of Default by the
Servicer in the performance of its obligations under either Sale and Servicing
Agreement except that a default in the making of any required deposit to the
Certificate Account that would result in a failure of the Trustee to make any
required payment of principal of or interest on the Certificates may only be
waived with the consent of 100% of the affected Certificateholders. Upon any
such waiver of a past default, such default shall cease to exist, any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement, and, to the extent that such default related to the
Servicer's obligation to make any Advance, the Trustee shall not be obligated to
make such Advance, notwithstanding anything to the contrary in this Agreement.
No such waiver shall extend to any subsequent or other default or impair any
right consequent thereon except to the extent expressly so waived.
Section 6.17. Notification to Holders. Upon termination of the Servicer or
appointment of a successor Servicer, in each case as provided herein, the
Trustee shall promptly mail notice thereof by first class mail to the
Certificateholders at their respective addresses appearing on the Certificate
Register. The Trustee shall also, within 45 days after the occurrence of any
Event of Default known to the Trustee, give written notice thereof to
Certificateholders, unless such Event of Default shall have been cured or waived
prior to the issuance of such notice and within such 45-day period.
Section 6.18. Directions by Certificateholders and Duties of Trustee During
Event of Default. Subject to the provisions of Section 8.01 hereof, during the
continuance of any Event of Default, Holders of Certificates evidencing not less
than 25% of the Class Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby may direct 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;
provided, however, that the Trustee shall be under no obligation to pursue any
such remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Servicer or any successor servicer from its rights and duties
as servicer hereunder) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which may be incurred therein or thereby; and, provided further,
that, subject to the provisions of Section 8.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, in accordance with
an Opinion of Counsel, determines that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith determines that the action
or proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
Section 6.19. Action Upon Certain Failures of the Servicer and Upon Event
of Default. In the event that the Trustee shall have actual knowledge of any
action or inaction of the Servicer that would become an Event of Default upon
the Servicer's failure to remedy the same after notice, the Trustee shall give
notice thereof to the Servicer. For all purposes of this Agreement, in the
absence of actual knowledge by a Responsible Officer of the Trustee, the Trustee
shall not be deemed to have knowledge of any failure of the Servicer or any
other Event of Default unless notified thereof in writing by the Servicer or by
a Certificateholder.
ARTICLE VII.
PURCHASE AND TERMINATION
OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of
All Mortgage Loans. (a) The obligations and responsibilities of the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Certificateholders as set forth in Section 7.02), shall terminate on the earlier
of (i) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO Property and (ii) the
sale of the property held by the Trust Fund in accordance with Section 7.01(b);
provided, however, that in no event shall the Trust Fund created hereby continue
beyond the earlier of (i) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the
United States to the Court of St. James's, living on the date hereof, and (ii)
the Latest Possible Maturity Date. Any termination of the Trust Fund shall be
carried out in such a manner so that the termination of each REMIC included
therein shall qualify as a "qualified liquidation" under the REMIC Provisions.
(b) On any Distribution Date occurring after the date on which the
Aggregate Loan Balance is less than 5% of the Cut-off Date Aggregate Loan
Balance, the Depositor may cause the Trust Fund to adopt a plan of complete
liquidation pursuant to Section 7.03(a)(i) hereof to sell all of its property.
The property of the Trust Fund shall be sold at a price (the "Termination
Price") equal to: (i) 100% of the unpaid principal balance of each Mortgage Loan
on the day of such purchase plus interest accrued thereon at the applicable
Mortgage Rate with respect to any Mortgage Loan to the Due Date in the
Collection Period immediately preceding the related Distribution Date to the
date of such repurchase and (ii) the fair market value of any REO Property and
any other property held by any REMIC, such fair market value to be determined by
an appraiser or appraisers mutually agreed upon by the Servicer and the Trustee.
Section 7.02. Procedure Upon Termination of Trust Fund. (a) Notice of any
termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
no later than the later of five Business Days after the Trustee has received
notice from the Depositor of its intent to exercise its right to cause the
termination of the Trust Fund pursuant to Section 7.01(b) or the final payment
or other liquidation of the last Mortgage Loan or REO Property in the Trust
Fund. Such notice shall specify (A) the Distribution Date upon which final
distribution on the Certificates of all amounts required to be distributed to
Certificateholders pursuant to Section 5.02 will be made upon presentation and
surrender of the Certificates at the Corporate Trust Office, and (B) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distribution being made only upon presentation and surrender of the Certificates
at the office or agency of the Trustee therein specified. The Trustee shall give
such notice to the Certificate Registrar at the time such notice is given to
Holders of the Certificates. Upon any such termination, the duties of the
Certificate Registrar with respect to the Certificates shall terminate and the
Trustee shall terminate the Collection Account it maintains, the Certificate
Account and any other account or fund maintained with respect to the
Certificates, subject to the Trustee's obligation hereunder to hold all amounts
payable to Certificateholders in trust without interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to contact
the remaining Certificateholders concerning surrender of such Certificates, and
the cost thereof shall be paid out of the amounts distributable to such Holders.
If within two years after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall, subject to applicable state law
relating to escheatment, hold all amounts distributable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held by the
Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
final distribution thereon in accordance with this Section.
Section 7.03. Additional Trust Fund Termination Requirements. (a) The Trust
Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee seeks, and subsequently receives, an Opinion of
Counsel, addressed to the Trustee to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 7.03 will not (i) result in
the imposition of taxes on any REMIC under the REMIC Provisions or (ii) cause
any REMIC established hereunder to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates, the Trustee (upon notification by the
Depositor that it intends to exercise its option to cause the termination
of the Trust Fund) shall adopt a plan of complete liquidation of the Trust
Fund on behalf of each REMIC, meeting the requirements of a qualified
liquidation under the REMIC Provisions;
(ii) The sale of the assets of the Trust Fund pursuant to Section 7.02
shall be a sale for cash and shall occur at or after the time of adoption
of such a plan of complete liquidation and prior to the time of making of
the final payment on the Certificates;
(iii) On the date specified for final payment of the Certificates, the
Trustee shall make final distributions of principal and interest on the
Certificates in accordance with Section 5.02 and, after payment of, or
provision for any outstanding expenses, distribute or credit, or cause to
be distributed or credited, to the Holders of the Residual Certificates all
cash on hand after such final payment (other than cash retained to meet
claims), and the Trust Fund (and each REMIC) shall terminate at that time;
and
(iv) In no event may the final payment on the Certificates or the
final distribution or credit to the Holders of the Residual Certificates be
made after the 89th day from the date on which the plan of complete
liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof hereby
(i) authorizes the Trustee to take such action as may be necessary to adopt a
plan of complete liquidation of the related REMIC and (ii) agrees to take such
other action as may be necessary to adopt a plan of complete liquidation of the
related REMIC, which authorization shall be binding upon all successor Residual
Certificateholders.
ARTICLE VIII.
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders. (a) The death or incapacity
of any Certificateholder shall not operate to terminate this Agreement or this
Trust Fund, nor entitle such Certificateholder's legal representatives or heirs
to claim an accounting or take any action or proceeding in any court for a
partition or winding up of this Trust Fund, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them. Except as
otherwise expressly provided herein, no Certificateholder, solely by virtue of
its status as a Certificateholder, shall have any right to vote 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 person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Certificate Principal Amount (or Percentage Interest) of Certificates of each
Class affected thereby 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 cost, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for sixty 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 and no direction inconsistent with such written
request has been given such Trustee during such sixty-day period by such
Certificateholders; 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 of any provision of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the benefit of all Certificateholders. 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 8.02. Access to List of Holders. (a) If the Trustee is not acting
as Certificate Registrar, the Certificate Registrar will furnish or cause to be
furnished to the Trustee, within fifteen days after receipt by the Certificate
Registrar of a request by the Trustee in writing, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter referred to
as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Holders with respect to
their rights under this Agreement or under the Certificates and is accompanied
by a copy of the communication which such Applicants propose to transmit, then
the Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants reasonable access during the normal business
hours of the Trustee to the most recent list of Certificateholders held by the
Trustee or shall, as an alternative, send, at the Applicants' expense, the
written communication proffered by the Applicants to all Certificateholders at
their addresses as they appear in the Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing Agency,
by receiving and holding a Certificate, agrees with the Depositor, the
Certificate Registrar and the Trustee that neither the Depositor, the
Certificate Registrar nor the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 8.03. Acts of Holders of Certificates. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Holders or Certificate Owner, if the
Holder is a Clearing Agency, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee. Such instrument or instruments (as the action
embodies therein and evidenced thereby) are herein sometimes referred to as an
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agents shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments or deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the individual executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee nor the Depositor shall be
affected by any notice to the contrary. (d) Any request, demand, authorization,
direction, notice, consent, waiver or other action by the Holder of any
Certificate shall bind every future Holder of the same Certificate and the
Holder of every Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee in reliance thereon, whether or not notation
of such action is made upon such Certificate.
ARTICLE IX.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 9.01. Trustee To Retain Possession of Certain Documents. Until all
amounts distributable in respect of the Certificates have been distributed in
full, the Trustee (or its custodian) shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions of this
Agreement; provided, that documents relating to any Additional Collateral may be
held by a custodian on behalf of the Trustee.
Section 9.02. Preparation of Tax Returns and Other Reports. (a) The Trustee
shall prepare or cause to be prepared on behalf of the Trust Fund, based upon
the information furnished by the Servicer or calculated by the Trustee in
accordance with this Agreement pursuant to instructions given by the Depositor,
and shall file federal tax returns and appropriate state income tax returns and
such other returns as may be required by applicable law relating to the Trust
Fund and shall forward copies to the Depositor of all such returns and Form 1099
information and such other information within the control of the Trustee as the
Depositor may reasonably request in writing, and shall forward to each
Certificateholder such forms and furnish such information within the control of
the Trustee as are required by the Code and the REMIC Provisions to be furnished
to them, and will prepare and disseminate to Certificateholders Form 1099s (or
otherwise furnish information within the control of the Trustee) to the extent
required by applicable law.
(b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4.
(c) The Depositor will prepare or cause to be prepared the initial current
report on Form 8-K and thereafter the Trustee will prepare or cause to be
prepared Form 10-Ks and Form 10-Qs (if necessary), or monthly current reports on
Form 8-K, on behalf of the Trust Fund, as may be required by applicable law or
regulation, and will file such reports electronically with the Securities and
Exchange Commission (the "SEC"). The Trustee will sign each such report on
behalf of the Trust Fund, and will forward a copy of each such report to the
Depositor promptly after such report has been filed with the SEC. The Trustee
shall use its best efforts to seek to terminate such filing obligation promptly
after the period during which such filings are required under the Securities
Exchange Act of 1934. Promptly after filing a Form 15 or other applicable form
with the SEC in connection with such termination, the Trustee shall deliver to
the Depositor a copy of such form together with copies of confirmations of
receipt by the SEC of each report filed therewith on behalf of the Trust Fund.
Section 9.03. Release of Mortgage Files. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or upon receipt by the Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Servicer will immediately notify the Trustee (or its custodian) by a
certification (which certification shall include a statement to the effect that
all amounts received in connection with such payment that are required to be
deposited in the Certificate Account maintained by the Trustee pursuant to
Section 4.04 have been or will be so deposited) of a Servicing Officer and shall
request the Trustee (or its custodian) to deliver to the Servicer the related
Mortgage File. Upon receipt of such certification and request, the Trustee (or
its custodian) shall promptly release the related Mortgage File to the Servicer
and the Trustee shall have no further responsibility with regard to such
Mortgage File. Upon any such payment in full, the Trustee authorizes the
Servicer to give, as agent for the Trustee, as the mortgagee under the Mortgage
that secured the Mortgage Loan, an instrument of satisfaction (or assignment of
mortgage without recourse) regarding the Mortgaged Property subject to the
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of such payment, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Certificate Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan and in accordance with Accepted Servicing Practices, the
Trustee (or its custodian) shall execute such documents as shall be prepared and
furnished to the Trustee by the Servicer (in form reasonably acceptable to the
Trustee) and as are necessary to the prosecution of any such proceedings. The
Trustee (or its custodian) shall, upon request of the Servicer and delivery to
the Trustee (or its custodian) of a trust receipt signed by a Servicing Officer
substantially in the form of Exhibit C, release the related Mortgage File held
in its possession or control to the Servicer. Such trust receipt shall obligate
the Servicer to return the Mortgage File to the Trustee (or its custodian) when
the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that specified above, the trust receipt shall be released by
the Trustee (or its custodian) to the Servicer.
(c) The Trustee covenants and agrees that it will comply with all relevant
laws and regulations governing the custody, processing, release and delivery of
the Mortgage Loan documents within its possession or control.
ARTICLE X.
REMIC ADMINISTRATION
Section 10.01. REMIC Administration. (a) An election will be made by the
Trustee on behalf of the REMIC to treat the Trust Fund as a REMIC under the
Code. Such election will be made on Form 1066 or other appropriate federal tax
or information return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. For the purposes of such
election, the Certificates other than the Class R Certificate shall be
designated as the "regular interests" in the REMIC and the Class R Certificate
shall be designated as the "residual interest" in the REMIC.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not including
taxes) of each REMIC, including but not limited to any professional fees or
expenses related to audits or any administrative or judicial proceedings with
respect to such REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder (including its
duties as tax return preparer).
(d) The Trustee shall act as Tax Matters Person for such REMIC. The Trustee
shall prepare, sign, and file all of each REMIC's federal and state tax and
information returns as such REMIC's direct representative. The expenses of
preparing and filing such returns shall be borne by the Trustee.
(e) The Trustee or its designee shall perform on behalf of such REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions, or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee shall provide (i) to the Treasury or other governmental
authority such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any disqualified person or
organization and (ii) to the Certificateholders such information or reports as
are required by the Code or REMIC Provisions.
(f) The Trustee and the Holders of Certificates shall take any action or
cause such REMIC to take any action necessary to create or maintain the status
of such REMIC 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 any Residual Certificate shall take any action, cause the REMIC to
take any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of such REMIC as a REMIC or (ii) result in the imposition of
a tax upon such REMIC (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 on 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. In addition, prior to taking any action with respect to the REMIC or
the assets therein, or causing such REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate 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 such REMIC, and no such Person shall take any such action or cause
such REMIC to take any such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Holder of the Residual
Certificate in such REMIC or, if no such amounts are available, out of other
amounts held in the Certificate Account, and shall reduce amounts otherwise
payable to holders of regular interests in such REMIC, as the case may be.
(h) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to such REMIC on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans to the extent permitted by the applicable Sale and
Servicing Agreement.
(j) The Trustee shall not enter into any arrangement by which any REMIC
will receive a fee or other compensation for services.
Section 10.02. Prohibited Transactions and Activities. Neither the
Depositor nor the Trustee shall sell, dispose of, or substitute for any of the
Mortgage Loans, except in a disposition pursuant to (i) the foreclosure of a
Mortgage Loan, (ii) the bankruptcy of the Trust Fund, (iii) the termination of
such REMIC pursuant to Article VII of this Agreement, (iv) a substitution
pursuant to Article II of this Agreement or (v) a repurchase of Mortgage Loans
pursuant to Article II of this Agreement, nor acquire any assets for any REMIC,
nor sell or dispose of any investments in the Certificate Account for gain, nor
accept any contributions to the REMIC after the Closing Date, unless it has
received an Opinion of Counsel (at the expense of the party causing such sale,
disposition, or substitution) that such disposition, acquisition, substitution,
or acceptance will not (a) affec`t adversely the status of such REMIC as a REMIC
or of the interests therein other than the Residual Certificates as the regular
interests therein, (b) affect the distribution of interest or principal on the
Certificates, (c) result in the encumbrance of the assets transferred or
assigned to the Trust Fund (except pursuant to the provisions of this Agreement)
or (d) cause such REMIC to be subject to a tax on prohibited transactions or
prohibited contributions pursuant to the REMIC Provisions.
The Trustee shall not consent to any modification of any material term of
any Mortgage Loan unless (i) such Mortgage Loan is in default or the Servicer
certifies that default thereunder is, in its, judgment imminent, or (ii) the
Trustee has received an Opinion of Counsel (at the expense of the party
requesting such modification) to the effect that such modification would not
cause the Trust Fund to fail to qualify as a REMIC or result in the imposition
of any tax under Section 860(F)(a) or Section 860(G)(d) of the Code.
Section 10.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status. In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Trustee of its duties and obligations set
forth herein, the Trustee shall indemnify the Holder of the related Residual
Certificate against any and all losses, claims, damages, liabilities or expenses
("Losses") resulting from such negligence; provided, however, that the Trustee
shall not be liable for any such Losses attributable to the action or inaction
of the Depositor, or the Holder of such Residual Certificate, as applicable, nor
for any such Losses resulting from misinformation provided by the Holder of such
Residual Certificate on which the Trustee has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Trustee have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any losses other than arising out of a
negligent performance by the Trustee of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 11.03. Amendment. (a) This Agreement may be amended from time to
time by the Depositor and the Trustee, without notice to or the consent of any
of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions herein
to conform to or be consistent with or in furtherance of the statements made
with respect to the Certificates, the Trust Fund or this Agreement in any
Offering Document, or to correct or supplement any provision herein which may be
inconsistent with any other provisions herein, (iii) to make any other
provisions, with respect to matters or questions arising under this Agreement or
(iv) to add, delete, or amend any provisions to the extent necessary or
desirable to comply with any requirements imposed by the Code and the REMIC
Provisions. No such amendment effected pursuant to the preceding sentence shall,
as evidenced by an Opinion of Counsel, adversely affect the status of any REMIC
created pursuant to this Agreement, nor shall such amendment effected pursuant
to clause (iii) of such sentence adversely affect in any material respect the
interests of any Holder. Prior to entering into any amendment without the
consent of Holders pursuant to this paragraph, the Trustee may require an
Opinion of Counsel (at the expense of the party requesting such amendment) to
the effect that such amendment is permitted under this paragraph. Any such
amendment shall be deemed not to adversely affect in any material respect any
Holder, if the Trustee receives written confirmation from each Rating Agency
that such amendment will not cause such Rating Agency to reduce the then current
rating assigned to the Certificates (and any Opinion of Counsel requested by the
Trustee in connection with any such amendment may rely expressly on such
confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the Depositor
and the Trustee with the consent of the Holders of not less than 66 2/3% of the
Class Certificate Principal Amount (or Percentage Interest) 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; provided, however, that no
such amendment shall be made unless the Trustee receives an Opinion of Counsel,
at the expense of the party requesting the change, that such change will not
adversely affect the status of any REMIC as a REMIC or cause a tax to be imposed
on such REMIC; and provided further, that no such amendment may (i) 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 (ii) reduce the aforesaid
percentages of Class Certificate Principal Amount (or Percentage Interest) of
Certificates of each Class, the Holders of which are required to consent to any
such amendment without the consent of the Holders of 100% of the Class
Certificate Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby. For purposes of this paragraph, references to
"Holder" or "Holders" shall be deemed to include, in the case of any Class of
Book-Entry Certificates, the related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Holder,
the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this Section
11.03 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 Holders shall be subject to such reasonable regulations as the
Trustee may prescribe.
Section 11.04. Voting Rights. Except to the extent that the consent of all
affected Certificateholders is required pursuant to this Agreement, with respect
to any provision of this Agreement requiring the consent of Certificateholders
representing specified percentages of aggregate outstanding Certificate
Principal Amount (or Percentage Interest), Certificates owned by the Depositor,
the Trustee or the Servicer or Affiliates thereof are not to be counted so long
as such Certificates are owned by the Depositor, the Trustee or the Servicer or
Affiliates thereof.
Section 11.05. Provision Information. (a) For so long as any of the
Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such Certificateholder,
upon the request of such Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Act. Any
reasonable, out-of-pocket expenses incurred by the Trustee in providing such
information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or documents
requested, (i) a copy (excluding exhibits) of any report on Form 8-K or Form
10-K filed with the Securities and Exchange Commission pursuant to Section
9.02(c) and (ii) a copy of any other document incorporated by reference in the
Prospectus. Any reasonable out-of-pocket expenses incurred by the Trustee in
providing copies of such documents shall be reimbursed by the Depositor.
(c) On each Distribution Date the Trustee shall deliver or cause to be
delivered by first class mail to the Depositor, Attention: Contract Finance, a
copy of the report delivered to Certificateholders pursuant to Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when received by
(a) in the case of the Depositor, Structured Asset Securities Corporation, 200
Vesey Street, 12th Floor, New York, New York 10285, Attention: Mark Zusy, and
(b) in the case of the Trustee, Norwest Bank Minnesota, National Association,
11000 Broken Land Parkway, Columbia, Maryland 21044, Attention: Corporate Trust
Services (SASCO 1998-5) or as to each party such other address as may hereafter
be furnished by such party to the other parties in writing. Any notice required
or permitted to be mailed to a Holder 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
Holder receives such notice.
Section 11.08. 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 11.09. Indulgences; No Waivers. Neither the failure nor any delay
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. (a) Nothing in this Agreement or in
the Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of the
Certificates, any benefit or any legal or equitable right, power, remedy or
claim under this Agreement, except to the extent specified in paragraph (b) of
this Section 11.11.
(b) Not withstanding any provision herein to the contrary, the parties to
this Agreement agree that it is appropriate, in furtherance of the intent of
such parties as set forth herein, that the Servicer receive the benefit of the
provisions of Section 9.03 hereof and of this Section 11.11 as an intended third
party beneficiary of this Agreement to the extent of such provisions. The
Trustee shall have the same obligations to the Servicer under Section 9.03
hereof as if the Servicer were a party to this Agreement, and the Servicer shall
have the same rights and remedies to enforce the provisions of Section 9.03
hereof and this Section 11.11 as if the Servicer were a party to this Agreement.
Section 11.12. Special Notices to the Rating Agencies. (a) The Depositor
shall give, prompt notice to the Rating Agencies of the occurrence of any of the
following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
(ii) the appointment of any successor to the Servicer pursuant to
Section 6.14; and (iii) the making of a final payment pursuant to Section
7.02. (b) All notices to the Rating Agencies provided for this Section
shall be in writing and sent by first class mail, telecopy or overnight
courier, as follows:
If to Fitch, to:
Fitch IBCA, Inc.
1201 East 7th Street
Powell, Wyoming 82435
Attention: Residential Mortgage Surveillance
If to S&P, to:
Standard & Poor's Rating Services,
a Division of The McGraw-Hill Companies, Inc.
26 Broadway, 15th Floor
New York, New York 10004
Attention: Residential Mortgages
(c) The Trustee shall deliver to the Rating Agencies reports prepared
pursuant to Section 4.03.
Section 11.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their
names to be signed hereto by their respective officers hereunto duly authorized
as of the day and year first above written.
STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor
By: /s/ Stanley Labanowski
----------------------------
Name: Stanley Labanowski
Title: Authorized Signatory
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: /s/ Amy Wahl
--------------------------------
Name: Amy Wahl
Title: Assistant Vice President
For purposes of Sections 9.03 and 11.11,
accepted and agreed to by:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Kelly A. Gately
----------------------
Name: Kelly A. Gately
Title: Vice President
EXHIBIT A
---------
FORMS OF CERTIFICATES
Exhibit B-1
-----------
FORM OF FINAL CERTIFICATION
------------
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of April 1,
1998 between Structured Asset Securities Corporation, as
Depositor and Norwest Bank Minnesota, National Association, as
Trustee, with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-5
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the undersigned
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or listed on the attachment
hereto) it (or its custodian) has received:
(i) the original Mortgage Note endorsed without recourse in proper
form to the order of the Trustee;
(ii) a duly executed Assignment of Mortgage or assignment of security
agreement;
(iii) with respect to any Mortgage Loan other than a Cooperative
Mortgage Loan, the original recorded Mortgage, and with respect to any
Cooperative Mortgage Loan, the original recorded pledge and security
agreement, with evidence of recording indicated thereon; or, if, in
connection with any Mortgage Loan, the Depositor (or the Servicer or any of
its correspondents, at the direction of Lehman Capital and the Depositor)
cannot deliver the Mortgage or pledge and security agreement with evidence
of recording thereon because such document has been lost, the Depositor (or
the Servicer or its correspondents, at the direction of Lehman Capital and
Depositor) shall deliver or cause to be delivered to the Trustee, a
photocopy of such document (certified by the Servicer or its correspondents
to be a true and correct copy) together with a written Opinion of Counsel
acceptable to the Trustee and the Depositor that an original recorded
Mortgage or pledge and security agreement is not required to enforce the
Trustee's interest in the Mortgage Loan;
(iv) if applicable, such original intervening assignments
("Intervening Assignments"), as may be necessary to show a complete chain
of title to the Mortgage from the originator to the Trustee at the
direction of Lehman Capital and the Depositor; or, as to any such
Intervening Assignment which cannot be delivered because such Intervening
Assignment has been lost, a photocopy of such Intervening Assignment and a
certificate of the Servicer as specified in Exhibit C-1 of the applicable
Sale and Servicing Agreement.
(v) with respect to any Mortgage Loan other than a Cooperative Loan,
the original lender's Title Insurance Policy or a written commitment to
issue such Title Insurance Policy or, in lieu thereof, a copy of such Title
Insurance Policy;
(vi) the original of each assumption, modification or substitution
agreement, if any, relating to the Mortgage Loans (as and to the extent of
those Mortgage Loans specifically identified by the Servicer to be subject
to any assumption, modification or substitution;
(vii) with respect to any Cooperative Mortgage Loan, the original
Cooperative Loan Documents; and
(viii) the original additional collateral pledge and security
agreement executed in connection with each pledge of Additional Collateral,
assigned to the Trustee.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on the
attachment hereto, it has reviewed the documents listed above and has determined
that each such document appears to be complete and, based on an examination of
such documents, the information set forth in the Mortgage Loan Schedule is
correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is qualified
in all respects by the terms of said Trust Agreement.
[Custodian]
[NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee]
By:________________________________
Name:
Title:
Exhibit B-2
-----------
FORM OF ENDORSEMENT
Pay to the order of Norwest Bank Minnesota, National Association, as
trustee (the "Trustee") under a Trust Agreement dated as of April 1, 1998,
between Structured Asset Securities Corporation, as Depositor, and the Trustee
relating to Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-5, without recourse.
----------------------------------
[current signatory on note]
By:_______________________________
Name:
Title:
EXHIBIT C
---------
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
-------------
Date
[Addressed to Trustee
or, if applicable, custodian]
In connection with the administration of the mortgages held by you as
Trustee under a certain Trust Agreement dated as of 1, 199 between Structured
Asset Securities Corporation, as Depositor, and you, as Trustee (the "Trust
Agreement"), the undersigned Servicer 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 loan have been or will be credited to
the Collection Account or the Certificate Account (whichever is applicable)
pursuant to the Trust Agreement.)
2. Mortgage Loan repurchased. (The Servicer hereby certifies that the
Purchase Price has been credited to the Collection Account or the Certificate
Account (whichever is applicable) pursuant to the Trust Agreement.)
3. Mortgage Loan substituted. (The Servicer hereby certifies that a
Qualifying Substitute Mortgage Loan has been assigned and delivered to you along
with the related Mortgage File pursuant to the Trust Agreement.)
4. The Mortgage Loan is being foreclosed.
5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Trust Agreement and
will be returned to you within ten (10) days of our receipt of the Mortgage
File, except if the Mortgage Loan has been paid in full, or repurchased or
substituted for a Qualifying Substitute Mortgage Loan (in which case the
Mortgage File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the Mortgage File will be returned when
no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Trust Agreement.
----------------------------------
[Name of Servicer]
By:_______________________________
Name:
Title: Servicing Officer
EXHIBIT D-1
-----------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes and
says:
1. That he [she] is [title of officer] _______________________ of [name of
Purchaser] _________________________________________ (the "Purchaser"), a
_______________________ [description of type of entity] duly organized and
existing under the laws of the [State of __________] [United States], on behalf
of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is [ ].
3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a "disqualified organization" as of [date of
transfer], and that the Purchaser is not acquiring a Residual Certificate (as
defined in the Agreement) for the account of, or as agent (including a broker,
nominee, or other middleman) for, any person or entity from which it has not
received an affidavit substantially in the form of this affidavit. For these
purposes, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other than
an instrumentality if all of its activities are subject to tax and a majority of
its board of directors is not selected by such governmental entity), any
cooperative organization furnishing electric energy or providing telephone
service to persons in rural areas as described in Code Section 1381(a)(2)(C), or
any organization (other than a farmers' cooperative described in Code Section
521) that is exempt from federal income tax unless such organization is subject
to the tax on unrelated business income imposed by Code Section 511.
4. That the Purchaser is not, and on __________ [insert date of transfer of
Residual Certificate to Purchaser] will not be, and is not and on such date will
not be investing the assets of, an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a plan subject
to Code Section 4975 or a person or entity that is using the assets of any
employee benefit plan or other plan to acquire a Residual Certificate.
5. That the Purchaser hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") between Structured Asset Securities Corporation and
Norwest Bank Minnesota, National Association, as Trustee, dated as of April 1,
1998, no transfer of the Residual Certificates shall be permitted to be made to
any person unless the Trustee has received a certificate from such transferee to
the effect that such transferee is not an employee benefit plan subject to ERISA
or a plan subject to Section 4975 of the Code and is not using the assets of any
employee benefit plan or other plan to acquire Residual Certificates.
6. That the Purchaser does not hold REMIC residual securities as nominee to
facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (such entity, a
"Book-Entry Nominee").
7. That the Purchaser does not have the intention to impede the assessment
or collection of any federal, state or local taxes legally required to be paid
with respect to such Residual Certificate.
8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge that the
requirements set forth in paragraph 3, paragraph 6 or paragraph 10 hereof are
not satisfied or that the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without obtaining from
the prospective Purchaser an affidavit substantially in this form and providing
to the Trustee a written statement substantially in the form of Exhibit G to the
Agreement.
9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any cash flows
generated by the interest and that it intends to pay taxes associated with
holding such Residual Certificate as they become due.
10. That the Purchaser (i) is not a Non-U.S. Person or (ii) is a Non-U.S.
Person that holds a Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Trustee with an effective Internal Revenue Service Form 4224 or successor
form at the time and in the manner required by the Code or (iii) is a Non-U.S.
Person that has delivered to both the transferor and the Trustee an opinion of a
nationally recognized tax counsel to the effect that the transfer of such
Residual Certificate to it is in accordance with the requirements of the Code
and the regulations promulgated thereunder and that such transfer of a Residual
Certificate will not be disregarded for federal income tax purposes. "Non-U.S.
Person" means an individual, corporation, partnership or other person other than
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 that is subject to U.S. federal
income tax regardless of the source of its income, or 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 trustees have
authority to control all substantial decisions of the trust.
11. That the Purchaser agrees to such amendments of the Trust Agreement as
may be required to further effectuate the restrictions on transfer of any
Residual Certificate to such a "disqualified organization," an agent thereof, a
Book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.
12. That the Purchaser consents to the designation of the Trustee as its
agent to act as "tax matters person" of the Trust Fund pursuant to the Trust
Agreement.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [title of
officer] this _____ day of __________, 19__.
---------------------------------
[name of Purchaser]
By:______________________________
Name:
Title:
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
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________, 19__.
NOTARY PUBLIC
- ------------------------------
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
EXHIBIT D-2
-----------
RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
---------------------------------------
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
EXHIBIT E-1
-----------
SALE AND SERVICING AGREEMENT
EXHIBIT E-2
-----------
SALE AND SERVICING AGREEMENT
EXHIBIT F
---------
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 1998-5
----------------------------------------
Reference is hereby made to the Trust Agreement dated as of 1, 199 (the
"Trust Agreement") between Structured Asset Securities Corporation, as
Depositor, and Norwest Bank Minnesota, National Association, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Trust Agreement.
This letter relates to $_________________ initial Certificate Balance of
Class Certificates which are held in the form of Definitive Certificates
registered in the name of ____________________________________ (the
"Transferor"). The Transferor has requested a transfer of such Definitive
Certificates for Definitive Certificates of such Class registered in the name of
[insert name of transferee].
In connection with such request, and in respect of such Certificates, the
Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Trust Agreement
and the Certificates and (ii) Rule 144A under the Securities Act to a purchaser
that the Transferor reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A purchasing for its own account or for the
account of a "qualified institutional buyer", which purchaser is aware that the
sale to it is being made in reliance upon Rule 144A, in a transaction meeting
the requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Placement Agent and the Depositor.
-------------------------------------
[Name of Transferor]
By:__________________________________
Name:
Title:
Dated: ___________, ____
EXHIBIT G
---------
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
------------------
Date
Dear Sirs:
In connection with our proposed purchase of $_________________ principal
amount of Mortgage Pass-Through Certificates, Series 1998-5 (the "Privately
Offered Certificates") of Structured Asset Securities Corporation (the
"Depositor"), we confirm that:
(1) We understand that the Privately Offered Certificates have not been,
and will not be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be sold except as permitted
in the following sentence. We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we
should sell any Privately Offered Certificates within three years of
the later of the date of original issuance of the Privately Offered
Certificates or the last day on which such Privately Offered
Certificates are owned by the Depositor or any affiliate of the
Depositor (which includes the Placement Agent) we will do so only (A)
to the Depositor, (B) to "qualified institutional buyers" (within the
meaning of Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act ("QIBs"), (C) pursuant to an exemption
from registration in accordance with Rule 904 of Regulation S under the
Securities Act, (D) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act, or (E) to an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act
that is not a QIB (an "Institutional Accredited Investor") which, prior
to such transfer, delivers to the Trustee under the Trust Agreement
dated as of April 1, 1998 between the Depositor and Norwest Bank
Minnesota, National Association, as Trustee (the "Trustee"), a signed
letter in the form of this letter; and we further agree, in the
capacities stated above, to provide to any person purchasing any of the
Privately Offered Certificates from us a notice advising such purchaser
that resales of the Privately Offered Certificates are restricted as
stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited Investor,
we will be required to furnish to the Trustee and the Depositor a
certification from such transferee in the form hereof to confirm that
the proposed sale is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act. We further understand that the Privately Offered
Certificates purchased by us will bear a legend to the foregoing
effect.
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Privately Offered Certificates, and we and any account for which we are
acting are each able to bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or
for one or more accounts (each of which is an Institutional Accredited
Investor) as to each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Trust Agreement.
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
----------------------------------
[Purchaser]
By________________________________
Name:
Title:
EXHIBIT H
---------
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"), a
[corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 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"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or (2)
if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account" (as
such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion") satisfactory
to the Trustee and the Depositor, and upon which the Trustee and the Depositor
shall be entitled to rely, to the effect that the purchase or holding of such
Certificate by the Investor will not result in the assets of the Trust Fund
being deemed to be plan assets and subject to the prohibited transaction
provisions of ERISA or the Code and will not subject the Trustee or the
Depositor to any obligation in addition to those undertaken by such entities in
the Trust Agreement, which opinion of counsel shall not be an expense of the
Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") between Structured Asset Securities Corporation, as
Depositor, and Norwest Bank Minnesota, National Association, as Trustee, dated
1, 199 , no transfer of the ERISA-Restricted Certificates shall be permitted to
be made to any person unless the Depositor and Trustee have received a
certificate from such transferee in the form hereof.
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to proper authority, by its duly authorized officer,
duly attested, this ____ day of _______________, 199 .
---------------------------------
[Investor]
By:______________________________
Name:
Title:
EXHIBIT K
---------
CUSTODIAL AGREEMENT
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
SCHEDULE B
----------
PRINCIPAL AMOUNT SCHEDULES
[Not Applicable]
================================================================================
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
SELLER
and
STRUCTURED ASSET SECURITIES CORPORATION
PURCHASER
MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT
Dated as of April 1, 1998
================================================================================
TABLE OF CONTENTS
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
1.01. Sale of Mortgage Loans................................................ 2
1.02. Delivery of Documents................................................. 2
1.03. Review of Documentation............................................... 2
1.04. Representations and Warranties of Lehman Capital...................... 3
1.05. Grant Clause.......................................................... 7
1.06 Assignment by Depositor............................................... 7
ARTICLE II
MISCELLANEOUS PROVISIONS
2.01. Binding Nature of Agreement; Assignment............................... 7
2.02. Entire Agreement...................................................... 7
2.03. Amendment............................................................. 8
2.04. Governing Law......................................................... 8
2.05. Severability of Provisions............................................ 9
2.06. Indulgences; No Waivers............................................... 9
2.07. Headings Not to Affect Interpretation................................. 9
2.08. Benefits of Agreement................................................. 9
2.09. Counterparts.......................................................... 9
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
This MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT is executed by and between
Lehman Capital, A Division of Lehman Brothers Holdings Inc. ("Lehman Capital"),
and Structured Asset Securities Corporation (the "Depositor"), dated as of the
1st day of April, 1998.
All capitalized terms not defined herein shall have the same meanings
assigned to such terms in that certain Trust Agreement (the "Trust Agreement"),
dated as of April 1, 1998, between the Depositor and Norwest Bank Minnesota,
National Association, as Trustee (the "Trustee").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to each of the Amended and Restated Sale, Warranties and
Servicing Agreements, each dated as of April 1, 1998 (each, a "Sale and
Servicing Agreement"), between Lehman Capital and Boston Safe Deposit and Trust
Company ("The Boston Company"), The Boston Company sold to Lehman Capital, and
Lehman Capital purchased from The Boston Company, certain mortgage loans
identified on the Mortgage Loan Schedule attached hereto as Schedule A (the
"Mortgage Loans"), and The Boston Company agreed to service such Mortgage Loans
according to the provisions thereof;
WHEREAS, pursuant to each Sale and Servicing Agreement, the parties thereto
agreed that, following the execution of such agreement, Lehman Capital would (i)
sell the Mortgage Loans to the Depositor, and (ii) assign all of its rights and
interest under each Sale and Servicing Agreement (other than its rights under
Section 11.12 of each Sale and Servicing Agreement thereof), and delegate all of
its obligations thereunder, to the Depositor, as if the Depositor had been a
party to each Sale and Servicing Agreement;
WHEREAS, Lehman Capital and the Depositor acknowledge and agree that the
Depositor will assign all of its rights and delegate all of its obligations
hereunder to the Trustee, and that each reference herein to the Depositor is
intended, unless otherwise specified, to mean the Depositor or the Trustee, as
assignee, whichever is the owner of the Mortgage Loans from time to time; and
WHEREAS, Lehman Capital desires to sell, without recourse, all of its
right, title and interest in the Mortgage Loans to the Depositor, to assign all
of its rights and interest under each Sale and Servicing Agreement (other than
its rights under Section 11.12 of each Sale and Servicing Agreement thereof),
and to delegate all of its obligations thereunder, to the Depositor.
NOW, THEREFORE, in consideration of the mutual agreements herein set forth,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Lehman Capital and the Depositor agree as follows:
ARTICLE I.
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans. Concurrently with the execution and
delivery of this Agreement, Lehman Capital does hereby transfer, assign, set
over, deposit with and otherwise convey to the Depositor, without recourse, all
the right, title and interest of Lehman Capital in and to the Mortgage Loans
identified on Schedule A hereto, having an aggregate principal balance as of the
Cut-off Date of $216,566,808.48. Such conveyance includes, without limitation,
the right to all distributions of principal and interest received on or with
respect to the Mortgage Loans on and after April 1, 1998 (other than payments of
principal and interest due on or before such date), and all such payments due
after such date but received prior to such date and intended by the related
Mortgagors to be applied after such date, together with all of Lehman Capital's
right, title and interest in and to each related account and all amounts from
time to time credited to and the proceeds of such account, any REO Property and
the proceeds thereof, Lehman Capital's rights under any Insurance Policies
related to the Mortgage Loans, and Lehman Capital's security interest in any
collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties, any Additional Collateral and any proceeds of the foregoing.
Concurrently with the execution and delivery of this Agreement, Lehman
Capital hereby assigns to the Depositor all of its rights and interest under
each Sale and Servicing Agreement (other than its rights under Section 11.12 of
each Sale and Servicing Agreement), and delegates to the Depositor all of its
obligations under each Sale and Servicing Agreement. Concurrently with the
execution hereof, the Depositor tenders the purchase price of $216,566,808.48
(including accrued interest). The Depositor hereby accepts such assignment and
delegation, and shall be entitled to exercise all such rights of Lehman Capital
under each Sale and Servicing Agreement, as if the Depositor had been a party to
each Sale and Servicing Agreement.
Section 1.02. Delivery of Documents. (a) In connection with such transfer
and assignment of the Mortgage Loans hereunder, Lehman Capital does hereby
deliver, or cause to be delivered, to the Depositor (or its designee) the
documents or instruments with respect to each Mortgage Loan (each a "Mortgage
File") so transferred and assigned, as specified in the applicable Sale and
Servicing Agreement.
(b) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the related Mortgage Files, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Servicer for such purpose have been
so deposited.
Section 1.03. Review of Documentation. The Depositor, by execution and
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by U.S. Bank Trust National Association (the "Custodian"), as custodian for the
Depositor. The Custodian is required to review, within 45 days following the
Closing Date, the Mortgage File. If in the course of such review a Custodian
identifies any Material Defect, Lehman Capital shall be obligated to cure such
defect or to repurchase the related Mortgage Loan from the Depositor (or, at the
direction of and on behalf of the Depositor, from the Trust Fund), or to
substitute a Qualifying Substitute Mortgage Loan therefor, in each case to the
same extent and in the same manner as the Depositor is obligated to the Trustee
and the Trust Fund under Section 2.02(c) of the Trust Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. (a) Lehman
Capital hereby represents and warrants to the Depositor that as of the date
hereof that:
(i) Lehman Capital is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and has
full corporate power and authority to own its property, to carry on its business
as presently conducted, and to enter into and perform its obligations under this
Agreement;
(ii) the execution and delivery by Lehman Capital of this Agreement
have been duly authorized by all necessary corporate action on the part of
Lehman Capital; neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or constitute a
default under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on Lehman Capital or its properties or the
certificate of incorporation or bylaws of Lehman Capital;
(iii) the execution, delivery and performance by Lehman Capital of
this Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except such as has been
obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by Lehman
Capital and, assuming due authorization, execution and delivery by the
Depositor, constitutes a valid and binding obligation of Lehman Capital
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of the rights of creditors
generally and (B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at law; and
(v) there are no actions, suits or proceedings pending or, to the
knowledge of Lehman Capital, threatened or likely to be asserted against or
affecting Lehman Capital, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the transactions
contemplated by this Agreement or (B) with respect to any other matter which in
the judgment of Lehman Capital will be determined adversely to Lehman Capital
and will if determined adversely to Lehman Capital materially and adversely
affect it or its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its obligations under this
Agreement.
(b) The representations and warranties of The Boston Company with respect
to the related Mortgage Loans in the applicable Sale and Servicing Agreement
were made as of the date specified in the applicable Sale and Servicing
Agreement. To the extent that any fact, condition or event with respect to a
Mortgage Loan constitutes a breach of both (i) a representation or warranty of
The Boston Company under the applicable Sale and Servicing Agreement and (ii) a
representation or warranty of Lehman Capital under this Agreement, the only
right or remedy of the Depositor shall be the right to enforce the obligations
of The Boston Company under any applicable representation or warranty made by
it. The Depositor acknowledges and agrees that the representations and
warranties of Lehman Capital in this Section 1.04(b) are applicable only to
facts or conditions that arise or events that occur subsequent to the date as of
which the representation and warranties with respect to the related Mortgage
Loans in the Sale and Servicing Agreements were made, and which do not
constitute a breach of any representation or warranty made by The Boston Company
in Section 3.02 of the applicable Sale and Servicing Agreement. Lehman Capital
shall have no obligation or liability with respect to any breach of a
representation or warranty made by it with respect to the Mortgage Loans if the
fact, condition or event constituting such breach also constitutes a breach of a
representation or warranty made by The Boston Company in Section 3.02 of the
applicable Sale and Servicing Agreement, without regard to whether The Boston
Company fulfills its contractual obligations in respect of such representation
or warranty. Subject to the foregoing, Lehman Capital represents and warrants
upon delivery of the Mortgage Loans to the Depositor hereunder, as to each,
that:
(i) The information set forth with respect to the Mortgage Loans on
the Mortgage Loan Schedule provides an accurate listing of the Mortgage Loans,
and the information with respect to each Mortgage Loan on the Mortgage Loan
Schedule is true and correct in all material respects at the date or dates
respecting which such information is given;
(ii) There are no defaults in complying with the terms of any
Mortgage, and Lehman Capital has no notice as to any taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing but which have
not been paid;
(iii) Except in the case of Cooperative Loans, each Mortgage requires
all buildings or other improvements on the related Mortgaged Property to be
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
related Mortgaged Property is located pursuant to insurance policies conforming
to the requirements of the guidelines of FNMA or FHLMC. 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 Flood Insurance Administration is in effect which policy conforms to the
requirements of the current guidelines of the Federal Flood Insurance
Administration. All individual insurance polices contain a standard mortgagee
clause naming The Boston Company and its successors and assigns as mortgagee,
and all premiums thereon have been paid. Each Mortgage obligates the related
Mortgagor thereunder to maintain the hazard insurance policy at the Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such Mortgagor's cost
and expense, and to seek reimbursement therefor from the Mortgagor. Where
required by state law or regulation, each Mortgagor has been given an
opportunity to choose the carrier of the required hazard insurance, provided the
policy is not a "master" or "blanket" hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance policy is
the valid and binding obligation of the insurer, is in full force and effect,
and will be in full force and effect and inure to the benefit of the Depositor
upon the consummation of the transactions contemplated by this Agreement.
(iv) Each Mortgage has not been satisfied, cancelled, 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
recision;
(v) Each Mortgage evidences a valid, subsisting, enforceable and
perfected first lien on the related Mortgaged Property (including all
improvements on the Mortgaged Property). The lien of the Mortgage is subject
only to: (1) liens of current real property taxes and assessments not yet due
and payable and, if the related Mortgaged Property is a condominium unit, any
lien for common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public record as of
the date of recording of such Mortgage acceptable to mortgage lending
institutions in the area in which the related Mortgaged Property is located and
specifically referred to in the lender's Title Insurance Policy or attorney's
opinion of title and abstract of title delivered to the originator of such
Mortgage Loan, and (3) such other matters to which like properties are commonly
subject which do not, individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the Mortgage. Any
security agreement, chattel mortgage or equivalent document related to, and
delivered to the Trustee in connection with, a Mortgage Loan establishes a
valid, subsisting and enforceable first lien on the property described therein
and the Depositor has full right to sell and assign the same to the Trustee;
(vi) Immediately prior to the transfer and assignment of the Mortgage
Loans to the Depositor, Lehman Capital was the sole owner of record and holder
of each Mortgage Loan, and Lehman Capital had good and marketable title thereto,
and has full right to transfer and sell each Mortgage Loan to the Depositor free
and clear, except as described in paragraph (v) above, of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest, and has 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 this Agreement;
(vii) Each Mortgage Loan other than any Cooperative Loan is covered by
either (i) an attorney's opinion of title and abstract of title the form and
substance of which is generally acceptable to mortgage lending institutions
originating mortgage loans in the locality where the related Mortgaged Property
is located or (ii) an ALTA mortgagee Title Insurance Policy or other generally
acceptable form of policy of insurance, issued by a title insurer qualified to
do business in the jurisdiction where the Mortgaged Property is located,
insuring the originator of the Mortgage Loan, and its successors and assigns, as
to the first priority lien of the Mortgage in the original principal amount of
the Mortgage Loan (subject only to the exceptions described in paragraph (v)
above. If the Mortgaged Property is a condominium unit located in a state in
which a title insurer will generally issue an endorsement, then the related
Title Insurance Policy contains an endorsement insuring the validity of the
creation of the condominium form of ownership with respect to the project in
which such unit is located. With respect to any Title Insurance Policy, the
originator is the sole insured of such mortgagee Title Insurance Policy, such
mortgagee Title Insurance Policy is in full force and effect and will inure to
the benefit of the Depositor upon the consummation of the transactions
contemplated by this Agreement, no claims have been made under such mortgagee
Title Insurance Policy and no prior holder of the related Mortgage, including
Lehman Capital, has done, by act or omission, anything that would impair the
coverage of such mortgagee Title Insurance Policy;
(viii) To the best of Lehman Capital's knowledge, no foreclosure
action is being threatened or commenced with respect to any Mortgage Loan. There
is no proceeding pending for the total or partial condemnation of any Mortgaged
Property (or, in the case of a Cooperative Loan, the related cooperative unit)
and each such property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to have a material
adverse effect on the value of the related Mortgaged Property as security for
the related Mortgage Loan or the use for which the premises were intended;
(ix) 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
the law could give rise to such liens) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(x) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
similar institution which is supervised and examined by a Federal or State
authority, or by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to sections 203 and 211 of the National Housing Act; and
(xi) Each Mortgage Loan is a "qualified mortgage" within the meaning
of Section 860G of the Code and Treas. Reg. ss.1.860G-2.
It is understood and agreed that the representations and warranties set
forth herein survive delivery of the Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Depositor. Upon discovery by either Lehman
Capital or the Depositor of a breach of any of the foregoing representations and
warranties that adversely and materially affects the value of the related
Mortgage Loan, and that does not also constitute a breach of a representation or
warranty of The Boston Company under Section 3.02 of the applicable Sale and
Servicing Agreement, the party discovering such breach shall give prompt written
notice to the other party. Within 60 days of the discovery of any such breach,
Lehman Capital shall either (a) cure such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect thereof from
the Depositor at the applicable Purchase Price or (c) within the two year period
following the Closing Date, substitute a Qualifying Substitute Mortgage Loan for
the affected Mortgage Loan.
Section 1.05. Grant Clause. It is intended that the conveyance of Lehman
Capital's right, title and interest in and to Mortgage Loans and other property
conveyed pursuant to this Agreement shall constitute, and shall be construed as,
a sale of such property and not a grant of a security interest to secure a loan.
However, if such conveyance is deemed to be in respect of a loan, it is intended
that: (1) the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement; (2) Lehman Capital hereby grants to the
Depositor a first priority security interest in all of Lehman Capital's right,
title and interest in, to and under, whether now owned or hereafter acquired,
such Mortgage Loans and other property; and (3) this Agreement shall constitute
a security agreement under applicable law.
Section 1.06. Assignment by Depositor. The Depositor shall have the right,
upon notice to but without the consent of Lehman Capital, to assign, in whole or
in part, its interest under this Agreement, with respect to the Mortgage Loans
to the Trustee, and the Trustee then shall succeed to all rights of the
Depositor under this Agreement. All references to the Depositor in this
Agreement shall be deemed to include its assignee or designee, specifically
including the Trustee.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 2.03. Amendment. (a) This Agreement may be amended from time to
time by Lehman Capital and the Depositor, without notice to or the consent of
any of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund, the Trust Agreement or
this Agreement in any Offering Document; or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement or (iv) to add, delete, or amend any provisions to the
extent necessary or desirable to comply with any requirements imposed by the
Code and the REMIC Provisions. No such amendment effected pursuant to clause
(iii) of the preceding sentence shall adversely affect in any material respect
the interests of any Holder. Any such amendment shall be deemed not to adversely
affect in any material respect any Holder, if the Trustee receives written
confirmation from each Rating Agency that such amendment will not cause such
Rating Agency to reduce the then current rating assigned to the Certificates
(and any Opinion of Counsel requested by the Trustee in connection with any such
amendment may rely expressly on such confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by Lehman Capital
and the Depositor with the consent of the Holders of not less than 66-2/3% of
the Class Certificate Principal Amount (or Percentage Interest) 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; provided, however, that no
such amendment may (i) 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 (ii)
reduce the aforesaid percentages of Class Certificate Principal Amount (or
Percentage Interest) of Certificates of each Class, the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of the Class Certificate Principal Amount (or Percentage Interest) of each
Class of Certificates affected thereby. For purposes of this paragraph,
references to "Holder" or "Holders" shall be deemed to include, in the case of
any Class of Book-Entry Certificates, the related Certificate Owners.
(c) It shall not be necessary for the consent of Holders under this Section
2.03 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 Holders shall be subject to such reasonable regulations as the
Trustee may prescribe.
Section 2.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 2.05. 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.
Section 2.06. Indulgences; No Waivers. Neither the failure nor any delay on
the part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
Section 2.07. Headings Not to Affect Interpretation. The headings contained
in this Agreement are for convenience of reference only, and they shall not be
used in the interpretation hereof.
Section 2.08. Benefits of Agreement. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties to this Agreement and
their successors hereunder, any benefit or any legal or equitable right, power,
remedy or claim under this Agreement.
Section 2.09. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lehman Capital and the Depositor have caused their
names to be signed hereto by their respective duly authorized officers as of the
date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Joseph J. Kelly
-----------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
STRUCTURED ASSET SECURITIES CORPORATION
By: /s/ Stanley Labanowski
-----------------------------
Name: Stanley Labanowski
Title: Authorized Signatory
SCHEDULE A
MORTGAGE LOAN SCHEDULE
Amends January 1, 1998 Agreement
BOSTON SAFE DEPOSIT AND TRUST COMPANY,
SELLER
AND
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
PURCHASER
AMENDED AND RESTATED
MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT
DATED AS OF APRIL 1, 1998
ADJUSTABLE RATE MORTGAGE LOANS
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..............................................................2
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;BOOKS
AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS.......................11
Section 2.01 Sale and Conveyance of Mortgage Loans;
Possession of Mortgage Files; Maintenance of
Servicing Files.............................................11
Section 2.02 Books and Records; Transfers of Mortgage Loans..............11
Section 2.03 Additional Pledged Collateral Custodial Agreement;
Delivery of Documents............ ..........................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES AND BREACH...........................13
Section 3.01 Company Representations and Warranties......................13
Section 3.02 Representations and Warranties Regarding
Individual Mortgage Loans...................................16
Section 3.03 Remedies for Breach of Representations and Warranties.......24
Section 3.04 Mortgage Loans Convertible to Fixed Interest Rate...........26
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................................26
Section 4.01 Company to Act as Servicer..................................26
Section 4.02 Liquidation of Mortgage Loans...............................28
Section 4.03 Collection of Mortgage Loan Payments........................29
Section 4.04 Establishment of and Deposits to Custodial Account..........29
Section 4.05 Permitted Withdrawals From Custodial Account................31
Section 4.06 Establishment of and Deposits to Escrow Account.............32
Section 4.07 Permitted Withdrawals From Escrow Account...................33
Section 4.08 Maintenance of Tax, Insurance, Other Charge Records.........34
Section 4.09 Protection of Accounts......................................34
Section 4.10 Maintenance of Hazard Insurance.............................34
Section 4.11 Maintenance of Mortgage Impairment Insurance................36
Section 4.12 Maintenance of Fidelity Bond and Errors and
Omissions Insurance..................... ...................36
Section 4.13 Inspections.................................................37
Section 4.14 Restoration of Mortgaged Property...........................37
Section 4.15 Title, Management and Disposition of REO Property...........37
Section 4.16 Real Estate Owned Reports...................................39
Section 4.17 Liquidation Reports.........................................39
Section 4.18 Notification of Adjustments.................................40
Section 4.19 Reports of Foreclosures and Abandonments of
Mortgaged Property..........................................40
ARTICLE V
PAYMENTS TO PURCHASER.........................................................40
Section 5.01 Remittances.................................................40
Section 5.02 Statements to Purchaser.....................................41
Section 5.03 Monthly Advances by Company.................................41
ARTICLE VI
GENERAL SERVICING PROCEDURES..................................................42
Section 6.01 Transfers of Mortgaged Property............................42
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.....43
Section 6.03 Servicing Compensation......................................43
Section 6.04 Annual Statement as to Compliance...........................43
Section 6.05 Annual Independent Public Accountants' Servicing Report.....44
Section 6.06 Right to Examine Company Records............................44
ARTICLE VII
COMPANY TO COOPERATE..........................................................44
Section 7.01 Provision of Information....................................44
Section 7.02 Financial Statements; Servicing Facilities.................45
ARTICLE VIII
THE COMPANY...................................................................45
Section 8.01 Third Party Claims..........................................45
Section 8.02 Merger or Consolidation of the Company......................45
Section 8.03 Limitation on Liability of Company and Others...............46
Section 8.04 Limitation on Resignation and Assignment by Company.........46
ARTICLE IX
DEFAULT.......................................................................47
Section 9.01 Events of Default...........................................47
Section 9.02 Waiver of Defaults..........................................49
ARTICLE X
TERMINATION...................................................................49
Section 10.01 Termination.................................................49
ARTICLE XI
MISCELLANEOUS PROVISIONS......................................................49
Section 11.01 Successor to Company........................................49
Section 11.02 Amendment...................................................50
Section 11.03 Governing Law...............................................51
Section 11.04 Duration of Agreement.......................................51
Section 11.05 Notices.....................................................51
Section 11.06 Severability of Provisions..................................52
Section 11.07 Relationship of Parties.....................................52
Section 11.08 Execution; Successors and Assigns...........................53
Section 11.09 Integration.................................................53
Section 11.10 Assignment by Purchaser.....................................53
Section 11.11 No Solicitation.............................................53
Section 11.12 Reconstitution..............................................54
EXHIBITS AND SCHEDULES
Exhibit A Mortgage Loan Schedule
Exhibit A-1 Summary of Underwriting Guidelines
Exhibit B Contents of Each Mortgage File
Exhibit C Mortgage Loan Documents
Exhibit C-1 Custodial Agreement
Exhibit D-1 Custodial Account Certification
Exhibit D-2 Custodial Account Letter Agreement
Exhibit E-1 Escrow Account Certification
Exhibit E-2 Escrow Account Letter Agreement
Exhibit F Monthly Remittance Advice
Exhibit G Intentionally Deleted
Exhibit H Company's Certificate of Compliance
Exhibit I Form of Opinion of Seller's Counsel
Exhibit J Form of Opinion of Purchaser's Counsel
Exhibit K Additional Pledged Collateral Custodial Agreement
Exhibit L Mortgage Loans with Conversion Option
Exhibit M Form of Certificate for Nonrecoverable Advances
AMENDED AND RESTATED
MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT
This AMENDED AND RESTATED MORTGAGE LOAN SALE, WARRANTIES AND SERVICING
AGREEMENT (the "Agreement") is executed by and between Lehman Capital, A
Division of Lehman Brothers Holdings Inc., as purchaser (the "Purchaser"), and
Boston Safe Deposit and Trust Company, as seller and servicer (the "Company"),
as of this 1st day of April, 1998. This Amended and Restated Agreement amends
and restates the MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT by and
between the Purchaser and the Company dated as of January 1, 1998 (the
"Original Agreement").
WITNESSETH
WHEREAS, the Purchaser purchased from the Company and the Company sold to
the Purchaser certain conventional, adjustable rate first-lien mortgage loans
and cooperative loans (hereinafter referred to as "Mortgage Loans") which have
an aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after deduction of payments due on or before such date, of
$104,349,740.96 pursuant to the Original Agreement;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on real estate (or
against the shares of a cooperative corporation and the related proprietary
lease) located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit A;
WHEREAS, the Purchaser and the Company have agreed that the Purchaser
will assign all of its rights and delegate all of its obligations hereunder to
the Depositor (as defined herein), which in turn will assign all of its rights
and delegate all of its obligations (except as otherwise specified herein)
hereunder to the Trustee (as defined herein) under the Trust Agreement (as
defined herein), and that each reference herein to the Purchaser is intended,
unless otherwise specified, to mean Lehman Capital or the Trustee, as
assignee, whichever is the holder of the Mortgage Loans from time to time; and
WHEREAS, the Purchaser and the Company wish to amend and restate the
provisions governing the purchase of the Mortgage Loans and the management,
servicing and control of the Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Purchaser and the Company agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Additional Collateral: Any real or personal property, securities, cash,
instruments, contracts or other documents constituting or evidencing
collateral pledged as additional security for a Mortgage Loan (other than the
Mortgaged Property).
Additional Pledged Collateral Custodial Agreement: The agreement
governing the retention of Additional Collateral, a form of which is annexed
hereto as Exhibit K.
Agreement: This Mortgage Loan Sale, Warranties and Servicing Agreement
and all amendments hereof and supplements and exhibits hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: The amount set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day (8:30 to 5:00 p.m. EST) other than (i) a Saturday
or Sunday, or (ii) a day on which banking and savings and loan institutions in
the Commonwealth of Massachusetts or the State of New York are authorized or
obligated by law or executive order to be closed.
Buydown Mortgage Loan: A Mortgage Loan for which funds have been
deposited with the Company by the Mortgagor and/or other third party to be
applied to the Monthly Payment for a specified period of time.
Certificates: Any or all of the Certificates to be issued pursuant to the
Trust Agreement.
Closing Date: January 16, 1998
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time, or any successor statute thereto, and applicable U.S. Department of
the Treasury regulations issued pursuant thereto.
Company: Boston Safe Deposit and Trust Company, or its successor in
interest or assigns. For purposes of representations and warranties and other
provisions relating to servicing, FNMA or FHLMC qualifications, "Company" is
deemed to include the Subservicer.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Convertible Mortgage Loan: Any Mortgage Loan as to which, pursuant to the
related Mortgage Note, the Mortgagor may elect to convert the Mortgage Rate
from an adjustable to a fixed rate of interest.
Coop Loan: A loan secured by a first lien against (i) shares issued by a
cooperative apartment corporation and (ii) a Mortgagor's leasehold interest in
a cooperative apartment located in such building.
Cooperative Property: The real property and improvements owned by the
cooperative corporation, that includes the allocation of individual dwelling
units to the holders of the cooperative shares of the cooperative corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The Custodial Agreement governing retention of the
Mortgage Loan Documents, the form of which is attached hereto as Exhibit C-1.
Custodian: The Custodian under the Custodial Agreement, or its successor
in interest or assigns or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: January 1, 1998.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement or which is, in the
case of a substitution pursuant to Section 3.03, replaced or to be replaced
with one or more Qualified Substitute Mortgage Loans.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation, or its successors in interest or assigns.
Determination Date: The 13th day (or if such 13th Day is not a Business
Day, the Business Day immediately preceding such 13th day) of the month of the
related Remittance Date.
Due Date: The day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of such Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
related document.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 9.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by or on behalf of the
Company pursuant to Section 4.12.
First Remittance Date: February 18, 1998.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note of not less than 250 basis
points (2.50%) and not more than 287.5 basis points (2.875%) basis points,
which amount is added to the Index in accordance with the terms of the related
Mortgage Note to determine, on each Interest Rate Adjustment Date, the
Mortgage Interest Rate for such Mortgage Loan.
Index: On each Interest Rate Adjustment Date, the applicable index shall
be the weekly average yield of the secondary market interest rates on one year
constant maturity treasuries (CMT).
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.
Interest Rate Adjustment Date: The date on which an adjustment to the
Mortgage Interest Rate on a Mortgage Note becomes effective. The first
Interest Rate Adjustment Date for each Mortgage Loan will occur in accordance
with the terms of the Mortgage Note.
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio
of the principal balance of such Mortgage Loan at origination, or the Stated
Principal Balance of such Mortgage Loan as of the Cut-Off Date or such other
date as is specified, less the minimum value of Additional Collateral to the
lesser of (a) the Appraised Value of the Mortgaged Property and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price of the Mortgaged Property, expressed as a
percentage.
Monthly Advance: The portion of Monthly Payment delinquent with respect
to each Mortgage Loan at the close of business on the Determination Date
required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and/or
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust, pledge and security agreement or
other instrument securing a Mortgage Note, which creates a first lien on
either (i) an unsubordinated estate in fee simple in real property or (ii) a
first lien on a cooperative apartment lease and related cooperative
corporation shares, each as security for a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit B annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note, as adjusted from time to time in accordance with the provisions of such
Mortgage Note. The Mortgage Interest Rate, as determined on each Interest Rate
Adjustment Date, is equal to the sum of the Index and the Gross Margin,
adjusted, if necessary, to comply with the Mortgage Interest Rate Cap.
Mortgage Interest Rate Cap: The limit on each Mortgage Interest Rate
adjustment, such that as to each Mortgage Loan, the Mortgage Interest Rate
shall not: (i) be more or less than the stated periodic cap as applied to the
Mortgage Interest Rate in effect immediately prior to the particular Interest
Rate Adjustment Date of the related Mortgage Loan; and (ii) exceed the maximum
Mortgage Interest Rate Cap provided in the related Mortgage Note.
Mortgage Loan: An individual loan secured by a first lien on real
property and each Coop Loan which is the subject of this Agreement and which
is identified on the Mortgage Loan Schedule, including, without limitation,
the Monthly Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and all
other rights, benefits, proceeds and obligations arising from or in connection
with such loan.
Mortgage Loan Documents: The documents listed in Exhibit C hereto
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
applicable Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan identifying number; (2) the
Mortgagor's name; (3) the street address of the Mortgaged Property including the
state code; (4) a code indicating whether the Mortgaged Property is a single
family residence, condominium, shares in a cooperative corporation, or a 2-4
family residence; (5) a description of Additional Collateral, if any, and the
value thereof at the close of business on the Cut-off Date; (6) the original
months to maturity or the remaining months to maturity from the Cut-off Date, in
any case based on the original amortization schedule, and if different, the
maturity expressed in the same manner but based on the actual amortization
schedule; (7) the Loan-to-Value Ratio at origination; (8) the Mortgage Interest
Rate as of the origination and Cut-off Dates; (9) the date on which the Mortgage
Loan was originated; (10) the stated maturity date; (11) the amount of the
Monthly Payment; (12) the last payment date on which a payment was actually
applied to the outstanding principal balance; (13) the original principal amount
of the Mortgage Loan; (14) the principal balance of the Mortgage Loan as of the
close of business on the Cut-off Date, after deduction of the payments of
principal due on or before the Cut-off Date, whether or not collected; (15) the
Index; (16) the next Interest Rate Adjustment Date; (17) the Gross Margin; (18)
the maximum Mortgage Interest Rate under the terms of the Mortgage Note; and
(19) the minimum value of any additional collateral required under the terms of
the Mortgage Loan. With respect to the Mortgage Loans in the aggregate, the
Mortgage Loan Schedule shall set forth the following information, as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current aggregate
outstanding principal balance of the Mortgage Loans; and (3) the weighted
average Mortgage Interest Rate of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property or shares of a cooperative
corporation and related leasehold interest, as of the Closing Date, securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Nonrecoverable Advance: With respect to each Mortgage Loan, a Monthly
Advance with regard to which the Company, in its sole discretion, anticipates
that the amount of such advance will not be ultimately recoverable from related
Liquidation Proceeds, Insurance Proceeds or other amounts received with respect
to such Mortgage Loan. The Company's determination as to a Nonrecoverable
Advance shall be evidenced by a certificate in the form set forth in Exhibit M.
Officer's Certificate: A certificate signed by the Chairman of the Board or
the Vice Chairman of the Board or the President or a Vice President or an
Assistant Vice President and by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Company, and delivered to
the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Company, reasonably acceptable to the addressee (except that such counsel
must be Independent (as defined in the Trust Agreement) outside counsel with
respect to any such opinion required under Sections 4.15 and 11.02 of this
Agreement).
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
Power of Attorney: The power of attorney appointing the Company as the
lawful agent and attorney-in-fact of the Purchaser, the form of which is
attached hereto as Exhibit N.
Prime Rate: The rate published as the Prime Rate in The Wall Street
Journal, Northeast edition.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Principal Prepayment Period: The month preceding the month in which the
related Remittance Date occurs.
Purchase Price: The price as stated in the Purchase Price and Terms Letter.
Purchase Price and Terms Letter: The Purchase Price and Terms Letter dated
as of November 21, 1997 and revised as of December 5, 1997 from the Company, as
accepted and agreed to by the Purchaser.
Purchaser: Lehman Capital, A Division of Lehman Brothers Holdings Inc., or
its successor(s) in interest or any successor to the Purchaser or assignee
thereof under this Agreement as herein provided, or of any such assignee.
Qualified Depository: A depository the accounts of which are insured by the
FDIC through the BIF or the SAIF and the debt obligations of which are rated the
equivalent of AA or better by each Rating Agency.
Qualified Substitute Mortgage Loan: A Mortgage Loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution: (i) have an outstanding principal balance, after deduction
of all scheduled payments 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), not in excess of the Stated Principal Balance of
the related Deleted Mortgage Loan (to the extent that the principal balance of
the Mortgage Loan is less than the Stated Principal Balance of the Deleted
Mortgage Loan, the amount of such difference together with one month's interest
on such difference at the applicable Remittance Rate, shall be deposited by the
Company in the Custodial Account pursuant to Section 4.04); (ii) have a Mortgage
Loan Remittance Rate not less than, and not more than 2% greater than the
Mortgage Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a Gross
Margin of not more than 1/8th of one percent (0.125%) less than the Gross Margin
of the related Deleted Mortgage Loan; (iv) have a remaining term to maturity not
greater than, and not more than one year less than that of the Deleted Mortgage
Loan; (v) comply with each representation and warranty set forth in Section
3.02; (vi) have a Loan-to-Value Ratio as of the date of such substitution not
greater than that of the related Deleted Mortgage Loan; and (vii) not be a Coop
Loan unless the related Deleted Mortgage Loan was a Coop Loan.
Rating Agency: Either of Standard & Poor's Rating Services, a division of
The McGraw Hill Companies, Inc. and Fitch IBCA, Inc.
Record Date: The close of business on the last Business Day of the month
preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: The provisions of the federal income tax law relating to
a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately following) of any month, beginning with the
First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.15.
REO Property: A Mortgaged Property acquired by the Company on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.15.
Repurchase Price: With respect to any Mortgage Loan, a price equal to (i)
the Stated Principal Balance of the Mortgage Loan plus (ii) interest on such
Stated Principal Balance at the Mortgage Loan Remittance Rate from the date on
which interest has last been paid (to the extent distributed to the Purchaser)
to and including the date prior to repurchase, less amounts received or advanced
in respect of such repurchased Mortgage Loan which are being held in the
Custodial Account for distribution in the month of repurchase.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary "out-of-pocket"
costs and expenses other than Monthly Advances (including reasonable attorneys'
fees and disbursements) incurred in the performance by the Company of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee with respect
to any Mortgage Loan for any month is limited to, and the Servicing Fee is
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds, to the extent permitted by Section 4.05) of
the related Monthly Payment collected by the Company, or as otherwise provided
under Section 4.05.
Servicing Fee Rate: 0.25% (25 basis points) per annum.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in Exhibit C hereto, the originals of which are delivered to the
Custodian pursuant to Section 2.01.
Servicing Officer: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal or advances in
lieu thereof.
Subservicer: Mellon Mortgage Company, or any other subservicer which is
subservicing the Mortgage Loans pursuant to a Subservicing Agreement. Any
Subservicer shall meet the qualifications set forth in Section 4.01.
Subservicing Agreement: An agreement between the Company and a Subservicer
for the subservicing of the Mortgage Loans.
Trust: The trust fund established by the Trust Agreement, the assets of
which primarily consist of the Mortgage Loans.
Trust Agreement: The Trust Agreement dated as of April 1, 1998 between the
Depositor and the Trustee.
Trustee: Norwest Bank Minnesota, National Association, as Trustee under the
Trust Agreement, or its successor in interest or assigns.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans; Possession of Mortgage
Files; Maintenance of . Servicing Files
(a) Sale and Conveyance of Mortgage Loans:
(1) Agreement to Purchase: The Company agrees to sell, and
Purchaser agrees to purchase, Mortgage Loans listed on the Mortgage Loan
Schedule annexed hereto as Exhibit A, having an aggregate principal balance on
the Cut-off Date of $104,349,740.96.
(2) The Company, simultaneously with the later to occur of
execution and delivery of this Agreement and the receipt of the Purchase Price
in good funds, as provided in the Purchase Price and Terms Letter, does hereby
sell, transfer, assign, set over and convey to the Purchaser, without recourse,
but subject to the terms of this Agreement, all the right, title and interest of
the Company in and to the Mortgage Loans.
(b) Possession of Mortgage Files: Pursuant to Section 2.03, the
Company has delivered or will have released as of the Closing Date the Mortgage
Loan Documents to the Custodian. The contents of each Mortgage File and
Servicing File not delivered to the Custodian are and shall be held in trust by
the Company for the benefit of the Purchaser as the owner thereof. Upon the sale
of the Mortgage Loans the ownership of each Mortgage Note, the related Mortgage
and the related Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to the
origination of each related Mortgage Loan prepared by or which come into the
possession of the Company shall vest immediately in the Purchaser and shall be
retained and maintained by the Company, in trust, at the will of the Purchaser
and only in such custodial capacity.
(c) Maintenance of Servicing Files: The Company shall maintain a
Servicing File consisting of all records required to service the Mortgage Loan.
Each Servicing File shall be marked appropriately to reflect clearly the sale of
the related Mortgage Loan to the Purchaser, and records relating to the
Servicing Files will reflect their segregation from other files in the
Servicer's possession. Ownership of Servicing Files shall be retained by the
Company.
Section 2.02. Books and Records; Transfers of Mortgage Loans
From and after the sale of the Mortgage Loans to the Purchaser, all rights
arising out of the Mortgage Loans, including but not limited to all funds
received on or in connection with each Mortgage Loan, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements as a sale of assets by the Company. The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations. To the extent that original documents are not required for purposes
of realization of Liquidation Proceeds, Condemnation Proceeds or Insurance
Proceeds, documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such a person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans, and any subsequent purchaser of one or more Mortgage Loans may
sell and transfer such Mortgage Loans; provided, however, that in no event shall
there be more than three persons at any given time having the status of
"Purchaser" hereunder. The Purchaser shall advise the Company of the transfer of
any Mortgage Loan by the Purchaser, and upon receipt of notice of such transfer,
the Company shall mark its books and records to reflect the ownership of the
Mortgage Loans by such transferee, and shall release the previous Purchaser from
its obligations hereunder with respect to the Mortgage Loans sold or
transferred.
Section 2.03. Additional Pledged Collateral Custodial Agreement; Delivery
of Documents.
Except as provided by the Additional Pledged Collateral Custodial Agreement
delivered herewith, the Company has or will have by the Closing Date delivered
and released to the Custodian those Mortgage Loan Documents as required by this
Agreement with respect to each Mortgage Loan, a list of which is attached as
Exhibit C hereto.
The Custodian has certified its receipt of all such Mortgage Loan Documents
required to be delivered, as evidenced by the initial certification of the
Custodian (the "Custodian Certificate").
Within 90 days of receipt by the Company of a copy of the Custodian
Certificate which indicates that any of the Mortgage Loan Documents is missing,
does not appear regular on its face (i.e., is mutilated, damaged, defaced, torn
or otherwise physically altered) (each, a "Material Defect"), the Company shall
cure such Material Defect or, if it does not cure such Material Defect within
such period and such Material Defect has a material adverse effect on
Purchaser's ability to enforce the obligations of the borrower or the guarantor,
as the case may be, under the Mortgage Loan Documents, repurchase the related
Mortgage Loan at the Repurchase Price (or, to the extent provided in Section
3.03, substitute one or more Qualifying Substitute Mortgage Loans).
The Company shall forward to the Custodian original documents evidencing
any assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or Section 6.01 within one week of
its execution; provided, however, that the Company shall provide the Custodian
with a certified true copy of any such document submitted for recordation within
one week of its execution and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within sixty (60) days of its submission for recordation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01. Company Representations and Warranties
The Company represents and warrants to the Purchaser that, as of the
Closing Date:
(a) Due Organization and Authority. The Company is a trust company
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and is licensed, qualified and in good standing in
each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in compliance with the
laws of any such state to the extent necessary to ensure the enforceability of
the related Mortgage Loan and the servicing of such Mortgage Loan in accordance
with the terms of this Agreement; the Company has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Company and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite corporate action has
been taken by the Company to make this Agreement valid and binding upon the
Company in accordance with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Company, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Company pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the origination or acquisition of the Mortgage Loans by the Company,
the sale of the Mortgage Loans to the Purchaser or the other transactions
contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, will conflict materially with or result in a
material breach of any of the terms, conditions or provisions of the Company's
charter or by-laws or any legal restriction or any agreement or instrument to
which the Company is now a party or by which it is bound, constitute a default
or result in an acceleration under any of the foregoing, or result in any
material violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject, or impair the ability of the
Purchaser to realize on the Mortgage Loans, or impair the value of the Mortgage
Loans;
(d) Ability to Service. The Company is an approved seller/servicer of
conventional residential mortgage loans for FNMA or FHLMC, with the facilities,
procedures, and experienced personnel necessary for the servicing, in accordance
with Accepted Servicing Practices, of mortgage loans of the same type as the
Mortgage Loans, and is in good standing, to sell mortgage loans to and service
mortgage loans for FNMA or FHLMC, and no event has occurred, including but not
limited to a change in insurance coverage, which would make the Company unable
to comply with FNMA or FHLMC eligibility requirements or which would require
notification to either FNMA or FHLMC;
(e) Reasonable Servicing Fee. The Company acknowledges and agrees that
the Servicing Fee, as calculated at the Servicing Fee Rate, represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Company, for accounting and tax purposes,
as compensation for the servicing and administration of the Mortgage Loans
pursuant to this Agreement;
(f) Ability to Perform. The Company does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(g) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Company which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the Company,
or in any material impairment of the right or ability of the Company to carry on
its business substantially as now conducted, or in any material liability on the
part of the Company, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Company contemplated herein, or which
would be likely to impair materially the ability of the Company to perform under
the terms of this Agreement;
(h) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Company of or the compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date;
(i) Selection Process. The Mortgage Loans were selected from among the
outstanding adjustable rate one- to four- family mortgage loans in the Company's
portfolio at the Closing Date as to which the representations and warranties set
forth in Section 3.02 could be made and such selection was not made in a manner
so as to affect adversely the interests of the Purchaser;
(j) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains any
materially untrue statement of fact or omits to state a fact necessary to make
the statements contained therein not misleading;
(k) [RESERVED];
(l) Sale Treatment. The Company has determined that the disposition of
the Mortgage Loans pursuant to this Agreement will be afforded sale treatment
for accounting and tax purposes;
(m) Financial Statements. The Company has delivered to the Purchaser
consolidated financial statements of Mellon Bank Corporation, as to its last two
complete fiscal years and any later quarter ended more than sixty (60) days
prior to the execution of this Agreement. All such financial statements fairly
present the pertinent results of operations and affiliates and have been
prepared in accordance with generally accepted accounting principles constantly
applied throughout the periods involved, except as set forth in the notes
thereto. In addition, the Company has delivered information as to its
conventional mortgage loan delinquency and foreclosure experience for the
immediately preceding three-year period, in each case with respect to mortgage
loans owned by it and such mortgage loans serviced for others during such
period, and all such information so delivered is true and correct in all
material respects. There has been no change in the business, operations,
financial condition, properties or assets of the Company since the date of the
Company's financial statements that would have a material adverse effect on its
ability to perform its obligations under this Agreement. The Company has
completed any forms requested by the Purchaser in a timely manner and in
accordance with the provided instructions;
(n) No Brokers' Fees. The Company has not dealt with any broker,
investment banker, agent or other person that may be entitled to any commission
or compensation in connection with the sale of the Mortgage Loans; and
(o) Fair Consideration. The consideration received by the Company upon
the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02. Representations and Warranties Regarding Individual
Mortgage Loans.
As to each Mortgage Loan, the Company hereby represents and warrants to
the Purchaser that, as of the Closing Date:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule is complete, true and correct, in all material
respects;
(b) Payments Current. Except as set forth in Schedule 3.02(b), all
payments required to be made up to the Closing Date for the Mortgage Loan
under the terms of the Mortgage Note have been made and credited. No payment
required under the Mortgage Loan has been delinquent by more than thirty (30)
days more than one time within the twelve months preceding the Cut-off Date;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgages, and Company has no notice as to any taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing but which have not been paid. The Company has not advanced funds,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the Mortgage Note
or date of disbursement of the Mortgage Loan proceeds, whichever is greater,
to the day which precedes by one month the Due Date of the first installment
of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
except by a written instrument (which, if necessary to protect the interests
of the Purchaser, has been recorded) which has been delivered to the
Custodian;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either
the Mortgage Note or the Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto, and Company has no knowledge that any Mortgagor was a debtor in any
state or federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated;
(f) Hazard Insurance. Except in the case of Coop Loans, the Mortgage
requires all buildings or other improvements on the Mortgaged Property to be
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 pursuant to insurance policies conforming to
the requirements of Section 4.10. 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 Flood Insurance
Administration is in effect which policy conforms to the requirements of
Section 4.10. All individual insurance policies contain a standard mortgagee
clause naming the Company and its successors and assigns as mortgagee, and all
premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at such Mortgagor's cost and
expense, and to seek reimbursement therefor from the Mortgagor. Where required
by state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser
upon the consummation of the transactions contemplated by this Agreement. The
Company has not engaged in, and has no knowledge of the Mortgagor's or any
Subservicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
therein, or the validity and binding effect of either, including without
limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by the Company;
(g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, and the Company shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The lien against the Mortgaged
Property has not been satisfied, canceled, 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. The
Company has not waived the performance by the Mortgagor of any action, if the
Mortgagor's failure to perform such action would cause the Mortgage Loan to be
in default, nor has the Company waived any default resulting from any action
or inaction by the Mortgagor;
(i) Location and Type of Mortgaged Property. Except for Coop Loans,
the Mortgaged Property is located in the state identified in the Mortgage Loan
Schedule and consists of a parcel of real property with a detached single
family residence erected thereon or upon which a detached single family
residence will be erected, or a two- to four- family dwelling, or an
individual condominium unit in a condominium project, or an individual unit in
a planned unit development. For Coop Loans, the Mortgaged Property consists of
shares of stock in a cooperative housing corporation and a leasehold interest
in a cooperative apartment owned by such corporation located in the state
identified in the Mortgaged Loan Schedule;
(j) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected first lien on the Mortgaged Property. Where the
Mortgaged Property consists of residential real estate, the lien includes all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or
annexed to such building, and all additions, alterations, and replacements
made at any time with respect to the foregoing. The lien of the Mortgage is
subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date
of recording acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage
Loan and (i) referred to or otherwise considered in the
appraisal made for the originator of the Mortgage Loan or (ii)
which do not adversely affect the Appraised Value of the
Mortgaged Property set forth in such appraisal; and
(3) 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, subsisting and enforceable first lien and first priority security
interest on the Mortgaged Property and any additional collateral for the
Mortgage Loan and the Company has full right to sell and assign the same to
the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage are genuine, and each is the legal, valid and binding obligation of
the maker thereof enforceable in accordance with its terms. All parties to the
Mortgage Note and the Mortgage and any other related agreement had legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage and any other related agreement, and the
Mortgage Note and the Mortgage have been duly and properly executed by such
parties. The documents, instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the information and statements therein not misleading. No
fraud was committed in connection with the origination of the Mortgage Loan.
The Company has reviewed all of the documents constituting the Servicing File
and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein;
(l) Full Payment of Costs. 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;
(m) Ownership. Immediately prior to the sale of the Mortgage Loans
by the Company to the Purchaser pursuant to this Agreement, the Company was
the sole owner of record and holder of the Mortgage Loan. The Mortgage Loan is
not assigned or pledged, and the Company has good and marketable title
thereto, and has full right to transfer and sell the Mortgage Loan therein to
the Purchaser free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and has 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 this
Agreement;
(n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1)
in compliance with any and all applicable licensing requirements of the laws
of the state wherein the real Mortgaged Property is located, and (2) organized
under the laws of such state, or (3) qualified to do business in such state,
or (4) federal savings and loan associations or national banks having
principal offices in such state, or (5) not doing business in such state;
(o) LTV. No Mortgage Loan has a Loan-to-Value Ratio at origination
(or, if any Mortgage Loan has been the subject of a significant modification
since origination, other than as a result of a default or imminent default, as
of the date of such modification) equal to or greater than 90%.
(p) Title Insurance. Except in the case of Coop Loans, the Mortgage
Loan is covered by either (i) an attorney's opinion of title and abstract of
title the form and substance of which is acceptable to mortgage lending
institutions making mortgage loans in the area where the Mortgaged Property is
located or (ii) an ALTA lender's title insurance policy or other generally
acceptable form of policy of insurance acceptable to FNMA or FHLMC, issued by
a title insurer acceptable to FNMA or FHLMC and qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring the
Company, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan, and against
any loss by reason of the invalidity or enforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment in the Mortgage
Interest Rate and Monthly Payment, subject only to the exceptions contained in
clauses (1), (2) and (3) of paragraph (j) of this Section 3.02 and against any
loss resulting from the provisions of the Mortgage providing for adjustment to
the Mortgage Interest Rate and Monthly Payment. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. 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. If
the Mortgaged Property is a condominium unit located in a state in which a
title insurer will generally issue an endorsement, then the related title
insurance policy contains an endorsement insuring the validity of the creation
of the condominium form of ownership with respect to the project in which such
unit is located. The Company 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 force and effect upon the consummation of the loan
sale transaction contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the
Mortgage, including the Company, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy including
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by the Company;
(q) No Defaults. 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 neither the Company nor its predecessors have waived any
default, breach, violation or event of acceleration, and no foreclosure action
has been commenced with respect to any Mortgage Loan;
(r) No Mechanics' Liens. 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 the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or subordinate
with the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of
the Mortgaged Property (and, if the property is a condominium unit, such
improvements lie wholly within the project) and no improvements on adjoining
properties encroach upon the Mortgaged Property. No improvement located on or
being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation;
(t) Origination; Payment Terms. At the time the Mortgage Loan was
originated, the originator was a Mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act or a 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. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the information and statements therein not
misleading. The Mortgage Interest Rate is adjusted on each Interest Rate
Adjustment Date to equal the Index plus the Gross Margin, which amount is
added in accordance with the terms of the Mortgage Note, subject to the
Mortgage Interest Rate Cap. The Mortgage Note is payable each month in
installments of principal and/or interest, which installments of interest are
subject to change due to the adjustments to the Mortgage Interest Rate on each
Interest Rate Adjustment Date, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity
date, over an original term of not more than thirty (30) years. The Mortgage
Note provides for accrual of interest on the basis of a 360 day year
consisting of twelve 30-day months. There is no negative amortization. At no
time has the Mortgage Interest Rate exceeded the lifetime cap as set forth in
the related Note.
(u) Customary Provisions. 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 (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan,
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan will be able to deliver
good and merchantable title to the Mortgaged Property. There is no homestead
or other exemption available to a Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage;
(v) Underwriting. The Mortgage Loans were generally underwritten and
approved substantially in accordance with the Company's written procedures and
standards set forth in Exhibit A-1.
(w) Occupancy of the Mortgaged Property. As of the Closing Date the
Mortgaged Property (or, in the case of a Coop Loan, the related Cooperative
Unit) 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 (or, in the case of a Coop Loan, the
related Cooperative Unit) and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities;
(x) No Additional Collateral. With the exception of Mortgage Loans
identified on the Mortgage Loan Schedule as having additional collateral, the
Mortgage Note is not secured by any collateral except the lien on Mortgaged
Property created by the corresponding Mortgage and the security interest or
any applicable security agreement or chattel mortgage referred to in Section
3.02(j) above;
(y) Deeds of Trust. 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 Purchaser to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. The Company has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor and/or the Mortgagor's credit standing that can
reasonably be expected to:
(i) cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment;
(ii) cause the Mortgage Loan to become delinquent; or
(iii) adversely affect the value or marketability of the
Mortgage Loan;
(aa) Delivery of Mortgage Documents. The Mortgage Loan Documents have
been delivered (or will have been released by the Closing Date) to the
Custodian. The Company is in possession of a complete, true and accurate
Mortgage File in compliance with Exhibit B, except for such documents the
originals of which have been delivered to the Custodian;
(bb) Appraisal. The Mortgage File contains an appraisal of the related
Mortgaged Property conducted by a qualified appraiser, duly appointed by the
Company, 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, and the
appraisal and appraiser both satisfy the requirements of Title XI of the
Federal Institution Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property consisting of residential real
estate is located;
(dd) Due on Sale. The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without
the prior written consent of the mortgagee thereunder;
(ee) Conversion to Fixed Interest Rate. Except as set forth in Schedule
3.02 (ee), the Mortgage Loan does not contain a provision permitting or
requiring conversion to a fixed interest rate Mortgage Loan;
(ff) Consolidation of Future Advances. None of the Mortgage Loans contain
any provisions permitting future advances after the Cut-off Date. Any future
advances made 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. Except in the case of Coop Loans, the lien of the Mortgage
securing the consolidated principal amounts is insured as having first lien
priority by a title insurance policy, and endorsement to the policy insuring
the mortgagee's consolidated interest or by other title evidence. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;
(gg) Mortgaged Property Undamaged. There is no proceeding pending or, to
the best of the Company's knowledge, threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were
intended;
(hh) Collection Practices; Escrow Deposits; Interest Rate Adjustments.
The origination and collection practices used with respect to the Mortgage
Loan have been in accordance with Accepted Servicing Practices, and have been
in all respects in compliance with all applicable laws and regulations. All
Mortgage Interest Rate adjustments have been made in compliance with state and
federal law and the terms of the related Mortgage Note. Any interest required
to be paid pursuant to state and local law has been properly paid and
credited;
(ii) Environmental Matters. To the best of the Company's knowledge, the
Mortgaged Property is free from any and all toxic or hazardous substances and
there exists no violation of any local, state or federal environmental law,
rule or regulation;
(jj) Soldiers' and Sailors' Relief Act. The Mortgagor has not notified
the Company, and the Company has no knowledge, of any relief requested or
allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940;
(kk) REMIC Qualification. Each Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G of the Code and Treas. Reg. 1.860G-2;
(ll) Buydown Mortgage Loans. None of the Mortgage Loans is a Buydown
Mortgage Loan; and
(mm) No Partial Release of Collateral. No Mortgage Loan requires the
Mortgagee to release any portion of the Mortgaged Property from the lien of
the Mortgage other than (i) upon payment in full of the Mortgage Loan or (ii)
with respect to Mortgaged Property consisting of more than one piece of real
property or shares of a cooperative corporation, a release of a portion of the
Mortgaged Property upon a partial repayment of the Mortgage Loan, provided the
LTV of the remaining Mortgaged Property after the release does not exceed 90%.
Section 3.03. Remedies for Breach of Representations and Warranties
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans
to the Purchaser and the subsequent sale of the Mortgage Loans by the
Purchaser to the Depositor and by the Depositor to the Trustee under the Trust
Agreement, and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, specifically, including the
Trustee, as provided in Section 11.10 hereof, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing
representations and warranties which materially and adversely affects the
value of the Mortgage Loans or the interest of the Purchaser (or which
materially and adversely affects the interests of the Purchaser in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan) the party discovering such breach shall give prompt
written notice to the other.
Within sixty (60) days of the earlier of either discovery by or notice to
the Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Purchaser (or which materially and adversely affects the interests of
Purchaser in the related Mortgage Loan in the case of a representation and
warranty relating to a particular Mortgage Loan), the Company shall use its
best efforts promptly to cure such breach in all material respects and, if
such breach cannot be cured, the Company shall, at the Purchaser's option,
repurchase such Mortgage Loan at the Repurchase Price. In the event that a
breach shall involve any representation or warranty set forth in Section 3.01,
and either discovery by or notice to the Company of such breach, all of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by the Company
at the Repurchase Price. However, if the breach shall involve a representation
or warranty set forth in Section 3.02 and the Company discovers or receives
notice of any such breach within 120 days of the Closing Date, the Company
shall, at the Purchaser's option and provided that the Company has a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in
its place a Qualified Substitute Mortgage Loan or Loans, provided that no such
substitution shall be made (i) after the 120-day period beginning on the
Closing Date and (ii) unless the Purchaser has received an Opinion of Counsel
(at the expense of the Company) that such substitution will not adversely
affect the status of any REMIC established pursuant to the Trust Agreement as
a REMIC or cause any such REMIC to be deemed to have engaged in a "prohibited
transaction" under the REMIC provisions. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan. Any
repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of
this Section 3.03 shall be accomplished by deposit in the Custodial Account of
the amount of the Repurchase Price for distribution to Purchaser on the next
scheduled Remittance Date, after deducting therefrom any amount received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian
relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the Company shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the
Deleted Mortgage Loan from this Agreement, and, in the case of substitution,
identify a Qualified Substitute Mortgage Loan and amend the Mortgage Loan
Schedule to reflect the addition of such Qualified Substitute Mortgage Loan to
this Agreement. In connection with any such substitution, the Company shall be
deemed to have made as to such Qualified Substitute Mortgage Loan the
representations and warranties set forth in this Agreement except that all
such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such substitution. The Company shall effect such
substitution by delivering to the Custodian for such Qualified Substitute
Mortgage Loan the related Mortgage Loan Documents with the Mortgage Note
endorsed as required. No substitution will be made in any calendar month after
the Determination Date for such month. The Company shall deposit in the
Custodial Account the Monthly Payment less the Servicing Fee due on such
Qualified Substitute Mortgage Loan or Loans in the month following the date of
such substitution. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall be retained by the Company.
For the month of substitution, distributions to Purchaser shall include the
Monthly Payment due on any Deleted Mortgage Loan in the month of substitution.
The Company shall thereafter be entitled to retain all amounts subsequently
received by the Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month
of substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees
and related costs, judgments, and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon or resulting
from a breach of the Company's representations and warranties contained in
this Agreement. It is understood and agreed that the obligations of the
Company set forth in this Section 3.03 to cure, substitute for or repurchase a
defective Mortgage Loan and to indemnify the Purchaser as provided in this
Section 3.03 constitute the sole remedies of the Purchaser respecting a breach
of the foregoing representations and warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Section 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failure by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
Section 3.04. Mortgage Loans Convertible to Fixed Interest Rate.
In the event the Mortgagor under any Convertible Mortgage Loan elects to
convert said Mortgage Loan to a fixed interest rate Mortgage Loan, as provided
in the related Mortgage Note, then the Company shall repurchase such Mortgage
Loan at the Repurchase Price or substitute in its place a Qualified Substitute
Mortgage Loan or Loans in the manner prescribed in Section 3.03.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01. Company to Act as Servicer.
The Company, as an independent contractor, shall service and administer
the Mortgage Loans and shall have full power and authority, acting alone, to
do any and all things in connection with such servicing and administration
which the Company may deem necessary or desirable, consistent with the terms
of this Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may waive any
late payment charge, assumption fee or other fee that may be collected in the
ordinary course of servicing the Mortgage Loans. The Company shall not make
any future advances with respect to a Mortgage Loan and (unless the Mortgagor
is in default with respect to the Mortgage Loan or such default is, in the
judgment of the Company, imminent) the Company shall not permit any
modification of any material term of any Mortgage Loan, including any
modification that would change the Mortgage Interest Rate, defer or forgive
the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal) or change the
final maturity date on such Mortgage Loan, unless approved by Purchaser on a
Mortgage Loan-by-Mortgage Loan basis (which approval shall not be unreasonably
withheld, conditioned or delayed), or unless pursuant to a loan modification
program previously presented to and approved by the Purchaser. In the event of
any such modification which permits the deferral of interest or principal
payments on any Mortgage Loan, the Company shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.03, the difference
between (a) such month's principal and one month's interest at the Mortgage
Loan Remittance Rate on the unpaid principal balance of such Mortgage Loan and
(b) the amount paid by the Mortgagor. The Company shall be entitled to
reimbursement for such advances to the same extent as for all other advances
made pursuant to Section 5.03. Without limiting the generality of the
foregoing, the Company shall continue, and is hereby authorized and empowered,
to execute, deliver and record (if appropriate) on behalf of itself and the
Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments and any other
certificate or instrument necessary to carry out the modifications
contemplated by this Section 4.01, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. The Purchaser has furnished and upon
request shall furnish the Company with any powers of attorney and other
documents reasonably required by the Company which are necessary or
appropriate to enable the Company to carry out its servicing and
administrative duties under this Agreement.
In the event that foreclosure proceedings are commenced in respect of any
Mortgage Loan as to which Additional Collateral has been pledged as security,
the Company shall, if such Additional Collateral is readily marketable,
immediately commence the liquidation of such collateral. The proceeds of such
sale shall be promptly deposited in the Custodial Account. If such Additional
Collateral is not readily marketable, the Company shall not exercise any right
it may have to seize, convert or otherwise assume ownership of such Additional
Collateral.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
The Mortgage Loans may be subserviced by the Subservicer, in accordance
with the servicing provisions of this Agreement, on behalf of the Company,
provided that the Subservicer is a FNMA-approved lender or a FHLMC
seller/servicer in good standing, and no event has occurred, including but not
limited to a change in insurance coverage, which would make it unable to
comply with the eligibility requirements for lenders imposed by FNMA or for
seller/servicers imposed by FHLMC, or which would require notification to FNMA
or FHLMC. The Company may perform any of its servicing responsibilities
hereunder or may cause the Subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Company of the Subservicer
shall not release the Company from any of its obligations hereunder and the
Company shall remain responsible hereunder for all acts and omissions of the
Subservicer as fully as if such acts and omissions were those of the Company.
The Company shall pay all fees and expenses of the Subservicer from its own
funds, and the Subservicer's fee shall not exceed the Servicing Fee.
References in this Agreement to performance by the Company of its
servicing responsibilities hereunder shall be deemed to include the
Subservicer acting on behalf of the Company.
At the cost and expense of the Company, without any right of
reimbursement from the Custodial Account, the Company shall be entitled to
terminate the rights and responsibilities of the Subservicer and arrange for
any servicing responsibilities to be performed by a successor Subservicer
meeting the requirements in the two preceding paragraphs; provided, however,
that nothing contained herein shall be deemed to prevent or prohibit the
Company, at the Company's option, from electing to service the related
Mortgage Loans itself. In the event that the Company's responsibilities and
duties under this Agreement are terminated pursuant to Section 8.04, 9.01,
10.01 or 10.02 , and if requested to do so by the Purchaser, the Company shall
at its own cost and expense terminate the rights and responsibilities of the
Subservicer as soon as is reasonably possible. The Company shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of the Subservicer from the Company's own funds without
reimbursement from the Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Company and the Subservicer or any
reference herein to action taken though the Subservicer or otherwise, the
Company shall not be relieved of its obligations to the Purchaser and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Company shall
be entitled to enter into an agreement with the Subservicer for
indemnification of the Company by the Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving the Subservicer shall be deemed to be
between the Subservicer and Company alone, and the Purchaser shall have no
obligations, duties or liabilities with respect to the Subservicer including
no obligation, duty or liability of Purchaser to pay the Subservicer's fees
and expenses. For purposes of distributions and advances by the Company
pursuant to this Agreement, the Company shall be deemed to have received a
payment or other recovery in respect of a Mortgage Loan when the Subservicer
has received such payment or recovery.
Section 4.02. Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, and (3) the Company shall determine prudently to be in
the best interest of Purchaser. In the event that any payment due under any
Mortgage Loan is not postponed pursuant to Section 4.01 and remains delinquent
for a period of ninety (90) days or any other default continues for a period
of ninety (90) days beyond the expiration of any grace or cure period, the
Company shall commence foreclosure proceedings, provided that, prior to
commencing foreclosure proceedings, the Company shall notify the Purchaser in
writing of the Company's intention to do so, and the Company shall not
commence foreclosure proceedings if the Purchaser objects to such action
within ten (10) Business Days of receiving such notice. The Company's
obligation to make such Monthly Advances shall terminate upon delivery by the
Company to the Purchaser of a Certificate of Nonrecoverable Advance in the
form set forth in Exhibit M.
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the
event the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection, a review of such Mortgaged
Property shall be conducted by a qualified inspector. Upon completion of the
inspection, the Company shall promptly provide the Purchaser with a written
report of the environmental inspection.
In the event that the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
the Company shall not proceed with foreclosure or acceptance of a deed in lieu
of foreclosure, and the Company shall be reimbursed for all Servicing Advances
made with respect to the related Mortgaged Property from the Custodial Account
pursuant to Section 4.05 hereof.
Section 4.03. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Company shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the
end that the installments payable by the Mortgagor will be sufficient to pay
such charges as and when they become due and payable.
Section 4.04. Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled "Boston Safe
Deposit and Trust Company in trust for Norwest Bank Minnesota, National
Association, as Trustee, Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 1998-5," or such other designation as the
Purchaser may direct. The Custodial Account shall be established with a
Qualified Depository. Any funds deposited in the Custodial Account shall at
all times be fully insured to the full extent permitted under applicable law.
Funds deposited in the Custodial Account may be drawn on by the Company in
accordance with Section 4.05. The creation of any Custodial Account shall be
evidenced by a certification in the form of Exhibit D-1 hereto, in the case of
an account established with the Company, or by a letter agreement in the form
of Exhibit D-2 hereto, in the case of an account held by a depository other
than the Company. A copy of such certification or letter agreement shall be
furnished to the Purchaser and, upon request, to any subsequent Purchaser.
Funds in a Custodial Account may be invested in Eligible Investments (as
defined in the Trust Agreement) which shall mature not later than the earlier
of the Business Day immediately preceding the next succeeding Remittance Date,
and such investments shall not be sold or disposed of prior to their maturity.
All income and gain realized from any investment shall be for the benefit of
the Company and shall be subject to its withdrawal or order. The amount of any
losses incurred in respect of any such investments shall be deposited in the
related Custodial Account by the Company out of its own funds immediately as
such loss is realized.
The Company shall deposit in the Custodial Account on a daily basis, as
received, and retain therein, the following collections received by the
Company and payments made by the Company after the Cut-off Date, other than
payments of principal and interest due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Section 4.14) and
Section 4.11;
(v) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor
in accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 4.04, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts required to be
deposited by the Company in connection with a shortfall in principal amount of
any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment received during the
immediately preceding Principal Prepayment Period, an amount (to be paid by
the Company out of its funds as provided in Section 6.03 hereof) which, when
added to all amounts allocable to interest received in connection with such
Principal Prepayment, equals one month's interest on the amount of principal
so prepaid at the Mortgage Loan Remittance Rate, the aggregate of such
payments by the Company for any month not to exceed the aggregate of the
Company's Servicing Fees for such month.
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket hazard
insurance policy; and
(x) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section 4.15.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges
and assumption fees, to the extent permitted by Section 6.01, need not be
deposited by the Company into the Custodial Account. Any interest paid on
funds deposited in the Custodial Account by the depository institution shall
accrue to the benefit of the Company and the Company shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to
Section 4.05.
Section 4.05. Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds
made pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received with respect
to the related Mortgage Loan which represent late payments of principal and/or
interest respecting which any such advance was made, it being understood that,
in the case of any such reimbursement, the Company's right thereto shall be
prior to the rights of the Purchaser, except that, where the Company is
required to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, the
Company's right to such reimbursement shall be subsequent to the payment to
the Purchaser of the Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and
for any unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Company from the
Mortgagor or otherwise relating to the Mortgage Loan, it being understood
that, in the case of any such reimbursement, the Company's right thereto shall
be prior to the rights of Purchaser except where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, in which case the
Company's right to such reimbursement shall be subsequent to the payment to
the Purchaser of the Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iv) to pay itself investment earnings on funds deposited in the
Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Sections 4.02 and 8.01;
(vi) to pay any amount required to be paid pursuant to Sections 4.02
and 4.15 related to any REO Property, it being understood that in the case of
any such expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account shall be
limited to amounts on deposit in the Custodial Account with respect to the
related REO Property;
(vii) to withdraw funds deposited in error in the Custodial Account;
and
(viii) to clear and terminate the Custodial Account upon the
termination of this Agreement.
On each Remittance Date, the Company shall withdraw all funds from the
Custodial Account except for those amounts which, pursuant to Section 5.01,
the Company is not obligated to remit on such Remittance Date. The Company may
use such withdrawn funds only for the purposes described in this Section 4.05.
Section 4.06. Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Escrow Accounts, in the form of time deposit or demand accounts
titled, "Boston Safe Deposit and Trust Company, in trust for Norwest Bank
Minnesota, National Association, as Trustee, Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1998-5," or such other
designation as the Purchaser may direct. The Escrow Account shall be
established with a Qualified Depository, in a manner which shall provide
maximum available insurance thereunder. Funds deposited in the Escrow Account
may be drawn on by the Company in accordance with Section 4.07. The creation
of any Escrow Account shall be evidenced by a certification in the form of
Exhibit E-1 hereto, in the case of an account established with the Company, or
by a letter agreement in the form of Exhibit E-2 hereto, in the case of an
account held by a depository other than the Company. A copy of such
certification shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
The Company shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any Mortgaged
Property.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required or permitted under this Agreement, as set forth
in Section 4.07. The Company shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other
than interest on escrowed funds required by law to be paid to the Mortgagor.
To the extent required by law, the Company shall pay interest on escrowed
funds to the Mortgagor notwithstanding that the Escrow Account may be
non-interest bearing or that interest paid thereon is insufficient for such
purposes.
Section 4.07. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Company only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire, flood and
hazard insurance premiums or other items constituting Escrow Payments for the
related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage Loan, but
only from amounts received on the related Mortgage Loan which represent late
collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of the
related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account;
(vii) to withdraw funds deposited in error in the Escrow Account;
and
(viii) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 4.08. Maintenance of Tax, Insurance, Other Charge Records.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water
rates, sewer rents, and the charges which are or may become a lien upon the
Mortgaged Property and the status of fire, flood and hazard insurance coverage
and with respect to each Mortgage Loan which provides for Escrow Payments, the
Company shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Company in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage. To the extent that a
Mortgage does not provide for Escrow Payments, the Company shall make a
Servicing Advance from its own funds to effect payment for such charges in
accordance with Accepted Servicing Practices.
Section 4.09. Protection of Accounts
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time. Such transfer shall be made
only upon obtaining the consent of the Purchaser, which consent shall not be
withheld unreasonably.
The Company shall bear any expenses, losses or damages sustained by the
Purchaser because the Custodial Account or Escrow Account is not a demand
deposit account.
Section 4.10. Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by a
FNMA or FHLMC 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, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer.
If upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified in the Federal Register by the Flood
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 Flood Insurance
Administration is in effect with a generally acceptable insurance carrier in
an amount representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on
a replacement-cost basis or the unpaid balance of the Mortgage Loan if
replacement coverage is not available for the type of building insured) and
(ii) the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973, as amended.
If a Mortgage is secured by a unit in a condominium, the Company shall
have received a certificate of insurance evidencing a master policy held by
the owner's association and naming the Company as loss payee.
In the event that the Purchaser or the Company shall determine that the
Mortgaged Property (or, in the case of a Cooperative Loan, the related
Cooperative Unit) should be insured against loss or damage by hazards and
risks not covered by the insurance required to be maintained by the Mortgagor
pursuant to the terms of the Mortgage, the Company shall communicate and
consult with the Mortgagor with respect to the need for such insurance and
bring to the Mortgagor's attention the desirability of protection of the
Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard mortgagee clauses, which shall provide for at
least 30 days' prior written notice of any cancellation, reduction in amount
or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent; provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies satisfy the requirements of FNMA or FHLMC and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide sufficient
risk coverage and amounts, that they insure the property owner, and that they
properly describe the property address. The Company shall furnish to the
Mortgagor a formal notice of expiration of any such insurance in sufficient
time for the Mortgagor to arrange for renewal coverage by the expiration date.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property (or, in
the case of a Cooperative Loan, the related Cooperative Unit), or property
acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11. Maintenance of Mortgage Impairment Insurance
The Company shall maintain a blanket policy insuring against losses
arising from fire and hazards covered under extended coverage on any or all of
the Mortgage Loans and, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 4.10 and otherwise
complies with all other requirements of Section 4.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 4.10. Any
amounts collected by the Company under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in
which case, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.10, and there
shall have been a loss which would have been covered by such policy, the
Company shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Company's funds, without
reimbursement therefor. Upon request of the Purchaser, the Company shall cause
to be delivered to such Purchaser a certified true copy of such policy and a
statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without thirty (30) days' prior written
notice to the Purchaser.
Section 4.12. Maintenance of Fidelity Bond and Errors and Omissions
Insurance.
The Company or its corporate parent shall maintain on behalf of the
Company with responsible companies, at its own expense, a blanket Fidelity
Bond and an Errors and Omissions Insurance Policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans ("Company Employees"). Any such Fidelity Bond and Errors and Omissions
Insurance Policy shall be in the form of the Mortgage Banker's Blanket Bond
and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance
Policy also shall protect and insure the Company against losses in connection
with the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 4.12 requiring such Fidelity Bond and Errors and Omissions Insurance
Policy shall diminish or relieve the Company from its duties and obligations
as set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts required
by FNMA in the FNMA Mortgage-Backed Securities Selling and Servicing Guide or
by FHLMC in the FHLMC Sellers' & Servicers' Guide. Upon the request of the
Purchaser, the Company shall cause to be delivered to the Purchaser a
certified true copy of such fidelity bond and insurance policy and a statement
from the surety and the insurer that such fidelity bond and insurance policy
shall in no event be terminated or materially modified without thirty (30)
days' prior written notice to the Purchaser.
Section 4.13. Inspections.
The Company shall inspect the Mortgaged Property as often as deemed
necessary by the Company to assure itself that the value of the Mortgaged
Property is being preserved. In addition, if any Mortgage Loan is more than
sixty (60) days delinquent, the Company immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices. The Company shall keep a written report of each
such inspection.
Section 4.14. Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to
be applied to the restoration or repair of the Mortgaged Property if such
release is in accordance with Accepted Servicing Practices. At a minimum, the
Company shall comply with the following conditions in connection with any such
release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent verification
of completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Company shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens; and
(iii) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim
in the name of the Purchaser.
Section 4.15. Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Company from
any attorney duly licensed to practice law in the state where the REO Property
is located. The Person or Persons holding such title other than the Purchaser
shall acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Company shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale.
The Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same
(and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the
Company deems to be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within three
years after title has been taken to such REO Property, unless (i) the
Purchaser shall have been supplied with an Opinion of Counsel to the effect
that the holding by the Trust of such Mortgaged Property subsequent to such
three-year period (and specifying the period beyond such three-year period for
which the Mortgaged Property may be held) will not result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code, or cause the related REMIC to fail to qualify as a REMIC, in which
case the Trust may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel), or (ii) the Purchaser (at
the Company's expense) or the Company shall have applied for, prior to the
expiration of such three-year period, an extension of such three-year period
in the manner contemplated by Section 856(e)(3) of the Code, in which case the
three-year period shall be extended by the applicable period. If a period
longer than three years is permitted under the foregoing sentence and is
necessary to sell any REO Property, (i) the Company shall report monthly to
the Purchaser as to progress being made in selling such REO Property and (ii)
if, with the written consent of the Purchaser, a purchase money mortgage is
taken in connection with such sale, such purchase money mortgage shall name
the Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate participation agreement
between the Company and Purchaser shall be entered into with respect to such
purchase money mortgage.
Notwithstanding any other provision of this Agreement, no Mortgaged
Property held by a REMIC shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust or
sold in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify at any time as "foreclosure property"
within a meaning of section 860G(a)(8) of the Code, (ii) subject the Trust to
the imposition of any federal or state income taxes on "net income from
foreclosure property" with respect to such Mortgaged Property within the
meaning of section 860G(c) of the Code, or (iii) cause the sale of such
Mortgaged Property to result in the receipt by the Trust or any income from
non-permitted assets as described in section 860F(a) (2)(B) of the Code,
unless the Company has agreed to indemnify and hold harmless the Trust with
respect to the imposition of any such taxes.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements which are part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. As soon as practical
thereafter, the expenses of such sale shall be paid and the Company shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed Monthly Advances made pursuant to Section
5.03, and on the Remittance Date immediately following the Principal
Prepayment Period in which such sale proceeds are received the net cash
proceeds of such sale remaining in the Custodial Account shall be distributed
to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation, management and maintenance of each REO Property,
including the cost of maintaining any hazard insurance pursuant to Section
4.10 and the fees of any managing agent of the Company, a Subservicer, or the
Company itself. The REO management fee shall be an amount that is reasonable
and customary in the area where the Mortgaged Property is located. The Company
shall make monthly distributions on each Remittance Date to the Purchaser of
the net cash flow from the REO Property (which shall equal the revenues from
such REO Property net of the expenses described in this Section 4.15 and of
any reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses).
Section 4.16. Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Company's efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as the Purchaser shall
reasonably request.
Sction 4.17. Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the
Company shall submit to the Purchaser a liquidation report with respect to
such Mortgaged Property.
Section 4.18. Notification of Adjustments.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Interest Rate Adjustment Date in compliance with
requirements of applicable law and the related Mortgage and Mortgage Note. The
Company shall execute and deliver any and all necessary notices required under
applicable law and the terms of the related Mortgage Note and Mortgage
regarding the Mortgage Interest Rate adjustments. The Company shall promptly,
upon written request therefor, deliver to the Purchaser such notifications and
any additional applicable data regarding such adjustments and the methods used
to calculate and implement such adjustments. Upon the discovery by the Company
or the receipt of notice from the Purchaser that the Company has failed to
adjust a Mortgage Interest Rate in accordance with the terms of the related
Mortgage Note, the Company shall immediately deposit in the Custodial Account
from its own funds the amount of any interest loss or deferral caused to the
Purchaser thereby.
Section 4.19. Reports of Foreclosures and Abandonments of Mortgaged
Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant
to Section 6050J of the Code.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01. Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser the sum of (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the Custodial
Account pursuant to Section 4.05 ), (b) all amounts, if any, which the Company
is obligated to deposit into the Custodial Account pursuant to Section 5.03,
and (c) any amounts payable with respect to Qualified Substitute Mortgage
Loans, but not including, (i) any amounts attributable to Principal
Prepayments received after the immediately preceding Principal Prepayment
Period, (ii) any Liquidation Proceeds and Insurance Proceeds received after
the immediately preceding Prepayment Period, and (iii) any amounts
attributable to Monthly Payments collected but due on a Due Date or Dates
subsequent to the first day of the month of such Remittance Date, all of which
amounts together with any additional interest required to be deposited into a
Custodial Account in connection with a Principal Prepayment in accordance with
Section 4.04(viii), shall be remitted on the next succeeding Remittance Date.
With respect to any remittance received by the Purchaser after the second
Business Day following the Remittance Date on which such payment was due, the
Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three (3) percentage points, but in no event greater than the maximum
amount permitted by applicable law. Such interest shall be deposited in the
Custodial Account by the Company on the date such late payment is made and
shall cover the period commencing with the day following such second Business
Day and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with the distribution payable
on the next succeeding Remittance Date. The payment by the Company of any such
interest shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Company.
Section 5.02. Statements to Purchaser.
Not later than the Remittance Date, the Company shall furnish to the
Purchaser a Monthly Remittance Advice, with a trial balance report attached
thereto, in the form of Exhibit F annexed hereto as to the preceding
remittance and the period ending on the preceding Determination Date.
In addition, not more than sixty (60) days after the end of each calendar
year, the Company shall furnish to each Person who was a Purchaser at any time
during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Company shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Company pursuant to any requirements of the Code as from time to time are in
force.
The Company shall prepare and file any and all tax returns, information
statements or other filings relating to the period of time prior to the sale
of the Mortgage Loans by the Company to the Purchaser required to be delivered
to any governmental taxing authority pursuant to any applicable law with
respect to the Mortgage Loans. In addition, the Company shall provide the
Purchaser with such information concerning the Mortgage Loans as is necessary
for the Purchaser to prepare its federal income tax returns.
Section 5.03. Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds an amount
equal to all Monthly Payments (with interest adjusted to the Mortgage Loan
Remittance Rate) which were due on the Mortgage Loans during the applicable
Due Period and which were delinquent at the close of business on the
immediately preceding Determination Date or which were deferred pursuant to
Section 4.01. The Company's obligation to make such Monthly Advances as to any
Mortgage Loan will continue (i) through the last Monthly Payment due prior to
the payment in full of the Mortgage Loan, (ii) through the last Remittance
Date prior to the Remittance Date for the distribution of all Liquidation
Proceeds or other payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds) with respect to the Mortgage Loans or (iii) until the
Company deems a future advance to be a Nonrecoverable Advance, whichever of
(i) (ii) or (iii) occurs first.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01. Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to
the extent it has knowledge of such conveyance, exercise its right to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto; provided, however, that the Company shall not exercise
such rights if prohibited by law from doing so.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property
has been conveyed, pursuant to which such person becomes liable under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Company is unable under applicable law to require that the original
Mortgagor remains liable under the Mortgage Note and the Company has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the purchaser of the
Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note. If an assumption fee is collected by the Company for entering
into an assumption agreement, a portion of such fee, up to an amount equal to
one-half of one percent (0.5%) of the outstanding principal balance of the
related Mortgage Loan, will be retained by the Company as additional servicing
compensation, and any portion thereof in excess of one-half of one percent
(0.5%) shall be deposited in the Custodial Account for the benefit of the
Purchaser. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage
Loan nor the outstanding principal amount of the Mortgage Loan shall be
changed.
To the extent that any Mortgage Loan is assumed, the Company shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the Company's Summary of Underwriting Guidelines attached hereto as
Exhibit A-1. If the credit of the proposed transferee does not meet such
underwriting criteria, the Company diligently shall, to the extent permitted
by the Mortgage or the Mortgage Note and by applicable law, accelerate the
maturity of the Mortgage Loan.
Section 6.02. Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents.
Except as permitted pursuant to Section 4.01, if (i) the Company
satisfies or releases a Mortgage without first having obtained payment in full
of the indebtedness secured by the Mortgage or notification that payment in
full will be escrowed in a manner customary for such purposes or (ii) should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit
thereof in the Custodial Account within two (2) Business Days of receipt of
such demand by the Purchaser. The Company shall maintain the Fidelity Bond and
Errors and Omissions Insurance Policy as provided for in Section 4.12 insuring
the Company against any loss it may sustain with respect to any Mortgage Loan
not satisfied in accordance with the procedures set forth herein.
Section 6.03. Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account or to retain from interest payments on
the Mortgage Loans the amount of its Servicing Fee. The Servicing Fee shall be
payable monthly and shall be computed on the basis of the same unpaid
principal balance and for the same period with respect to which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee shall be
payable only at the time of and with respect to those Mortgage Loans for which
payment is in fact made of the entire amount of the Monthly Payment. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and
payable solely from, the interest portion of such Monthly Payments collected
by the Company. The aggregate of the Servicing Fees for any months with
respect to the Mortgage Loans shall be reduced by any amount payable by the
Company with respect to such month pursuant to Section 4.04(viii).
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained by
the Company to the extent not required to be deposited in the Custodial
Account. The Company shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled
to reimbursement thereof except as specifically provided for herein.
Section 6.04. Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before March 31st each
year beginning March 31, 1999, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of performance under this Agreement has been made under such officer's
supervision, and (ii) the Company has complied fully with the provisions of
Article II and Article IV, and (iii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all of its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.05. Annual Independent Public Accountants' Servicing Report.
On or before March 31st of each year beginning March 31, 1999, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the Mortgage Loans,
on the basis of such examination conducted substantially in compliance with
the Single Attestation Program for Mortgage Bankers, nothing has come to their
attention which would indicate that such servicing has not been conducted in
compliance therewith, except for (i) such exceptions as such firm shall
believe to be immaterial, and (ii) such other exceptions as shall be set forth
in such statement.
Section 6.06. Right to Examine Company Records.
The Purchaser shall have the right to examine and audit any and all of
the books, records, or other information of the Company, whether held by the
Company or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during business hours or at such other times
as may be reasonable under applicable circumstances, upon reasonable advance
notice.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01. Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information and copies
or originals of any documents contained in the Servicing File for each
Mortgage Loan, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Purchaser, any regulatory
requirement pertaining to the Purchaser or the purposes of this Agreement. All
such reports, documents or information shall be provided by and in accordance
with all reasonable instructions and directions which the Purchaser may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in
order to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02. Financial Statements; Servicing Facilities.
The Company may make available to a prospective Purchaser a Consolidated
Statement of Operations of Mellon Bank Corporation for the most recently
completed five fiscal years for which such a statement is available, as well
as a Consolidated Statement of Condition at the end of the last two fiscal
years covered by such Consolidated Statement of Operations. The Company also
shall make available any comparable interim statements to the extent any such
statements have been prepared by or on behalf of the Company (and are
available upon request to members or stockholders of the Company or to the
public at large). Upon Purchaser's request, the Company shall furnish promptly
to the Purchaser copies of the statement specified above.
Upon Purchaser's request, the Company also shall make available to
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or
the financial statements of the Company.
ARTICLE VIII
THE COMPANY
Section 8.01. Third Party Claims.
The Company immediately shall notify the Purchaser if a claim is made by
a third party with respect to this Agreement or the Mortgage Loans, assume
(with the prior written consent of the Purchaser) the defense of any such
claim and pay all expenses in connection therewith, including reasonable and
necessary counsel fees, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against it or the Purchaser in respect of such
claim. The Company shall follow any written instructions received from the
Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03 and the Purchaser has notified the
Company of such third party claim as provided herein, or to the failure of the
Company to service and administer the Mortgage Loans in strict compliance with
the material terms of this Agreement and such failure of the Company is not
attributable to acts or omissions by the Purchaser. In the event of claims
relating to the Company's indemnification pursuant to Section 3.03, the
Purchaser immediately shall notify the Company of any claim by a third party.
Section 8.02. Merger or Consolidation of the Company.
The Company shall 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 duties under this
Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the
execution or filing of any paper or any further act on the part of any the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall be an institution (i)
whose deposits are insured by the FDIC through the BIF or the SAIF, (ii) which
is or is affiliated with a FNMA-approved servicer in good standing, and (iii)
has a net worth of at least $15 million.
Section 8.03. Limitation on Liability of Company and Others.
Neither the Company nor any of the parents, affiliates, subsidiaries,
directors, officers, employees or agents of the Company shall be under any
liability to the Purchaser 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
Company or any such Person against any breach of warranties or representations
made herein, or failure to perform its obligations in strict compliance with
any standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of
this Agreement. The Company and any parent, affiliate, subsidiary, director,
officer, employee or agent of the Company 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 Company shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability;
provided, however, that the Company may, with the consent of the Purchaser,
undertake any such action which it may deem necessary or desirable in respect
to this Agreement and the rights and duties of the parties hereto. In such
event, the Company shall be entitled to reimbursement from the Purchaser of
the reasonable legal expenses and costs of such action.
Section 8.04. Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and any
subsequent Purchaser will purchase the Mortgage Loans in reliance upon the
representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. Therefore, the Company shall not assign
this Agreement or the servicing hereunder nor shall it delegate its rights or
duties hereunder or any portion hereof (to other than a Subservicer) or sell
or otherwise dispose of all or substantially all of its property or assets
without the prior written consent of the Purchaser (which consent shall be
granted or withheld in the sole discretion of the Purchaser) except that the
Company may assign this Agreement to a successor, parent, or affiliated entity
without the prior written consent of the Purchaser in accordance with Section
8.02.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or
upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Company by
reasonable means. Any such determination permitting the resignation of the
Company shall be evidenced by an Opinion of Counsel to such effect delivered
to the Purchaser, which Opinion of Counsel shall be in form and substance
acceptable to the Purchaser. No such resignation shall become effective unless
(i) the Company also resigns from the Amended and Restated Mortgage Loan Sale,
Warranties and Servicing Agreement, dated as of April 1, 1998 (the "Second
Sale and Servicing Agreement") between the Company and the Purchaser, which
amends and restates the Mortgage Loan Sale, Warranties and Servicing, dated as
of April 1, 1998 between the Company and the Purchaser and (ii) until a
successor shall have assumed the Company's responsibilities and obligations
hereunder and under the Second Sale and Servicing Agreement in the manner
provided in Section 11.01 in each of this Agreement and the Second Sale and
Servicing Agreement.
Without in any way limiting the generality of this Section 8.04, and
except as otherwise permitted under this Agreement, in the event that the
Company either shall assign this Agreement or the servicing responsibilities
hereunder or delegate its duties hereunder or any portion thereof (to other
than a Subservicer) or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written consent of the Purchaser,
then the Purchaser shall have the right to terminate this Agreement and the
Second Sale and Servicing Agreement upon notice given as set forth in Section
11.05 in each of this Agreement and the Second Sale and Servicing Agreement,
without any payment of any penalty or damages and without any liability
whatsoever to the Company or any third party.
ARTICLE IX
DEFAULT
Section 9.01. Events of Default.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of five (5) Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement or in the Custodial Agreement which
continues unremedied for a period of thirty (30) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser (or by the Custodian); or
(iii) failure by the Company to maintain any license required to do
business in any jurisdiction where a Mortgaged Property is located; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Company and such decree or order shall have remained in force undischarged or
unstayed for a period of sixty (60) days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Company or
of or relating to all or substantially all of its property; or
(vi) the Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations or cease its normal business operations for three (3) Business
Days; or
(vii) the Company ceases to meet the financial qualifications of a
FNMA lender;
(viii) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts, without the consent of the
Purchaser, to sell or otherwise dispose of all or substantially all of its
property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof ( to other than a Subservicer) in violation of Section 8.04; or
(ix) an Event of Default (as defined in the Second Sale and
Servicing Agreement) on the part of the Company.
In each and every such case, so long as an Event of Default shall not
have been remedied (within, if applicable, the period specified), in addition
to whatsoever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, the Purchaser, by notice
in writing to the Company, may terminate all the rights and obligations of the
Company under this Agreement and in and to the Mortgage Loans and the proceeds
thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 11.01. Upon written request from the Purchaser,
the Company shall prepare, execute and deliver to the successor entity
designated by the Purchaser any and all documents and other instruments, place
in such successor's possession all Mortgage Files, and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer and
endorsement or assignment of the Mortgage Loans and related documents, at the
Company's sole expense. The Company shall cooperate with the Purchaser and
such successor in effecting the termination of the Company'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 Company to the Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
Section 9.02. Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company
in the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE X
TERMINATION
Section 10.01. Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 9.01 or 10.01 (ii) the Purchaser
shall (i) succeed to and assume all of the Company's responsibilities, rights,
duties and obligations under this Agreement, or (ii) appoint a successor
having the characteristics set forth in clauses (i) through (iii) of Section
8.02 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Company under this Agreement
prior to the termination of Company's responsibilities, duties and liabilities
under this Agreement. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor
(not to exceed the Servicing Fee) out of payments on Mortgage Loans as it and
such successor shall agree. In the event that the Company's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Company shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it its obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 11.01
and shall in no event relieve the Company of the representations and
warranties made pursuant to Sections 3.01 and 3.02 and the remedies available
to the Purchaser under Section 3.03, it being understood and agreed that the
provisions of such Sections 3.01 and 3.02 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and
warranties set forth in Section 3.01, except for subsections (h), (i) and (j)
thereof, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Company, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Company or termination of this Agreement
pursuant to Section 8.04, 9.01 or 10.01 shall not affect any claims that any
Purchaser may have against the Company arising out of the Company's actions or
failure to act prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account, REO Account and Escrow Account and all Mortgage Files
and related documents and statements held by it hereunder and the Company
shall account for all funds and shall execute and deliver such instruments and
do such other things as may reasonably be required to more fully and
definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company.
Section 11.02. Amendment.
Capitalized terms used in this Section 11.02 but not defined in this
Agreement shall have the meanings assigned to them in the Trust Agreement.
(a) This Agreement may be amended from time to time by the Company
and the Purchaser (ii) to cure any ambiguity, (ii) to correct or supplement
any provision herein which may be inconsistent with any other provisions
herein, (iii) to make any other provisions, with respect to matters or
questions arising under this Agreement or (iv) to add, delete, or amend any
provisions to the extent necessary or desirable to comply with any
requirements imposed by the Code and the REMIC Provisions. No such amendment
effected pursuant to the preceding sentence shall, as evidenced by an Opinion
of Counsel, adversely affect the status of any REMIC created pursuant to the
Trust Agreement, nor shall such amendment effected pursuant to clause (iii) of
such sentence adversely affect in any material respect the interest of any
Holder of any Certificates issued by the Trust. Prior to entering into any
amendment pursuant to this paragraph, the Purchaser may require an Opinion of
Counsel (at the expense of the party requesting such amendment) to the effect
that such amendment is permitted under this paragraph. Any such amendment
shall be deemed not to adversely affect in any material respect any Holder of
Certificates, if the Purchaser receives written confirmation from each Rating
Agency that such amendment will not cause such Rating Agency to reduce the
then current rating assigned to the Certificates (and any Opinion of Counsel
requested by the Trustee in connection with any such amendment may rely
expressly on such confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the
Company and the Purchaser with the consent of the Holders of not less that
66K% of the Class Certificate Principal Amount (or Aggregate Notional Amount)
of each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or deleting any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders (except
as such additions, changes, deletions or modifications may be permitted under
Section 11.02(a) above); provided, however, that no such amendment shall be
made unless the Purchaser receives an Opinion of Counsel, at the expense of
the party requesting the change, that such change will not adversely affect
the status of any REMIC created pursuant to the Trust Agreement as a REMIC or
cause a tax to be imposed on any such REMIC.
Section 11.03. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 11.04. Duration of Agreement.
This Agreement shall continue in existence and effect until
terminated as herein provided, except that Sections 3.01, 3.02, 8.01 and 8.03
shall survive such termination. This Agreement shall continue notwithstanding
transfers of the Mortgage Loans by the Purchaser.
Section 11.05. Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by registered mail or by Federal Express or another nationally
recognized overnight courier service, postage prepaid, addressed follows:
(i) if to the Company:
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
Attention: Kelly A. Gately, Vice President
with a copy to:
Marilyn Kolb, Esq.
Deputy General Counsel
The Boston Company
One Boston Place
Boston, MA 02108
or such other address as may hereafter be furnished to the Purchaser in
writing by the Company;
(ii) if to Purchaser: Lehman Capital, a Division of Lehman Brothers
Holdings Inc.
c/o Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Attention: Jack E. Desens, Senior Vice President
with a copy to:
John Arnholz, Esq.
Brown & Wood LLP
815 Connecticut Avenue, N.W.
Suite 701
Washington, D.C. 20006
or such other address as may hereafter be furnished to the Company in writing
by the Purchaser.
Section 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, 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.
Section 11.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of
the Company shall be rendered as an independent contractor and not as agent
for the Purchaser.
Section 11.08. Execution; Successors and Assigns.
This Agreement 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 agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and the Purchaser and their
respective successors and permitted assigns.
Section 11.09. Integration.
This Agreement, including all schedules and exhibits, constitutes the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto with respect to such
transactions; provided, however, that the Purchase Price referred to herein
shall be the purchase price set forth in the Purchase Price and Terms Letter,
and that provision of the Purchase Price and Terms Letter shall survive for
the exclusive purpose of such cross-reference. The provisions of this
Agreement shall govern in any conflict between the terms of this Agreement and
the Purchase Price and Terms Letter.
Section 11.10. Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company
but subject to the limit set forth in Section 2.02 hereof, to assign, in whole
or in part, its interest under this Agreement with respect to some or all of
the Mortgage Loans, and designate any person to exercise any rights of the
Purchaser hereunder, and the assignee or designee shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage
Loans. All references to the Purchaser in this Agreement shall be deemed to
include its assignee or designee and any subsequent assignee, specifically
including the Trustee.
Section 11.11. No Solicitation.
From and after the Closing Date, the Company agrees that it will not take
any action or permit or cause any action to be taken by any of its agents or
affiliates, or by any independent contractors on the Company's behalf, to
personally, by telephone or mail, solicit the borrower or obligor under any
Mortgage Loan for purposes relating to the marketing of the Company's first
mortgage loan products, including to refinance a Mortgage Loan, in whole or in
part, without the prior written consent of the Purchaser, its successors and
assigns. It is understood and agreed that all rights and benefits relating to
the solicitation of any Mortgagors and the attendant rights, title and
interest in and to the list of such Mortgagors and data relating to their
Mortgages (including insurance renewal dates) shall be transferred to the
Purchaser pursuant hereto on the Closing Date and the Company shall take no
action to undermine these rights and benefits. Notwithstanding the foregoing,
it is understood and agreed that general promotions undertaken by the Company
or any affiliate of the Company, including, without limitation, mass mailings
based on commercially acquired mailing lists, newspaper, radio and television
advertisements, shall not constitute solicitation under this Section 11.11.
Section 11.12. Reconstitution.
The Company understands and agrees that it is the intent of the Purchaser
to securitize the Mortgage Loans (i.e., to form a trust and to issue
securities evidencing interests therein). The Company agrees to review and
adhere to the terms of any agreements that may be required to facilitate such
securitization and to provide and execute such certificates, Opinions of
Counsel and other documents as may be necessary to facilitate such
securitization, it being understood that any such agreements and other
documents will not impose upon the Company any obligations more burdensome
than those contained in this Agreement. It is further understood that the
Purchaser has agreed to reimburse the Company for its reasonable attorneys'
fees and other costs incurred in connection with such securitization.
The Company agrees that, notwithstanding anything to the contrary in the
Purchase Price and Terms Letter or in this Agreement (including Section 11.09
hereof), the provisions of Sections 3 and 12 of the Purchase Price and Terms
Letter shall survive the execution of this Agreement and shall remain in
effect.
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as
of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Jack Desens
______________________________
Name: Jack Desens
Title: Senior Vice President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Kelly Gately
_______________________________
Name: Kelly A. Gately
Title: Vice President
STATE OF )
-----------------------------
)
COUNTY OF ) ss.:
----------------------------
On the ____ day of _________, 1998 before me, a Notary Public in and for
said State, personally appeared ________________________________, known to me
to be ____________ of
________________________________________________________________ the
corporation 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 affixed my office seal
the day and year in this certificate first above written.
____________________________
Notary Public
My Commission expires:
COMMONWEALTH OF MASSACHUSETTS )
)
COUNTY OF SUFFOLK ) ss.:
On the ____ day of ___________, 1998 before me, a Notary Public in and
for said Commonwealth, personally appeared Kelly A. Gately, known to me to be
Vice President of Boston Safe Deposit and Trust Company, the trust company
that executed the within instrument and also known to me to be the person who
executed it on behalf of said trust company, and acknowledged to me that such
trust company executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
____________________________
Notary Public
My Commission expires:
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT A-1
SUMMARY OF UNDERWRITING GUIDELINES
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
originals or copies of each of the following items, which shall be available
for inspection by the Purchaser and any prospective Purchaser. To the extent
that the Servicing File contains copies of any of the items set forth herein,
the Company represents to the Purchaser that the originals or certified copies
of said items have been delivered to the Custodian pursuant to Section 2 of
the Custodial Agreement, except as indicated on Schedule I thereto.
I. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of ______________ without recourse" and signed in
the name of the Company by an authorized officer (in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature must be
in the following form: "Boston Safe Deposit and Trust Company, successor by
merger to [name of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business under another name,
the signature must be in the following form: "Boston Safe Deposit and Trust
Company, formerly known as [previous name]".
I. The original of any guarantee executed in connection with the Mortgage
Note (if any).
I. The original Mortgage or Deed of Trust, with evidence of recording
thereon and, as to Coop Loans, the original Pledge and Security Agreement, or
copies certified by the related recording office or if the original Mortgage
has not yet been returned from the recording office, a copy certified by the
Seller indicating that such Mortgage has been delivered for recording. The
return directions for the original Mortgage should indicate, when recorded,
mail to the Company.
I. The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
I. The original Assignment of Security Agreement or Assignment of
Mortgage for each Mortgage Loan, in form and substance acceptable for
recording. The Assignment of Security Agreement and the Assignment of Mortgage
shall be delivered in blank.
I. Originals of any intervening recorded assignments of the Mortgage with
evidence of recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of Mortgage,
the Company shall deliver or cause to be delivered to the Custodian, a
photocopy of such intervening assignment, together with (i) in the case of
delay caused by the public recording office, an Officer's Certificate of the
Company stating that such intervening assignment of Mortgage has been
dispatched to the appropriate public recording office for recordation and that
such original recorded intervening assignment of mortgage or a copy of such
intervening assignment of mortgage certified by the appropriate public
recording office or by the title insurance company that issued the title
policy to be a true and complete copy of the original recorded intervening
assignment of mortgage will be promptly delivered to the Custodian upon
receipt thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is lost
after recordation in a public recording office, a copy of such intervening
assignment certified by such public recording office to be a true and complete
copy of the original recorded intervening assignment.
I. Except as to Coop Loans, the original mortgagee policy of title
insurance or attorney's opinion of title and abstract of title.
I. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
I. Except as to Coop Loans, the original hazard insurance policy and, if
required by law, flood insurance policy, in accordance with Section 4.10 of
the Agreement.
I. Residential loan application.
I. Mortgage Loan closing statement.
I. Verification of employment and income.
I. Verification of acceptable evidence of source and amount of down-payment.
I. Credit report on the Mortgagor.
I. Residential appraisal report.
I. Photograph of the Mortgaged Property.
I. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy, i.e., map
or plat, restrictions, easements, sewer agreements, home associations
declarations, etc.
I. All required disclosure statements.
I. If available, termite report, structural engineer's report, water
portability and septic certification.
I. Sales contract.
II. Tax receipts, insurance premium receipts, ledger sheets, payment
history form date of origination, insurance claim files, correspondence,
current and historical computerized data files, and all other processing,
underwriting and closing papers and records which are customarily contained in
a mortgage loan file and which are required to document the Mortgage Loan or
to service the Mortgage Loan.
I. As to New York Coop Loans, the following documents: Pledge and
Security Agreement; Stock Certificate; Proprietary Lease; Recognition
Agreement (if any); Stock Power; Assignment of the Lease; and UCC-1.
I. As to San Francisco Coop Loans, the following documents: Lessor's
Consent; Lessor's Estoppel Certificate; Leasehold Deed of Trust, Security
Agreement, Assignment of Leases and Rents and Fixture Filing; Assignment of
Leasehold Estate; Title Insurance; Recognition Agreement; UCC-1; Pledge and
Security Agreement.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 60
days of the Closing Date, an Officer's Certificate which shall (i) identify
the recorded document, (ii) state that the recorded document has not been
delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will
be delivered to the Custodian. The Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv)
above. An extension of the date specified in (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT C
MORTGAGE LOAN DOCUMENTS
I. The original Mortgage Note bearing all intervening endorsements, endorsed
"Pay to the order of ______________ without recourse" and signed in the name
of the Company by an authorized officer (in the event that the Mortgage Loan
was acquired by the Company in a merger, the signature must be in the
following form: "Boston Safe Deposit and Trust Company, successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was acquired
or originated by the Company while doing business under another name, the
signature must be in the following form: "Boston Safe Deposit and Trust
Company, formerly known as [previous name]".
I. The original of any guarantee executed in connection with the Mortgage Note
(if any).
I. The original Mortgage or Deed of Trust, with evidence of recording thereon
and, as to Coop Loans, the original Pledge and Security Agreement, or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a copy certified by the Seller
indicating that such Mortgage has been delivered for recording. The return
directions for the original Mortgage should indicate, when recorded, mail to
the Seller.
I. The originals of all assumption, modification, consolidation or extension
agreements, with evidence of recording thereon.
I. The original Assignment of Security Agreement or Assignment of Mortgage for
each Mortgage Loan, in form and substance acceptable for recording. The
Assignment of Security Agreement and the Assignment of Mortgage shall be
delivered in blank.
I. Originals of any intervening recorded assignments of the Mortgage with
evidence of recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of Mortgage,
the Company shall deliver or cause to be delivered to the Custodian, a
photocopy of such intervening assignment, together with (i) in the case of
delay caused by the public recording office, an Officer's Certificate of the
Company stating that such intervening assignment of Mortgage has been
dispatched to the appropriate public recording office for recordation and that
such original recorded intervening assignment of Mortgage or a copy of such
intervening assignment of Mortgage certified by the appropriate public
recording office or by the title insurance company that issued the title
policy to be a true and complete copy of the original recorded intervening
assignment of Mortgage will be promptly delivered to the Custodian upon
receipt thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is lost
after recordation in a public recording office, a copy of such intervening
assignment certified by such public recording office to be a true and complete
copy of the original recorded intervening assignment.
I. Except as to Coop Loans, the original mortgagee policy of title insurance
or attorney's opinion of title and abstract of title.
I. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
I. As to New York Coop Loans, the following documents: Pledge and Security
Agreement; Stock Certificate; Proprietary Lease; Recognition Agreement (if
any); Stock Power; and Assignment of the Lease.
I. As to San Francisco Coop Loans, the following documents: Lessor's Consent;
Lessor's Estoppel Certificate; Leasehold Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing; Assignment of Leasehold
Estate; Title Insurance; Recognition Agreement; UCC-1; Pledge and Security
Agreement.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 60
days of the Closing Date, an Officer's Certificate which shall (i) identify
the recorded document, (ii) state that the recorded document has not been
delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will
be delivered to the Custodian. The Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv)
above. An extension of the date specified in (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT C-1
CUSTODIAL AGREEMENT
EXHIBIT D-1
CUSTODIAL ACCOUNT CERTIFICATION
--------------, ----
Boston Safe Deposit and Trust Company hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 4.04 of the Mortgage Loan Sale, Warranties and Servicing Agreement,
dated as of _______________ _________________ Residential Adjustable Rate
Mortgage Loans, Group _____________.
Title of Account: Boston Safe Deposit and Trust Company in trust for the
purchaser Group _____________.
Account Number: _________________________________
Address of office or branch
of the Company at
which Account is maintained:
- -------------------------------
- -------------------------------
- -------------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:______________________________
Name:
Title:
EXHIBIT D-2
CUSTODIAL ACCOUNT LETTER AGREEMENT
------------------, -----
To: ____________________________
----------------------------
----------------------------
(the "Depository")
As Company under the Mortgage Loan Sale, Warranties and Servicing
Agreement, dated as of _____________ ___the _________________, Residential
Adjustable Rate Mortgage Loans, Group____________ (the "Agreement"), we hereby
authorize and request you to establish an account, as a Custodial Account
pursuant to Section 4.04 of the Agreement, to be designated as "Boston Safe
Deposit and Trust Company, in trust for the [Purchaser] - Residential
Adjustable Rate Mortgage Loans - Group ____________." All deposits in the
account shall be subject to withdrawal therefrom by order signed by the
Company. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter
is submitted to you in duplicate. Please execute and return one original to
us.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:__________________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ________________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance. Corporation through
the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF").
[DEPOSITORY]
By: _______________________________
Name:
Title:
Date:
EXHIBIT E-1
ESCROW ACCOUNT CERTIFICATION
--------------, ----
Boston Safe Deposit and Trust Company hereby certifies that it has
established the account described below as an Escrow Account pursuant to
Section 4.06 of the Mortgage Loan Sale, Warranties and Servicing Agreement,
dated as of _________________, Residential Adjustable Rate Mortgage Loans,
Group
- ---------------------.
Title of Account: "Boston Safe Deposit and Trust Company in trust for the
Purchaser Group _____________, and various Mortgagors."
Account Number: _______________________________
Address of office or branch of the Company at which Account is maintained:
- --------------------------------
- --------------------------------
- --------------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: _______________________
Name:
Title:
EXHIBIT E-2
ESCROW ACCOUNT LETTER AGREEMENT
__________________, 199__
To: ____________________________
----------------------------
----------------------------
(the "Depository")
As Company under the Mortgage Loan Sale, Warranties and Servicing
Agreement, dated as of _____________ ___, 199__, Residential Adjustable Rate
Mortgage Loans, Group____________ (the "Agreement"), we hereby authorize and
request you to establish an account, as an Escrow Account pursuant to Section
4.06 of the Agreement, to be designated as "Boston Safe Deposit and Trust
Company, in trust for the [Purchaser] - Residential Adjustable Rate Mortgage
Loans - Group ____________." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Company. You may refuse any
deposit which would result in violation of the requirement that the account be
fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: ________________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ________________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance. Corporation through
the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF").
[DEPOSITORY]
By:______________________________
Name:
Title:
Date:
EXHIBIT F
MONTHLY REMITTANCE ADVICE
EXHIBIT G
INTENTIONALLY DELETED
EXHIBIT H
COMPANY'S CERTIFICATE OF COMPLIANCE
-------------------- ----, ----
I, Kelly A. Gately, a Vice President of Boston Safe Deposit and Trust
Company (the "Company"), do hereby confirm and state, on the basis of my
personal knowledge, that the following are true to the best of my knowledge
and belief:
l. I am a Vice President of the Company, having charge of the Mortgage
Loans this day being sold, transferred and assigned to __________________
("Purchaser").
2. I do hereby confirm that the representations and warranties contained
in Sections 3.01 and 3.02 of the Mortgage Loan Sale, Warranties and Servicing
Agreement entered into as of the first day of ______________, ___, are true
and correct as of such date.
-----------------------------
Kelly A. Gately
Vice President
EXHIBIT I
FORM OF OPINION OF SELLER'S COUNSEL
_____________ ____,199__
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Dear Ladies and Gentlemen:
I am Deputy General Counsel of and counsel for Boston Safe Deposit and
Trust Company (the "Seller"), in connection with the sale (the "Sale") by the
Seller of a portfolio of loans secured by residential real estate and shares
of cooperative associations (the "Loans") to Lehman Capital, A Division of
Lehman Brothers Holdings Inc. ("the Purchaser") pursuant to a Mortgage Loan
Sale, Warranties and Servicing Agreement dated as of _____________ ___, ____,
by and between the Seller and the Purchaser. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Agreement.
In connection with rendering this opinion, I have examined originals, or
copies identified to my satisfaction as being true copies of originals, of the
following, among other things:
(a) the Mortgage Loan Sale, Warranties and Servicing Agreement;
(b) the Additional Pledged Collateral Custodial Agreement by and among
the Seller, the Purchaser and [ ] ("the Custodian");
(c) the form of Assignment of Mortgage;
(d) the form of endorsement of the Mortgage Notes;
(e) the Charter and By-laws of the Seller; and,
(f) such other documents, records and papers as we have deemed necessary
and relevant as a basis for this opinion.
For the purposes of the opinions expressed below, I have assumed (i) the
genuineness of all signatures on original documents or instruments; (ii) the
authenticity of all documents or instruments submitted to me as originals,
(iii) the conformity to originals of all documents or instruments submitted to
me as copies; (iv) the due authorization, execution and delivery of all
documents where due authorization, execution and delivery are requisite to the
effectiveness thereof (other than the authorization, execution and delivery by
the Seller of the Agreement, as to which my opinions are expressed below); (v)
that, immediately prior to the transfer of any Loan to the Purchaser pursuant
to the Agreement, with respect to such Loan, (A) the Seller was the holder and
named payee of the Note, (B) the Seller was the mortgagee or beneficiary, as
applicable, under each related Security Instrument, and (C) the Seller was the
owner of such Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges, security or other
interests of any nature; (vi) that each Note corresponding to each Loan has
been endorsed by the Seller using the form of endorsement attached hereto and
each Note so endorsed has been delivered to the Purchaser on or before the
date hereof; (vii) that the Purchaser is acquiring the Loans in good faith for
value without notice that they are overdue or have been dishonored or of any
defense against or claim to the Loans or any interest therein on the part of
any person; (viii) that there is no evidence on any of the Loan Documents of
any interest contrary to the Seller's interests under the Agreement; (ix) that
the Seller is solvent and will not be rendered insolvent by the sale of the
portfolio of Loans; and, (x) that the Seller has received payment of
reasonably equivalent value for the Loans. I have no actual knowledge that any
of the foregoing assumptions is incorrect. I also have relied to the extent I
deem proper upon written statements and certificates of public officials and,
as to various matters of fact relevant to the opinions expressed herein, I
have relied upon certificates and statements of officers of the Seller.
On the basis of the foregoing examination, statements and assumptions and
in reliance thereon and upon consideration of applicable law, I am of the
opinion that:
(1) The Seller is a Massachusetts trust company, duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Massachusetts and is duly authorized to transact its business.
(2) The Seller has the requisite corporate power to execute and deliver
the Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by the Seller and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Seller. The Agreement has been
duly executed and delivered by the Seller and, assuming due authorization,
execution and delivery by Purchaser and prior satisfaction of all conditions
to the obligations of each of the parties under the Agreement (or a valid
waiver thereof by such parties, as applicable), the Agreement constitutes the
legal, valid, and binding obligation of the Seller enforceable in accordance
with its terms subject only to the exceptions set forth below, and Seller has
all power, authority and right to perform and observe the terms and conditions
of such instruments.
(3) The execution and delivery of the Agreement by the Seller does not,
and the performance of the Agreement by the Seller will not, (a) result in a
breach of or violate the Charter or By-laws of the Seller, (b) violate (A) any
statute, law, rule or regulation, or (B) to the best of my knowledge, any
order, judgment, award, administrative interpretation, injunction, writ, or
decree or the like of any court or government authority, or (C) to the best of
my knowledge, conflict with or violate any agreement, permit, license, or
other governmental authorization or approval necessary for the purchase by the
Seller of the Loans, the effect of which breach, conflict or violation would
be material and adverse to the rights of the Purchaser under the Agreement or
to the Loans. No regulatory approvals or consents are required under
Massachusetts or federal law or regulation with respect to Seller's
consummation of the transactions between Purchaser and Seller contemplated by
the Agreement.
(4) To the best of my knowledge, there are no actions, suits,
proceedings, or governmental investigations or inquiries pending or threatened
against the Seller seeking to prevent or that, if successful, would prevent
the consummation of the transactions contemplated by the Agreement.
(5) The Mortgages have been duly assigned and the Mortgage Notes have
been duly endorsed by a duly authorized officer of the Company as provided in
the Custodial Agreement.
The opinion set forth in the last sentence of paragraph (2) above to the
effect that the Agreement is enforceable against Seller in accordance with its
terms, is subject to the following exceptions:
a. Such enforceability may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization or other similar laws now or
hereafter in effect relating to or affecting creditor's rights.
b. Such enforceability may be limited by general equitable principles,
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.
I hereby advise your that the opinions expressed herein are limited to
matters of federal law and the law of the Commonwealth of Massachusetts and do
not purport to cover any matters as to which any laws of any other
jurisdiction are applicable. Insofar as the opinions expressed herein are
limited to transactions between the Seller and the Purchaser, except for the
opinion I express in paragraph (5) above, I express no opinion regarding any
transaction(s) between Seller or Purchaser and any Obligor(s) evidenced by
loan applications, Notes, Mortgages, disclosures, notices or any other
instrument or documents entered into or exchanged between the Seller or
Purchaser and the Obligor(s). I am not assuming any obligation to revise or
supplement the opinions expressed above should such laws be changed by
legislative action, judicial decision, or otherwise.
This opinion is rendered to you as the Purchaser named in the Agreement
solely in connection with the transactions contemplated therein and may not be
used or relied upon by any other person or for any other purpose without our
express prior written consent.
Respectfully submitted,
Marilyn K. Kolb
Deputy General Counsel
EXHIBIT J
FORM OF OPINION OF PURCHASER'S COUNSEL
_____________ ___, 199__
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
Dear Ladies and Gentlemen:
I am counsel for Lehman Capital, A Division of Lehman Brothers Holdings
Inc. (the "Purchaser"), in connection with the sale (the "Sale") by Boston
Safe Deposit and Trust Company ("Seller") of a portfolio of loans secured by
residential real estate and shares of cooperative associations (the "Loans")
to Purchaser pursuant to a Mortgage Loan Sale, Warranties and Servicing
Agreement dated as of _________________ ___, _____, by and between the Seller
and the Purchaser. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Agreement.
In connection with rendering this opinion, I have examined originals, or
copies identified to my satisfaction as being true copies of originals, of the
following, among other things:
(a) the Agreement and all exhibits and schedules thereto; and
(b) the Charter and By-laws of the Purchaser.
For the purposes of the opinions expressed below, I have assumed (i) the
genuineness of all signatures on original documents or instruments; (ii) the
authenticity of all documents or instruments submitted to me as originals,
(iii) the conformity to originals of all documents or instruments submitted to
me as copies; (iv) the due authorization, execution and delivery of all
documents where due authorization, execution and delivery are requisite to the
effectiveness thereof (other than the authorization, execution and delivery by
the Purchaser of the Agreement, as to which my opinions are expressed below);
(v) that, immediately prior to the transfer of any Loan to the Purchaser
pursuant to the Agreement, with respect to such Loan, (A) the Seller was the
holder and named payee of the Note, (B) the Seller was the mortgagee or
beneficiary, as applicable, under each related Security Instrument, and (C)
the Seller was the owner of such Loan free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges, charges,
security or other interests of any nature; (vi) that each Note corresponding
to each Loan has been endorsed by the Seller using the form of endorsement
attached hereto and each Note so endorsed has been delivered to the Purchaser
on or before the date hereof; (vii) that the Purchaser is acquiring the Loans
in good faith for value without notice that they are overdue or have been
dishonored or of any defense against or claim to the Loans or any interest
therein on the part of any person; (viii) that there is no evidence on any of
the Loan Documents of any interest contrary to the Seller's interests under
the Agreement; (ix) that the Purchaser is solvent and will not be rendered
insolvent by the purchase of the portfolio of Loans, and (x) that the Seller
has received payment of reasonably equivalent value for the Loans. I have no
actual knowledge that any of the foregoing assumptions is incorrect. I also
have relied to the extent I deem proper upon written statements and
certificates of public officials and, as to various matters of fact relevant
to the opinions expressed herein, I have relied upon certificates and
statements of officers of the Purchaser.
On the basis of the foregoing examination, statements and assumptions and
in reliance thereon and upon consideration of applicable law, I am of the
opinion that:
(1) The Purchaser is a [ ], duly organized, validly existing, and in good
standing under the laws of [ ].
(2) The Purchaser has the requisite corporate power to execute and
deliver the Agreement and to consummate the transactions contemplated thereby.
The execution and delivery of the Agreement by the Purchaser and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the Purchaser. The
Agreement has been duly executed and delivered by the Purchaser and, assuming
due authorization, execution and delivery by Seller and prior satisfaction of
all conditions to the obligations of each of the parties under the Agreement
(or a valid waiver thereof by such parties, as applicable), the Agreement
constitutes the legal, valid, and binding obligation of the Purchaser
enforceable in accordance with its terms subject only to the exceptions set
forth below.
(3) The execution and delivery of the Agreement by the Purchaser does
not, and the performance of the Agreement by the Purchaser will not, (a)
result in a breach of or violate the Charter or By-laws of the Purchaser, (b)
violate (A) any statute, law, rule or regulation, or (B) to the best of my
knowledge, any order, judgment, award, administrative interpretation,
injunction, writ, or decree or the like of any court or government authority,
or (C) to the best of my knowledge, conflict with or violate any agreement,
permit, concession, grant, franchise, license, or other governmental
authorization or approval necessary for the purchase by the Purchaser of the
Loans, the effect of which breach, conflict or violation would be material and
adverse to the rights of the Purchaser under the Agreement or to the Loans. No
regulatory approvals or consents are required under federal law or regulation
with respect to Purchaser's consummation of the transactions between Purchaser
and Seller contemplated by the Agreement.
(4) To the best of my knowledge, there are no actions, suits,
proceedings, or governmental investigations or inquiries pending or threatened
against the Purchaser seeking to prevent or that, if successful, would prevent
the consummation of the transactions contemplated by the Agreement.
The opinion set forth in the last sentence of paragraph (2) above to the
effect that the Agreement is enforceable against Purchaser in accordance with
its terms, is subject to the following exceptions:
a. Such enforceability may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization or other similar laws now or
hereafter in effect relating to or affecting creditor's rights.
b. Such enforceability may be limited by general equitable principles,
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.
I hereby advise your that the opinions expressed herein are limited to
matters of federal and [ ] law and do not purport to cover any matters as to
which any laws of any other jurisdiction are applicable. Insofar as the
opinions expressed herein are limited to transactions between the Seller and
the Purchaser, I express no opinion regarding any transaction(s) between
Seller or Purchaser and any Obligor(s) evidenced by loan applications, Notes,
Mortgages, disclosures, notices or any other instrument or documents entered
into or exchanged between the Seller or Purchaser and the Obligor(s). I am not
assuming any obligation to revise or supplement the opinions expressed above
should such laws be changed by legislative action, judicial decision, or
otherwise.
This opinion is rendered to you as the Seller named in the Agreement
solely in connection with the transactions contemplated therein and may not be
used or relied upon by any other person or for any other purpose without our
express prior written consent.
Respectfully submitted,
EXHIBIT K
ADDITIONAL PLEDGED COLLATERAL
CUSTODIAL AGREEMENT
THIS ADDITIONAL PLEDGED COLLATERAL CUSTODIAL AGREEMENT, dated as of
_____________ ____, 199__, is by and between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., a corporation with an office at 3 World
Financial Center, New York, NY 10285-1200 (the "Purchaser") and Boston Safe
Deposit and Trust Company, a Massachusetts trust company with its principal
place of business at One Boston Place, Boston, MA 02108 (the "Custodian");
WITNESSETH
WHEREAS, pursuant to the terms of a Mortgage Loan Sale, Warranties and
Servicing Agreement of even date herewith (the "Loan Sale Agreement"), the
Purchaser has agreed to purchase certain loans (each a "Mortgage Loan") from
the Company as whole loans; and
WHEREAS, certain Mortgage Loans are secured by Additional Pledged
Collateral (as defined in the Loan Sale Agreement) currently in the custody of
the Custodian; and
WHEREAS, the Purchaser desires to have the Custodian retain possession of
the Additional Pledged Collateral for the benefit of the Purchaser and any
future purchaser, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual undertakings herein
expressed the parties hereto hereby agree as follows:
Section 1. Definitions.
Capitalized terms shall have the meanings assigned to them, except that
capitalized terms used and not defined herein shall have the meanings assigned
to such terms by the Loan Sale Agreement.
Agreement: This Custodial Agreement and all amendments and attachments
hereto and supplements hereof.
Custodian: Boston Safe Deposit and Trust Company or any successor in
interest or assigns, or any successor to the Custodian under this
Agreement as herein provided.
Purchaser: Lehman Capital, A Division of Lehman Brothers Holdings Inc. or
its successor in interest or assigns.
Section 2. Appointment of Custodian.
The Purchaser hereby appoints and designates the Custodian as the
custodian of the Additional Collateral. The Custodian hereby accepts such
appointment and designation and agrees that it shall maintain custody of the
Additional Collateral in accordance with this Agreement. In its discretion,
the Custodian is permitted to engage sub-contractors to assist in providing
certain of the services to Purchaser under this Agreement.
Section 3. Obligations of the Custodian.
The Custodian shall hold all Additional Collateral for the use and
benefit of the Purchaser, and shall make disposition thereof in accordance
with this Agreement and the instructions furnished by the Purchaser. The
Custodian shall segregate and maintain continuous custody of all Additional
Collateral in accordance with customary standards for such custody.
Section 4. Custodian Duties.
As Custodian for the Additional Collateral, Custodian shall:
(a) hold the Additional Collateral, as applicable, in
safekeeping facilities, including, without limitation, in central
depositories including the Depository Trust Company, in Book Entry
System of the U.S. Treasury Department ("Fed Book Entry"), or in the
safekeeping of other custodian banks, clearing corporations and
depositories or similar organizations in the U.S. or elsewhere, as
required for the secure and efficient handling of the property and
as Custodian in its sole discretion shall select;
(b) collect all income earned by, and all distributions due to,
the Additional Collateral, if any;
(c) collect all proceeds from securities, certificates of
deposit or other investments which may mature or be called;
(d) attend to exchanges of securities, to deposits or exchanges
of the securities of companies in reorganization, and to other
so-called corporate actions which affect the Additional Collateral
as directed by the Purchaser; and
(e) upon the Purchaser's written instructions, deliver to any
person, agent, financial institution, partnership, corporation or
other designated recipient any or all of the Additional Collateral
held under this Agreement.
The Custodian shall have no duty or responsibility to manage or recommend
investments of the assets held by it hereunder or to initiate any purchase,
sale or other investment transaction in the absence of proper instructions (as
set forth in Section 5 below).
Section 5. Directions and Instructions.
All directions to Custodian from the Purchaser shall be in writing
(provided that Custodian may, in its discretion, accept oral directions
subject to confirmation in writing), and Custodian shall be fully protected in
acting in accordance therewith or for failing to act in the absence thereof.
The Purchaser shall certify to Custodian the names and specimen signatures of
persons authorized to act for the Purchaser in relation to Custodian.
Communications to Custodian shall be sent to its offices at One Boston Place,
Boston, Massachusetts 02108 or to such other address as Custodian shall
specify, and such communications shall be binding upon Custodian when received
by it.
Notwithstanding anything herein to the contrary, Custodian shall be fully
protected in acting in accordance with directions with respect to securities
transactions (including without limitation the affirmation and/or confirmation
of such transactions) received by it through a system or arrangement for the
coordination of securities transaction settlements operated by Depository
Trust Company or by any central securities depository, securities clearing
organization or book entry system which serves to link investment managers,
securities brokers and custodian banks, pursuant to an agreement entered into
by Custodian and the Purchaser to the same extent as if the directions were in
writing.
Section 6. Without Express Authority.
The Custodian may, in its discretion and without express authority from
the Purchaser:
(a) endorse for collection, in the name of the Purchaser,
checks, drafts and other negotiable instruments; and
(b) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer
and other dealings with the Additional Collateral of the Purchaser
except as otherwise provided by proper instructions.
Section 7. Standard of Care.
The duties of Custodian shall only be those specifically undertaken
pursuant to this Agreement, and Custodian shall not be liable for an act or
omission of another person in carrying out any responsibility imposed upon
such person with respect to the Additional Collateral held under this
Agreement whether such responsibility is allocated to such other person by
this Agreement or pursuant to a procedure established in this Agreement or
otherwise. In performing its duties under this Agreement, Custodian shall
exercise the same care and diligence that it would devote to its own property
and shall be liable only for losses arising from its negligence or willful
misconduct.
Section 8. Indemnification of Custodian.
The Purchaser agrees to indemnify and hold harmless the Custodian and its
directors, officers, employees, agents and nominees from all taxes (except
taxes on the net income of the Custodian, its agents and its nominees),
charges, expenses, assessments, claims and liabilities (including reasonable
legal fees and expenses) incurred by any of them in connection with the
performance of this Agreement, except such as may arise from any negligent
action, negligent failure to act or willful misconduct on the part of the
indemnified entity.
Section 9. Compensation of Custodian.
Throughout the Term of this Agreement, as set forth in Section 14 below,
the Custodian shall perform its duties hereunder without compensation.
Thereafter, the Custodian shall be entitled to reimbursement of expenses
incurred in connection with any necessary transfer following notice of
termination or removal under Sections 11, 12 or 14.
Section 10. Examination of Custodial Files.
Upon reasonable prior notice to the Custodian, the Purchaser and its
agents, accounts, attorneys and auditors will be permitted during normal
business hours to examine the records relating to Additional Pledged
Collateral in the possession of or under the control of the Custodian relating
to any or all of the Mortgage Loans.
Section 11. Removal of Custodian.
Upon at least 45 days' prior written notice to the Custodian, and only
for cause, the Purchaser may remove and discharge the Custodian from the
performance of its duties under this Agreement. Having given notice of such
removal, the Purchaser promptly shall appoint a successor Custodian to act on
behalf of the Purchaser by written instrument, one original counterpart of
which instrument shall be delivered to the Custodian. Any termination by the
Purchaser shall be accompanied or followed promptly by proper instructions in
writing setting forth the names of the persons to whom the Custodian shall
deliver the Additional Collateral. The Custodian will deliver promptly the
Additional Collateral to the persons so specified, after deducting therefrom
any amounts which the Custodian is owed for services or reimbursement of
expenses hereunder. The Purchaser shall be responsible for the fees of the
successor Custodian.
Section 12. Termination by Custodian.
The Custodian may terminate its obligations under this Agreement upon at
least 45 days' prior written notice to the Purchaser. In the event of such
termination, the Purchaser shall appoint a successor Custodian. The payment of
such successor Custodian's fees and expenses shall be solely the
responsibility of the Company or any successor to the Company as servicer
pursuant to the Loan Sale Agreement. If notice of termination is given by the
Custodian, the Purchaser shall, within 30 days following the giving of such
notice, deliver to the Custodian proper instructions in writing specifying the
names of the persons to whom the Custodian shall deliver the Additional
Pledged Collateral held by it. The Custodian will deliver promptly the
Additional Pledged Collateral to the persons so specified, after deducting
therefrom any amounts which the Custodian is owed for services or
reimbursement of expenses hereunder.
If within 30 days following the giving of a notice of termination by the
Custodian, the Custodian does not receive from the Purchaser proper
instructions in writing specifying the names of the persons to whom the
Custodian shall deliver the assets of the Purchaser held by it, the Custodian,
at its election, may seek court action with respect to the appointment of a
successor custodian.
Section 13. Survival.
The obligations of the parties hereto regarding the use of reasonable
care, indemnities and payment of fees and expenses shall survive the
termination of this Agreement.
Section 14. Term of Agreement.
Unless terminated pursuant to Section 11 or Section 12 hereof, this
Agreement shall terminate upon the earlier of (1) the resignation or removal
of the Custodian, its agent or affiliate as the servicer under the Loan Sale
Agreement, and (2) the final payment or other liquidation (or advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan,
and the final remittance of all funds due the Purchaser under the Loan Sale
Agreement. In such event, all Additional Pledged Collateral shall be released
in accordance with the written instructions of the Purchaser.
Section 15. Notices.
Except as otherwise specified herein, each notice or other communication
hereunder shall be in writing and shall be delivered to the intended recipient
at the following address (or at such other address as the intended recipient
shall have specified in a written notice given to the other parties hereto):
if to the Purchaser:
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Attention: Jack E. Desens, Senior Vice President
if to the Custodian:
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
Attention: Kelly A. Gately, Vice President
Section 16. Amendments.
Unless otherwise specifically provided herein, this Agreement may not be
amended, modified, altered or supplemented other than by means of an agreement
or instrument executed on behalf of each of the parties hereto.
Section 17. Waiver.
No failure on the part of any person to exercise any power, right,
privilege or remedy hereunder, and no delay on the part of any person in the
exercise of any power, right, privilege or remedy hereunder, shall operate as
a waiver thereof; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy.
Section 18. Severability.
In the event that any provision of this Agreement, or the application of
any such provision to any person or set of circumstances, shall be determined
to be invalid, unlawful, void or unenforceable to any extent, the remainder of
this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected
and shall continue to be valid and enforceable to the fullest extent permitted
by law.
Section 19. Successor and Assigns.
This agreement shall inure to the benefit of the successors and assigns
of the parties hereto.
Section 20. Governing Law.
This Agreement shall be construed in accordance with, and governed in all
respects by, the laws of the Commonwealth of Massachusetts.
Section 21. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, when taken together, shall
constitute one agreement.
IN WITNESS WHEREOF, the Purchaser and the Custodian have caused their
names to be signed hereto by their respective duly-authorized officers, all as
of the date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.,
as Purchaser
By:_____________________________
Name: Jack E. Desens
Title: Senior Vice President
BOSTON SAFE DEPOSIT AND TRUST
COMPANY, as Custodian
By: ______________________________
Name: Kelly A. Gately
Title: Vice President
EXHIBIT L
INTENTIONALLY LEFT BLANK
EXHIBIT M
FORM OF CERTIFICATE FOR NONRECOVERABLE ADVANCES
__________________ ____, 199__
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Re: Mortgage Loan Sale, Warranties and Servicing Agreement dated as of
_________________, between _________________________, as Purchaser, and Boston
Safe Deposit and Trust Company, as Company.
Ladies and Gentlemen:
In accordance with the provisions of Sections 4.02 and 5.03 of the
above-referenced Agreement, the undersigned hereby certifies that it has
determined, with regard to the Mortgage Loan(s) identified below, that future
advances constitute Nonrecoverable Advances as such term is defined by the
Agreement.
- ------------------------------------ ------------------------
Mortgagor Identifying Number
- ------------------------------------ ------------------------
Mortgagor Identifying Number
- ------------------------------------ ------------------------
Mortgagor Identifying Number
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
Name:
Title:
Amends April 1, 1998 Agreement
===============================================================================
Boston Safe Deposit and Trust Company,
Seller
and
Lehman Capital, A Division of Lehman Brothers Holdings Inc.
Purchaser
AMENDED AND RESTATED
MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT
Dated as of April 1, 1998
Adjustable Rate Mortgage Loans
===============================================================================
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES;BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF
DOCUMENTS...............................................................11
Section 2.01 Sale and Conveyance of Mortgage Loans;
Possession of Mortgage Files; Maintenance
of Servicing Files..............................11
Section 2.02 Books and Records; Transfers of
Mortgage Loans..................................11
Section 2.03 Additional Pledged Collateral Custodial
Agreement; Delivery of Documents................12
ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES AND BREACH........ .....13
Section 3.01 Company Representations and Warranties..........13
Section 3.02 Representations and Warranties Regarding
Individual Mortgage Loans.......................16
Section 3.03 Remedies for Breach of Representations
and Warrant...ies...............................24
Section 3.04 Mortgage Loans Convertible to Fixed
Interest Rate...................................26
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...................26
Section 4.01 Company to Act as Servicer......................26
Section 4.02 Liquidation of Mortgage Loans...................28
Section 4.03 Collection of Mortgage Loan Payments............29
Section 4.04 Establishment of and Deposits to
Custodial Account...............................29
Section 4.05 Permitted Withdrawals From Custodial Account....31
Section 4.06 Establishment of and Deposits to Escrow
Account.........................................32
Section 4.07 Permitted Withdrawals From Escrow Account.......33
Section 4.08 Maintenance of Tax, Insurance, Other
Charge Records..................................34
Section 4.09 Protection of Accounts..........................34
Section 4.10 Maintenance of Hazard Insurance.................34
Section 4.11 Maintenance of Mortgage Impairment Insurance....36
Section 4.12 Maintenance of Fidelity Bond and Errors
and Omissions Insurance.........................36
Section 4.13 Inspections.....................................37
Section 4.14 Restoration of Mortgaged Property...............37
Section 4.15 Title, Management and Disposition
of REO Property.................................37
Section 4.16 Real Estate Owned Reports.......................39
Section 4.17 Liquidation Reports.............................39
Section 4.18 Notification of Adjustments.....................40
Section 4.19 Reports of Foreclosures and Abandonments
of Mortgaged Property...........................40
ARTICLE V PAYMENTS TO PURCHASER.............................................40
Section 5.01 Remittances.....................................40
Section 5.02 Statements to Purchaser.........................41
Section 5.03 Monthly Advances by Company.....................41
ARTICLE VI GENERAL SERVICING PROCEDURES.....................................42
Section 6.01 Transfers of Mortgaged Property................42
Section 6.02 Satisfaction of Mortgages and Release
of Mortgage Files...............................43
Section 6.03 Servicing Compensation..........................43
Section 6.04 Annual Statement as to Compliance...............43
Section 6.05 Annual Independent Public Accountants'
Servicing Report................................44
Section 6.06 Right to Examine Company Records................44
ARTICLE VII COMPANY TO COOPERATE............................................44
Section 7.01 Provision of Information........................44
Section 7.02 Financial Statements; Servicing Facilities.....45
ARTICLE VIII THE COMPANY.....................................................45
Section 8.01 Third Party Claims..............................45
Section 8.02 Merger or Consolidation of the Company..........45
Section 8.03 Limitation on Liability of Company and
Others..........................................46
Section 8.04 Limitation on Resignation and Assignment
by Company......................................46
ARTICLE IX DEFAULT...........................................................47
Section 9.01 Events of Default...............................47
Section 9.02 Waiver of Defaults..............................49
ARTICLE X TERMINATION........................................................49
Section 10.01 Termination.....................................49
ARTICLE XI MISCELLANEOUS PROVISIONS..........................................49
Section 11.01 Successor to Company............................49
Section 11.02 Amendment.......................................50
Section 11.03 Governing Law...................................51
Section 11.04 Duration of Agreement...........................51
Section 11.05 Notices.........................................51
Section 11.06 Severability of Provisions......................52
Section 11.07 Relationship of Parties.........................52
Section 11.08 Execution; Successors and Assigns...............53
Section 11.09 Integration.....................................53
Section 11.10 Assignment by Purchaser.........................53
Section 11.11 No Solicitation.................................53
Section 11.12 Reconstitution..................................54
EXHIBITS AND SCHEDULES
Exhibit A Mortgage Loan Schedule
Exhibit A-1 Summary of Underwriting Guidelines
Exhibit B Contents of Each Mortgage File
Exhibit C Mortgage Loan Documents
Exhibit C-1 Custodial Agreement
Exhibit D-1 Custodial Account Certification
Exhibit D-2 Custodial Account Letter Agreement
Exhibit E-1 Escrow Account Certification
Exhibit E-2 Escrow Account Letter Agreement
Exhibit F Monthly Remittance Advice
Exhibit G Intentionally Deleted
Exhibit H Company's Certificate of Compliance
Exhibit I Form of Opinion of Seller's Counsel
Exhibit J Form of Opinion of Purchaser's Counsel
Exhibit K Additional Pledged Collateral Custodial Agreement
Exhibit L Mortgage Loans with Conversion Option
Exhibit M Form of Certificate for Nonrecoverable Advances
AMENDED AND RESTATED
MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT
This AMENDED AND RESTATED MORTGAGE LOAN SALE, WARRANTIES AND SERVICING
AGREEMENT (the "Agreement") is executed by and between Lehman Capital, A
Division of Lehman Brothers Holdings Inc., as purchaser (the "Purchaser"), and
Boston Safe Deposit and Trust Company, as seller and servicer (the "Company"),
as of this 1st day of April, 1998. This Amended and Restated Agreement amends
and restates the MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT by and
between the Purchaser and the Company dated as of April 1, 1998 (the "Original
Agreement").
WITNESSETH
WHEREAS, the Purchaser purchased from the Company and the Company sold to
the Purchaser certain conventional, adjustable rate first-lien mortgage loans
and cooperative loans (hereinafter referred to as "Mortgage Loans") which have
an aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after deduction of payments due on or before such date, of
$104,349,740.96 pursuant to the Original Agreement;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on real estate (or
against the shares of a cooperative corporation and the related proprietary
lease) located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit A;
WHEREAS, the Purchaser and the Company have agreed that the Purchaser
will assign all of its rights and delegate all of its obligations hereunder to
the Depositor (as defined herein), which in turn will assign all of its rights
and delegate all of its obligations (except as otherwise specified herein)
hereunder to the Trustee (as defined herein) under the Trust Agreement (as
defined herein), and that each reference herein to the Purchaser is intended,
unless otherwise specified, to mean Lehman Capital or the Trustee, as
assignee, whichever is the holder of the Mortgage Loans from time to time; and
WHEREAS, the Purchaser and the Company wish to amend and restate the
provisions governing the purchase of the Mortgage Loans and the management,
servicing and control of the Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Purchaser and the Company agree
as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Additional Collateral: Any real or personal property, securities, cash,
instruments, contracts or other documents constituting or evidencing
collateral pledged as additional security for a Mortgage Loan (other than the
Mortgaged Property).
Additional Pledged Collateral Custodial Agreement: The agreement
governing the retention of Additional Collateral, a form of which is annexed
hereto as Exhibit K.
Agreement: This Mortgage Loan Sale, Warranties and Servicing Agreement
and all amendments hereof and supplements and exhibits hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: The amount set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day (8:30 to 5:00 p.m. EST) other than (i) a Saturday
or Sunday, or (ii) a day on which banking and savings and loan institutions in
the Commonwealth of Massachusetts or the State of New York are authorized or
obligated by law or executive order to be closed.
Buydown Mortgage Loan: A Mortgage Loan for which funds have been
deposited with the Company by the Mortgagor and/or other third party to be
applied to the Monthly Payment for a specified period of time.
Certificates: Any or all of the Certificates to be issued pursuant to the
Trust Agreement.
Closing Date: January 16, 1998
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time, or any successor statute thereto, and applicable U.S. Department of
the Treasury regulations issued pursuant thereto.
Company: Boston Safe Deposit and Trust Company, or its successor in
interest or assigns. For purposes of representations and warranties and other
provisions relating to servicing, FNMA or FHLMC qualifications, "Company" is
deemed to include the Subservicer.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Convertible Mortgage Loan: Any Mortgage Loan as to which, pursuant to the
related Mortgage Note, the Mortgagor may elect to convert the Mortgage Rate
from an adjustable to a fixed rate of interest.
Coop Loan: A loan secured by a first lien against (i) shares issued by a
cooperative apartment corporation and (ii) a Mortgagor's leasehold interest in
a cooperative apartment located in such building.
Cooperative Property: The real property and improvements owned by the
cooperative corporation, that includes the allocation of individual dwelling
units to the holders of the cooperative shares of the cooperative corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The Custodial Agreement governing retention of the
Mortgage Loan Documents, the form of which is attached hereto as Exhibit C-1.
Custodian: The Custodian under the Custodial Agreement, or its successor
in interest or assigns or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: January 1, 1998.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement or which is, in the
case of a substitution pursuant to Section 3.03, replaced or to be replaced
with one or more Qualified Substitute Mortgage Loans.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation, or its successors in interest or assigns.
Determination Date: The 13th day (or if such 13th Day is not a Business
Day, the Business Day immediately preceding such 13th day) of the month of the
related Remittance Date.
Due Date: The day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of such Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
related document.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 9.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by or on behalf of the
Company pursuant to Section 4.12.
First Remittance Date: February 18, 1998.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note of not less than 250 basis
points (2.50%) and not more than 287.5 basis points (2.875%) basis points,
which amount is added to the Index in accordance with the terms of the related
Mortgage Note to determine, on each Interest Rate Adjustment Date, the
Mortgage Interest Rate for such Mortgage Loan.
Index: On each Interest Rate Adjustment Date, the applicable index shall
be the weekly average yield of the secondary market interest rates on one year
constant maturity treasuries (CMT).
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.
Interest Rate Adjustment Date: The date on which an adjustment to the
Mortgage Interest Rate on a Mortgage Note becomes effective. The first
Interest Rate Adjustment Date for each Mortgage Loan will occur in accordance
with the terms of the Mortgage Note.
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio
of the principal balance of such Mortgage Loan at origination, or the Stated
Principal Balance of such Mortgage Loan as of the Cut-Off Date or such other
date as is specified, less the minimum value of Additional Collateral to the
lesser of (a) the Appraised Value of the Mortgaged Property and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price of the Mortgaged Property, expressed as a
percentage.
Monthly Advance: The portion of Monthly Payment delinquent with
respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and/or
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust, pledge and security agreement or
other instrument securing a Mortgage Note, which creates a first lien on
either (i) an unsubordinated estate in fee simple in real property or (ii) a
first lien on a cooperative apartment lease and related cooperative
corporation shares, each as security for a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit B annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note, as adjusted from time to time in accordance with the provisions of such
Mortgage Note. The Mortgage Interest Rate, as determined on each Interest Rate
Adjustment Date, is equal to the sum of the Index and the Gross Margin,
adjusted, if necessary, to comply with the Mortgage Interest Rate Cap.
Mortgage Interest Rate Cap: The limit on each Mortgage Interest Rate
adjustment, such that as to each Mortgage Loan, the Mortgage Interest Rate
shall not: (i) be more or less than the stated periodic cap as applied to the
Mortgage Interest Rate in effect immediately prior to the particular Interest
Rate Adjustment Date of the related Mortgage Loan; and (ii) exceed the maximum
Mortgage Interest Rate Cap provided in the related Mortgage Note.
Mortgage Loan: An individual loan secured by a first lien on real
property and each Coop Loan which is the subject of this Agreement and which
is identified on the Mortgage Loan Schedule, including, without limitation,
the Monthly Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and all
other rights, benefits, proceeds and obligations arising from or in connection
with such loan.
Mortgage Loan Documents: The documents listed in Exhibit C hereto
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
applicable Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect
to each Mortgage Loan: (1) the Company's Mortgage Loan identifying number; (2)
the Mortgagor's name; (3) the street address of the Mortgaged Property
including the state code; (4) a code indicating whether the Mortgaged Property
is a single family residence, condominium, shares in a cooperative
corporation, or a 2-4 family residence; (5) a description of Additional
Collateral, if any, and the value thereof at the close of business on the
Cut-off Date; (6) the original months to maturity or the remaining months to
maturity from the Cut-off Date, in any case based on the original amortization
schedule, and if different, the maturity expressed in the same manner but
based on the actual amortization schedule; (7) the Loan-to-Value Ratio at
origination; (8) the Mortgage Interest Rate as of the origination and Cut-off
Dates; (9) the date on which the Mortgage Loan was originated; (10) the stated
maturity date; (11) the amount of the Monthly Payment; (12) the last payment
date on which a payment was actually applied to the outstanding principal
balance; (13) the original principal amount of the Mortgage Loan; (14) the
principal balance of the Mortgage Loan as of the close of business on the
Cut-off Date, after deduction of the payments of principal due on or before
the Cut-off Date, whether or not collected; (15) the Index; (16) the next
Interest Rate Adjustment Date; (17) the Gross Margin; (18) the maximum
Mortgage Interest Rate under the terms of the Mortgage Note; and (19) the
minimum value of any additional collateral required under the terms of the
Mortgage Loan. With respect to the Mortgage Loans in the aggregate, the
Mortgage Loan Schedule shall set forth the following information, as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current aggregate
outstanding principal balance of the Mortgage Loans; and (3) the weighted
average Mortgage Interest Rate of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property or shares of a cooperative
corporation and related leasehold interest, as of the Closing Date, securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Nonrecoverable Advance: With respect to each Mortgage Loan, a Monthly
Advance with regard to which the Company, in its sole discretion, anticipates
that the amount of such advance will not be ultimately recoverable from
related Liquidation Proceeds, Insurance Proceeds or other amounts received
with respect to such Mortgage Loan. The Company's determination as to a
Nonrecoverable Advance shall be evidenced by a certificate in the form set
forth in Exhibit M.
Officer's Certificate: A certificate signed by the Chairman of the Board
or the Vice Chairman of the Board or the President or a Vice President or an
Assistant Vice President and by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Company, and delivered to
the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee
of the Company, reasonably acceptable to the addressee (except that such
counsel must be Independent (as defined in the Trust Agreement) outside
counsel with respect to any such opinion required under Sections 4.15 and
11.02 of this Agreement).
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
Power of Attorney: The power of attorney appointing the Company as
the lawful agent and attorney-in-fact of the Purchaser, the form of which is
attached hereto as Exhibit N.
Prime Rate: The rate published as the Prime Rate in The Wall Street
Journal, Northeast edition.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of
prepayment.
Principal Prepayment Period: The month preceding the month in which the
related Remittance Date occurs.
Purchase Price: The price as stated in the Purchase Price and Terms
Letter.
Purchase Price and Terms Letter: The Purchase Price and Terms Letter
dated as of November 21, 1997 and revised as of December 5, 1997 from the
Company, as accepted and agreed to by the Purchaser.
Purchaser: Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or its successor(s) in interest or any successor to the Purchaser or assignee
thereof under this Agreement as herein provided, or of any such assignee.
Qualified Depository: A depository the accounts of which are insured by
the FDIC through the BIF or the SAIF and the debt obligations of which are
rated the equivalent of AA or better by each Rating Agency.
Qualified Substitute Mortgage Loan: A Mortgage Loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution: (i) have an outstanding principal balance, after
deduction of all scheduled payments 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), not in excess of the Stated
Principal Balance of the related Deleted Mortgage Loan (to the extent that the
principal balance of the Mortgage Loan is less than the Stated Principal
Balance of the Deleted Mortgage Loan, the amount of such difference together
with one month's interest on such difference at the applicable Remittance
Rate, shall be deposited by the Company in the Custodial Account pursuant to
Section 4.04); (ii) have a Mortgage Loan Remittance Rate not less than, and
not more than 2% greater than the Mortgage Loan Remittance Rate of the Deleted
Mortgage Loan; (iii) have a Gross Margin of not more than 1/8th of one percent
(0.125%) less than the Gross Margin of the related Deleted Mortgage Loan; (iv)
have a remaining term to maturity not greater than, and not more than one year
less than that of the Deleted Mortgage Loan; (v) comply with each
representation and warranty set forth in Section 3.02; (vi) have a
Loan-to-Value Ratio as of the date of such substitution not greater than that
of the related Deleted Mortgage Loan; and (vii) not be a Coop Loan unless the
related Deleted Mortgage Loan was a Coop Loan.
Rating Agency: Either of Standard & Poor's Rating Services, a division of
The McGraw Hill Companies, Inc. and Fitch IBCA, Inc.
Record Date: The close of business on the last Business Day of the month
preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: The provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of
Chapter 1, Subtitle A of the Code, and related provisions, and regulations,
rulings or pronouncements promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately following) of any month, beginning with the
First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.15.
REO Property: A Mortgaged Property acquired by the Company on behalf of
the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.15.
Repurchase Price: With respect to any Mortgage Loan, a price equal to (i)
the Stated Principal Balance of the Mortgage Loan plus (ii) interest on such
Stated Principal Balance at the Mortgage Loan Remittance Rate from the date on
which interest has last been paid (to the extent distributed to the Purchaser)
to and including the date prior to repurchase, less amounts received or
advanced in respect of such repurchased Mortgage Loan which are being held in
the Custodial Account for distribution in the month of repurchase.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses other than Monthly Advances (including
reasonable attorneys' fees and disbursements) incurred in the performance by
the Company of its servicing obligations, including, but not limited to, the
cost of (a) the preservation, restoration and protection of the Mortgaged
Property, (b) any enforcement or judicial proceedings, including foreclosures,
(c) the management and liquidation of any REO Property and (d) compliance with
the obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Company, which shall, for a period
of one full month, be equal to one-twelfth of the product of (a) the Servicing
Fee Rate and (b) the outstanding principal balance of such Mortgage Loan. Such
fee shall be payable monthly, computed on the basis of the same principal
amount and period respecting which any related interest payment on a Mortgage
Loan is computed. The obligation of the Purchaser to pay the Servicing Fee
with respect to any Mortgage Loan for any month is limited to, and the
Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds, to the extent
permitted by Section 4.05) of the related Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 0.25% (25 basis points) per annum.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File
which are not delivered to the Custodian and copies of the Mortgage Loan
Documents listed in Exhibit C hereto, the originals of which are delivered to
the Custodian pursuant to Section 2.01.
Servicing Officer: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to
payments of principal due on or before such date, whether or not received,
minus (ii) all amounts previously distributed to the Purchaser with respect to
the related Mortgage Loan representing payments or recoveries of principal or
advances in lieu thereof.
Subservicer: Mellon Mortgage Company, or any other subservicer which is
subservicing the Mortgage Loans pursuant to a Subservicing Agreement. Any
Subservicer shall meet the qualifications set forth in Section 4.01.
Subservicing Agreement: An agreement between the Company and a
Subservicer for the subservicing of the Mortgage Loans.
Trust: The trust fund established by the Trust Agreement, the assets of
which primarily consist of the Mortgage Loans.
Trust Agreement: The Trust Agreement dated as of April 1, 1998 between
the Depositor and the Trustee.
Trustee: Norwest Bank Minnesota, National Association, as Trustee under
the Trust Agreement, or its successor in interest or assigns.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans; Possession of
Mortgage Files; . Maintenance of Servicing Files
(a) Sale and Conveyance of Mortgage Loans:
(1) Agreement to Purchase: The Company agrees to sell, and
Purchaser agrees to purchase, Mortgage Loans listed on the Mortgage Loan
Schedule annexed hereto as Exhibit A, having an aggregate principal balance on
the Cut-off Date of $104,349,740.96.
(2) The Company, simultaneously with the later to occur of
execution and delivery of this Agreement and the receipt of the Purchase Price
in good funds, as provided in the Purchase Price and Terms Letter, does hereby
sell, transfer, assign, set over and convey to the Purchaser, without
recourse, but subject to the terms of this Agreement, all the right, title and
interest of the Company in and to the Mortgage Loans.
(b) Possession of Mortgage Files: Pursuant to Section 2.03, the Company
has delivered or will have released as of the Closing Date the Mortgage Loan
Documents to the Custodian. The contents of each Mortgage File and Servicing
File not delivered to the Custodian are and shall be held in trust by the
Company for the benefit of the Purchaser as the owner thereof. Upon the sale
of the Mortgage Loans the ownership of each Mortgage Note, the related
Mortgage and the related Mortgage File and Servicing File shall vest
immediately in the Purchaser, and the ownership of all records and documents
with respect to the origination of each related Mortgage Loan prepared by or
which come into the possession of the Company shall vest immediately in the
Purchaser and shall be retained and maintained by the Company, in trust, at
the will of the Purchaser and only in such custodial capacity.
(c) Maintenance of Servicing Files: The Company shall maintain a
Servicing File consisting of all records required to service the Mortgage
Loan. Each Servicing File shall be marked appropriately to reflect clearly the
sale of the related Mortgage Loan to the Purchaser, and records relating to
the Servicing Files will reflect their segregation from other files in the
Servicer's possession. Ownership of Servicing Files shall be retained by the
Company.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser, all
rights arising out of the Mortgage Loans, including but not limited to all
funds received on or in connection with each Mortgage Loan, shall be received
and held by the Company in trust for the benefit of the Purchaser as owner of
the Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the
supervision of the servicing of Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the
Company. The Company shall be responsible for maintaining, and shall maintain,
a complete set of books and records for each Mortgage Loan which shall be
marked clearly to reflect the ownership of each Mortgage Loan by the
Purchaser. In particular, the Company shall maintain in its possession,
available for inspection by the Purchaser, or its designee and shall deliver
to the Purchaser upon demand, evidence of compliance with all federal, state
and local laws, rules and regulations. To the extent that original documents
are not required for purposes of realization of Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds, documents maintained by the
Company may be in the form of microfilm or microfiche or such other reliable
means of recreating original documents, including but not limited to, optical
imagery techniques.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Company
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Company shall be under no obligation to deal
with any person with respect to this Agreement or the Mortgage Loans unless
the books and records show such a person as the owner of the Mortgage Loan.
The Purchaser may, subject to the terms of this Agreement, sell and transfer
one or more of the Mortgage Loans, and any subsequent purchaser of one or more
Mortgage Loans may sell and transfer such Mortgage Loans; provided, however,
that in no event shall there be more than three persons at any given time
having the status of "Purchaser" hereunder. The Purchaser shall advise the
Company of the transfer of any Mortgage Loan by the Purchaser, and upon
receipt of notice of such transfer, the Company shall mark its books and
records to reflect the ownership of the Mortgage Loans by such transferee, and
shall release the previous Purchaser from its obligations hereunder with
respect to the Mortgage Loans sold or transferred.
Section 2.03 Additional Pledged Collateral Custodial Agreement; Delivery
of Documents
Except as provided by the Additional Pledged Collateral Custodial
Agreement delivered herewith, the Company has or will have by the Closing Date
delivered and released to the Custodian those Mortgage Loan Documents as
required by this Agreement with respect to each Mortgage Loan, a list of which
is attached as Exhibit C hereto.
The Custodian has certified its receipt of all such Mortgage Loan
Documents required to be delivered, as evidenced by the initial certification
of the Custodian (the "Custodian Certificate").
Within 90 days of receipt by the Company of a copy of the Custodian
Certificate which indicates that any of the Mortgage Loan Documents is
missing, does not appear regular on its face (i. e., is mutilated, damaged,
defaced, torn or otherwise physically altered) (each, a "Material Defect"),
the Company shall cure such Material Defect or, if it does not cure such
Material Defect within such period and such Material Defect has a material
adverse effect on Purchaser's ability to enforce the obligations of the
borrower or the guarantor, as the case may be, under the Mortgage Loan
Documents, repurchase the related Mortgage Loan at the Repurchase Price (or,
to the extent provided in Section 3.03, substitute one or more Qualifying
Substitute Mortgage Loans).
The Company shall forward to the Custodian original documents evidencing
any assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or Section 6.01 within one week
of its execution; provided, however, that the Company shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within one week of its execution and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within sixty (60) days of its submission for recordation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties
The Company represents and warrants to the Purchaser that, as of the
Closing Date:
(a) Due Organization and Authority. The Company is a trust company duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in compliance with
the laws of any such state to the extent necessary to ensure the
enforceability of the related Mortgage Loan and the servicing of such Mortgage
Loan in accordance with the terms of this Agreement; the Company has the full
corporate power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Company and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Company; and
all requisite corporate action has been taken by the Company to make this
Agreement valid and binding upon the Company in accordance with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Company, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Company pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this Agreement,
the origination or acquisition of the Mortgage Loans by the Company, the sale
of the Mortgage Loans to the Purchaser or the other transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict materially with or result in a material breach
of any of the terms, conditions or provisions of the Company's charter or
by-laws or any legal restriction or any agreement or instrument to which the
Company is now a party or by which it is bound, constitute a default or result
in an acceleration under any of the foregoing, or result in any material
violation of any law, rule, regulation, order, judgment or decree to which the
Company or its property is subject, or impair the ability of the Purchaser to
realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Service. The Company is an approved seller/servicer of
conventional residential mortgage loans for FNMA or FHLMC, with the
facilities, procedures, and experienced personnel necessary for the servicing,
in accordance with Accepted Servicing Practices, of mortgage loans of the same
type as the Mortgage Loans, and is in good standing, to sell mortgage loans to
and service mortgage loans for FNMA or FHLMC, and no event has occurred,
including but not limited to a change in insurance coverage, which would make
the Company unable to comply with FNMA or FHLMC eligibility requirements or
which would require notification to either FNMA or FHLMC;
(e) Reasonable Servicing Fee. The Company acknowledges and agrees that
the Servicing Fee, as calculated at the Servicing Fee Rate, represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Company, for accounting and tax
purposes, as compensation for the servicing and administration of the Mortgage
Loans pursuant to this Agreement;
(f) Ability to Perform. The Company does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(g) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Company which, either in any
one instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the Company
to carry on its business substantially as now conducted, or in any material
liability on the part of the Company, or which would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or to
be taken in connection with the obligations of the Company contemplated
herein, or which would be likely to impair materially the ability of the
Company to perform under the terms of this Agreement;
(h) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Company of or the compliance by the Company
with this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Closing Date;
(i) Selection Process. The Mortgage Loans were selected from among the
outstanding adjustable rate one- to four- family mortgage loans in the
Company's portfolio at the Closing Date as to which the representations and
warranties set forth in Section 3.02 could be made and such selection was not
made in a manner so as to affect adversely the interests of the Purchaser;
(j) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any materially untrue statement of fact or omits to state a fact necessary to
make the statements contained therein not misleading;
(k) [RESERVED];
(l) Sale Treatment. The Company has determined that the disposition of
the Mortgage Loans pursuant to this Agreement will be afforded sale treatment
for accounting and tax purposes;
(m) Financial Statements. The Company has delivered to the Purchaser
consolidated financial statements of Mellon Bank Corporation, as to its last
two complete fiscal years and any later quarter ended more than sixty (60)
days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and affiliates and have
been prepared in accordance with generally accepted accounting principles
constantly applied throughout the periods involved, except as set forth in the
notes thereto. In addition, the Company has delivered information as to its
conventional mortgage loan delinquency and foreclosure experience for the
immediately preceding three-year period, in each case with respect to mortgage
loans owned by it and such mortgage loans serviced for others during such
period, and all such information so delivered is true and correct in all
material respects. There has been no change in the business, operations,
financial condition, properties or assets of the Company since the date of the
Company's financial statements that would have a material adverse effect on
its ability to perform its obligations under this Agreement. The Company has
completed any forms requested by the Purchaser in a timely manner and in
accordance with the provided instructions;
(n) No Brokers' Fees. The Company has not dealt with any broker,
investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage Loans;
and
(o) Fair Consideration. The consideration received by the Company upon
the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02 Representations and Warranties Regarding Individual Mortgage
Loans
As to each Mortgage Loan, the Company hereby represents and warrants to
the Purchaser that, as of the Closing Date:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule is complete, true and correct, in all material
respects;
(b) Payments Current. Except as set forth in Schedule 3.02(b), all
payments required to be made up to the Closing Date for the Mortgage Loan
under the terms of the Mortgage Note have been made and credited. No payment
required under the Mortgage Loan has been delinquent by more than thirty (30)
days more than one time within the twelve months preceding the Cut-off Date;
(c) No Outstanding Charges. There are no defaults in complying with the
terms of the Mortgages, and Company has no notice as to any taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing but which have not been paid. The Company has not advanced funds,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the Mortgage Note
or date of disbursement of the Mortgage Loan proceeds, whichever is greater,
to the day which precedes by one month the Due Date of the first installment
of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
except by a written instrument (which, if necessary to protect the interests
of the Purchaser, has been recorded) which has been delivered to the
Custodian;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either
the Mortgage Note or the Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto, and Company has no knowledge that any Mortgagor was a debtor in any
state or federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated;
(f) Hazard Insurance. Except in the case of Coop Loans, the Mortgage
requires all buildings or other improvements on the Mortgaged Property to be
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 pursuant to insurance policies conforming to
the requirements of Section 4.10. 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 Flood Insurance
Administration is in effect which policy conforms to the requirements of
Section 4.10. All individual insurance policies contain a standard mortgagee
clause naming the Company and its successors and assigns as mortgagee, and all
premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at such Mortgagor's cost and
expense, and to seek reimbursement therefor from the Mortgagor. Where required
by state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser
upon the consummation of the transactions contemplated by this Agreement. The
Company has not engaged in, and has no knowledge of the Mortgagor's or any
Subservicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
therein, or the validity and binding effect of either, including without
limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by the Company;
(g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, and the Company shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The lien against the Mortgaged Property
has not been satisfied, canceled, 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. The
Company has not waived the performance by the Mortgagor of any action, if the
Mortgagor's failure to perform such action would cause the Mortgage Loan to be
in default, nor has the Company waived any default resulting from any action
or inaction by the Mortgagor;
(i) Location and Type of Mortgaged Property. Except for Coop Loans, the
Mortgaged Property is located in the state identified in the Mortgage Loan
Schedule and consists of a parcel of real property with a detached single
family residence erected thereon or upon which a detached single family
residence will be erected, or a two- to four- family dwelling, or an
individual condominium unit in a condominium project, or an individual unit in
a planned unit development. For Coop Loans, the Mortgaged Property consists of
shares of stock in a cooperative housing corporation and a leasehold interest
in a cooperative apartment owned by such corporation located in the state
identified in the Mortgaged Loan Schedule;
(j) Valid First Lien. The Mortgage is a valid, subsisting, enforceable
and perfected first lien on the Mortgaged Property. Where the Mortgaged
Property consists of residential real estate, the lien includes all buildings
on the Mortgaged Property and all installations and mechanical, electrical,
plumbing, heating and air conditioning systems located in or annexed to such
building, and all additions, alterations, and replacements made at any time
with respect to the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not
yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (i) referred to
or otherwise considered in the appraisal made for the originator of
the Mortgage Loan or (ii) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth in such
appraisal; and
(3) 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, subsisting and enforceable first lien and first priority security
interest on the Mortgaged Property and any additional collateral for the
Mortgage Loan and the Company has full right to sell and assign the same to
the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the Mortgage
are genuine, and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to the Mortgage
Note and the Mortgage and any other related agreement had legal capacity to
enter into the Mortgage Loan and to execute and deliver the Mortgage Note and
the Mortgage and any other related agreement, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties. The documents,
instruments and agreements submitted for loan underwriting were not falsified
and contain no untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the information and
statements therein not misleading. No fraud was committed in connection with
the origination of the Mortgage Loan. The Company has reviewed all of the
documents constituting the Servicing File and has made such inquiries as it
deems necessary to make and confirm the accuracy of the representations set
forth herein;
(l) Full Payment of Costs. 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;
(m) Ownership. Immediately prior to the sale of the Mortgage Loans by the
Company to the Purchaser pursuant to this Agreement, the Company was the sole
owner of record and holder of the Mortgage Loan. The Mortgage Loan is not
assigned or pledged, and the Company has good and marketable title thereto,
and has full right to transfer and sell the Mortgage Loan therein to the
Purchaser free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest, and has 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 this Agreement;
(n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1)
in compliance with any and all applicable licensing requirements of the laws
of the state wherein the real Mortgaged Property is located, and (2) organized
under the laws of such state, or (3) qualified to do business in such state,
or (4) federal savings and loan associations or national banks having
principal offices in such state, or (5) not doing business in such state;
(o) LTV. No Mortgage Loan has a Loan-to-Value Ratio at origination (or,
if any Mortgage Loan has been the subject of a significant modification since
origination, other than as a result of a default or imminent default, as of
the date of such modification) equal to or greater than 90%.
(p) Title Insurance. Except in the case of Coop Loans, the Mortgage Loan
is covered by either (i) an attorney's opinion of title and abstract of title
the form and substance of which is acceptable to mortgage lending institutions
making mortgage loans in the area where the Mortgaged Property is located or
(ii) an ALTA lender's title insurance policy or other generally acceptable
form of policy of insurance acceptable to FNMA or FHLMC, issued by a title
insurer acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the Company,
its successors and assigns, as to the first priority lien of the Mortgage in
the original principal amount of the Mortgage Loan, and against any loss by
reason of the invalidity or enforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Mortgage Interest
Rate and Monthly Payment, subject only to the exceptions contained in clauses
(1), (2) and (3) of paragraph (j) of this Section 3.02 and against any loss
resulting from the provisions of the Mortgage providing for adjustment to the
Mortgage Interest Rate and Monthly Payment. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. 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. If
the Mortgaged Property is a condominium unit located in a state in which a
title insurer will generally issue an endorsement, then the related title
insurance policy contains an endorsement insuring the validity of the creation
of the condominium form of ownership with respect to the project in which such
unit is located. The Company 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 force and effect upon the consummation of the loan
sale transaction contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the
Mortgage, including the Company, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy including
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by the Company;
(q) No Defaults. 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 neither the Company nor its predecessors have waived any
default, breach, violation or event of acceleration, and no foreclosure action
has been commenced with respect to any Mortgage Loan;
(r) No Mechanics' Liens. 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 the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or subordinate
with the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements which
were considered in determining the Appraised Value of the Mortgaged Property
lay wholly within the boundaries and building restriction lines of the
Mortgaged Property (and, if the property is a condominium unit, such
improvements lie wholly within the project) and no improvements on adjoining
properties encroach upon the Mortgaged Property. No improvement located on or
being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation;
(t) Origination; Payment Terms. At the time the Mortgage Loan was
originated, the originator was a Mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act or a 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. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the information and statements therein not
misleading. The Mortgage Interest Rate is adjusted on each Interest Rate
Adjustment Date to equal the Index plus the Gross Margin, which amount is
added in accordance with the terms of the Mortgage Note, subject to the
Mortgage Interest Rate Cap. The Mortgage Note is payable each month in
installments of principal and/or interest, which installments of interest are
subject to change due to the adjustments to the Mortgage Interest Rate on each
Interest Rate Adjustment Date, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity
date, over an original term of not more than thirty (30) years. The Mortgage
Note provides for accrual of interest on the basis of a 360 day year
consisting of twelve 30-day months. There is no negative amortization. At no
time has the Mortgage Interest Rate exceeded the lifetime cap as set forth in
the related Note.
(u) Customary Provisions. 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 (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan,
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan will be able to deliver
good and merchantable title to the Mortgaged Property. There is no homestead
or other exemption available to a Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage;
(v) Underwriting. The Mortgage Loans were generally underwritten and
approved substantially in accordance with the Company's written procedures and
standards set forth in Exhibit A-1.
(w) Occupancy of the Mortgaged Property. As of the Closing Date the
Mortgaged Property (or, in the case of a Coop Loan, the related Cooperative
Unit) 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 (or, in the case of a Coop Loan, the
related Cooperative Unit) and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities;
(x) No Additional Collateral. With the exception of Mortgage Loans
identified on the Mortgage Loan Schedule as having additional collateral, the
Mortgage Note is not secured by any collateral except the lien on Mortgaged
Property created by the corresponding Mortgage and the security interest or
any applicable security agreement or chattel mortgage referred to in Section
3.02(j) above;
(y) Deeds of Trust. 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 Purchaser to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. The Company has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor and/or the Mortgagor's credit standing that can
reasonably be expected to:
(i) cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment;
(ii) cause the Mortgage Loan to become delinquent; or
(iii) adversely affect the value or marketability of the
Mortgage Loan;
(aa) Delivery of Mortgage Documents. The Mortgage Loan Documents have
been delivered (or will have been released by the Closing Date) to the
Custodian. The Company is in possession of a complete, true and accurate
Mortgage File in compliance with Exhibit B, except for such documents the
originals of which have been delivered to the Custodian;
(bb) Appraisal. The Mortgage File contains an appraisal of the related
Mortgaged Property conducted by a qualified appraiser, duly appointed by the
Company, 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, and the
appraisal and appraiser both satisfy the requirements of Title XI of the
Federal Institution Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property consisting of residential real
estate is located;
(dd) Due on Sale. The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without
the prior written consent of the mortgagee thereunder;
(ee) Conversion to Fixed Interest Rate. Except as set forth in Schedule
3.02 (ee), the Mortgage Loan does not contain a provision permitting or
requiring conversion to a fixed interest rate Mortgage Loan;
(ff) Consolidation of Future Advances. None of the Mortgage Loans contain
any provisions permitting future advances after the Cut-off Date. Any future
advances made 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. Except in the case of Coop Loans, the lien of the Mortgage
securing the consolidated principal amounts is insured as having first lien
priority by a title insurance policy, and endorsement to the policy insuring
the mortgagee's consolidated interest or by other title evidence. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;
(gg) Mortgaged Property Undamaged. There is no proceeding pending or, to
the best of the Company's knowledge, threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were
intended;
(hh) Collection Practices; Escrow Deposits; Interest Rate Adjustments.
The origination and collection practices used with respect to the Mortgage
Loan have been in accordance with Accepted Servicing Practices, and have been
in all respects in compliance with all applicable laws and regulations. All
Mortgage Interest Rate adjustments have been made in compliance with state and
federal law and the terms of the related Mortgage Note. Any interest required
to be paid pursuant to state and local law has been properly paid and
credited;
(ii) Environmental Matters. To the best of the Company's knowledge, the
Mortgaged Property is free from any and all toxic or hazardous substances and
there exists no violation of any local, state or federal environmental law,
rule or regulation;
(jj) Soldiers' and Sailors' Relief Act. The Mortgagor has not notified
the Company, and the Company has no knowledge, of any relief requested or
allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940;
(kk) REMIC Qualification. Each Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G of the Code and Treas. Reg. 1.860G-2;
(ll) Buydown Mortgage Loans. None of the Mortgage Loans is a Buydown
Mortgage Loan; and
(mm) No Partial Release of Collateral. No Mortgage Loan requires the
Mortgagee to release any portion of the Mortgaged Property from the lien of
the Mortgage other than (i) upon payment in full of the Mortgage Loan or (ii)
with respect to Mortgaged Property consisting of more than one piece of real
property or shares of a cooperative corporation, a release of a portion of the
Mortgaged Property upon a partial repayment of the Mortgage Loan, provided the
LTV of the remaining Mortgaged Property after the release does not exceed 90%.
Section 3.03 Remedies for Breach of Representations and Warranties.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans
to the Purchaser and the subsequent sale of the Mortgage Loans by the
Purchaser to the Depositor and by the Depositor to the Trustee under the Trust
Agreement, and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, specifically, including the
Trustee, as provided in Section 11.10 hereof, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing
representations and warranties which materially and adversely affects the
value of the Mortgage Loans or the interest of the Purchaser (or which
materially and adversely affects the interests of the Purchaser in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan) the party discovering such breach shall give prompt
written notice to the other.
Within sixty (60) days of the earlier of either discovery by or notice to
the Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Purchaser (or which materially and adversely affects the interests of
Purchaser in the related Mortgage Loan in the case of a representation and
warranty relating to a particular Mortgage Loan), the Company shall use its
best efforts promptly to cure such breach in all material respects and, if
such breach cannot be cured, the Company shall, at the Purchaser's option,
repurchase such Mortgage Loan at the Repurchase Price. In the event that a
breach shall involve any representation or warranty set forth in Section 3.01,
and either discovery by or notice to the Company of such breach, all of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by the Company
at the Repurchase Price. However, if the breach shall involve a representation
or warranty set forth in Section 3.02 and the Company discovers or receives
notice of any such breach within 120 days of the Closing Date, the Company
shall, at the Purchaser's option and provided that the Company has a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in
its place a Qualified Substitute Mortgage Loan or Loans, provided that no such
substitution shall be made (i) after the 120-day period beginning on the
Closing Date and (ii) unless the Purchaser has received an Opinion of Counsel
(at the expense of the Company) that such substitution will not adversely
affect the status of any REMIC established pursuant to the Trust Agreement as
a REMIC or cause any such REMIC to be deemed to have engaged in a "prohibited
transaction" under the REMIC provisions. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan. Any
repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of
this Section 3.03 shall be accomplished by deposit in the Custodial Account of
the amount of the Repurchase Price for distribution to Purchaser on the next
scheduled Remittance Date, after deducting therefrom any amount received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian
relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the Company shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the
Deleted Mortgage Loan from this Agreement, and, in the case of substitution,
identify a Qualified Substitute Mortgage Loan and amend the Mortgage Loan
Schedule to reflect the addition of such Qualified Substitute Mortgage Loan to
this Agreement. In connection with any such substitution, the Company shall be
deemed to have made as to such Qualified Substitute Mortgage Loan the
representations and warranties set forth in this Agreement except that all
such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such substitution. The Company shall effect such
substitution by delivering to the Custodian for such Qualified Substitute
Mortgage Loan the related Mortgage Loan Documents with the Mortgage Note
endorsed as required. No substitution will be made in any calendar month after
the Determination Date for such month. The Company shall deposit in the
Custodial Account the Monthly Payment less the Servicing Fee due on such
Qualified Substitute Mortgage Loan or Loans in the month following the date of
such substitution. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall be retained by the Company.
For the month of substitution, distributions to Purchaser shall include the
Monthly Payment due on any Deleted Mortgage Loan in the month of substitution.
The Company shall thereafter be entitled to retain all amounts subsequently
received by the Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month
of substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees
and related costs, judgments, and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon or resulting
from a breach of the Company's representations and warranties contained in
this Agreement. It is understood and agreed that the obligations of the
Company set forth in this Section 3.03 to cure, substitute for or repurchase a
defective Mortgage Loan and to indemnify the Purchaser as provided in this
Section 3.03 constitute the sole remedies of the Purchaser respecting a breach
of the foregoing representations and warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Section 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failure by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
Section 3.04 Mortgage Loans Convertible to Fixed Interest Rate.
In the event the Mortgagor under any Convertible Mortgage Loan elects
to convert said Mortgage Loan to a fixed interest rate Mortgage Loan, as
provided in the related Mortgage Note, then the Company shall repurchase such
Mortgage Loan at the Repurchase Price or substitute in its place a Qualified
Substitute Mortgage Loan or Loans in the manner prescribed in Section 3.03.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, as an independent contractor, shall service and administer
the Mortgage Loans and shall have full power and authority, acting alone, to
do any and all things in connection with such servicing and administration
which the Company may deem necessary or desirable, consistent with the terms
of this Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may waive
any late payment charge, assumption fee or other fee that may be collected in
the ordinary course of servicing the Mortgage Loans. The Company shall not
make any future advances with respect to a Mortgage Loan and (unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is,
in the judgment of the Company, imminent) the Company shall not permit any
modification of any material term of any Mortgage Loan, including any
modification that would change the Mortgage Interest Rate, defer or forgive
the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal) or change the
final maturity date on such Mortgage Loan, unless approved by Purchaser on a
Mortgage Loan-by-Mortgage Loan basis (which approval shall not be unreasonably
withheld, conditioned or delayed), or unless pursuant to a loan modification
program previously presented to and approved by the Purchaser. In the event of
any such modification which permits the deferral of interest or principal
payments on any Mortgage Loan, the Company shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.03, the difference
between (a) such month's principal and one month's interest at the Mortgage
Loan Remittance Rate on the unpaid principal balance of such Mortgage Loan and
(b) the amount paid by the Mortgagor. The Company shall be entitled to
reimbursement for such advances to the same extent as for all other advances
made pursuant to Section 5.03. Without limiting the generality of the
foregoing, the Company shall continue, and is hereby authorized and empowered,
to execute, deliver and record (if appropriate) on behalf of itself and the
Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments and any other
certificate or instrument necessary to carry out the modifications
contemplated by this Section 4.01, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. The Purchaser has furnished and upon
request shall furnish the Company with any powers of attorney and other
documents reasonably required by the Company which are necessary or
appropriate to enable the Company to carry out its servicing and
administrative duties under this Agreement.
In the event that foreclosure proceedings are commenced in respect of any
Mortgage Loan as to which Additional Collateral has been pledged as security,
the Company shall, if such Additional Collateral is readily marketable,
immediately commence the liquidation of such collateral. The proceeds of such
sale shall be promptly deposited in the Custodial Account. If such Additional
Collateral is not readily marketable, the Company shall not exercise any right
it may have to seize, convert or otherwise assume ownership of such Additional
Collateral.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
The Mortgage Loans may be subserviced by the Subservicer, in
accordance with the servicing provisions of this Agreement, on behalf of the
Company, provided that the Subservicer is a FNMA-approved lender or a FHLMC
seller/servicer in good standing, and no event has occurred, including but not
limited to a change in insurance coverage, which would make it unable to
comply with the eligibility requirements for lenders imposed by FNMA or for
seller/servicers imposed by FHLMC, or which would require notification to FNMA
or FHLMC. The Company may perform any of its servicing responsibilities
hereunder or may cause the Subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Company of the Subservicer
shall not release the Company from any of its obligations hereunder and the
Company shall remain responsible hereunder for all acts and omissions of the
Subservicer as fully as if such acts and omissions were those of the Company.
The Company shall pay all fees and expenses of the Subservicer from its own
funds, and the Subservicer's fee shall not exceed the Servicing Fee.
References in this Agreement to performance by the Company of its
servicing responsibilities hereunder shall be deemed to include the
Subservicer acting on behalf of the Company.
At the cost and expense of the Company, without any right of
reimbursement from the Custodial Account, the Company shall be entitled to
terminate the rights and responsibilities of the Subservicer and arrange for
any servicing responsibilities to be performed by a successor Subservicer
meeting the requirements in the two preceding paragraphs; provided, however,
that nothing contained herein shall be deemed to prevent or prohibit the
Company, at the Company's option, from electing to service the related
Mortgage Loans itself. In the event that the Company's responsibilities and
duties under this Agreement are terminated pursuant to Section 8.04, 9.01,
10.01 or 10.02 , and if requested to do so by the Purchaser, the Company shall
at its own cost and expense terminate the rights and responsibilities of the
Subservicer as soon as is reasonably possible. The Company shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of the Subservicer from the Company's own funds without
reimbursement from the Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Company and the Subservicer or any
reference herein to action taken though the Subservicer or otherwise, the
Company shall not be relieved of its obligations to the Purchaser and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Company shall
be entitled to enter into an agreement with the Subservicer for
indemnification of the Company by the Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving the Subservicer shall be deemed to be
between the Subservicer and Company alone, and the Purchaser shall have no
obligations, duties or liabilities with respect to the Subservicer including
no obligation, duty or liability of Purchaser to pay the Subservicer's fees
and expenses. For purposes of distributions and advances by the Company
pursuant to this Agreement, the Company shall be deemed to have received a
payment or other recovery in respect of a Mortgage Loan when the Subservicer
has received such payment or recovery.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, and (3) the Company shall determine prudently to be in
the best interest of Purchaser. In the event that any payment due under any
Mortgage Loan is not postponed pursuant to Section 4.01 and remains delinquent
for a period of ninety (90) days or any other default continues for a period
of ninety (90) days beyond the expiration of any grace or cure period, the
Company shall commence foreclosure proceedings, provided that, prior to
commencing foreclosure proceedings, the Company shall notify the Purchaser in
writing of the Company's intention to do so, and the Company shall not
commence foreclosure proceedings if the Purchaser objects to such action
within ten (10) Business Days of receiving such notice. The Company's
obligation to make such Monthly Advances shall terminate upon delivery by the
Company to the Purchaser of a Certificate of Nonrecoverable Advance in the
form set forth in Exhibit M.
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the
event the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection, a review of such Mortgaged
Property shall be conducted by a qualified inspector. Upon completion of the
inspection, the Company shall promptly provide the Purchaser with a written
report of the environmental inspection.
In the event that the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
the Company shall not proceed with foreclosure or acceptance of a deed in lieu
of foreclosure, and the Company shall be reimbursed for all Servicing Advances
made with respect to the related Mortgaged Property from the Custodial Account
pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Company shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the
end that the installments payable by the Mortgagor will be sufficient to pay
such charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled "Boston Safe
Deposit and Trust Company in trust for Norwest Bank Minnesota, National
Association, as Trustee, Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 1998-5," or such other designation as the
Purchaser may direct. The Custodial Account shall be established with a
Qualified Depository. Any funds deposited in the Custodial Account shall at
all times be fully insured to the full extent permitted under applicable law.
Funds deposited in the Custodial Account may be drawn on by the Company in
accordance with Section 4.05. The creation of any Custodial Account shall be
evidenced by a certification in the form of Exhibit D-1 hereto, in the case of
an account established with the Company, or by a letter agreement in the form
of Exhibit D-2 hereto, in the case of an account held by a depository other
than the Company. A copy of such certification or letter agreement shall be
furnished to the Purchaser and, upon request, to any subsequent Purchaser.
Funds in a Custodial Account may be invested in Eligible Investments
(as defined in the Trust Agreement) which shall mature not later than the
earlier of the Business Day immediately preceding the next succeeding
Remittance Date, and such investments shall not be sold or disposed of prior
to their maturity. All income and gain realized from any investment shall be
for the benefit of the Company and shall be subject to its withdrawal or
order. The amount of any losses incurred in respect of any such investments
shall be deposited in the related Custodial Account by the Company out of its
own funds immediately as such loss is realized.
The Company shall deposit in the Custodial Account on a daily basis, as
received, and retain therein, the following collections received by the
Company and payments made by the Company after the Cut-off Date, other than
payments of principal and interest due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans, including
all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the Escrow Account
and applied to the restoration or repair of the Mortgaged Property or released
to the Mortgagor in accordance with Section 4.14) and Section 4.11;
(v) all Condemnation Proceeds which are not applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor in accordance
with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 4.04, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts required to be
deposited by the Company in connection with a shortfall in principal amount of
any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment received during the
immediately preceding Principal Prepayment Period, an amount (to be paid by
the Company out of its funds as provided in Section 6.03 hereof) which, when
added to all amounts allocable to interest received in connection with such
Principal Prepayment, equals one month's interest on the amount of principal
so prepaid at the Mortgage Loan Remittance Rate, the aggregate of such
payments by the Company for any month not to exceed the aggregate of the
Company's Servicing Fees for such month.
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket hazard
insurance policy; and
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.15.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges
and assumption fees, to the extent permitted by Section 6.01, need not be
deposited by the Company into the Custodial Account. Any interest paid on
funds deposited in the Custodial Account by the depository institution shall
accrue to the benefit of the Company and the Company shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to
Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself pursuant to
this subclause (ii) being limited to amounts received with respect to the
related Mortgage Loan which represent late payments of principal and/or
interest respecting which any such advance was made, it being understood that,
in the case of any such reimbursement, the Company's right thereto shall be
prior to the rights of the Purchaser, except that, where the Company is
required to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, the
Company's right to such reimbursement shall be subsequent to the payment to
the Purchaser of the Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and for
any unpaid Servicing Fees, the Company's right to reimburse itself pursuant to
this subclause (iii) with respect to any Mortgage Loan being limited to
related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Company from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Company's right thereto shall be prior to the
rights of Purchaser except where the Company is required to repurchase a
Mortgage Loan pursuant to Section 3.03 or 6.02, in which case the Company's
right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iv) to pay itself investment earnings on funds deposited in the
Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Sections 4.02 and 8.01;
(vi) to pay any amount required to be paid pursuant to Sections 4.02 and
4.15 related to any REO Property, it being understood that in the case of any
such expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account shall be
limited to amounts on deposit in the Custodial Account with respect to the
related REO Property;
(vii) to withdraw funds deposited in error in the Custodial Account; and
(viii) to clear and terminate the Custodial Account upon the termination
of this Agreement.
On each Remittance Date, the Company shall withdraw all funds from the
Custodial Account except for those amounts which, pursuant to Section 5.01,
the Company is not obligated to remit on such Remittance Date. The Company may
use such withdrawn funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Escrow Accounts, in the form of time deposit or demand accounts
titled, "Boston Safe Deposit and Trust Company, in trust for Norwest Bank
Minnesota, National Association, as Trustee, Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1998-5," or such other
designation as the Purchaser may direct. The Escrow Account shall be
established with a Qualified Depository, in a manner which shall provide
maximum available insurance thereunder. Funds deposited in the Escrow Account
may be drawn on by the Company in accordance with Section 4.07. The creation
of any Escrow Account shall be evidenced by a certification in the form of
Exhibit E-1 hereto, in the case of an account established with the Company, or
by a letter agreement in the form of Exhibit E-2 hereto, in the case of an
account held by a depository other than the Company. A copy of such
certification shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
The Company shall deposit in the Escrow Account or Accounts on a
daily basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as required under
the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any Mortgaged
Property.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required or permitted under this Agreement, as set forth
in Section 4.07. The Company shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other
than interest on escrowed funds required by law to be paid to the Mortgagor.
To the extent required by law, the Company shall pay interest on escrowed
funds to the Mortgagor notwithstanding that the Escrow Account may be
non-interest bearing or that interest paid thereon is insufficient for such
purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Company only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire, flood and
hazard insurance premiums or other items constituting Escrow Payments for the
related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage Loan, but
only from amounts received on the related Mortgage Loan which represent late
collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms of the
related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged Property in
accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
(vii) to withdraw funds deposited in error in the Escrow Account; and
(viii) to clear and terminate the Escrow Account on the termination of
this Agreement.
Section 4.08 Maintenance of Tax, Insurance, Other Charge Records.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water
rates, sewer rents, and the charges which are or may become a lien upon the
Mortgaged Property and the status of fire, flood and hazard insurance coverage
and with respect to each Mortgage Loan which provides for Escrow Payments, the
Company shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Company in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage. To the extent that a
Mortgage does not provide for Escrow Payments, the Company shall make a
Servicing Advance from its own funds to effect payment for such charges in
accordance with Accepted Servicing Practices.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time. Such transfer shall be made
only upon obtaining the consent of the Purchaser, which consent shall not be
withheld unreasonably.
The Company shall bear any expenses, losses or damages sustained by the
Purchaser because the Custodial Account or Escrow Account is not a demand
deposit account.
Section 4.10 Maintenance of Hazard Insurance
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by a
FNMA or FHLMC 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, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer.
If upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified in the Federal Register by the Flood
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 Flood Insurance
Administration is in effect with a generally acceptable insurance carrier in
an amount representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on
a replacement-cost basis or the unpaid balance of the Mortgage Loan if
replacement coverage is not available for the type of building insured) and
(ii) the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973, as amended.
If a Mortgage is secured by a unit in a condominium, the Company shall
have received a certificate of insurance evidencing a master policy held by
the owner's association and naming the Company as loss payee.
In the event that the Purchaser or the Company shall determine that the
Mortgaged Property (or, in the case of a Cooperative Loan, the related
Cooperative Unit) should be insured against loss or damage by hazards and
risks not covered by the insurance required to be maintained by the Mortgagor
pursuant to the terms of the Mortgage, the Company shall communicate and
consult with the Mortgagor with respect to the need for such insurance and
bring to the Mortgagor's attention the desirability of protection of the
Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard mortgagee clauses, which shall provide for at
least 30 days' prior written notice of any cancellation, reduction in amount
or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent; provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies satisfy the requirements of FNMA or FHLMC and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide sufficient
risk coverage and amounts, that they insure the property owner, and that they
properly describe the property address. The Company shall furnish to the
Mortgagor a formal notice of expiration of any such insurance in sufficient
time for the Mortgagor to arrange for renewal coverage by the expiration date.
Pursuant to Section 4.04, any amounts collected by the Company under
any such policies (other than amounts to be deposited in the Escrow Account
and applied to the restoration or repair of the related Mortgaged Property
(or, in the case of a Cooperative Loan, the related Cooperative Unit), or
property acquired in liquidation of the Mortgage Loan, or to be released to
the Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
The Company shall maintain a blanket policy insuring against losses
arising from fire and hazards covered under extended coverage on any or all of
the Mortgage Loans and, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 4.10 and otherwise
complies with all other requirements of Section 4.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 4.10. Any
amounts collected by the Company under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in
which case, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.10, and there
shall have been a loss which would have been covered by such policy, the
Company shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Company's funds, without
reimbursement therefor. Upon request of the Purchaser, the Company shall cause
to be delivered to such Purchaser a certified true copy of such policy and a
statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without thirty (30) days' prior written
notice to the Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance
The Company or its corporate parent shall maintain on behalf of the
Company with responsible companies, at its own expense, a blanket Fidelity
Bond and an Errors and Omissions Insurance Policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans ("Company Employees"). Any such Fidelity Bond and Errors and Omissions
Insurance Policy shall be in the form of the Mortgage Banker's Blanket Bond
and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance
Policy also shall protect and insure the Company against losses in connection
with the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 4.12 requiring such Fidelity Bond and Errors and Omissions Insurance
Policy shall diminish or relieve the Company from its duties and obligations
as set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts required
by FNMA in the FNMA Mortgage-Backed Securities Selling and Servicing Guide or
by FHLMC in the FHLMC Sellers' & Servicers' Guide. Upon the request of the
Purchaser, the Company shall cause to be delivered to the Purchaser a
certified true copy of such fidelity bond and insurance policy and a statement
from the surety and the insurer that such fidelity bond and insurance policy
shall in no event be terminated or materially modified without thirty (30)
days' prior written notice to the Purchaser.
Section 4.13 Inspections.
The Company shall inspect the Mortgaged Property as often as deemed
necessary by the Company to assure itself that the value of the Mortgaged
Property is being preserved. In addition, if any Mortgage Loan is more than
sixty (60) days delinquent, the Company immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices. The Company shall keep a written report of each
such inspection.
Section 4.14 Restoration of Mortgaged Property
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to
be applied to the restoration or repair of the Mortgaged Property if such
release is in accordance with Accepted Servicing Practices. At a minimum, the
Company shall comply with the following conditions in connection with any such
release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Company shall take all steps necessary to preserve the priority
of the lien of the Mortgage, including, but not limited to requiring waivers
with respect to mechanics' and materialmen's liens; and
(iii) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim
in the name of the Purchaser.
Section 4.15 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Company from
any attorney duly licensed to practice law in the state where the REO Property
is located. The Person or Persons holding such title other than the Purchaser
shall acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Company shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale.
The Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same
(and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the
Company deems to be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within three
years after title has been taken to such REO Property, unless (i) the
Purchaser shall have been supplied with an Opinion of Counsel to the effect
that the holding by the Trust of such Mortgaged Property subsequent to such
three-year period (and specifying the period beyond such three-year period for
which the Mortgaged Property may be held) will not result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code, or cause the related REMIC to fail to qualify as a REMIC, in which
case the Trust may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel), or (ii) the Purchaser (at
the Company's expense) or the Company shall have applied for, prior to the
expiration of such three-year period, an extension of such three-year period
in the manner contemplated by Section 856(e)(3) of the Code, in which case the
three-year period shall be extended by the applicable period. If a period
longer than three years is permitted under the foregoing sentence and is
necessary to sell any REO Property, (i) the Company shall report monthly to
the Purchaser as to progress being made in selling such REO Property and (ii)
if, with the written consent of the Purchaser, a purchase money mortgage is
taken in connection with such sale, such purchase money mortgage shall name
the Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate participation agreement
between the Company and Purchaser shall be entered into with respect to such
purchase money mortgage.
Notwithstanding any other provision of this Agreement, no Mortgaged
Property held by a REMIC shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust or
sold in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify at any time as "foreclosure property"
within a meaning of section 860G(a)(8) of the Code, (ii) subject the Trust to
the imposition of any federal or state income taxes on "net income from
foreclosure property" with respect to such Mortgaged Property within the
meaning of section 860G(c) of the Code, or (iii) cause the sale of such
Mortgaged Property to result in the receipt by the Trust or any income from
non-permitted assets as described in section 860F(a) (2)(B) of the Code,
unless the Company has agreed to indemnify and hold harmless the Trust with
respect to the imposition of any such taxes.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements which are part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. As soon as practical
thereafter, the expenses of such sale shall be paid and the Company shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed Monthly Advances made pursuant to Section
5.03, and on the Remittance Date immediately following the Principal
Prepayment Period in which such sale proceeds are received the net cash
proceeds of such sale remaining in the Custodial Account shall be distributed
to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation, management and maintenance of each REO Property,
including the cost of maintaining any hazard insurance pursuant to Section
4.10 and the fees of any managing agent of the Company, a Subservicer, or the
Company itself. The REO management fee shall be an amount that is reasonable
and customary in the area where the Mortgaged Property is located. The Company
shall make monthly distributions on each Remittance Date to the Purchaser of
the net cash flow from the REO Property (which shall equal the revenues from
such REO Property net of the expenses described in this Section 4.15 and of
any reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses).
Section 4.16 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Company's efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as the Purchaser shall
reasonably request.
Section 4.17 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the
Company shall submit to the Purchaser a liquidation report with respect to
such Mortgaged Property.
Section 4.18 Notification of Adjustments.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Interest Rate Adjustment Date in compliance with
requirements of applicable law and the related Mortgage and Mortgage Note. The
Company shall execute and deliver any and all necessary notices required under
applicable law and the terms of the related Mortgage Note and Mortgage
regarding the Mortgage Interest Rate adjustments. The Company shall promptly,
upon written request therefor, deliver to the Purchaser such notifications and
any additional applicable data regarding such adjustments and the methods used
to calculate and implement such adjustments. Upon the discovery by the Company
or the receipt of notice from the Purchaser that the Company has failed to
adjust a Mortgage Interest Rate in accordance with the terms of the related
Mortgage Note, the Company shall immediately deposit in the Custodial Account
from its own funds the amount of any interest loss or deferral caused to the
Purchaser thereby.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant
to Section 6050J of the Code.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser the sum of (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the Custodial
Account pursuant to Section 4.05 ), (b) all amounts, if any, which the Company
is obligated to deposit into the Custodial Account pursuant to Section 5.03,
and (c) any amounts payable with respect to Qualified Substitute Mortgage
Loans, but not including, (i) any amounts attributable to Principal
Prepayments received after the immediately preceding Principal Prepayment
Period, (ii) any Liquidation Proceeds and Insurance Proceeds received after
the immediately preceding Prepayment Period, and (iii) any amounts
attributable to Monthly Payments collected but due on a Due Date or Dates
subsequent to the first day of the month of such Remittance Date, all of which
amounts together with any additional interest required to be deposited into a
Custodial Account in connection with a Principal Prepayment in accordance with
Section 4.04(viii), shall be remitted on the next succeeding Remittance Date.
With respect to any remittance received by the Purchaser after the second
Business Day following the Remittance Date on which such payment was due, the
Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three (3) percentage points, but in no event greater than the maximum
amount permitted by applicable law. Such interest shall be deposited in the
Custodial Account by the Company on the date such late payment is made and
shall cover the period commencing with the day following such second Business
Day and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with the distribution payable
on the next succeeding Remittance Date. The payment by the Company of any such
interest shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Company.
Section 5.02 Statements to Purchaser.
Not later than the Remittance Date, the Company shall furnish to the
Purchaser a Monthly Remittance Advice, with a trial balance report attached
thereto, in the form of Exhibit F annexed hereto as to the preceding
remittance and the period ending on the preceding Determination Date.
In addition, not more than sixty (60) days after the end of each
calendar year, the Company shall furnish to each Person who was a Purchaser at
any time during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Company shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Company pursuant to any requirements of the Code as from time to time are in
force.
The Company shall prepare and file any and all tax returns, information
statements or other filings relating to the period of time prior to the sale
of the Mortgage Loans by the Company to the Purchaser required to be delivered
to any governmental taxing authority pursuant to any applicable law with
respect to the Mortgage Loans. In addition, the Company shall provide the
Purchaser with such information concerning the Mortgage Loans as is necessary
for the Purchaser to prepare its federal income tax returns.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds an amount
equal to all Monthly Payments (with interest adjusted to the Mortgage Loan
Remittance Rate) which were due on the Mortgage Loans during the applicable
Due Period and which were delinquent at the close of business on the
immediately preceding Determination Date or which were deferred pursuant to
Section 4.01. The Company's obligation to make such Monthly Advances as to any
Mortgage Loan will continue (i) through the last Monthly Payment due prior to
the payment in full of the Mortgage Loan, (ii) through the last Remittance
Date prior to the Remittance Date for the distribution of all Liquidation
Proceeds or other payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds) with respect to the Mortgage Loans or (iii) until the
Company deems a future advance to be a Nonrecoverable Advance, whichever of
(i) (ii) or (iii) occurs first.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to
the extent it has knowledge of such conveyance, exercise its right to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto; provided, however, that the Company shall not exercise
such rights if prohibited by law from doing so.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property
has been conveyed, pursuant to which such person becomes liable under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Company is unable under applicable law to require that the original
Mortgagor remains liable under the Mortgage Note and the Company has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the purchaser of the
Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note. If an assumption fee is collected by the Company for entering
into an assumption agreement, a portion of such fee, up to an amount equal to
one-half of one percent (0.5%) of the outstanding principal balance of the
related Mortgage Loan, will be retained by the Company as additional servicing
compensation, and any portion thereof in excess of one-half of one percent
(0.5%) shall be deposited in the Custodial Account for the benefit of the
Purchaser. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage
Loan nor the outstanding principal amount of the Mortgage Loan shall be
changed.
To the extent that any Mortgage Loan is assumed, the Company shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the Company's Summary of Underwriting Guidelines attached hereto as
Exhibit A-1. If the credit of the proposed transferee does not meet such
underwriting criteria, the Company diligently shall, to the extent permitted
by the Mortgage or the Mortgage Note and by applicable law, accelerate the
maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents.
Except as permitted pursuant to Section 4.01, if (i) the Company
satisfies or releases a Mortgage without first having obtained payment in full
of the indebtedness secured by the Mortgage or notification that payment in
full will be escrowed in a manner customary for such purposes or (ii) should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit
thereof in the Custodial Account within two (2) Business Days of receipt of
such demand by the Purchaser. The Company shall maintain the Fidelity Bond and
Errors and Omissions Insurance Policy as provided for in Section 4.12 insuring
the Company against any loss it may sustain with respect to any Mortgage Loan
not satisfied in accordance with the procedures set forth herein.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account or to retain from interest payments on
the Mortgage Loans the amount of its Servicing Fee. The Servicing Fee shall be
payable monthly and shall be computed on the basis of the same unpaid
principal balance and for the same period with respect to which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee shall be
payable only at the time of and with respect to those Mortgage Loans for which
payment is in fact made of the entire amount of the Monthly Payment. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and
payable solely from, the interest portion of such Monthly Payments collected
by the Company. The aggregate of the Servicing Fees for any months with
respect to the Mortgage Loans shall be reduced by any amount payable by the
Company with respect to such month pursuant to Section 4.04(viii).
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained by
the Company to the extent not required to be deposited in the Custodial
Account. The Company shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled
to reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before March 31st each
year beginning March 31, 1999, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of performance under this Agreement has been made under such officer's
supervision, and (ii) the Company has complied fully with the provisions of
Article II and Article IV, and (iii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all of its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before March 31st of each year beginning March 31, 1999, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the Mortgage Loans,
on the basis of such examination conducted substantially in compliance with
the Single Attestation Program for Mortgage Bankers, nothing has come to their
attention which would indicate that such servicing has not been conducted in
compliance therewith, except for (i) such exceptions as such firm shall
believe to be immaterial, and (ii) such other exceptions as shall be set forth
in such statement.
Section 6.06 Right to Examine Company Records.
The Purchaser shall have the right to examine and audit any and all of
the books, records, or other information of the Company, whether held by the
Company or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during business hours or at such other times
as may be reasonable under applicable circumstances, upon reasonable advance
notice.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information and copies
or originals of any documents contained in the Servicing File for each
Mortgage Loan, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Purchaser, any regulatory
requirement pertaining to the Purchaser or the purposes of this Agreement. All
such reports, documents or information shall be provided by and in accordance
with all reasonable instructions and directions which the Purchaser may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in
order to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facilities.
The Company may make available to a prospective Purchaser a Consolidated
Statement of Operations of Mellon Bank Corporation for the most recently
completed five fiscal years for which such a statement is available, as well
as a Consolidated Statement of Condition at the end of the last two fiscal
years covered by such Consolidated Statement of Operations. The Company also
shall make available any comparable interim statements to the extent any such
statements have been prepared by or on behalf of the Company (and are
available upon request to members or stockholders of the Company or to the
public at large). Upon Purchaser's request, the Company shall furnish promptly
to the Purchaser copies of the statement specified above.
Upon Purchaser's request, the Company also shall make available to
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or
the financial statements of the Company.
ARTICLE VIII
THE COMPANY
Section 8.01 Third Party Claims.
The Company immediately shall notify the Purchaser if a claim is made by
a third party with respect to this Agreement or the Mortgage Loans, assume
(with the prior written consent of the Purchaser) the defense of any such
claim and pay all expenses in connection therewith, including reasonable and
necessary counsel fees, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against it or the Purchaser in respect of such
claim. The Company shall follow any written instructions received from the
Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03 and the Purchaser has notified the
Company of such third party claim as provided herein, or to the failure of the
Company to service and administer the Mortgage Loans in strict compliance with
the material terms of this Agreement and such failure of the Company is not
attributable to acts or omissions by the Purchaser. In the event of claims
relating to the Company's indemnification pursuant to Section 3.03, the
Purchaser immediately shall notify the Company of any claim by a third party.
Section 8.02 Merger or Consolidation of the Company.
The Company shall 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 duties under this
Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the
execution or filing of any paper or any further act on the part of any the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall be an institution (i)
whose deposits are insured by the FDIC through the BIF or the SAIF, (ii) which
is or is affiliated with a FNMA-approved servicer in good standing, and (iii)
has a net worth of at least $15 million.
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the parents, affiliates, subsidiaries,
directors, officers, employees or agents of the Company shall be under any
liability to the Purchaser 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
Company or any such Person against any breach of warranties or representations
made herein, or failure to perform its obligations in strict compliance with
any standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of
this Agreement. The Company and any parent, affiliate, subsidiary, director,
officer, employee or agent of the Company 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 Company shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability;
provided, however, that the Company may, with the consent of the Purchaser,
undertake any such action which it may deem necessary or desirable in respect
to this Agreement and the rights and duties of the parties hereto. In such
event, the Company shall be entitled to reimbursement from the Purchaser of
the reasonable legal expenses and costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and any
subsequent Purchaser will purchase the Mortgage Loans in reliance upon the
representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. Therefore, the Company shall not assign
this Agreement or the servicing hereunder nor shall it delegate its rights or
duties hereunder or any portion hereof (to other than a Subservicer) or sell
or otherwise dispose of all or substantially all of its property or assets
without the prior written consent of the Purchaser (which consent shall be
granted or withheld in the sole discretion of the Purchaser) except that the
Company may assign this Agreement to a successor, parent, or affiliated entity
without the prior written consent of the Purchaser in accordance with Section
8.02.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or
upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Company by
reasonable means. Any such determination permitting the resignation of the
Company shall be evidenced by an Opinion of Counsel to such effect delivered
to the Purchaser, which Opinion of Counsel shall be in form and substance
acceptable to the Purchaser. No such resignation shall become effective unless
(i) the Company also resigns from the Amended and Restated Mortgage Loan Sale,
Warranties and Servicing Agreement, dated as of April 1, 1998 (the "First Sale
and Servicing Agreement") between the Company and the Purchaser, which amends
and restates the Mortgage Loan Sale, Warranties and Servicing Agreement, dated
as of January 1, 1998, between the Company and the Purchaser and (ii) until a
successor shall have assumed the Company's responsibilities and obligations
hereunder and under the First Sale and Servicing Agreement in the manner
provided in Section 11.01 in each of this Agreement and the First Sale and
Servicing Agreement.
Without in any way limiting the generality of this Section 8.04, and
except as otherwise permitted under this Agreement, in the event that the
Company either shall assign this Agreement or the servicing responsibilities
hereunder or delegate its duties hereunder or any portion thereof (to other
than a Subservicer) or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written consent of the Purchaser,
then the Purchaser shall have the right to terminate this Agreement and the
First Sale and Servicing Agreement upon notice given as set forth in Section
11.05 in each of this Agreement and the First Sale and Servicing Agreement,
without any payment of any penalty or damages and without any liability
whatsoever to the Company or any third party.
ARTICLE IX
DEFAULT
Section 9.01 Events of Default.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of five (5) Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Company
set forth in this Agreement or in the Custodial Agreement which continues
unremedied for a period of thirty (30) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Company by the Purchaser (or by the Custodian); or
(iii) failure by the Company to maintain any license required to do
business in any jurisdiction where a Mortgaged Property is located; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Company and such decree or order shall have remained in force undischarged or
unstayed for a period of sixty (60) days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Company or
of or relating to all or substantially all of its property; or
(vi) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations or cease its normal business operations for three (3) Business
Days; or
(vii) the Company ceases to meet the financial qualifications of a FNMA
lender;
(viii) the Company attempts to assign its right to servicing compensation
hereunder or the Company attempts, without the consent of the Purchaser, to
sell or otherwise dispose of all or substantially all of its property or
assets or to assign this Agreement or the servicing responsibilities hereunder
or to delegate its duties hereunder or any portion thereof ( to other than a
Subservicer) in violation of Section 8.04; or
(ix) an Event of Default (as defined in the First Sale and Servicing
Agreement) on the part of the Company.
In each and every such case, so long as an Event of Default shall not
have been remedied (within, if applicable, the period specified), in addition
to whatsoever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, the Purchaser, by notice
in writing to the Company, may terminate all the rights and obligations of the
Company under this Agreement and in and to the Mortgage Loans and the proceeds
thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 11.01. Upon written request from the Purchaser,
the Company shall prepare, execute and deliver to the successor entity
designated by the Purchaser any and all documents and other instruments, place
in such successor's possession all Mortgage Files, and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer and
endorsement or assignment of the Mortgage Loans and related documents, at the
Company's sole expense. The Company shall cooperate with the Purchaser and
such successor in effecting the termination of the Company'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 Company to the Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
Section 9.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company
in the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE X
TERMINATION
Section 10.01 Termination.
This Agreement shall terminate upon either: (i) the later of the
final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or the disposition of any REO Property with respect to
the last Mortgage Loan and the remittance of all funds due hereunder; or (ii)
mutual consent of the Company and the Purchaser in writing.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 9.01 or 10.01 (ii) the Purchaser
shall (i) succeed to and assume all of the Company's responsibilities, rights,
duties and obligations under this Agreement, or (ii) appoint a successor
having the characteristics set forth in clauses (i) through (iii) of Section
8.02 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Company under this Agreement
prior to the termination of Company's responsibilities, duties and liabilities
under this Agreement. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor
(not to exceed the Servicing Fee) out of payments on Mortgage Loans as it and
such successor shall agree. In the event that the Company's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Company shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it its obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 11.01
and shall in no event relieve the Company of the representations and
warranties made pursuant to Sections 3.01 and 3.02 and the remedies available
to the Purchaser under Section 3.03, it being understood and agreed that the
provisions of such Sections 3.01 and 3.02 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and
warranties set forth in Section 3.01, except for subsections (h), (i) and (j)
thereof, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Company, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Company or termination of this Agreement
pursuant to Section 8.04, 9.01 or 10.01 shall not affect any claims that any
Purchaser may have against the Company arising out of the Company's actions or
failure to act prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account, REO Account and Escrow Account and all Mortgage Files
and related documents and statements held by it hereunder and the Company
shall account for all funds and shall execute and deliver such instruments and
do such other things as may reasonably be required to more fully and
definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company.
Section 11.02 Amendment.
Capitalized terms used in this Section 11.02 but not defined in this
Agreement shall have the meanings assigned to them in the Trust Agreement.
(a) This Agreement may be amended from time to time by the Company and
the Purchaser (ii) to cure any ambiguity, (ii) to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions, with respect to matters or questions
arising under this Agreement or (iv) to add, delete, or amend any provisions
to the extent necessary or desirable to comply with any requirements imposed
by the Code and the REMIC Provisions. No such amendment effected pursuant to
the preceding sentence shall, as evidenced by an Opinion of Counsel, adversely
affect the status of any REMIC created pursuant to the Trust Agreement, nor
shall such amendment effected pursuant to clause (iii) of such sentence
adversely affect in any material respect the interest of any Holder of any
Certificates issued by the Trust. Prior to entering into any amendment
pursuant to this paragraph, the Purchaser may require an Opinion of Counsel
(at the expense of the party requesting such amendment) to the effect that
such amendment is permitted under this paragraph. Any such amendment shall be
deemed not to adversely affect in any material respect any Holder of
Certificates, if the Purchaser receives written confirmation from each Rating
Agency that such amendment will not cause such Rating Agency to reduce the
then current rating assigned to the Certificates (and any Opinion of Counsel
requested by the Trustee in connection with any such amendment may rely
expressly on such confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the Company
and the Purchaser with the consent of the Holders of not less that 66K% of the
Class Certificate Principal Amount (or Aggregate Notional Amount) of each
Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or deleting any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders (except
as such additions, changes, deletions or modifications may be permitted under
Section 11.02(a) above); provided, however, that no such amendment shall be
made unless the Purchaser receives an Opinion of Counsel, at the expense of
the party requesting the change, that such change will not adversely affect
the status of any REMIC created pursuant to the Trust Agreement as a REMIC or
cause a tax to be imposed on any such REMIC.
Section 11.03 Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 11.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided, except that Sections 3.01, 3.02, 8.01 and 8.03 shall survive
such termination. This Agreement shall continue notwithstanding transfers of
the Mortgage Loans by the Purchaser.
Section 11.05 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed
by registered mail or by Federal Express or another nationally recognized
overnight courier service, postage prepaid, addressed follows:
(i) if to the Company: Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
Attention: Kelly A. Gately, Vice President
with a copy to: Marilyn Kolb, Esq.
Deputy General Counsel
The Boston Company
One Boston Place
Boston, MA 02108
or such other address as may hereafter be furnished to the Purchaser in
writing by the Company;
(ii) if to Purchaser: Lehman Capital, a Division of Lehman Brothers
Holdings Inc.
c/o Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Attention: Jack E. Desens,
Senior Vice President
with a copy to: John Arnholz, Esq.
Brown & Wood LLP
815 Connecticut Avenue, N.W.
Suite 701
Washington, D.C. 20006
or such other address as may hereafter be furnished to the Company in writing
by the Purchaser.
Section 11.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, 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.
Section 11.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of
the Company shall be rendered as an independent contractor and not as agent
for the Purchaser.
Section 11.08 Execution; Successors and Assigns.
This Agreement 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 agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and the Purchaser and their
respective successors and permitted assigns.
Section 11.09 Integration.
This Agreement, including all schedules and exhibits, constitutes the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto with respect to such
transactions; provided, however, that the Purchase Price referred to herein
shall be the purchase price set forth in the Purchase Price and Terms Letter,
and that provision of the Purchase Price and Terms Letter shall survive for
the exclusive purpose of such cross-reference. The provisions of this
Agreement shall govern in any conflict between the terms of this Agreement and
the Purchase Price and Terms Letter.
Section 11.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company
but subject to the limit set forth in Section 2.02 hereof, to assign, in whole
or in part, its interest under this Agreement with respect to some or all of
the Mortgage Loans, and designate any person to exercise any rights of the
Purchaser hereunder, and the assignee or designee shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage
Loans. All references to the Purchaser in this Agreement shall be deemed to
include its assignee or designee and any subsequent assignee, specifically
including the Trustee.
Section 11.11 No Solicitation.
From and after the Closing Date, the Company agrees that it will not take
any action or permit or cause any action to be taken by any of its agents or
affiliates, or by any independent contractors on the Company's behalf, to
personally, by telephone or mail, solicit the borrower or obligor under any
Mortgage Loan for purposes relating to the marketing of the Company's first
mortgage loan products, including to refinance a Mortgage Loan, in whole or in
part, without the prior written consent of the Purchaser, its successors and
assigns. It is understood and agreed that all rights and benefits relating to
the solicitation of any Mortgagors and the attendant rights, title and
interest in and to the list of such Mortgagors and data relating to their
Mortgages (including insurance renewal dates) shall be transferred to the
Purchaser pursuant hereto on the Closing Date and the Company shall take no
action to undermine these rights and benefits. Notwithstanding the foregoing,
it is understood and agreed that general promotions undertaken by the Company
or any affiliate of the Company, including, without limitation, mass mailings
based on commercially acquired mailing lists, newspaper, radio and television
advertisements, shall not constitute solicitation under this Section 11.11.
Section 11.12 Reconstitution.
The Company understands and agrees that it is the intent of the Purchaser
to securitize the Mortgage Loans (i.e., to form a trust and to issue
securities evidencing interests therein). The Company agrees to review and
adhere to the terms of any agreements that may be required to facilitate such
securitization and to provide and execute such certificates, Opinions of
Counsel and other documents as may be necessary to facilitate such
securitization, it being understood that any such agreements and other
documents will not impose upon the Company any obligations more burdensome
than those contained in this Agreement. It is further understood that the
Purchaser has agreed to reimburse the Company for its reasonable attorneys'
fees and other costs incurred in connection with such securitization.
The Company agrees that, notwithstanding anything to the contrary in the
Purchase Price and Terms Letter or in this Agreement (including Section 11.09
hereof), the provisions of Sections 3 and 12 of the Purchase Price and Terms
Letter shall survive the execution of this Agreement and shall remain in
effect.
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as
of the day and year first above written.
LEHMAN CAPITAL, A Division of
Lehman Brothers Holdings Inc.
By: /s/ Jack Desens
______________________________
Name: Jack Desens
Title: Senior Vice President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Kelly Gately
________________________________
Name: Kelly A. Gately
Title: Vice President
STATE OF _________________________________)
)
COUNTY OF _________________________________) ss.:
On the ____ day of _________, 1998 before me, a Notary Public in and for
said State, personally appeared ________________________________, known to me
to be ____________ of
________________________________________________________________ the
corporation 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 affixed my office seal
the day and year in this certificate first above written.
___________________________________________
Notary Public
My Commission expires:_____________________
COMMONWEALTH OF MASSACHUSETTS )
)
COUNTY OF SUFFOLK )ss.:
On the ____ day of ___________, 1998 before me, a Notary Public in and
for said Commonwealth, personally appeared Kelly A. Gately, known to me to be
Vice President of Boston Safe Deposit and Trust Company, the trust company
that executed the within instrument and also known to me to be the person who
executed it on behalf of said trust company, and acknowledged to me that such
trust company executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
_____________________________________
Notary Public
My Commission expires:
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT A-1
SUMMARY OF UNDERWRITING GUIDELINES
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
originals or copies of each of the following items, which shall be available
for inspection by the Purchaser and any prospective Purchaser. To the extent
that the Servicing File contains copies of any of the items set forth herein,
the Company represents to the Purchaser that the originals or certified copies
of said items have been delivered to the Custodian pursuant to Section 2 of
the Custodial Agreement, except as indicated on Schedule I thereto.
I. The original Mortgage Note bearing all intervening endorsements, endorsed
"Pay to the order of ______________ without recourse" and signed in the name
of the Company by an authorized officer (in the event that the Mortgage Loan
was acquired by the Company in a merger, the signature must be in the
following form: "Boston Safe Deposit and Trust Company, successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was acquired
or originated by the Company while doing business under another name, the
signature must be in the following form: "Boston Safe Deposit and Trust
Company, formerly known as [previous name]".
I. The original of any guarantee executed in connection with the Mortgage Note
(if any).
I. The original Mortgage or Deed of Trust, with evidence of recording thereon
and, as to Coop Loans, the original Pledge and Security Agreement, or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a copy certified by the Seller
indicating that such Mortgage has been delivered for recording. The return
directions for the original Mortgage should indicate, when recorded, mail to
the Company.
I. The originals of all assumption, modification, consolidation or extension
agreements, with evidence of recording thereon.
I. The original Assignment of Security Agreement or Assignment of Mortgage for
each Mortgage Loan, in form and substance acceptable for recording. The
Assignment of Security Agreement and the Assignment of Mortgage shall be
delivered in blank.
I. Originals of any intervening recorded assignments of the Mortgage with
evidence of recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of Mortgage,
the Company shall deliver or cause to be delivered to the Custodian, a
photocopy of such intervening assignment, together with (i) in the case of
delay caused by the public recording office, an Officer's Certificate of the
Company stating that such intervening assignment of Mortgage has been
dispatched to the appropriate public recording office for recordation and that
such original recorded intervening assignment of mortgage or a copy of such
intervening assignment of mortgage certified by the appropriate public
recording office or by the title insurance company that issued the title
policy to be a true and complete copy of the original recorded intervening
assignment of mortgage will be promptly delivered to the Custodian upon
receipt thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is lost
after recordation in a public recording office, a copy of such intervening
assignment certified by such public recording office to be a true and complete
copy of the original recorded intervening assignment.
I. Except as to Coop Loans, the original mortgagee policy of title insurance
or attorney's opinion of title and abstract of title.
I. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
I. Except as to Coop Loans, the original hazard insurance policy and, if
required by law, flood insurance policy, in accordance with Section 4.10 of
the Agreement.
I. Residential loan application.
I. Mortgage Loan closing statement.
I. Verification of employment and income.
I. Verification of acceptable evidence of source and amount of down-payment.
I. Credit report on the Mortgagor.
I. Residential appraisal report.
I. Photograph of the Mortgaged Property.
I. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy, i.e., map
or plat, restrictions, easements, sewer agreements, home associations
declarations, etc.
I. All required disclosure statements.
I. If available, termite report, structural engineer's report, water
portability and septic certification.
I. Sales contract.
II. Tax receipts, insurance premium receipts, ledger
sheets, payment history form date of origination, insurance claim files,
correspondence, current and historical computerized data files, and all other
processing, underwriting and closing papers and records which are customarily
contained in a mortgage loan file and which are required to document the
Mortgage Loan or to service the Mortgage Loan.
I. As to New York Coop Loans, the following documents: Pledge and Security
Agreement; Stock Certificate; Proprietary Lease; Recognition Agreement (if
any); Stock Power; Assignment of the Lease; and UCC-1.
I. As to San Francisco Coop Loans, the following documents: Lessor's Consent;
Lessor's Estoppel Certificate; Leasehold Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing; Assignment of Leasehold
Estate; Title Insurance; Recognition Agreement; UCC-1; Pledge and Security
Agreement.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 60
days of the Closing Date, an Officer's Certificate which shall (i) identify
the recorded document, (ii) state that the recorded document has not been
delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will
be delivered to the Custodian. The Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv)
above. An extension of the date specified in (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT C
MORTGAGE LOAN DOCUMENTS
I. The original Mortgage Note bearing all intervening endorsements, endorsed
"Pay to the order of ______________ without recourse" and signed in the name
of the Company by an authorized officer (in the event that the Mortgage Loan
was acquired by the Company in a merger, the signature must be in the
following form: "Boston Safe Deposit and Trust Company, successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was acquired
or originated by the Company while doing business under another name, the
signature must be in the following form: "Boston Safe Deposit and Trust
Company, formerly known as [previous name]".
I. The original of any guarantee executed in connection with the Mortgage Note
(if any).
I. The original Mortgage or Deed of Trust, with evidence of recording thereon
and, as to Coop Loans, the original Pledge and Security Agreement, or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a copy certified by the Seller
indicating that such Mortgage has been delivered for recording. The return
directions for the original Mortgage should indicate, when recorded, mail to
the Seller.
I. The originals of all assumption, modification, consolidation or extension
agreements, with evidence of recording thereon.
I. The original Assignment of Security Agreement or Assignment of Mortgage for
each Mortgage Loan, in form and substance acceptable for recording. The
Assignment of Security Agreement and the Assignment of Mortgage shall be
delivered in blank.
I. Originals of any intervening recorded assignments of the Mortgage with
evidence of recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of Mortgage,
the Company shall deliver or cause to be delivered to the Custodian, a
photocopy of such intervening assignment, together with (i) in the case of
delay caused by the public recording office, an Officer's Certificate of the
Company stating that such intervening assignment of Mortgage has been
dispatched to the appropriate public recording office for recordation and that
such original recorded intervening assignment of Mortgage or a copy of such
intervening assignment of Mortgage certified by the appropriate public
recording office or by the title insurance company that issued the title
policy to be a true and complete copy of the original recorded intervening
assignment of Mortgage will be promptly delivered to the Custodian upon
receipt thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is lost
after recordation in a public recording office, a copy of such intervening
assignment certified by such public recording office to be a true and complete
copy of the original recorded intervening assignment.
I. Except as to Coop Loans, the original mortgagee policy of title insurance
or attorney's opinion of title and abstract of title.
I. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
I. As to New York Coop Loans, the following documents: Pledge and Security
Agreement; Stock Certificate; Proprietary Lease; Recognition Agreement (if
any); Stock Power; and Assignment of the Lease.
I. As to San Francisco Coop Loans, the following documents: Lessor's Consent;
Lessor's Estoppel Certificate; Leasehold Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing; Assignment of Leasehold
Estate; Title Insurance; Recognition Agreement; UCC-1; Pledge and Security
Agreement.
In the event an Officer's Certificate of the Company is delivered to
the Custodian because of delay caused by the public recording office in
returning any recorded document, the Company shall deliver to the Custodian,
within 60 days of the Closing Date, an Officer's Certificate which shall (i)
identify the recorded document, (ii) state that the recorded document has not
been delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will
be delivered to the Custodian. The Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv)
above. An extension of the date specified in (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT C-1
CUSTODIAL AGREEMENT
EXHIBIT D-1
CUSTODIAL ACCOUNT CERTIFICATION
--------------, ----
Boston Safe Deposit and Trust Company hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 4.04 of the Mortgage Loan Sale, Warranties and Servicing Agreement,
dated as of _______________ _________________ Residential Adjustable Rate
Mortgage Loans, Group _____________.
Title of Account: Boston Safe Deposit and Trust Company in trust for the
purchaser Group _____________.
Account Number: _________________________________
Address of office or branch
of the Company at
which Account is maintained:
________________________________________
________________________________________
________________________________________
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:______________________________
Name:
Title:
EXHIBIT D-2
CUSTODIAL ACCOUNT LETTER AGREEMENT
------------------, -----
To: ____________________________
____________________________
____________________________
(the "Depository")
As Company under the Mortgage Loan Sale, Warranties and Servicing
Agreement, dated as of _____________ ___the _________________, Residential
Adjustable Rate Mortgage Loans, Group____________ (the "Agreement"), we hereby
authorize and request you to establish an account, as a Custodial Account
pursuant to Section 4.04 of the Agreement, to be designated as "Boston Safe
Deposit and Trust Company, in trust for the [Purchaser] - Residential
Adjustable Rate Mortgage Loans - Group ____________." All deposits in the
account shall be subject to withdrawal therefrom by order signed by the
Company. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter
is submitted to you in duplicate. Please execute and return one original to
us.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:__________________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ________________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance. Corporation through
the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF").
[DEPOSITORY]
By: _______________________________
Name:
Title:
Date:
EXHIBIT E-1
ESCROW ACCOUNT CERTIFICATION
- --------------, ----
Boston Safe Deposit and Trust Company hereby certifies that it has
established the account described below as an Escrow Account pursuant to
Section 4.06 of the Mortgage Loan Sale, Warranties and Servicing Agreement,
dated as of _________________, Residential Adjustable Rate Mortgage Loans,
Group ---------------------.
Title of Account: "Boston Safe Deposit and Trust Company in trust for the
Purchaser Group _____________, and various Mortgagors."
Account Number: _______________________________
Address of office or branch
of the Company at
which Account is maintained:
_________________________________
_________________________________
_________________________________
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: _____________________________
Name:
Title:
EXHIBIT E-2
ESCROW ACCOUNT LETTER AGREEMENT
__________________, 199__
To: ____________________________
----------------------------
----------------------------
(the "Depository")
As Company under the Mortgage Loan Sale, Warranties and Servicing
Agreement, dated as of _____________ ___, 199__, Residential Adjustable Rate
Mortgage Loans, Group____________ (the "Agreement"), we hereby authorize and
request you to establish an account, as an Escrow Account pursuant to Section
4.06 of the Agreement, to be designated as "Boston Safe Deposit and Trust
Company, in trust for the [Purchaser] - Residential Adjustable Rate Mortgage
Loans - Group ____________." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Company. You may refuse any
deposit which would result in violation of the requirement that the account be
fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: ________________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ________________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance. Corporation through
the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF").
[DEPOSITORY]
By:________________________________
Name:
Title:
Date:
EXHIBIT F
MONTHLY REMITTANCE ADVICE
EXHIBIT G
INTENTIONALLY DELETED
EXHIBIT H
COMPANY'S CERTIFICATE OF COMPLIANCE
-------------------- ----, ----
I, Kelly A. Gately, a Vice President of Boston Safe Deposit and Trust
Company (the "Company"), do hereby confirm and state, on the basis of my
personal knowledge, that the following are true to the best of my knowledge
and belief:
l. I am a Vice President of the Company, having charge of the Mortgage
Loans this day being sold, transferred and assigned to __________________
("Purchaser").
2. I do hereby confirm that the representations and warranties contained
in Sections 3.01 and 3.02 of the Mortgage Loan Sale, Warranties and Servicing
Agreement entered into as of the first day of ______________, ___, are true
and correct as of such date.
-----------------------------
Kelly A. Gately
Vice President
EXHIBIT I
FORM OF OPINION OF SELLER'S COUNSEL
_____________ ____,199__
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Dear Ladies and Gentlemen:
I am Deputy General Counsel of and counsel for Boston Safe Deposit and
Trust Company (the "Seller"), in connection with the sale (the "Sale") by the
Seller of a portfolio of loans secured by residential real estate and shares
of cooperative associations (the "Loans") to Lehman Capital, A Division of
Lehman Brothers Holdings Inc. ("the Purchaser") pursuant to a Mortgage Loan
Sale, Warranties and Servicing Agreement dated as of _____________ ___, ____,
by and between the Seller and the Purchaser. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Agreement.
In connection with rendering this opinion, I have examined originals, or
copies identified to my satisfaction as being true copies of originals, of the
following, among other things:
(a) the Mortgage Loan Sale, Warranties and Servicing Agreement;
(b) the Additional Pledged Collateral Custodial Agreement by and among
the Seller, the Purchaser and [ ] ("the Custodian");
(c) the form of Assignment of Mortgage;
(d) the form of endorsement of the Mortgage Notes;
(e) the Charter and By-laws of the Seller; and,
(f) such other documents, records and papers as we have deemed necessary
and relevant as a basis for this opinion.
For the purposes of the opinions expressed below, I have assumed (i) the
genuineness of all signatures on original documents or instruments; (ii) the
authenticity of all documents or instruments submitted to me as originals,
(iii) the conformity to originals of all documents or instruments submitted to
me as copies; (iv) the due authorization, execution and delivery of all
documents where due authorization, execution and delivery are requisite to the
effectiveness thereof (other than the authorization, execution and delivery by
the Seller of the Agreement, as to which my opinions are expressed below); (v)
that, immediately prior to the transfer of any Loan to the Purchaser pursuant
to the Agreement, with respect to such Loan, (A) the Seller was the holder and
named payee of the Note, (B) the Seller was the mortgagee or beneficiary, as
applicable, under each related Security Instrument, and (C) the Seller was the
owner of such Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges, security or other
interests of any nature; (vi) that each Note corresponding to each Loan has
been endorsed by the Seller using the form of endorsement attached hereto and
each Note so endorsed has been delivered to the Purchaser on or before the
date hereof; (vii) that the Purchaser is acquiring the Loans in good faith for
value without notice that they are overdue or have been dishonored or of any
defense against or claim to the Loans or any interest therein on the part of
any person; (viii) that there is no evidence on any of the Loan Documents of
any interest contrary to the Seller's interests under the Agreement; (ix) that
the Seller is solvent and will not be rendered insolvent by the sale of the
portfolio of Loans; and, (x) that the Seller has received payment of
reasonably equivalent value for the Loans. I have no actual knowledge that any
of the foregoing assumptions is incorrect. I also have relied to the extent I
deem proper upon written statements and certificates of public officials and,
as to various matters of fact relevant to the opinions expressed herein, I
have relied upon certificates and statements of officers of the Seller.
On the basis of the foregoing examination, statements and assumptions and
in reliance thereon and upon consideration of applicable law, I am of the
opinion that:
(1) The Seller is a Massachusetts trust company, duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Massachusetts and is duly authorized to transact its business.
(2) The Seller has the requisite corporate power to execute and deliver
the Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by the Seller and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Seller. The Agreement has been
duly executed and delivered by the Seller and, assuming due authorization,
execution and delivery by Purchaser and prior satisfaction of all conditions
to the obligations of each of the parties under the Agreement (or a valid
waiver thereof by such parties, as applicable), the Agreement constitutes the
legal, valid, and binding obligation of the Seller enforceable in accordance
with its terms subject only to the exceptions set forth below, and Seller has
all power, authority and right to perform and observe the terms and conditions
of such instruments.
(3) The execution and delivery of the Agreement by the Seller does
not, and the performance of the Agreement by the Seller will not, (a) result
in a breach of or violate the Charter or By-laws of the Seller, (b) violate
(A) any statute, law, rule or regulation, or (B) to the best of my knowledge,
any order, judgment, award, administrative interpretation, injunction, writ,
or decree or the like of any court or government authority, or (C) to the best
of my knowledge, conflict with or violate any agreement, permit, license, or
other governmental authorization or approval necessary for the purchase by the
Seller of the Loans, the effect of which breach, conflict or violation would
be material and adverse to the rights of the Purchaser under the Agreement or
to the Loans. No regulatory approvals or consents are required under
Massachusetts or federal law or regulation with respect to Seller's
consummation of the transactions between Purchaser and Seller contemplated by
the Agreement.
(4) To the best of my knowledge, there are no actions, suits,
proceedings, or governmental investigations or inquiries pending or threatened
against the Seller seeking to prevent or that, if successful, would prevent
the consummation of the transactions contemplated by the Agreement.
(5) The Mortgages have been duly assigned and the Mortgage Notes have
been duly endorsed by a duly authorized officer of the Company as provided in
the Custodial Agreement.
The opinion set forth in the last sentence of paragraph (2) above to the
effect that the Agreement is enforceable against Seller in accordance with its
terms, is subject to the following exceptions:
a. Such enforceability may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization or other similar laws now or
hereafter in effect relating to or affecting creditor's rights.
b. Such enforceability may be limited by general equitable principles,
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.
I hereby advise your that the opinions expressed herein are limited to
matters of federal law and the law of the Commonwealth of Massachusetts and do
not purport to cover any matters as to which any laws of any other
jurisdiction are applicable. Insofar as the opinions expressed herein are
limited to transactions between the Seller and the Purchaser, except for the
opinion I express in paragraph (5) above, I express no opinion regarding any
transaction(s) between Seller or Purchaser and any Obligor(s) evidenced by
loan applications, Notes, Mortgages, disclosures, notices or any other
instrument or documents entered into or exchanged between the Seller or
Purchaser and the Obligor(s). I am not assuming any obligation to revise or
supplement the opinions expressed above should such laws be changed by
legislative action, judicial decision, or otherwise.
This opinion is rendered to you as the Purchaser named in the Agreement
solely in connection with the transactions contemplated therein and may not be
used or relied upon by any other person or for any other purpose without our
express prior written consent.
Respectfully submitted,
Marilyn K. Kolb
Deputy General Counsel
EXHIBIT J
FORM OF OPINION OF PURCHASER'S COUNSEL
_____________ ___, 199__
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
Dear Ladies and Gentlemen:
I am counsel for Lehman Capital, A Division of Lehman Brothers Holdings
Inc. (the "Purchaser"), in connection with the sale (the "Sale") by Boston
Safe Deposit and Trust Company ("Seller") of a portfolio of loans secured by
residential real estate and shares of cooperative associations (the "Loans")
to Purchaser pursuant to a Mortgage Loan Sale, Warranties and Servicing
Agreement dated as of _________________ ___, _____, by and between the Seller
and the Purchaser. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Agreement.
In connection with rendering this opinion, I have examined originals, or
copies identified to my satisfaction as being true copies of originals, of the
following, among other things:
(a) the Agreement and all exhibits and schedules thereto; and
(b) the Charter and By-laws of the Purchaser.
For the purposes of the opinions expressed below, I have assumed (i) the
genuineness of all signatures on original documents or instruments; (ii) the
authenticity of all documents or instruments submitted to me as originals,
(iii) the conformity to originals of all documents or instruments submitted to
me as copies; (iv) the due authorization, execution and delivery of all
documents where due authorization, execution and delivery are requisite to the
effectiveness thereof (other than the authorization, execution and delivery by
the Purchaser of the Agreement, as to which my opinions are expressed below);
(v) that, immediately prior to the transfer of any Loan to the Purchaser
pursuant to the Agreement, with respect to such Loan, (A) the Seller was the
holder and named payee of the Note, (B) the Seller was the mortgagee or
beneficiary, as applicable, under each related Security Instrument, and (C)
the Seller was the owner of such Loan free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges, charges,
security or other interests of any nature; (vi) that each Note corresponding
to each Loan has been endorsed by the Seller using the form of endorsement
attached hereto and each Note so endorsed has been delivered to the Purchaser
on or before the date hereof; (vii) that the Purchaser is acquiring the Loans
in good faith for value without notice that they are overdue or have been
dishonored or of any defense against or claim to the Loans or any interest
therein on the part of any person; (viii) that there is no evidence on any of
the Loan Documents of any interest contrary to the Seller's interests under
the Agreement; (ix) that the Purchaser is solvent and will not be rendered
insolvent by the purchase of the portfolio of Loans, and (x) that the Seller
has received payment of reasonably equivalent value for the Loans. I have no
actual knowledge that any of the foregoing assumptions is incorrect. I also
have relied to the extent I deem proper upon written statements and
certificates of public officials and, as to various matters of fact relevant
to the opinions expressed herein, I have relied upon certificates and
statements of officers of the Purchaser.
On the basis of the foregoing examination, statements and assumptions and
in reliance thereon and upon consideration of applicable law, I am of the
opinion that:
(1) The Purchaser is a [ ], duly organized, validly existing, and in good
standing under the laws of [ ].
(2) The Purchaser has the requisite corporate power to execute and
deliver the Agreement and to consummate the transactions contemplated thereby.
The execution and delivery of the Agreement by the Purchaser and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the Purchaser. The
Agreement has been duly executed and delivered by the Purchaser and, assuming
due authorization, execution and delivery by Seller and prior satisfaction of
all conditions to the obligations of each of the parties under the Agreement
(or a valid waiver thereof by such parties, as applicable), the Agreement
constitutes the legal, valid, and binding obligation of the Purchaser
enforceable in accordance with its terms subject only to the exceptions set
forth below.
(3) The execution and delivery of the Agreement by the Purchaser does
not, and the performance of the Agreement by the Purchaser will not, (a)
result in a breach of or violate the Charter or By-laws of the Purchaser, (b)
violate (A) any statute, law, rule or regulation, or (B) to the best of my
knowledge, any order, judgment, award, administrative interpretation,
injunction, writ, or decree or the like of any court or government authority,
or (C) to the best of my knowledge, conflict with or violate any agreement,
permit, concession, grant, franchise, license, or other governmental
authorization or approval necessary for the purchase by the Purchaser of the
Loans, the effect of which breach, conflict or violation would be material and
adverse to the rights of the Purchaser under the Agreement or to the Loans. No
regulatory approvals or consents are required under federal law or regulation
with respect to Purchaser's consummation of the transactions between Purchaser
and Seller contemplated by the Agreement.
(4) To the best of my knowledge, there are no actions, suits,
proceedings, or governmental investigations or inquiries pending or threatened
against the Purchaser seeking to prevent or that, if successful, would prevent
the consummation of the transactions contemplated by the Agreement.
The opinion set forth in the last sentence of paragraph (2) above to the
effect that the Agreement is enforceable against Purchaser in accordance with
its terms, is subject to the following exceptions:
a. Such enforceability may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization or other similar laws now or
hereafter in effect relating to or affecting creditor's rights.
b. Such enforceability may be limited by general equitable principles,
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.
I hereby advise your that the opinions expressed herein are limited to
matters of federal and [ ] law and do not purport to cover any matters as to
which any laws of any other jurisdiction are applicable. Insofar as the
opinions expressed herein are limited to transactions between the Seller and
the Purchaser, I express no opinion regarding any transaction(s) between
Seller or Purchaser and any Obligor(s) evidenced by loan applications, Notes,
Mortgages, disclosures, notices or any other instrument or documents entered
into or exchanged between the Seller or Purchaser and the Obligor(s). I am not
assuming any obligation to revise or supplement the opinions expressed above
should such laws be changed by legislative action, judicial decision, or
otherwise.
This opinion is rendered to you as the Seller named in the Agreement
solely in connection with the transactions contemplated therein and may not be
used or relied upon by any other person or for any other purpose without our
express prior written consent.
Respectfully submitted,
EXHIBIT K
ADDITIONAL PLEDGED COLLATERAL
CUSTODIAL AGREEMENT
THIS ADDITIONAL PLEDGED COLLATERAL CUSTODIAL AGREEMENT, dated as of
_____________ ____, 199__, is by and between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., a corporation with an office at 3 World
Financial Center, New York, NY 10285-1200 (the "Purchaser") and Boston Safe
Deposit and Trust Company, a Massachusetts trust company with its principal
place of business at One Boston Place, Boston, MA 02108 (the "Custodian");
WITNESSETH
WHEREAS, pursuant to the terms of a Mortgage Loan Sale, Warranties and
Servicing Agreement of even date herewith (the "Loan Sale Agreement"), the
Purchaser has agreed to purchase certain loans (each a "Mortgage Loan") from
the Company as whole loans; and
WHEREAS, certain Mortgage Loans are secured by Additional Pledged
Collateral (as defined in the Loan Sale Agreement) currently in the custody of
the Custodian; and
WHEREAS, the Purchaser desires to have the Custodian retain possession of
the Additional Pledged Collateral for the benefit of the Purchaser and any
future purchaser, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual undertakings herein
expressed the parties hereto hereby agree as follows:
Section 1. Definitions.
Capitalized terms shall have the meanings assigned to them, except that
capitalized terms used and not defined herein shall have the meanings assigned
to such terms by the Loan Sale Agreement.
Agreement: This Custodial Agreement and all amendments and attachments
hereto and supplements hereof.
Custodian: Boston Safe Deposit and Trust Company or any successor in
interest or assigns, or any successor to the Custodian under this Agreement as
herein provided.
Purchaser: Lehman Capital, A Division of Lehman Brothers Holdings Inc. or
its successor in interest assigns.
Section 2. Appointment of Custodian.
The Purchaser hereby appoints and designates the Custodian as the
custodian of the Additional Collateral. The Custodian hereby accepts such
appointment and designation and agrees that it shall maintain custody of the
Additional Collateral in accordance with this Agreement. In its discretion,
the Custodian is permitted to engage sub-contractors to assist in providing
certain of the services to Purchaser under this Agreement.
Section 3. Obligations of the Custodian.
The Custodian shall hold all Additional Collateral for the use and
benefit of the Purchaser, and shall make disposition thereof in accordance
with this Agreement and the instructions furnished by the Purchaser. The
Custodian shall segregate and maintain continuous custody of all Additional
Collateral in accordance with customary standards for such custody.
Section 4. Custodian Duties.
As Custodian for the Additional Collateral, Custodian shall:
(a) hold the Additional Collateral, as applicable, in safekeeping
facilities, including, without limitation, in central depositories
including the Depository Trust Company, in Book Entry System of the U.S.
Treasury Department ("Fed Book Entry"), or in the safekeeping of other
custodian banks, clearing corporations and depositories or similar
organizations in the U.S. or elsewhere, as required for the secure and
efficient handling of the property and as Custodian in its sole
discretion shall select;
(b) collect all income earned by, and all distributions due to, the
Additional Collateral, if any;
(c) collect all proceeds from securities, certificates of deposit or
other investments which may mature or be called;
(d) attend to exchanges of securities, to deposits or exchanges of
the securities of companies in reorganization, and to other so-called
corporate actions which affect the Additional Collateral as directed by
the Purchaser; and
(e) upon the Purchaser's written instructions, deliver to any
person, agent, financial institution, partnership, corporation or other
designated recipient any or all of the Additional Collateral held under
this Agreement.
The Custodian shall have no duty or responsibility to manage or recommend
investments of the assets held by it hereunder or to initiate any purchase,
sale or other investment transaction in the absence of proper instructions (as
set forth in Section 5 below).
Section 5. Directions and Instructions.
All directions to Custodian from the Purchaser shall be in writing
(provided that Custodian may, in its discretion, accept oral directions
subject to confirmation in writing), and Custodian shall be fully protected in
acting in accordance therewith or for failing to act in the absence thereof.
The Purchaser shall certify to Custodian the names and specimen signatures of
persons authorized to act for the Purchaser in relation to Custodian.
Communications to Custodian shall be sent to its offices at One Boston Place,
Boston, Massachusetts 02108 or to such other address as Custodian shall
specify, and such communications shall be binding upon Custodian when received
by it.
Notwithstanding anything herein to the contrary, Custodian shall be
fully protected in acting in accordance with directions with respect to
securities transactions (including without limitation the affirmation and/or
confirmation of such transactions) received by it through a system or
arrangement for the coordination of securities transaction settlements
operated by Depository Trust Company or by any central securities depository,
securities clearing organization or book entry system which serves to link
investment managers, securities brokers and custodian banks, pursuant to an
agreement entered into by Custodian and the Purchaser to the same extent as if
the directions were in writing.
Section 6. Without Express Authority.
The Custodian may, in its discretion and without express authority from
the Purchaser:
(a) endorse for collection, in the name of the Purchaser, checks,
drafts and other negotiable instruments; and
(b) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and
other dealings with the Additional Collateral of the Purchaser except as
otherwise provided by proper instructions.
Section 7. Standard of Care.
The duties of Custodian shall only be those specifically undertaken
pursuant to this Agreement, and Custodian shall not be liable for an act or
omission of another person in carrying out any responsibility imposed upon
such person with respect to the Additional Collateral held under this
Agreement whether such responsibility is allocated to such other person by
this Agreement or pursuant to a procedure established in this Agreement or
otherwise. In performing its duties under this Agreement, Custodian shall
exercise the same care and diligence that it would devote to its own property
and shall be liable only for losses arising from its negligence or willful
misconduct.
Section 8. Indemnification of Custodian.
The Purchaser agrees to indemnify and hold harmless the Custodian and
its directors, officers, employees, agents and nominees from all taxes (except
taxes on the net income of the Custodian, its agents and its nominees),
charges, expenses, assessments, claims and liabilities (including reasonable
legal fees and expenses) incurred by any of them in connection with the
performance of this Agreement, except such as may arise from any negligent
action, negligent failure to act or willful misconduct on the part of the
indemnified entity.
Section 9. Compensation of Custodian.
Throughout the Term of this Agreement, as set forth in Section 14 below,
the Custodian shall perform its duties hereunder without compensation.
Thereafter, the Custodian shall be entitled to reimbursement of expenses
incurred in connection with any necessary transfer following notice of
termination or removal under Sections 11, 12 or 14.
Section 10. Examination of Custodial Files.
Upon reasonable prior notice to the Custodian, the Purchaser and its
agents, accounts, attorneys and auditors will be permitted during normal
business hours to examine the records relating to Additional Pledged
Collateral in the possession of or under the control of the Custodian relating
to any or all of the Mortgage Loans.
Section 11. Removal of Custodian.
Upon at least 45 days' prior written notice to the Custodian, and only
for cause, the Purchaser may remove and discharge the Custodian from the
performance of its duties under this Agreement. Having given notice of such
removal, the Purchaser promptly shall appoint a successor Custodian to act on
behalf of the Purchaser by written instrument, one original counterpart of
which instrument shall be delivered to the Custodian. Any termination by the
Purchaser shall be accompanied or followed promptly by proper instructions in
writing setting forth the names of the persons to whom the Custodian shall
deliver the Additional Collateral. The Custodian will deliver promptly the
Additional Collateral to the persons so specified, after deducting therefrom
any amounts which the Custodian is owed for services or reimbursement of
expenses hereunder. The Purchaser shall be responsible for the fees of the
successor Custodian.
Section 12. Termination by Custodian.
The Custodian may terminate its obligations under this Agreement upon at
least 45 days' prior written notice to the Purchaser. In the event of such
termination, the Purchaser shall appoint a successor Custodian. The payment of
such successor Custodian's fees and expenses shall be solely the
responsibility of the Company or any successor to the Company as servicer
pursuant to the Loan Sale Agreement. If notice of termination is given by the
Custodian, the Purchaser shall, within 30 days following the giving of such
notice, deliver to the Custodian proper instructions in writing specifying the
names of the persons to whom the Custodian shall deliver the Additional
Pledged Collateral held by it. The Custodian will deliver promptly the
Additional Pledged Collateral to the persons so specified, after deducting
therefrom any amounts which the Custodian is owed for services or
reimbursement of expenses hereunder.
If within 30 days following the giving of a notice of termination by the
Custodian, the Custodian does not receive from the Purchaser proper
instructions in writing specifying the names of the persons to whom the
Custodian shall deliver the assets of the Purchaser held by it, the Custodian,
at its election, may seek court action with respect to the appointment of a
successor custodian.
Section 13. Survival.
The obligations of the parties hereto regarding the use of reasonable
care, indemnities and payment of fees and expenses shall survive the
termination of this Agreement.
Section 14. Term of Agreement.
Unless terminated pursuant to Section 11 or Section 12 hereof, this
Agreement shall terminate upon the earlier of (1) the resignation or removal
of the Custodian, its agent or affiliate as the servicer under the Loan Sale
Agreement, and (2) the final payment or other liquidation (or advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan,
and the final remittance of all funds due the Purchaser under the Loan Sale
Agreement. In such event, all Additional Pledged Collateral shall be released
in accordance with the written instructions of the Purchaser.
Section 15. Notices.
Except as otherwise specified herein, each notice or other communication
hereunder shall be in writing and shall be delivered to the intended recipient
at the following address (or at such other address as the intended recipient
shall have specified in a written notice given to the other parties hereto):
if to the Purchaser:
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Attention: Jack E. Desens, Senior Vice President
if to the Custodian:
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
Attention: Kelly A. Gately, Vice President
Section 16. Amendments.
Unless otherwise specifically provided herein, this Agreement may not be
amended, modified, altered or supplemented other than by means of an agreement
or instrument executed on behalf of each of the parties hereto.
Section 17. Waiver.
No failure on the part of any person to exercise any power, right,
privilege or remedy hereunder, and no delay on the part of any person in the
exercise of any power, right, privilege or remedy hereunder, shall operate as
a waiver thereof; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy.
Section 18. Severability.
In the event that any provision of this Agreement, or the application of
any such provision to any person or set of circumstances, shall be determined
to be invalid, unlawful, void or unenforceable to any extent, the remainder of
this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected
and shall continue to be valid and enforceable to the fullest extent permitted
by law.
Section 19. Successor and Assigns.
This agreement shall inure to the benefit of the successors and
assigns of the parties hereto.
Section 20. Governing Law.
This Agreement shall be construed in accordance with, and governed in all
respects by, the laws of the Commonwealth of Massachusetts.
Section 21. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, when taken together, shall
constitute one agreement.
IN WITNESS WHEREOF, the Purchaser and the Custodian have caused their
names to be signed hereto by their respective duly-authorized officers, all as
of the date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.,
as Purchaser
By:_____________________________
Name: Jack E. Desens
Title: Senior Vice President
BOSTON SAFE DEPOSIT AND TRUST
COMPANY, as Custodian
By: ______________________________
Name: Kelly A. Gately
Title: Vice President
EXHIBIT L
INTENTIONALLY LEFT BLANK
EXHIBIT M
FORM OF CERTIFICATE FOR NONRECOVERABLE ADVANCES
__________________ ____, 199__
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285-1200
Re: Mortgage Loan Sale, Warranties and Servicing Agreement dated as of
_________________, between _________________________, as Purchaser, and Boston
Safe Deposit and Trust Company, as Company.
Ladies and Gentlemen:
In accordance with the provisions of Sections 4.02 and 5.03 of the
above-referenced Agreement, the undersigned hereby certifies that it has
determined, with regard to the Mortgage Loan(s) identified below, that future
advances constitute Nonrecoverable Advances as such term is defined by the
Agreement.
- ------------------------------------ ------------------------
Mortgagor Identifying Number
- ------------------------------------ ------------------------
Mortgagor Identifying Number
- ------------------------------------ ------------------------
Mortgagor Identifying Number
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
Name:
Title:
